<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) March 1, 1996
____________________
NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in charter)
Delaware 1-3229 95-1055798
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1840 Century Park East, Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 553-6262
NONE
(Former name or former address, if changed since last report)
Page 1 of 28
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 1, 1996, pursuant to the Asset Purchase Agreement dated as of
January 3, 1996 (the "Purchase Agreement"), Northrop Grumman Corporation
("Registrant") acquired from Westinghouse Electric Corporation (collectively
"Seller") substantially all of the assets of Seller's Electronic Systems Group
(excluding the security systems, wireless communications and airship businesses
thereof and the business of Westinghouse Landmark GIS, Inc.) (the "Division").
The purchase includes the Seller's voting stock or other interests in several
domestic and foreign subsidiaries and joint ventures. A copy of the Purchase
Agreement is filed herewith as Exhibit 2.1, and certain ancillary agreements are
filed as Exhibits 2.2 and 2.3, and reference is made thereto for the complete
terms and conditions thereof.
The purchase price of $3 billion cash (subject to adjustment following an
audit of the closing date balance sheet of the Division) was based upon the
estimated net assets to be acquired as well as the value of the ongoing
business, and took into account the liabilities reflected on the balance sheet
and assumed by Registrant.
Registrant obtained the cash portion of the purchase price from (i) an
offering made pursuant to Rule 144A promulgated under the Securities Act of
1933, as amended, of $1 billion in debt securities having maturity dates of 10,
20 and 30 years and (ii) a bank credit facility advanced under the Second
Amended and Restated Credit Agreement dated as of April 15, 1994, Amended and
Restated as of March 1, 1996 among Northrop Grumman Corporation, Bank of America
National Trust and Savings Association, as Documentation Agent, Chemical
Securities, Inc., as Syndication Agent, The Chase Manhattan Bank (National
Association), as Administrative Agent and the Banks Signatories thereto (the
"Credit Agreement"). A copy of the Credit Agreement is filed herewith as
Exhibit 2.4 and reference is made thereto for the complete terms and conditions
thereof.
Registrant intends to continue to use the assets purchased from Seller in
the operation of the Division, which will be known as the Electronic Sensors and
Systems Division of Registrant, and is reviewing these business areas and its
strategic core competencies to determine whether any synergies may be achieved
by repositioning or divesting certain assets or business areas.
No material relationship exists between Seller and Registrant or any of its
affiliates, directors or officers, or any associate of any such directors or
officers.
The Press Release of Registrant dated March 1, 1996, announcing the
completion of the acquisition described above is filed herewith as Exhibit 99.1
and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of the Division
The following Financial Statements of the Division are included with this
Form 8-K:
Report of Independent Accountants
Combined Statement of Financial Position as of December 31, 1994
and 1995
Combined Statement of Earnings for the Years Ended December 31,
1993, 1994 and 1995
Page 2 of 28
<PAGE>
Combined Statement of Cash Flows for the Years Ended December 31, 1993,
1994 and 1995
Combined Statement of Changes in Invested Equity for the Years
Ended December 31, 1993, 1994 and 1995
Notes to Combined Financial Statements
(b) Pro Forma Financial Information of Registrant.
It is impracticable on the date of this Form 8-K to provide the pro forma
financial information required by Item 7(b). The required pro forma financial
information will be filed under cover of a Form 8-K/A as soon as practicable,
but not later than May 17, 1996, as required by Item 7(a)(4) of the General
Instructions to Form 8-K.
(c) Exhibits
The following Exhibits are included with this Form 8-K:
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------------------------
<C> <S>
2.1 Asset Purchase Agreement dated as of January 3, 1996, between
Westinghouse Electric Corporation, a Pennsylvania corporation,
as Seller, and Northrop Grumman Corporation, a Delaware
corporation, as Buyer. (Schedules and Exhibits have been
omitted pursuant to Rule 6.01(b)(2) of Regulation S-K. Such
Schedules and Exhibits are listed and described in the Purchase
Agreement. Registrant hereby agrees to furnish to the
Securities and Exchange Commission, upon its request, any or
all such omitted Schedules and Exhibits.)
2.2 Letter Agreement dated February 28, 1996 from Westinghouse
Electric Corporation to Northrop Grumman Corporation.
2.3 Letter Agreement dated February 29, 1996 from Westinghouse
Electric Corporation to Northrop Grumman Corporation.
(Schedules have been omitted pursuant to Rule 6.01(b)(2) of
Regulation S-K. Such Schedules are listed and described in the
Letter Agreement. Registrant hereby agrees to furnish to the
Securities and Exchange Commission, upon its request, any or
all such omitted Schedules.)
2.4 Second Amended and Restated Credit Agreement dated as of April
15, 1994, Amended and Restated as of March 1, 1996 among
Northrop Grumman Corporation, Bank of America National Trust
and Savings Association, as Documentation Agent, Chemical
Securities, Inc., as Syndication Agent, The Chase Manhattan
Bank (National Association), as Administrative Agent and the
Banks Signatories thereto. (Schedules and Exhibits have been
omitted pursuant to Rule 6.01(b)(2) of Regulation S-K. Such
Schedules and Exhibits are listed and described in the Credit
Agreement. Registrant hereby agrees to furnish to the
Securities and Exchange Commission, upon its request, any or
all such omitted Schedules and Exhibits.)
23.1 Consent of Independent Accountants
99.1 Press release of Registrant dated March 1, 1996
</TABLE>
Page 3 of 28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Westinghouse Electric Corporation
In our opinion, the accompanying combined statement of financial
position and the related combined statements of earnings, of cash flows and of
changes in invested equity present fairly, in all material respects, the
financial position of Electronic Systems (a unit of Westinghouse Electric
Corporation) at December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 12, the Company changed its method of accounting
for certain postemployment benefits in 1993.
Electronic Systems is a unit of Westinghouse Electric Corporation and,
as disclosed in the financial statements, receives support services from, and
has transactions and relationships with, Westinghouse Electric Corporation and
its affiliates.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 31, 1996
Page 4 of 28
<PAGE>
ELECTRONIC SYSTEMS
(A UNIT OF WESTINGHOUSE ELECTRIC CORPORATION)
COMBINED STATEMENT OF FINANCIAL POSITION
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.................. $ 3,996 $ 81
Trade accounts receivable, net (Note 5).... 283,027 237,197
Inventories (Note 6)....................... 182,562 203,554
Costs and profits in excess of billings
on long-term contracts (Note 6).......... 178,783 219,030
Deferred income taxes (Note 11)............ 135,644 129,162
Prepaid expenses and other current assets.. 13,888 5,785
---------- ----------
Total current assets.................... 797,900 794,809
---------- ----------
Property, plant and equipment, net (Note 7).. 404,161 414,724
Goodwill and other intangible assets,
net (Note 8)............................... 138,253 159,621
Deferred income taxes (Note 11).............. 173,057 128,733
Other noncurrent assets (Note 9)............. 11,662 25,135
---------- ----------
Total assets................................. $1,525,033 $1,523,022
---------- ----------
LIABILITIES AND INVESTED EQUITY
Current liabilities
Accounts payable........................... $ 105,110 $ 84,160
Accrued expenses (Note 10)................. 314,131 252,639
Billings in excess of costs and profits
on long-term contracts (Note 6).......... 128,307 75,912
---------- ----------
Total current liabilities............... 547,548 412,711
---------- ----------
Pension liability (Note 12).................. 369,395 279,298
Postretirement and postemployment
benefits (Note 12)......................... 279,024 279,414
Other noncurrent liabilities................. 15,340 37,130
---------- ----------
663,759 595,842
---------- ----------
Commitments and contingencies
(Notes 13 and 17)
Invested equity (Notes 12 and 13)............ 313,726 514,469
---------- ----------
Total liabilities and invested equity........ $1,525,033 $1,523,022
---------- ----------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
Page 5 of 28
<PAGE>
ELECTRONIC SYSTEMS
(A UNIT OF WESTINGHOUSE ELECTRIC CORPORATION)
COMBINED STATEMENT OF EARNINGS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenue.............................. $2,554,490 $2,184,785 $2,348,073
---------- ---------- ----------
Costs and expenses
Cost of sales...................... 1,997,466 1,684,615 1,782,640
Selling, general and
administrative (Note 13)......... 244,894 229,327 261,070
Research and development........... 75,204 72,293 75,883
Restructuring charges, net (Note 4) 51,200 8,600 90,500
Other expense, net (Note 14)....... 13,816 62,464 11,755
---------- ---------- ----------
2,382,580 2,057,299 2,221,848
---------- ---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change.................. 171,910 127,486 126,225
Provision for income taxes (Note 11). 64,663 46,821 47,294
---------- ---------- ----------
Earnings before cumulative
effect of accounting change........ 107,247 80,665 78,931
Cumulative effect of
accounting change (Note 12)........ (13,377)
---------- ---------- ----------
Net earnings......................... $ 107,247 $ 80,665 $ 65,554
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
Page 6 of 28
<PAGE>
ELECTRONIC SYSTEMS
(A UNIT OF WESTINGHOUSE ELECTRIC CORPORATION)
COMBINED STATEMENT OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash flow from operating activities:
Net earnings............................ $ 107,247 $ 80,665 $ 65,554
Noncash items included in earnings
Depreciation and amortization......... 69,760 72,864 68,558
Pension settlement loss............... 60,984
Noncash restructuring charges......... (3,200) 200 30,500
Loss on sale of property, plant
and equipment........................ 3,508 2,175 3,603
Other changes that provided
(used) cash, net of effects
of acquisition of business
Trade accounts receivable............. (45,830) 44,641 52,494
Inventories........................... 20,992 104,594 (38,590)
Costs and profits in
excess of billings on
long-term contracts................. 40,247 (28,879) (30,060)
Prepaid expenses and other
current assets...................... (8,103) 5,642 15,600
Deferred income taxes................. (6,972) (43,166) (20,495)
Accounts payable...................... 20,950 781 (31,969)
Accrued expenses...................... 86,592 (106,432) 21,082
Billings in excess of costs and
profits on long-term contracts...... 52,395 (106,800) 120,416
Pension liability..................... (12,049) 42,536 3,547
Postretirement and postemployment
benefits............................ (390) (11,363) 18,794
Other noncurrent assets and
liabilities......................... (4,025) 69,462 8,850
--------- --------- ---------
Net cash provided by operating
activities.............................. 321,122 187,904 287,884
--------- --------- ---------
Cash flow from investing activities:
Business acquisition.................. (21,900) (72,700)
Purchases of property, plant
and equipment....................... (54,823) (43,951) (18,869)
--------- --------- ---------
Net cash used in investing activities..... (76,723) (116,651) (18,869)
--------- --------- ---------
Cash flow from financing activities:
Net intercompany transactions........... (240,484) (71,486) (269,944)
--------- --------- ---------
Net increase (decrease) in cash and
cash equivalents........................ 3,915 (233) (929)
Cash and cash equivalents at
beginning of year....................... 81 314 1,243
--------- --------- ---------
Cash and cash equivalents at end of year.. $ 3,996 $ 81 $ 314
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
Page 7 of 28
<PAGE>
ELECTRONIC SYSTEMS
(A UNIT OF WESTINGHOUSE ELECTRIC CORPORATION)
COMBINED STATEMENT OF CHANGES IN INVESTED EQUITY
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
---------- --------- ----------
<S> <C> <C> <C>
Balance at beginning of year............. $ 514,469 $457,234 $ 784,877
Net earnings............................. 107,247 80,665 65,554
Equity translation adjustments........... (1,761) (4,120) 2,632
Minimum pension liability adjustments.... (65,745) 52,176 (125,905)
Intercompany transactions, net........... (240,484) (71,486) (269,944)
--------- -------- ---------
Balance at end of year................... $ 313,726 $514,469 $ 457,234
--------- -------- ---------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
Page 8 of 28
<PAGE>
ELECTRONIC SYSTEMS
(A UNIT OF WESTINGHOUSE ELECTRIC CORPORATION)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(DOLLAR AMOUNTS IN THOUSANDS)
NOTE 1 NATURE OF OPERATIONS AND RELATIONSHIPS WITH WESTINGHOUSE
General
Electronic Systems (the Company), a unit of Westinghouse Electric
Corporation (Westinghouse), provides advanced electronic systems, products and
technologies primarily to U.S. and non-U.S. government agencies. The Company is
not a legal entity. The operations included in these financial statements are
substantially the Electronic Systems segment of Westinghouse as disclosed by
Westinghouse for external reporting purposes. However, for purposes of these
financial statements, operations disposed of or transferred to other business
units during the three year period ended December 31, 1995 and those operations
which will be retained by Westinghouse have been excluded for all years
presented because any remaining assets and liabilities related to these entities
are not included in the sale of the Company to Northrop Grumman Corporation (see
Note 18).
The Company operates in one business segment -- the research, development,
production and support of advanced electronic systems. The Company derives a
substantial portion of its revenue from long-term contracts for systems
development and production and related services principally in defense
electronics, air traffic control systems and space systems. Significant
customers include the U.S. Department of Defense (DOD), the Federal Aviation
Administration (FAA) and the National Aeronautics and Space Administration
(NASA). Sales to U.S. government agencies totalled $2,040,000, $1,789,000, and
$2,039,000 in 1995, 1994 and 1993, respectively.
As more fully described in Notes 2, 3, 4, 5, 6, and 17, the periodic
reporting of results for long-term government contracts is inherently dependent
on the extensive use of estimates. All such estimates have been made to the best
of management's ability based upon facts available at the time, but it is
possible that future developments may require revisions of those estimates.
Related Party Transactions
The Company is an integrated component of Westinghouse's operations and
receives a number of administrative and support services from Westinghouse and
participates in a number of Westinghouse employee benefit plans and is included
in Westinghouse's insurance programs and income tax returns. Further information
about such relationships and transactions is included in Notes 2, 12, 13, 17 and
18.
Page 9 of 28
<PAGE>
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The combined financial statements of the Company primarily comprise the
accounts of one Westinghouse operating unit which is not a separate legal entity
and certain subsidiaries of Westinghouse. All material intercompany accounts and
transactions have been eliminated in combination.
Revenue Recognition
The majority of the Company's revenue results from contract services
performed under a variety of contracts, including cost plus, fixed-price and
time-and-materials type contracts. Sales under government and commercial fixed-
price incentive contracts are recorded at the time deliveries are made or, for
long-term contracts with a duration in excess of two years, upon the completion
of specific tasks (pre-defined milestones). Sales under cost-reimbursement
contracts are recorded as work is performed and billed. Estimated contract
profits are recorded in proportion to recorded sales. Some contracts contain
incentive provisions which provide for increased or decreased earnings based
upon performance in relation to established targets. Such adjustments are
considered in estimating sales and profit rates and are recorded when there is
sufficient information to assess anticipated contract performance. Revenues
relating to contracts or contract changes that have not been completely priced,
negotiated, documented, or funded are not recognized unless realization is
considered probable.
Major contracts for complex military systems are performed over extended
periods of time and are subject to changes in scope and delivery schedules.
Pricing negotiations on changes and settlement of claims often extend over
prolonged periods of time. Estimates of final contract revenues include future
revenue from expected recovery on claims. Such revenues are included when it is
probable that the claim will result in additional contract revenue, when the
amount can be reliably estimated and legal entitlement has been established.
Estimates are reviewed periodically, and changes in estimated contract
revenue and costs which result in changes to estimated contract profit are
recognized in the period in which they are determined. Provisions for
anticipated losses on contracts are recorded in full as they are identified.
A standard one year warranty against defective material and workmanship is
provided for products sold. Standard warranty costs, which have not been
significant, are reported as incurred. Warranty beyond the scope of defective
material and workmanship is quoted as a separate contract cost element, and
provision is made for the anticipated warranty costs as sales are recognized.
Cash and Cash Equivalents
Westinghouse performs cash management on a centralized basis in North
America for the Company as well as for other Westinghouse businesses. Under such
service arrangements, accounts receivable are collected and cash is invested
centrally. Activity in the Company's cash balances supporting its North American
operations is recorded through the invested equity account with Westinghouse.
The Company maintains certain separate bank accounts primarily related to its
non-North American operations; the balances in such accounts are included in
cash and cash equivalents in the accompanying balance sheet. The Company
considers cash and cash equivalents to include cash on hand and on deposit and
highly liquid investments with original maturities at date of acquisition
generally of three months or less.
Page 10 of 28
<PAGE>
Debt and Interest Cost
Westinghouse has not allocated any portion of its debt or related interest
cost to the Company, and no portion of Westinghouse's debt is specifically
related to the operations of the Company. Accordingly, the Company's financial
statements include no charges for interest or capitalized interest.
Inventories
Inventories consist principally of unreimbursed costs under fixed-price
contracts and are stated at total costs incurred reduced by the estimated
average cost of deliveries. Inventoried costs include both direct contract costs
and allocable overhead costs (generally determined on an average cost basis).
All other inventories are stated at the lower of cost (generally determined on
an average cost basis) or market.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated
depreciation. Depreciation is recorded using the straight-line method over the
estimated useful lives of the assets (buildings, 40-45 years; land improvements,
15-25 years; machinery and equipment, 8-12 years; furniture and fixtures, 5-10
years; and information systems equipment, 3-5 years). Leasehold improvements are
amortized on a straight-line basis over the shorter of the lease term or the
estimated useful lives of the improvements. Capitalization of newly acquired
assets is limited to those with cost in excess of $1.5 (one thousand, five
hundred dollars).
Goodwill and Other Intangible Assets
Goodwill and other intangible assets are amortized using the straight-line
method over their estimated lives, but not exceeding 40 years for assets
acquired prior to January 1, 1994 and not in excess of 15 years for assets
acquired after December 31, 1993.
Subsequent to the acquisition of an intangible asset, management
continually evaluates whether later events or circumstances have occurred that
indicate the remaining estimated useful life of an intangible asset may warrant
revision or that the remaining balance of such an asset may not be recoverable.
When factors indicate that an intangible asset should be evaluated for possible
impairment, management uses an estimate of the undiscounted future cash flows of
the asset over its remaining useful life in measuring whether the intangible
asset is recoverable. If such an analysis indicates that impairment has in fact
occurred, the book value of the intangible asset is written down to its
estimated realizable value.
Income Taxes
Historically, the results of the Company's domestic operations have been
included in the consolidated U.S. federal income tax return of Westinghouse. The
results of the Company's foreign operations have been reported separately in
their respective taxing jurisdictions. The income tax expense and other tax-
related information in these statements is presented as if the Company had not
been eligible to be included in the consolidated tax returns of Westinghouse or
other affiliates (i.e., the Company on a stand-alone basis). The recognition and
measurement of income tax expense and deferred income taxes required certain
assumptions, allocations, and significant estimates which management believes
are reasonable to measure the tax consequences as if the Company was a stand-
alone taxpayer.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes."
SFAS 109 requires the asset and liability
Page 11 of 28
<PAGE>
method of accounting for income taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in years in which
those temporary differences are expected to be recovered or settled.
For purposes of these financial statements, any current income tax
liabilities are considered to have been paid by Westinghouse and are recorded
through the invested equity account with Westinghouse.
Deferred federal income taxes have not been provided on the cumulative
undistributed earnings of foreign affiliates as these earnings are considered to
be permanently reinvested.
Employee Benefit Plans
Westinghouse has a number of employee benefit plans covering substantially
all employees. Historically, most of the Company's employees have participated
in the Westinghouse plans for pensions, postretirement benefits other than
pensions, and postemployment benefits. In addition, the Company has maintained
its own pension and postretirement benefit plans for certain of its employees
not included in the Westinghouse plans. Most pension plan benefits are based on
years of service and compensation levels at the time of retirement, a formula
based on career earnings or a final average compensation amount. Pension
benefits are paid from trusts funded by contributions from employees and
Westinghouse. The pension funding policy is consistent with the funding
requirements of U.S. federal and other governmental laws and regulations. Plan
assets consist primarily of listed stocks, fixed income securities and real
estate investments. Postretirement benefit arrangements consist of various
retiree medical, dental and life insurance arrangements sponsored by
Westinghouse.
For purposes of these financial statements, the costs and related balance
sheet accounts and disclosures for pensions, postretirement benefits other than
pensions, and postemployment benefits have been presented as if the portion of
the plans relating to the Company's employees had been segregated from the
Westinghouse plans as separate plans. The accumulated benefit obligation (ABO)
and projected benefit obligation (PBO) for pensions and accumulated
postretirement benefit obligation (APBO) were calculated based on demographic
data for the active, inactive, and retired employees of the Company. Plan assets
and unrecognized net transition obligation, prior service cost and gain or loss
were allocated based on the proportion of the Company's PBO or APBO to the total
Westinghouse PBO or APBO for pensions and postretirement benefits other than
pensions, respectively. The actuarially determined net periodic costs and
related balance sheet accounts have been reflected in these financial
statements. Contributions have been recorded through the invested equity
account. Management believes that the assumptions, allocations, and significant
estimates used are reasonable.
Research and Development Costs
Research and development costs are incurred under both independent Company-
initiated programs and under contracts for specific programs with others,
primarily the U.S. government. Research and development costs incurred under
contract are charged to inventory as contracts in progress. Independent research
and development costs which are not incurred in performance of specific contract
requirements are reimbursable as indirect period cost through government-
mandated cost accounting procedures. Unallowable research and development costs
are charged against income as incurred.
Page 12 of 28
<PAGE>
Foreign Currency
Non-U.S. operations utilize the local currency as the functional currency.
Assets and liabilities are translated into U.S. dollars at the exchange rate
applicable at the time of translation, while revenue and costs are translated at
the average rates of exchange prevailing during the year. Translation
adjustments are accumulated in invested equity. Foreign exchange gains and
losses incurred on foreign currency transactions are included in income. The
Company has entered into forward exchange contracts to hedge the effect of
foreign currency fluctuations on certain transactions and commitments
denominated in foreign currencies. The Company's foreign exchange policy
includes matching purchases and sales in national currencies when possible and
hedging unmatched transactions in excess of $250. Gains and losses on commitment
hedges are deferred and included in the basis of the transaction underlying the
commitment. Gains and losses on transaction hedges are recognized in income and
offset the foreign exchange gains and losses on the related transactions.
Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist of billed accounts receivable and unbilled
accounts receivable (principally unreimbursed costs and fees under contracts).
Receivables result primarily from contracts with U.S. and non-U.S. governments
and from subcontracts with prime contractors to the U.S. government. Contracts
with the U.S. government do not require collateral or other security. The
Company conducts ongoing credit evaluations of non-government customers and
generally does not require collateral or other security from these customers.
The Company generally has negotiated terms and conditions which provide for non-
U.S. government customers to make advance payments in amounts sufficient to
limit the Company's credit risk. Historically, the Company has not incurred any
significant credit related losses under its long-term contracts.
Fair Value of Financial Instruments
The carrying amount of the Company's cash and cash equivalents and trade
accounts receivable approximates fair value.
NOTE 3 ACQUISITION
Effective June 1, 1994, the Company acquired certain assets of the Norden
Systems Division (Norden) of United Technologies Corporation for $94,600, of
which $72,700 was paid at closing and the remaining $21,900 in January 1995, and
assumed certain liabilities. Norden designs and manufactures advanced electronic
systems for combat vehicles, aircraft, ships, submarines and air traffic
control. The transaction was accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to assets
acquired and liabilities assumed based on the estimated fair value of such
assets and liabilities at the date of acquisition. The purchase price resulted
in an excess of costs over net assets acquired of approximately $56,100. Such
excess is being amortized on a straight-line basis over 13 years. Norden's
results of operations have been included in the consolidated results of
operations since the date of acquisition.
The following unaudited pro forma information presents the results of
operations of the Company and Norden for the years ended December 31, 1994 and
1993, with pro forma adjustments as if the Norden acquisition had occurred as of
the beginning of the periods presented. The pro forma presentation does not
purport to be indicative of what would have occurred had the acquisition been
made as of those dates or of results which may occur in the future.
Page 13 of 28
<PAGE>
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Revenue.................................. $2,258,081 $2,570,693
Earnings before cumulative effect of
accounting change....................... 69,364 77,687
Net earnings............................. 69,364 64,310
</TABLE>
A $25 million liability was established in conjunction with the Norden
acquisition for the consolidation of administrative and manufacturing facilities
at the Norwalk and Melville locations into Baltimore, of which $1.7 million has
been expended to date; the consolidation is to be completed by May 1997. A
memorandum of understanding for the treatment of the costs of the consolidation
actions has been reached with the Corporate Administrative Contracting Officer.
Such costs are subject to recovery through inclusion in allowable costs for
government rate purposes over future periods. However, because the extent of
recovery is not estimable, no asset has been recorded for any amounts that might
ultimately be recovered from inclusion of these costs in future contracting
rates.
NOTE 4 SPECIAL RESTRUCTURING ACTIONS
Management is committed to ongoing restructuring actions that will enhance the
Company's competitive position in the defense industry. As a result, net
restructuring charges principally related to workforce reductions, asset
writedowns, and consolidation of facilities of $51,200, $8,600 and $90,500 were
recorded by the Company and charged against income in 1995, 1994 and 1993,
respectively. A portion of the restructuring charges are expected to be allowed
as indirect costs under the Company's government contracts in future periods.
The amount estimated to be subject to recovery through inclusion for government
rate purposes for years after 1995 is approximately $94 million. Because the
extent of recovery is not estimable, no asset has been recorded for any amounts
that might ultimately be recovered from the inclusion of these costs in future
contracting rates.
The 1993 and 1994 actions included the separation of approximately 1,000
employees, exiting of certain product lines and closure of certain facilities.
In 1995, management announced a series of additional restructuring actions that
included the separation of approximately 1,300 employees and the closure of
additional facilities. The following table is a reconciliation of the
restructuring charges under each of the initiatives to the remaining amounts
accrued at December 31, 1995:
<TABLE>
<CAPTION>
EMPLOYEE SEPARATION ASSET FACILITY CLOSURE &
COSTS WRITEDOWNS RATIONALIZATION COSTS OTHER TOTAL
------------------- ---------- --------------------- ------- --------
<S> <C> <C> <C> <C> <C>
1993 provision................ $ 37,600 $ 30,500 $15,700 $ 6,700 $ 90,500
Expenditures/disposals........ (1,400) (800) (2,200)
-------- -------- ------- ------- --------
Balance at December 31, 1993.. 36,200 30,500 14,900 6,700 88,300
1994 provision................ 6,000 6,000
Expenditures/disposals........ (34,600) (22,100) (5,600) (5,900) (68,200)
Adjustments................... 5,300 200 (2,200) (700) 2,600
-------- -------- ------- ------- --------
Balance at December 31, 1994.. 12,900 8,600 7,100 100 28,700
1995 provision................ 61,000 5,700 1,700 400 68,800
Expenditures/disposals........ (17,700) (300) (1,000) (19,000)
Adjustments................... (4,000) (8,900) (4,600) (100) (17,600)
-------- -------- ------- ------- --------
Balance at December 31, 1995.. $ 52,200 $ 5,100 $ 3,200 $ 400 $ 60,900
-------- -------- ------- ------- --------
</TABLE>
Page 14 of 28
<PAGE>
Actions related to the above restructuring programs are expected to be
substantially completed by December 1996.
NOTE 5 TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
-------- ---------
<S> <C> <C>
Commercial................................. $ 65,861 $ 50,371
Government contracts
Billed.................................... 165,858 132,593
Unbilled.................................. 53,488 57,041
-------- ---------
285,207 240,005
Less: Allowance for doubtful and
potentially unrecoverable amounts... (2,180) (2,808)
-------- ---------
$283,027 $ 237,197
-------- ---------
</TABLE>
Unbilled receivables consist of amounts of revenue recognized on contracts
for which billings have not been presented to the customers. Such amounts are
usually billed and collected within one year.
The Company generally has several open contract disputes with its customers,
particularly the U.S. government, at any point in time. These disputes arise in
the normal course of long-term contracting and most of the disputes are
formalized in Requests for Equitable Adjustments (RFEAs) that relate primarily
to work beyond the scope of the contracts. Customers occasionally terminate
contracts before completion, resulting in Termination for Convenience Claims
(TCs). Unbilled accounts receivable at December 31, 1995 and 1994 included
$29,800 and $37,300, respectively, in RFEAs and $13,300 and $13,200,
respectively, in TCs. Management believes that the amounts are collectible
during 1996.
Substantially all billed accounts receivable are expected to be collected
within one year.
Page 15 of 28
<PAGE>
NOTE 6 INVENTORIES AND COSTS INCURRED UNDER LONG-TERM CONTRACTS
Inventories consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Raw materials............................ $ 10,689 $ 17,908
Work-in-process.......................... 264,617 321,436
Finished goods........................... 1,748 1,866
--------- ----------
277,054 341,210
Profit on long-term
contracts-in-progress................... 277,826 387,668
Progress payments to subcontractors...... 52,837 58,377
Recoverable engineering and development
costs................................... 197,556 290,302
--------- ----------
805,273 1,077,557
Inventoried costs and profits related
to contracts with progress billing
terms.................................. (622,711) (874,003)
--------- ----------
Inventories.............................. $ 182,562 $ 203,554
--------- ----------
</TABLE>
Costs of $81,087 and $90,212 are included in inventory at December 31, 1995
and 1994, respectively, for projects or products which were not under contract
at those dates. Management of the Company believes that all inventories will be
recovered in the normal course of business, and that costs incurred in advance
of contractual coverage at December 31, 1995 will receive firm contractual
coverage in 1996.
Costs and profits on long-term contracts with progress billing terms are
presented in the accompanying financial statements according to the funded
status of individual contracts as shown below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Costs and profits included in inventories.......... $ 554,518 $ 795,342
Progress billing on contracts...................... (375,735) (576,312)
---------- ----------
Uncompleted contract costs and profits over
related billings................................. $ 178,783 $ 219,030
---------- ----------
Progress billings on contracts..................... $ 196,500 $ 154,573
Costs and profits included in inventories.......... (68,193) (78,661)
---------- ----------
Uncompleted contracts billings over
related costs and profits........................ $ 128,307 $ 75,912
---------- ----------
</TABLE>
The government has a security interest in the inventories identified with
progress billable contracts.
Page 16 of 28
<PAGE>
NOTE 7 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
---------- ----------
<S> <C> <C>
Land and land improvements......................... $ 16,815 $ 13,732
Buildings and building improvements................ 115,811 117,044
Machinery, equipment, furniture and fixtures....... 899,049 902,085
Leasehold improvements............................. 29,390 31,453
---------- ----------
1,061,065 1,064,314
Less: Accumulated depreciation and amortization.... (706,237) (684,258)
---------- ----------
354,828 380,056
Construction-in-progress........................... 49,333 34,668
---------- ----------
$ 404,161 $ 414,724
---------- ----------
</TABLE>
Depreciation and amortization expense was $60,117, $64,932 and $64,104 in
1995, 1994 and 1993, respectively.
NOTE 8 GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Patents and licenses............................... $ 21,855 $ 20,710
Excess of cost over fair value of acquired
businesses....................................... 131,650 137,087
Intangible pension asset........................... 19,288 26,721
--------- ---------
172,793 184,518
Less: Accumulated amortization..................... (34,540) (24,897)
--------- ---------
$ 138,253 $159,621
--------- ---------
</TABLE>
Amortization expense was $9,643, $7,932 and $4,454 in 1995, 1994 and 1993,
respectively.
NOTE 9 OTHER NONCURRENT ASSETS
Other noncurrent assets comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Long-term receivables............................... $ 9,811 $ 12,036
Equity investments.................................. 606 8,413
Other............................................... 1,245 4,686
--------- ---------
$ 11,662 $ 25,135
--------- ---------
</TABLE>
Page 17 of 28
<PAGE>
NOTE 10 ACCRUED EXPENSES
Accrued expenses comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Price and fee reserves............................... $ 73,243 $ 48,527
Restructuring reserve (Note 4)....................... 60,900 28,700
Vacation liability................................... 44,027 46,043
Accrued payroll and employee benefits................ 43,350 42,647
Reserve for contract loss............................ 14,966 5,034
Current portion of Norden consolidation liability
(Note 3)............................................ 13,500 11,400
Accrued product warranty............................. 12,283 16,236
Other................................................ 51,862 54,052
-------- --------
$314,131 $252,639
-------- --------
</TABLE>
NOTE 11 INCOME TAXES
The provision (benefit) for income taxes by taxing jurisdiction consists of
the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
------- ---------- ----------
<S> <C> <C> <C>
Current
U.S. federal........................... $57,517 $ 74,862 $ 51,143
State and foreign...................... 14,614 17,674 11,763
------- -------- ---------
72,131 92,536 62,906
------- -------- ---------
Deferred
U.S. federal........................... (6,163) (37,487) (12,599)
State and foreign...................... (1,305) (8,228) (3,013)
------- -------- ---------
(7,468) (45,715) (15,612)
------- -------- ---------
Total provision for income taxes........ $64,663 $ 46,821 $ 47,294
------- -------- ---------
</TABLE>
A reconciliation from the statutory U.S. federal income tax rate to the
Company's effective income tax rate follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
------- ---------- ----------
<S> <C> <C> <C>
Statutory U.S. federal income tax rate.. 35.0% 35.0% 35.0%
Increase (decrease) in the tax rate
resulting from:
State taxes, net of U.S. federal tax
benefit............................... 4.4 4.3 4.5
Other.................................. (1.8) (2.6) (2.0)
---- ---- ----
Effective income tax rate............... 37.6% 36.7% 37.5%
---- ---- ----
</TABLE>
Page 18 of 28
<PAGE>
The components of deferred tax assets and liabilities included in the combined
statement of financial position are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
--------- --------
<S> <C> <C>
Assets
Provisions for expenses and losses................. $ 97,126 $ 77,222
Employee related accruals.......................... 264,358 226,573
Inventories........................................ 14,238 16,423
Long-term contracts in process..................... 10,583 21,896
-------- --------
386,305 342,114
-------- --------
Liabilities
Depreciation and amortization...................... (71,774) (78,587)
Other.............................................. (5,830) (5,632)
-------- --------
(77,604) (84,219)
-------- --------
Net deferred tax asset.............................. $308,701 $257,895
-------- --------
Deferred taxes are displayed as follows:
Net current deferred tax assets.................... $135,644 $129,162
Net noncurrent deferred tax assets................. 173,057 128,733
-------- --------
$308,701 $257,895
-------- --------
</TABLE>
NOTE 12 EMPLOYEE BENEFIT PLANS
Pensions
Net periodic pension cost was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Service cost............................ $ 17,172 $ 25,646 $ 18,749
Interest cost on projected benefit
obligations............................ 87,909 91,591 95,815
Actual return on plan assets............ (133,863) 1,389 (88,605)
Net amortization and deferrals.......... 81,244 (53,425) 12,011
--------- -------- --------
Net periodic pension cost............... $ 52,462 $ 65,201 $ 37,970
--------- -------- --------
</TABLE>
Net periodic pension cost decreased $12,739 in 1995 compared to 1994, due
primarily to reduced amortization cost as a result of a pension settlement
charge of $60,984 recognized in 1994.
The Company's restructuring activities contributed to a high level of lump sum
cash distributions from the pension fund during 1994. The magnitude of these
cash distributions required that the Company apply the provisions of SFAS No.
88, "Employers' Accounting for Settlements and Curtailments of Defined
Page 19 of 28
<PAGE>
Benefit Pension Plans and for Termination Benefits," and recognize a settlement
loss of $60,984 during the fourth quarter of 1994. This charge was recorded as
an other expense item in the 1994 statement of earnings (see Note 14). This
noncash charge to income represents the pro-rata portion of unrecognized losses
associated with the pension obligation that was settled.
The actuarial present value of benefit obligations and funded status were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Actuarial present value of benefit
obligation
Vested................................... $(1,130,535) $(1,008,994)
Nonvested................................ (33,604) (29,501)
----------- -----------
Accumulated benefit obligation............ $(1,164,139) $(1,038,495)
----------- -----------
Projected benefit obligation.............. $(1,270,998) $(1,133,188)
Plan assets at fair value................. 794,744 759,197
----------- -----------
Projected benefit obligation in excess
of plan assets........................... (476,254) (373,991)
Unrecognized prior service cost
(benefit)................................ (27,973) (28,422)
Unrecognized losses, net.................. 506,062 384,317
Unrecognized net transition obligation.... 47,261 55,143
----------- -----------
Prepaid pension cost...................... 49,096 37,047
Adjustment to recognize minimum liability (418,491) (316,345)
----------- -----------
Accrued pension liability................. $ (369,395) $ (279,298)
----------- -----------
</TABLE>
For financial reporting purposes, a pension plan is considered unfunded when
the fair value of plan assets is less than the accumulated benefit obligation.
When that is the case, a minimum pension liability must be recognized for the
sum of the unfunded amount less any accrued pension cost. In recognizing such a
liability, an intangible asset is usually recorded. However, the amount of the
intangible asset may not be greater than the sum of the prior service cost not
yet recognized and any unrecognized transition obligation. When the liability to
be recognized is greater than the intangible asset limit, the excess is charged
to invested equity, net of any tax effects which could be recognized in the
future.
At December 31, 1995, a minimum pension liability of $418,491 was recognized
for the sum of the unfunded amount of $369,395 plus the prepaid pension cost of
$49,096. An intangible asset of $19,288 and a charge to invested equity of
$399,203, which was reduced to $239,522 due to tax deferrals of $159,681, offset
the pension liability. As a result of this remeasurement, year-end 1995 invested
equity was decreased by $65,745 from December 31, 1994.
At December 31, 1994, a minimum pension liability of $316,345 was recognized
for the sum of the unfunded amount of $279,298 plus the prepaid pension cost of
$37,047. An intangible asset of $26,721 and a charge to invested equity of
$289,624, which was reduced to $173,777 due to tax deferrals of $115,847, offset
the pension liability. As a result of this remeasurement, year-end 1994 invested
equity was increased by $52,176 from December 31, 1993.
Page 20 of 28
<PAGE>
The Company sponsors various nonqualified supplemental pension plans which
provide additional benefits to certain employees and are paid from the Company's
assets. The unfunded accumulated benefit obligation under these plans at
December 31, 1995 was $37,500 and is included in the accrued pension liability
above.
Assumptions used in developing the projected benefit obligations as of
December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Discount rate...................... 6.75% 8.50% 7.25%
Rate of increase in compensation... 4.00% 4.00% 4.00%
Rate of return on plan assets...... 9.75% 9.75% 9.75%
</TABLE>
In addition to the above described defined benefit pension plans, employees of
the Company meeting certain eligibility requirements may elect to participate in
employee savings plans sponsored by Westinghouse and the Company which qualify
as deferred salary arrangements under Section 401(k) of the Internal Revenue
Code. Under these plans, participating employees may defer a portion of their
pretax earnings, subject to statutory limitations. The Company matches a portion
of employees' contributions. Expense recorded by the Company related to these
plans was $16,338, $15,869, and $15,939 in 1995, 1994 and 1993, respectively.
Postretirement Benefits Other than Pensions
Net periodic postretirement cost was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
Service cost............................. $ 2,768 $ 4,360 $ 3,286
Interest cost on accumulated
postretirement benefit obligation....... 23,253 21,287 21,809
Amortization of unrecognized net loss.... 1,053
Actual return on plan assets............. (218)
------- ------- --------
Net periodic postretirement benefit cost. $25,803 $26,700 $ 25,095
------- ------- --------
</TABLE>
Page 21 of 28
<PAGE>
The actuarial present value of benefit obligations and funded status were
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees........................................... $(220,801) $(183,779)
Fully eligible active participants................. (11,517) (9,801)
Other active participants.......................... (96,962) (81,174)
--------- ---------
Accumulated benefit obligation..................... (329,280) (274,754)
Plan assets at fair value.......................... 3,000 2,748
--------- ---------
Accumulated benefit obligation in excess of plan
assets............................................. (326,280) (272,006)
Unrecognized net loss.............................. 62,250 8,244
--------- ---------
Accrued postretirement benefits.................... $(264,030) $(263,762)
--------- ---------
</TABLE>
The accumulated postretirement benefit obligation was calculated using the
terms of Westinghouse's medical, dental and life insurance plans, including the
effects of established maximums on covered costs.
The effect of a 1% annual increase in the assumed healthcare cost trend rates
would increase the accumulated postretirement benefit obligation by
approximately $19,169 and would increase net periodic postretirement benefit
cost by approximately $1,620.
Assumptions used in developing the projected benefit obligation at December 31
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Discount rate............................ 6.75% 8.50% 7.25%
Compensation increase rate............... 4.00% 4.00% 4.00%
Healthcare cost trend rates.............. 10.50% 11.00% 12.00%
Long-term rate of return on plan assets.. 7.00% 7.00% 9.75%
</TABLE>
Postemployment Benefits
The Company provides certain postemployment benefits to former or inactive
employees and their dependents during the time period following employment but
before retirement. These amounts include salary continuation and other
miscellaneous postemployment benefits such as weekly accident and sickness pay,
life insurance and death gratuities. Electronic Systems' liability for
postemployment benefits was $14,994 and $15,652 at December 31, 1995 and 1994,
respectively. In December 1993, Electronic Systems adopted, retroactive to
January 1, 1993, SFAS No. 112, "Employers Accounting for Postemployment
Benefits". Electronic Systems' charge for adoption of SFAS 112 at January 1,
1993 was $13,377, net of $8,918 of deferred taxes, and was immediately
recognized as a cumulative effect of a change in accounting for postemployment
benefits.
NOTE 13 RELATED PARTY TRANSACTIONS
The Company purchases products from and sells products to other Westinghouse
operations on a limited basis. The Company also purchases certain services from
Westinghouse, including liability,
Page 22 of 28
<PAGE>
property and workers' compensation insurance. These transactions are discussed
in further detail below. All transactions with Westinghouse are assumed to be
immediately settled and, accordingly, are recorded through the invested equity
account.
Corporate Services
The Company uses, and is charged directly for, certain services that
Westinghouse provides to its business units. These services generally include
information systems support, certain accounting functions, such as transaction
processing, legal services, environmental affairs, human resources and
telecommunications. The Company also purchases other Westinghouse internally-
provided services as needed, including printing, productivity and quality
consulting and other services.
Westinghouse centrally develops, negotiates and administers Electronic
Systems' insurance programs. The insurance includes broad all-risk coverage for
real and personal property, third-party liability coverage, employer's
liability, automobile liability, general product liability, and other standard
liability coverage. Westinghouse also maintains a program of self-insurance for
workers' compensation in the U.S. The cost of this program is charged to the
Company based on claims history.
All of the cost of services described above are included in the combined
statement of earnings. Such charges are based on costs which directly relate to
the Company on a basis that management believes is reasonable. However,
management believes that it is possible that the costs of these transactions may
differ from those that would result from transactions among unrelated parties.
Charges included in the statement of earnings related to the services above are
$51,323, $56,468 and $69,857 for 1995, 1994 and 1993, respectively.
Other Corporate Expenses
Westinghouse allocates a certain portion of its corporate expenses to its
business units. These allocated costs include Westinghouse executive management
and corporate overhead; corporate legal, environmental, audit, treasury and tax
services, and other corporate support and executive costs.
These corporate expenses are allocated primarily based on payroll dollars.
Such allocations are not necessarily indicative of actual results and it is not
practical for management to estimate the level of expenses that might have been
incurred had the Company operated as a separate stand-alone entity.
Amounts so allocated included in the statement of earnings are $47,457,
$45,949 and $46,078 for 1995, 1994 and 1993, respectively, approximately one-
half of which is allowable for the Company's government contract pricing
purposes in accordance with government-mandated cost accounting procedures.
Guarantees
The Company provides guarantees to customers in the form of standby letters of
credit for Company bids, advance payments and performance of contractual
obligations. Such guarantees are supported by Westinghouse's lines of credit. At
December 31, 1995 there are 53 guarantees in the amount of approximately $202
million outstanding. The cost for the lines of credit which support the
guarantees is charged to the Company and is inventoried if specifically related
to an ongoing contract or otherwise expensed as incurred.
Page 23 of 28
<PAGE>
NOTE 14 OTHER EXPENSE, NET
Other (income) expense consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
Loss on disposition of fixed assets..... $ 3,508 $ 2,175 $ 3,603
Share of net losses of investees........ 5,423 405 3,917
Pension settlement loss (Note 12)....... 60,984
Other................................... 4,885 (1,100) 4,235
------- ------- -------
$13,816 $62,464 $11,755
------- ------- -------
</TABLE>
NOTE 15 FORWARD EXCHANGE CONTRACTS
At December 31, 1995, the Company had outstanding forward exchange contracts
to buy the U.S. dollar equivalent of $6,592 of foreign currencies and sell the
U.S. dollar equivalent of $15,447 of foreign currencies. These contracts mature
in various periods through March 1998 and were entered into to hedge foreign
currency commitments. The aggregate fair value of these forward exchange
contracts at December 31, 1995 was $6,414 and $14,176 bought and sold,
respectively.
NOTE 16 GEOGRAPHIC INFORMATION
A summary of geographic information relating to foreign and domestic
operations is presented below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Sales
U.S.................................... $2,510,433 $2,135,503 $2,299,698
Non-U.S................................ 44,057 49,282 48,375
---------- ---------- ----------
$2,554,490 $2,184,785 $2,348,073
---------- ---------- ----------
Earnings before income taxes and
cumulative effect of accounting
change
U.S.................................... $ 167,732 $ 126,050 $ 123,646
Non-U.S................................ 4,178 1,436 2,579
---------- ---------- ----------
$ 171,910 $ 127,486 $ 126,225
---------- ---------- ----------
Assets
U.S.................................... $1,492,617 $1,484,836 $1,569,868
Non-U.S................................ 32,416 38,186 42,934
---------- ---------- ----------
$1,525,033 $1,523,022 $1,612,802
---------- ---------- ----------
</TABLE>
Page 24 of 28
<PAGE>
Export sales included in U.S. sales above were $546,529, $466,970 and $354,923
for 1995, 1994 and 1993, respectively.
NOTE 17 COMMITMENTS AND CONTINGENCIES
The Company leases certain office space and facilities and equipment under
noncancelable operating leases which expire in various years through 2010. These
leases generally provide for renewal options ranging from one to five years. In
addition, certain of such leases require the Company to share proportionately in
building operating costs and real estate taxes and contain escalation clauses
for periodic increases. Rental expense incurred under such leases was
approximately $32,067, $25,753 and $39,217 in 1995, 1994 and 1993, respectively.
These amounts include payments to West Quest Limited Partnership, of which the
Company is a 25% owner, of $5,400, $5,268 and $5,140 in 1995, 1994 and 1993,
respectively. Future minimum lease commitments at December 31, 1995, are as
follows:
<TABLE>
<S> <C>
1996.................... $ 23,258
1997.................... 16,593
1998.................... 14,443
1999.................... 13,658
2000.................... 13,164
2001 and thereafter..... 40,196
--------
$121,312
--------
</TABLE>
These minimum lease commitments include amounts due to West Quest Limited
Partnership of $5,335 -- 1996, $5,673 -- 1997, $5,815 -- 1998, $5,960 -- 1999,
$6,109 -- 2000, and $9,164 -- thereafter.
All of the costs that are directly or indirectly allocable to the Company's
U.S. government contracts or subcontracts are subject to audit by the Defense
Contract Audit Agency (DCAA) or other government agencies. Payments made to the
Company under cost-reimbursable contracts, which represent approximately 30% of
total revenue during 1995, are subject to adjustment (including refunds to the
government) in the event that claimed overhead costs are determined to be
unallowable for reimbursement. In addition, the DCAA has made various
allegations under the Truth in Negotiation Act (TINA). Certain of these matters
are currently under review by the DCAA or other government agencies. As of
December 31, 1995, DCAA had completed rate audits through 1988 and has open
allegations dating back to 1985. While the outcome of these matters is
uncertain, the Company believes that its existing accruals for any such matters
are adequate and that future audits and final adjustments will not have a
significant impact on the Company's financial position.
In the normal course of its operations, the Company becomes involved in
certain legal proceedings, including contract claims and disputes, employment
related disputes or litigation, environmental matters, and investigations of
compliance with government laws and regulations. In the opinion of management,
based upon information presently available, after consideration of existing
accruals, none of these matters is likely to have a significant effect upon the
financial position of the Company. The more significant of these matters are
discussed below:
Page 25 of 28
<PAGE>
Herman/EEOC
In January 1993, Herman and 96 (later 106) other former Electronic Systems
employees filed suit for unlawful termination associated with a reduction in
force (RIF) of approximately 1,200 employees. In April 1993, the EEOC filed suit
in connection with the same RIF. These cases have been consolidated for the
purpose of discovery. Both suits are based on alleged age discrimination and
together involve 385 plaintiffs, 126 of whom have been dismissed with prejudice
from the action. The Federal Court in Baltimore has adopted a multi-phase trial
structure plan pursuant to which in the initial phase only a few of the
remaining 259 plaintiffs claims would be tried and resolved. The first phase
trial is presently expected to commence in 1996.
Abu Dhabi
In April 1994, suit was brought in Abu Dhabi Civil Court for $21 million in
compensation allegedly due to the plaintiff under an oral agreement to provide
information and consulting services to Electronic Systems in support of its
efforts to win a contract. The trial court issued a judgment in November 1995,
awarding $3 million to the plaintiff. Both of the parties have appealed this
decision, and a quasi-de novo trial will now be held on this matter at the next
higher court.
Over and above any judgment the Court may render in this case, Electronic
Systems could be subject to a penalty of up to $70 million under the contract if
the Court determines that the plaintiff was an agent for Electronic Systems.
Iran-Iranian Air Force Claim
In 1982, Electronic Systems filed claims against the Islamic Republic of
Iran Air Force (IRIAF) with the Iran - U.S. Claims Tribunal. The Company is
claiming compensation in respect of the failure of IRIAF to pay sums due under
several contracts, and IRIAF has submitted counterclaims challenging the
Company's performance of the contracts. The trial in this case was completed in
March 1992, and the parties are awaiting the decision of the Tribunal.
Iran-Iranian Defense Ministry Claim
In October 1991, the Ministry of Defense of the Islamic Republic of Iran
brought an arbitration before the International Court of Arbitration of the
International Chamber of Commerce against the Company alleging breach of nine
radar equipment contracts that had been executed and performed prior to the 1979
Iranian Revolution. Only one of those contracts contained an arbitration clause,
and as a preliminary matter, the Company sought to dismiss the arbitration
proceeding with regard to the other eight contracts. The Company also sought to
dismiss all of the claims as untimely because the arbitration was filed well
after the expiration of the applicable statutes of limitations.
A hearing was held in July 1995 with respect to Electronic Systems' motion
to dismiss this case and the parties are awaiting a decision of the arbitrators.
NOTE 18 SUBSEQUENT EVENT
On January 3, 1996, Westinghouse and Northrop Grumman Corporation (Northrop
Grumman) entered into an Asset Purchase Agreement whereby substantially all of
the operations and assets of the Company will be sold to Northrop Grumman, and
Northrop Grumman will assume substantially all of the liabilities of the
Company. The consummation of the sale is scheduled to take place on March 1,
1996, pending regulatory approval.
Page 26 of 28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHROP GRUMMAN CORPORATION
Date: March 18, 1996 By: /s/ James C. Johnson
---------------------------------------
James C. Johnson
Corporate Vice President and Secretary
Page 27 of 28
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- ----------------------------- -------------------------------------------------
<S> <C>
2.1 Asset Purchase Agreement dated as of January 3,
1996, between Westinghouse Electric Corporation,
a Pennsylvania corporation, as Seller, and
Northrop Grumman Corporation, a Delaware
corporation, as Buyer (the "Purchase
Agreement"). (Schedules and Exhibits have been
omitted pursuant to Rule 6.01(b)(2) of
Regulation S-K. Such Schedules and Exhibits are
listed and described in the Purchase Agreement.
Registrant hereby agrees to furnish to the
Securities and Exchange Commission, upon its
request, any or all such omitted Schedules and
Exhibits.)
2.2 Letter Agreement dated February 28, 1996 from
Westinghouse Electric Corporation to Northrop
Grumman Corporation
2.3 Letter Agreement dated February 29, 1996 from
Westinghouse Electric Corporation to Northrop
Grumman Corporation. (Schedules have been
omitted pursuant to Rule 6.01(b)(2) of
Regulation S-K. Such Schedules are listed and
described in the Letter Agreement. Registrant
hereby agrees to furnish to the Securities and
Exchange Commission, upon its request, any or
all such omitted Schedules.)
2.4 Second Amended and Restated Credit Agreement
dated as of April 15, 1994, Amended and Restated
as of March 1, 1996 among Northrop Grumman
Corporation, Bank of America National Trust and
Savings Association, as Documentation Agent,
Chemical Securities, Inc., as Syndication Agent,
The Chase Manhattan Bank (National Association),
as Administrative Agent and the Banks
Signatories thereto (the "Credit Agreement").
(Schedules and Exhibits have been omitted
pursuant to Rule 6.01(b)(2) of Regulation S-K.
Such Schedules and Exhibits are listed and
described in the Credit Agreement. Registrant
hereby agrees to furnish to the Securities and
Exchange Commission, upon its request, any or
all such omitted Schedules and Exhibits.)
23.1 Consent of Independent Accountants
99.1 Press release of Registrant dated March 1, 1996
</TABLE>
Page 28 of 28
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT dated as of January 3, 1996,
between WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania
Corporation ("Seller"), and Northrop Grumman Corporation, a
Delaware corporation ("Purchaser").
Seller wishes to sell to Purchaser, and Purchaser wishes to purchase
from Seller, substantially all the assets of Seller's Electronic Systems Group,
excluding the security systems, wireless communications and airship businesses
thereof and the business of Westinghouse Landmark GIS, Inc., (the "Division"),
which Division includes certain assets owned by subsidiaries of Seller, upon the
terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
ARTICLE I
Purchase and Sale of Acquired Assets
------------------------------------
SECTION 1.1. Purchase and Sale. Upon the terms and subject to the
------------------
conditions of this Agreement, at the Closing (as defined in Section 2.1) Seller
agrees to sell, assign, transfer, convey and deliver to Purchaser all of
Seller's right, title and interest in, to and under the Acquired Assets (as
defined in Section 1.2(a)) and to cause any Subsidiary (as defined below) of
Seller, other than any Sold Subsidiary (as defined in Section 1.2(a)(x)), having
any right, title or interest in, to or under the Acquired
<PAGE>
Assets or any obligations or liabilities included in the Assumed Liabilities (as
defined in Section 1.3(a)) (each such Subsidiary other than a Sold Subsidiary, a
"Selling Subsidiary") to sell, assign, transfer, convey and deliver to Purchaser
all of such Selling Subsidiary's right, title and interest in, to and under the
Acquired Assets, and Purchaser agrees to purchase, acquire and accept from
Seller and each Selling Subsidiary (collectively, "Sellers") all such right,
title and interest in, to and under the Acquired Assets. The term "Subsidiary"
means a corporation more than 50% of the capital stock of which is owned
directly or indirectly by Seller.
SECTION 1.2. Acquired Assets and Excluded Assets. (a) The term
------------------------------------
"Acquired Assets" means all the business, properties, assets, goodwill and
rights of Sellers of whatever kind and nature, real or personal, tangible
or intangible, other than the Excluded Assets (as defined in Section
1.2(b)), owned by any of Sellers on the Closing Date (as defined in Section
2.1) and used or held for use primarily in the Division, including:
(i) all real property, leaseholds and other interests in real
property of Sellers listed in Schedules 3.1(g)-1 and 3.1(g)-2, in each case
together with Sellers' right, title and interest in all
<PAGE>
buildings, improvements, fixtures and all other appurtenances thereto (the
"Premises");
(ii) all raw materials, work-in-process, finished goods, supplies,
parts and other inventories ("Inventory") of Sellers that on the Closing
Date is located on the Premises and all other Inventory, including
Inventory in transit, of Sellers on the Closing Date that is used or held
for use primarily by or for the Division;
(iii) all machinery and equipment of Sellers that is used or held
for use primarily by or for the Division;
(iv) all accounts receivable of Sellers on the Closing Date arising
out of operations of the Division;
(v) subject to the license to be granted pursuant to Section
4.9(a), all domestic and foreign patents, patent applications, trademarks,
trademark registrations, servicemarks, trade names, registered copyrights
and licenses with respect to the foregoing ("Intellectual Property") owned
by Sellers that relate primarily to the operations of the Division
(excluding the names and marks "Westinghouse Electric Corporation",
"Westinghouse" and "Circle W" (in logotype design or any other style or
-
design), and any
<PAGE>
name or mark derived from or including any of the foregoing);
(vi) subject to the license to be granted pursuant to Section
4.9(a), all trade secrets, inventions, know-how, formulae, processes,
procedures, research records, records of inventions, test information,
market surveys and marketing know-how and unregistered copyrights
("Technology") owned by Sellers that relate primarily to the operations of
the Division;
(vii) all permits, licenses, franchises, approvals and authorizations
by governmental or regulatory authorities or bodies ("Permits") owned by
Sellers that relate primarily to the operations of the Division;
(viii) all contracts, leases, indentures, joint venture, environmental
indemnity and other agreements, commitments and all other legally binding
arrangements, whether oral or written, to which any of Sellers is a party
or by which any of Sellers is bound, including any contracts, agreements,
commitments and other legally binding arrangements relating to plans and
arrangements referred to in Section 3.1(o) to the extent provided in
Section 4.5 excluding such contracts, agreements, commitments and other
legally binding arrangements relating to plans and arrangements
<PAGE>
referred to in Section 3.1(o), ("Contracts") that are listed in Schedule
3.1(g)-1, 3.1(g)-2, 3.1(j) or 3.1(q) and all other Contracts that relate
primarily to the Division and that are not required to be listed in such
Schedules;
(ix) all bids, quotations and proposals for Contracts, whether oral or
written, to which any of Sellers is a party or by which any of Sellers is
bound that relate primarily to the Division;
(x) all capital stock, partnership interests and other equity
interests owned by Sellers in any corporation, partnership, joint venture,
trust or other business association ("Investments") listed in Schedule
3.1(k), including all capital stock owned by Sellers in the corporations
listed in Schedule 3.1(r) under the caption "Sold Subsidiaries" (each, a
"Sold Subsidiary"), and all other Investments relating primarily to the
Division acquired by any of Sellers after the date of this Agreement;
(xi) all books of account, general, financial, accounting and
personnel records, files, invoices, customers' and suppliers' lists and
other data owned by Sellers on the Closing Date and used or held for use
primarily by or for the Division, except to the extent
<PAGE>
relating to the Excluded Assets or the Excluded Liabilities (as defined in
Section 1.3(b));
(xii) all personal property of Sellers that is used or held for use
primarily by or for the Division; and
(xiii) all rights, claims and causes of action to the extent relating
to any of the Assumed Liabilities or the Acquired Assets, including,
subject to Section 4.19, rights, claims and causes of action under
insurance policies relating thereto, but excluding claims for refunds of
Income Taxes as provided in Section 1.2(b).
The term "Acquired Assets" shall also include all equipment (including any
equipment constituting a fixture) and personal property owned by any of Sellers
on the Closing Date and used or held for use primarily in the portion of
Sellers' Science and Technology Center which primarily provides research and
development support to the business comprised of the Division and the
performance of third party Contracts of the type listed in Schedule 3.1(j)
pursuant to Section 3.1(j)(xiv) (such portion, the "Center"), and any such
Contracts so listed or entered into in the ordinary course of business between
the date of this Agreement and the Closing Date, and any Intellectual Property
and
<PAGE>
Technology relating primarily to the Division or the performance of such third
party Contracts. For the avoidance of doubt, "Acquired Assets" shall include all
assets set forth on the Closing Balance Sheet (as defined in Section 2.3(a)).
(b) The term "Excluded Assets" means:
(i) all cash on hand or in banks and all cash equivalents, except any
cash or cash equivalents reflected on the Closing Statement (as defined in
Section 2.3(a));
(ii) all rights of Sellers under this Agreement and the agreements,
instruments and certificates delivered in connection with this Agreement;
(iii) all records prepared in connection with the sale of the
Division, including bids received from third persons and analyses relating
to the Division;
(iv) all rights, claims and causes of action relating to any of the
Excluded Liabilities or the Excluded Assets, including rights, claims and
causes of action under insurance policies relating thereto;
(v) all rights to claims, available to or being pursued by Sellers or
any Sold Subsidiary, for refunds of or credits against Income Taxes (as
defined in Section 4.14(g)(ii)) (including all refunds or credits
<PAGE>
relating to any FSC for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), investment tax credits, research credits and credits
for prepayments of Income Taxes) attributable to the Division for taxable
periods ending on or before the Closing Date and for the portion ending on
the Closing Date of any taxable period that includes but does not end on
the Closing Date (the "Pre-Closing Tax Periods") (determined as if such
taxable period ended as of the close of business on the Closing Date);
provided, however, that in the case of a taxable period that includes
-------- -------
but does not end on the Closing Date, if a taxable loss exists for the
portion of such period that is included in the Pre-Closing Tax Period, then
the amount of such refund that constitutes an Excluded Asset shall not
exceed the amount of Income Taxes (including estimated Income Taxes)
actually paid by Seller, any of its affiliates or any other Person (as
defined in Section 1.3(c)) prior to the Closing Date with respect to such
taxable period; and provided, further, to the extent that any such
-------- -------
refunds or credits of state Income Taxes relate to any "allowable cost"
that is credited to the United States Government as a cost reduction by
credit or actual refund, the amount
<PAGE>
of such tax refunds or credits so credited or refunded, less any amount
that was reserved for such taxes through the fee and rate reserve reflected
on the Closing Balance Sheet, shall not constitute an Excluded Asset and
shall be for the benefit of Purchaser, and Seller shall cause such amount
to be promptly paid to Purchaser;
(vi) any consolidated, combined, unitary or separate company Tax
Return (as defined in Section 4.14(g)(iii)) relating to Income Taxes that
includes any of Sellers or any Sold Subsidiary, and records and work papers
used in preparation thereof;
(vii) the names and marks "Westinghouse Electric Corporation",
"Westinghouse" and "Circle W" (in logotype design or any other style or
-
design), and any name or mark derived from or including any of the
foregoing); and
(viii) all assets identified in Schedule 1.2(b).
SECTION 1.3. Assumption of Liabilities. (a) Upon the terms
--------------------------
and subject to the conditions of this Agreement, Purchaser hereby assumes,
effective as of the Closing, and agrees to pay, perform and discharge when due,
and indemnify Seller, its affiliates (including the Selling Subsidiaries) and
their respective officers, directors, employees,
<PAGE>
stockholders, agents and representatives against and hold them harmless from and
after the Closing from all obligations and liabilities of Sellers and the Sold
Subsidiaries of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, in the case of
Sellers, arising out of, relating to or otherwise in respect of the Acquired
Assets, the Division or the operations of the Division before, on or after the
Closing Date (collectively, the "Assumed Liabilities"), excluding any Excluded
Liabilities, but otherwise including:
(i) all obligations and liabilities of Sellers under Contracts that
are to be acquired by Purchaser pursuant to the provisions of this
Agreement;
(ii) all accounts payable owed by Sellers arising out of operations of
the Division or otherwise in respect of the Division;
(iii) all obligations and liabilities in respect of any and all
products sold by the Division at any time, including obligations and
liabilities for refunds, adjustments, allowances, repairs, exchanges,
returns and warranty, merchantability and other claims;
(iv) subject to the rights of Purchaser under Section 7.3, all
obligations and liabilities arising as
<PAGE>
a result of at any time being the owner or occupant of, or the operator of
the activities conducted at, the Premises included in the Acquired Assets
or any other real property owned or leased at any time by any of Sellers
for use primarily in the Division or by any Sold Subsidiary, including all
obligations and liabilities relating to personal injury, property damage,
the environment and on-site or off-site waste disposal;
(v) other than the items included in Section 1.3(a)(vi), which are
assumed only to the extent provided in Section 4.5, and subject to the
rights of Purchaser under Section 7.4, all obligations and liabilities
relating to the employment or termination of employment of (x) any employee
of the Division and (y) any employee of the Center, at any time;
(vi) to the extent provided in Section 4.5, all obligations or
liabilities arising under or in connection with any bonus, pension, profit
sharing, deferred compensation, retirement, vacation, severance pay,
disability benefits, death benefits, hospitalization, insurance or other
similar plan or arrangement or understanding (whether or not legally
<PAGE>
binding) providing benefits, including postretirement benefits, to Division
or Center employees;
(vii) all obligations and liabilities for taxes (other than Income
Taxes described in Section 1.3(b)(ii)) attributable to the Division
(including the Sold Subsidiaries) for all taxable periods;
(viii) other than the items included in Section 1.3(a)(vi), which
are assumed only to the extent provided in Section 4.5, and subject to the
rights of Purchaser under Sections 7.3, 7.4 and 7.5, all obligations and
liabilities in respect of lawsuits, actions and proceedings, pending or
threatened, and claims, whether or not presently asserted, arising out of,
relating to or otherwise in any way in respect of the Division or the
operations of the Division at any time; and
(ix) subject to the rights of Purchaser under Sections 7.3, 7.4 and
7.5, all obligations and liabilities of Sellers and the Sold Subsidiaries
as of the Closing Date of the type reflected on the Balance Sheet (as
defined in Section 3.1(c)), including the notes thereto.
(b) The term "Excluded Liabilities" means:
<PAGE>
(i) any obligation or liability of Sellers to the extent related to
the Excluded Assets; and
(ii) any obligation or liability of Sellers or any Sold Subsidiary for
Income Taxes attributable to the Division (including the Sold Subsidiaries)
for Pre-Closing Tax Periods, including (A) Income Taxes of Seller's
Federal Consolidated Income Tax group (and any other Income Tax group or
predecessor Income Tax group which included a Sold Subsidiary) under any
Treasury Regulation under Section 1502 of the Code or any comparable
provisions of foreign, state or local law, (B) Income Taxes resulting from
any transferee liability or successor liability of a Sold Subsidiary
attributable to Pre-Closing Tax Periods and (C) Income Taxes resulting from
the sale and transfer from Seller to Purchaser of the Acquired Assets
(including Income Taxes resulting from the Section 338 Elections (as
defined in Section 4.14(c)), and any state Income Taxes imposed by states
which do not recognize an election comparable to the election under Section
338(h)(10) of the Code and for which a regular Section 338 election is made
or deemed made), but excluding (X) any Transfer Taxes (as defined in
Section 4.14(d)), (Y) any taxes resulting from actions taken by Purchaser
or its
<PAGE>
affiliates after the Closing and (Z) any state Income Taxes resulting from
a regular Section 338 election with respect to a Sold Subsidiary created
pursuant to Section 4.14(l).
(c) Notwithstanding anything to the contrary contained herein, but
subject to the provisions of Section 4.4, this Agreement shall not operate to
assign any Intellectual Property, Technology or Contract (including any
Government Contract as defined in Section 4.4(a)) or any claim, right or benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "Governmental
Entity"), or any individual, corporation, partnership, limited liability
company, joint venture, trust, business association or other entity (a "Person",
which term shall include a Governmental Entity), would constitute a breach,
default or other contravention thereof or a violation of applicable law. Except
as otherwise contemplated in Section 4.4(a), Seller and Purchaser shall each use
all reasonable efforts to obtain the consent of such Persons for the assignment
thereof to Purchaser prior to the Closing (it being understood that the failure
to obtain such consents shall not relieve either
<PAGE>
party from its obligation to consummate at the Closing the transactions
contemplated by this Agreement) and shall otherwise comply with the provisions
of Section 4.4.
(d) Notwithstanding anything to the contrary in any agreement or
otherwise, any rights, express or implied, of any Sold Subsidiary to use any
Intellectual Property or Technology owned by Sellers shall terminate at the
Closing, except to the extent any such Intellectual Property or Technology is an
Acquired Asset and except as otherwise contemplated by the license to be granted
pursuant to Section 4.9(b).
SECTION 1.4. Purchase Price. The purchase price for the
---------------
Acquired Assets shall be $3,000,000,000 (the "Purchase Price"), payable as set
forth in Section 2.2(b) and subject to adjustment as provided in Section 2.3,
together with the assumption of the Assumed Liabilities as provided in Section
1.3.
ARTICLE II
The Closing; Purchase Price Adjustment
--------------------------------------
SECTION 2.1. Closing Date. The closing of the sale and transfer
-------------
of the Acquired Assets and the assumption of the Assumed Liabilities (the
"Closing") shall take place at the offices of Cravath, Swaine & Moore, 825
Eighth Avenue, New York, New York 10019, at 10:00 a.m. on March 1,
<PAGE>
1996, or, if the conditions to the Closing set forth in Article V shall not have
been satisfied by such date, as soon as practicable after such conditions shall
have been satisfied. The date on which the Closing shall occur is herein
referred to as the "Closing Date".
SECTION 2.2. Transactions To Be Effected at the Closing. At the
-------------------------------------------
Closing:
(a) Seller shall deliver or cause to be delivered to Purchaser
such appropriately executed deeds, bills of sale, assignments and other
instruments of transfer providing for the sale, assignment, transfer,
conveyance and delivery as contemplated by this Agreement of the Acquired
Assets in form and substance reasonably satisfactory to Purchaser and its
counsel (it being understood that any such deed, bill of sale, assignment
or other instrument shall not provide for any representations or warranties
or any obligations or liabilities that are not otherwise expressly provided
for in this Agreement), together with resignations as director of each
director of each Sold Subsidiary; and
(b) Purchaser shall deliver to Seller (or, at Seller's direction, one
or more Selling Subsidiaries) (i) by wire transfer to an account designated
in writing by Seller prior to the Closing of immediately
<PAGE>
available funds in an amount equal to the Purchase Price plus or minus an
estimate prepared by Seller and delivered to Purchaser at least two
business days prior to the Closing Date of any adjustment to the Purchase
Price under Section 2.3 (the Purchase Price plus or minus such estimate
being herein referred to as the "Closing Date Amount") and (ii) such
appropriately executed assumption agreements and other instruments of
assumption providing for the assumption of, and indemnification against,
the Assumed Liabilities as contemplated by this Agreement in form and
substance reasonably satisfactory to Seller and its counsel (it being
understood that any such deed, bill of sale, assignment or other instrument
shall not provide for any representations or warranties or any obligations
or liabilities that are not otherwise expressly provided for in this
Agreement).
SECTION 2.3. Purchase Price Adjustment. (a) Within 60 days
--------------------------
after the Closing Date, Seller shall prepare and deliver to Purchaser (i) an
audited combined balance sheet of the Division as of the Closing Date (the
"Closing Balance Sheet"), prepared from the books and records of Seller and its
subsidiaries relating to the Division in accordance with generally accepted
accounting principles
<PAGE>
applied on a consistent basis with the Balance Sheet, together with a report
thereon prepared and certified by Price Waterhouse, (ii) a statement (the
"Closing Statement") setting forth Working Capital (as defined below) as of the
close of business on the Closing Date ("Closing Working Capital"), together with
a certificate of Price Waterhouse that the Closing Statement has been prepared
in compliance with the requirements of this Section 2.3 , (iii) a statement
setting forth the Restructuring Amount (as defined below) as of the close of
business on the Closing Date and (iv) a statement setting forth the Norden
Amount (as defined below) as of the close of business on the Closing Date.
Purchaser shall cause the employees of the Division to assist Seller
in the preparation of the Closing Balance Sheet and the Closing Statement and
shall provide Seller access at all reasonable times to the personnel,
properties, books and records of the Division for such purpose. Seller's
independent auditors may participate in the preparation of the Closing Statement
and Purchaser's independent auditors may review the preparation of, and all
working papers related to, the Closing Balance Sheet and the Closing Statement;
provided, however, that Purchaser acknowledges that Seller shall have the
- -------- -------
primary
<PAGE>
responsibility and authority for preparing the Closing Balance Sheet and
the Closing Statement.
At Purchaser's option and expense, a physical of the inventory shall
be conducted by Sellers consistent with past practice on or before the Closing
Date for the purpose of preparing the Closing Balance Sheet, and each of Seller
and Purchaser and their respective independent auditors shall have the right to
observe the taking of such physical inventory. Any costs or expenses incurred by
the Division in connection with such taking of such physical inventory shall be
added back in determining Closing Working Capital.
During the 30-day period following Purchaser's receipt of the Closing
Statement, subject to signing of customary releases, Purchaser and its
independent auditors shall be permitted to review Seller's independent auditors'
working papers relating to the Closing Balance Sheet and the Closing Statement.
The Closing Statement shall become final and binding upon the parties on the
thirtieth day following delivery thereof, unless Purchaser gives written notice
of its disagreement with the Closing Statement ("Notice of Disagreement") to
Seller prior to such date. Any Notice of Disagreement shall (A) specify in
reasonable detail the nature of any disagreement so asserted, (B) only include
<PAGE>
disagreements based on Closing Working Capital not being calculated in
accordance with this Section 2.3 (which includes disagreements based on the
Closing Balance Sheet and the Closing Statement not being in compliance with the
requirements of this Section 2.3) and (C) be accompanied by a certificate of
Purchaser that it has complied with the covenants set forth in Section 2.3(f).
If a Notice of Disagreement is received by Seller in a timely manner, then the
Closing Statement (as revised in accordance with clause (I) or (II) below) shall
become final and binding upon Seller and Purchaser on the earlier of (I) the
date Seller and Purchaser resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (II) the date
any disputed matters are finally resolved in writing by the Accounting Firm (as
defined below).
During the 30-day period following the delivery of a Notice of
Disagreement, Seller and Purchaser shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such period Seller and its
independent auditors shall have access to the working papers relating to the
Notice of Disagreement. At the end of such 30-day period, Seller and Purchaser
shall submit to an
<PAGE>
independent accounting firm (the "Accounting Firm") for review and resolution
any and all matters which remain in dispute and which were properly included in
the Notice of Disagreement. The Accounting Firm shall be Ernst & Young or, if
such firm is unable or unwilling to act, such other nationally recognized
independent public accounting firm as shall be agreed upon by the parties hereto
in writing. Seller and Purchaser shall jointly use all reasonable efforts to
cause the Accounting Firm to render a decision resolving the matters submitted
to the Accounting Firm within 30 days following submission. Seller and
Purchaser agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. The cost of any arbitration (including
the fees and expenses of the Accounting Firm and reasonable attorney fees and
expenses of the parties) pursuant to this Section 2.3 shall be borne by
Purchaser and Seller in inverse proportion as they may prevail on matters
resolved by the Accounting Firm, which proportionate allocations shall also be
determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted. The fees
and disbursements of Seller's independent auditors incurred in connection with
<PAGE>
their review of any Notice of Disagreement shall be borne by Seller, and the
fees and disbursements of Purchaser's independent auditors incurred in
connection with their review of the Closing Statement shall be borne by
Purchaser.
(b) The Purchase Price shall be increased by the Restructuring
Amount, by the Norden Amount and by the amount by which Closing Working Capital
exceeds $349,000,000 (the "WC Amount"), and the Purchase Price shall be
decreased by the amount by which Closing Working Capital is less than the WC
Amount (the Purchase Price as so increased or decreased is herein referred to as
the "Adjusted Purchase Price"). If the Closing Date Amount is less than the
Adjusted Purchase Price, Purchaser shall, and if the Closing Date Amount is more
than the Adjusted Purchase Price, Seller shall, within 10 business days after
the Closing Statement becomes final and binding on the parties, make payment by
wire transfer in immediately available funds of the amount of such difference,
together with interest thereon at the rate of 8.5% per annum, calculated on the
basis of the actual number of days elapsed divided by 365, from the Closing Date
to the date of actual payment, compounded annually.
(c) The term "Working Capital" shall mean Current Assets minus
Current Liabilities (in each case as defined below). The WC Amount equals
Working Capital as set forth
<PAGE>
on the Statement of Working Capital as of September 30, 1995, attached as
Schedule 2.3 (the "September 30 Statement") plus $12,000,000, and shall not be
subject to change regardless of whether the items included therein were in
accordance with generally accepted accounting principles or for any other reason
whatsoever. Subject to the adjustments described in Schedule 2.3(c), the terms
"Current Assets" and "Current Liabilities" shall mean the current assets (other
than any Excluded Assets) and current liabilities (other than any Excluded
Liabilities), respectively, of the Division, determined in the same way, using
the same methods, estimates, methodologies and judgments, as the line items
comprising Working Capital on the September 30 Statement (but only to the extent
doing so would be in accordance with generally accepted accounting principles
consistently applied). The amounts used in preparing the Closing Statement for
each category of Current Assets and Current Liabilities shall be the
corresponding amount shown on the Closing Balance Sheet with the respective
adjustments thereto described on Schedule 2.3(c). Without limiting the
generality of the foregoing, Closing Working Capital and the amounts shown on
the Closing Balance Sheet are to be determined in the same way, using the same
methods, estimates, methodologies and judgments, employed in
<PAGE>
determining the WC Amount, including using the same accounting methods,
policies, practices, assumptions and procedures with consistent classifications,
judgments and valuation and estimation methodologies, and using the same
methodologies used by Seller in determining its estimates and judgments for
evaluating the status of its Contracts (but only to the extent doing so would be
in accordance with generally accepted accounting principles consistently
applied). Purchaser acknowledges that it has had the opportunity to review
Seller's contract estimates at completion. Purchaser agrees that, in calculating
the Closing Working Capital, no changes will be made in the estimates at
completion except to reflect events occurring between the date of this Agreement
and the Closing Date and that any items relating to contract estimates at
completion in any Notice of Disagreement will be limited to those proposed
changes in contract estimates at completion which are based on such intervening
events. The scope of the disputes to be resolved by the Accounting Firm is
limited to whether the Closing Statement was prepared in compliance with the
requirements of this Section 2.3, and the Accounting Firm is not to make any
other determination (including as to whether the WC Amount is correct).
(d) The term "Restructuring Amount" shall mean the
<PAGE>
amount by which the cash expenditures by Sellers and the Sold Subsidiaries
during the period from October 1, 1995 to the Closing Date, in respect of the
restructuring actions described in the second paragraph of note 16 to the
Financial Statements (as defined in Section 3.1(c)) (other than the
approximately $35 million portion thereof in respect of pension curtailment),
exceed the economic benefit realized by Sellers during such period as a result
of such expenditures (it being agreed that such economic benefit shall consist
of any increased operating margins realized by Sellers during such period as a
result of the expense reductions associated with such restructuring actions and
any cost recoveries of such expenditures realized by Sellers during such period
as a result of increases in billing rates on government contracts).
(e) The term "Norden Amount" shall mean the amount by which the
cash expenditures by Sellers and the Sold Subsidiaries during the period from
October 1, 1995 to the Closing Date, in respect of the restructuring actions
described in the third paragraph of note 16 to the Financial Statements, exceed
the economic benefit realized by Sellers during such period as a result of such
expenditures (it being agreed that such economic benefit shall consist of any
increased operating margins realized during such period as a
<PAGE>
result of the expense reductions associated with such restructuring actions and
any cost recoveries of such expenditures realized during such period as a result
of increases in billing rates on government contracts).
(f) During the period of time from and after the Closing Date
through the resolution of any adjustment to the Purchase Price contemplated by
this Section 2.3, Purchaser agrees that it shall maintain the accounting books
and records of the Division on which the Closing Balance Sheet is to be based in
a manner consistent with the Division's past practices. Without limiting the
generality of the foregoing, during the period of time from and after the date
of this Agreement through the resolution of any adjustment to the Purchase Price
contemplated by this Section 2.3, Purchaser and Seller agree that no changes
shall be made in any reserve or other account existing as of September 30, 1995,
except as a result of specific events occurring after September 30, 1995, and,
in such event, only in a manner consistent with generally accepted accounting
principles and past practices. Purchaser shall cooperate in the preparation of
the Closing Balance Sheet and the Closing Statement.
(g) During the period of time from and after the Closing Date through
the resolution of any adjustment to the Purchase Price contemplated by this
Section 2.3, Purchaser shall afford to Seller and any accountants, counsel or
financial advisers retained by Seller in connection with any adjustment to the
Purchase Price contemplated by this
<PAGE>
Section 2.3 reasonable access during normal business hours to all the Division's
properties, books, contracts, personnel and records relevant to the adjustment
contemplated by this Section 2.3.
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.1. Representations and Warranties of Seller. Seller
-----------------------------------------
hereby represents and warrants to Purchaser as follows:
(a) Organization, Standing and Power. Seller is a corporation duly
---------------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the requisite power and authority to own
the Acquired Assets owned by it and to carry on the business of the Division as
now being conducted.
(b) Authority. Seller has the requisite corporate power and
----------
authority to execute this Agreement. Sellers have the requisite corporate
power and authority to execute the agreements to be entered into by them at the
Closing pursuant hereto (the "Seller Ancillary Documents") and to consummate the
transactions contemplated hereby and
<PAGE>
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Sellers, or, in the case of the Selling
Subsidiaries and in the case of the Seller Ancillary Documents, will be
authorized by all necessary corporate action on the part of Sellers prior to the
Closing, and do not and will not require the approval of the stockholders of
Seller. This Agreement has been duly executed and delivered by Seller and
constitutes, and each Seller Ancillary Document to be entered into by any of
Sellers will be duly executed and delivered at the Closing and when so executed
and delivered will constitute, its legal, valid and binding obligation
enforceable against it in accordance with its terms. The execution and delivery
of this Agreement by Seller do not, and the consummation by Sellers of the
transactions contemplated hereby and the compliance by Sellers with the terms
hereof will not, conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation (except any
acceleration of vesting under the Westinghouse Savings Program) or to loss of a
material benefit under, or result in the creation of any Lien (as
<PAGE>
defined in Section 3.1(f)) upon any of the Acquired Assets under, any provision
of (i) the Business Corporation Law of the Commonwealth of Pennsylvania, (ii)
the certificate of incorporation or by-laws (or comparable organizational
documents) of any of Sellers, (iii) except as disclosed on Schedule 3.1(b), any
Intellectual Property, Technology or Contract which is not subject to Section
4.4 or (iv) subject to the filings and other matters referred to in the
following sentence, any law, judgment, order, decree, statute, ordinance, rule
or regulation applicable to Sellers or the Acquired Assets, other than, in the
case of clauses (iii) and (iv) above, any such conflicts, violations, defaults,
rights or Liens that, individually or in the aggregate, would not (A) have a
material adverse effect on the business or financial condition of the Division
or (B) materially impair the ability of Seller to perform its obligations under
this Agreement. No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to Sellers or the Acquired
Assets in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) compliance
with and filings under the Hart-Scott-Rodino
<PAGE>
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) compliance
with and filings under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (iii) compliance with the facilities clearance
requirements of the Defense Investigative Service of the United States
Department of Defense ("DIS"), as set forth in the DIS Industrial Security
Regulation and the DIS Industrial Security Manual, as amended from time to time,
(iv) consents or novations which may be required for the assignment of any
Intellectual Property, Technology or Contract as contemplated in Section 4.4,
(v) compliance with, and notices and filings under, environmental permits,
statutes and regulations, including the Connecticut Transfer Act, Conn. Gen.
Stat. (S) 22a-134 et seq. (1993), and the California Health and Safety Code (S)
-- ----
25359.7 (1992), (vi) those that may be required solely by reason of Purchaser's
(as opposed to any other Person's) participation in the transactions
contemplated hereby and (vii) those the failure of which to obtain or make,
individually or in the aggregate, would not (A) have a material adverse effect
on the business or financial condition of the Division or (B) materially impair
the ability of Seller to perform its obligations under this Agreement.
<PAGE>
(c) Financial Statements. Schedule 3.1(c) sets forth the unaudited
---------------------
combined balance sheet of the Division as of September 30, 1995 (the "Balance
Sheet"), and the unaudited combined statement of income of the Division for the
nine months ended September 30, 1995, together with the notes to such financial
statements (the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Seller and its subsidiaries relating to
the Division and, except as described in the notes thereto, have been prepared
in accordance with generally accepted accounting principles and fairly present,
in all material respects, the financial condition and the results of operations
of the Division as at the date and for the period indicated. The estimated
allocation of assets of the Westinghouse Pension Plan between Seller's
Electronic Systems Group active employees and other employees as reflected in
Note 13 of the Financial Statements is based on application of the Pension
Benefit Guaranty Corporation ("PBGC") safe harbor assumptions set forth in
Treas. Reg. (S)1.414(l)-(b)(5)(ii) (the projected benefit obligation in Note 13
having been calculated using other assumptions, as set forth therein).
(d) Compliance with Applicable Laws. Subject to Section 4.4, Sellers
--------------------------------
have complied with all laws,
<PAGE>
regulations, rules and orders of all Governmental Entities applicable to them
which relate to the Acquired Assets (including the Truth-In-Negotiations-Act,
the Procurement Integrity Act, the Foreign Corrupt Practices Act, the Cost
Accounting Standards, the regulations and rules of applicable Governmental
Entities governing foreign military sales, the regulations and rules of
applicable Governmental Entities governing the submission of progress payment
requests on Government Contracts, the regulations and rules of applicable
Governmental Entities governing cost accounting and procurement systems with
respect to Government Contracts, and any laws, regulations, rules and orders
incorporated expressly, by reference or by operation of law into any Government
Contract), except where the failure to so comply would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
business or financial condition of the Division. Except as set forth in Schedule
3.1(d), since January 1, 1995, Sellers have not received any written notice
alleging any non-compliance in a material respect with any such laws,
regulations, rules or orders. Except as set forth in Schedule 3.1(d), since
January 1, 1995, Sellers have not received any written notice of any
administrative, civil or criminal investigation or audit by any Governmental
<PAGE>
Entity (including any qui tam action brought under the Civil False Claims Act
-------
alleging any irregularity, misstatement or omission arising under or relating to
any Contract) relating to the Division which is reasonably likely to be
adversely determined and which if adversely determined would have a material
adverse effect on the business or financial condition of the Division. This
Section 3.1(d) does not relate to labor and employment matters for which Section
3.1(e) is applicable, employee benefits matters for which Section 3.1(o) is
applicable, Environmental Laws (as defined in Section 3.1(p)) for which Section
3.1(p) is applicable or to tax matters for which Section 3.1(q) is applicable.
(e) Litigation; Decrees. Schedule 3.1(e) sets forth a list as of
--------------------
the date of this Agreement of certain lawsuits, actions and proceedings.
Except as set forth in Schedule 3.1(e) and except for any lawsuit, action or
proceeding brought after the date of this Agreement by any Person seeking to
delay or prevent, or otherwise challenging, the transactions contemplated
hereby, there is no lawsuit, action or proceeding pending, or, to Seller's
knowledge, threatened, against any of Sellers relating to the Division
(including any relating to the suspension, debarment or similar preclusion of
Seller from doing business with a Governmental Entity) which is reasonably
<PAGE>
likely to be adversely determined and which if adversely determined would have a
material adverse effect on the business or financial condition of the Division.
Sellers are not in default under any material judgment, order, injunction or
decree of any Governmental Entity or arbitrator entered against any of Sellers
and relating to the Division.
(f) Title to Acquired Assets. Sellers have good and valid title to
-------------------------
all the Acquired Assets free and clear of all mortgages, liens, security
interests, easements, rights of way, pledges, restrictions or encumbrances of
any nature whatsoever (collectively, "Liens"), except for (i) Liens disclosed in
Schedule 3.1(f) or in the Financial Statements or securing debt reflected as a
liability on the Balance Sheet, (ii) any progress payment liens arising in the
ordinary course of business from progress payments made by the United States
Government or any agency thereof or any other Governmental Entity on Government
Contracts and (iii) (A) mechanics', carriers', workmen's, repairmen's and other
like Liens arising or incurred in the ordinary course of business, (B) Liens for
taxes, assessments and other governmental charges that are not yet due and
payable or that may thereafter be paid without penalty or that are being
contested in good faith by appropriate proceedings and
<PAGE>
(C) imperfections of title and other Liens that, individually or in the
aggregate, do not materially impair the continued operation of the business of
the Division as presently conducted (the Liens described in clauses (i), (ii)
and (iii) being herein referred to as "Permitted Liens"). This Section 3.1(f)
does not relate to Intellectual Property, Technology, real property, interests
in real property or leasehold interests (except that the defined term "Permitted
Liens" shall be applicable to Section 3.1(g) to the extent used therein).
(g) Real Property. Schedule 3.1(g)-1 sets forth a list of all
--------------
material real property and interests in real property owned in fee by Sellers
and used by Sellers primarily with respect to the operations of the Division,
other than any Excluded Assets (individually, an "Owned Property"). There is no
real property or interest in real property owned in fee by Sellers (other than
any Excluded Assets) which is material to the operations of the Division as
presently conducted which is not listed on Schedule 3.1(g)-1. Schedule 3.1(g)-2
sets forth a list of all material real property and interests in real property
leased by Sellers and used by Sellers primarily with respect to the operations
of the Division (other than any Excluded Assets) (individually, a "Leased
Property"). Sellers have good and
<PAGE>
insurable fee title to all Owned Property free and clear of all Liens other than
(i) Permitted Liens, (ii) easements, covenants, rights-of-way and other
encumbrances or restrictions of record, (iii) any conditions that a current,
accurate survey or physical inspection of any Owned Property may show, (iv)
zoning, building and other similar restrictions, (v) unrecorded easements,
covenants, rights- of-way or other restrictions, (vi) Liens that have been
placed by any developer, landlord or other Person (other than Sellers) on
property over which any of Sellers has easement rights, none of which items set
forth in clauses (iii), (iv), (v) or (vi) above, individually or in the
aggregate, materially impair the continued operation of the business of the
Division as presently conducted. Except as set forth on Schedule 3.1(g)-2, one
of Sellers is the lessee of all the Leased Property and is in possession of the
premises purported to be leased thereunder, and each such lease is a valid
obligation of one of Sellers without any material default thereunder by Sellers,
or, to Seller's knowledge, by the applicable lessor.
(h) Intellectual Property and Technology. Schedule 3.1(h) sets forth
-------------------------------------
a list, as of the date of this Agreement, of all material Intellectual Property
(other than licenses) included in the Acquired Assets and, to the extent
<PAGE>
indicated on such Schedule, such Intellectual Property has been duly registered
in, filed in or issued by the United States Copyright Office or the United
States Patent and Trademark Office, the appropriate offices in the various
states of the United States and the appropriate offices of other jurisdictions.
Except as set forth on Schedule 3.1(h), Sellers are the sole and exclusive owner
of all material Intellectual Property (other than licenses) and material
Technology included in the Acquired Assets. Except as set forth on Schedule
3.1(h), Sellers have not received any written notice from any other Person
challenging in any material respect the right of Sellers to use any of the
material Intellectual Property or material Technology included in the Acquired
Assets or any rights thereunder. Sellers have taken measures, consistent with
Seller's corporate practice, to protect the secrecy, confidentiality and value
of the material Technology included in the Acquired Assets. Except as set forth
in Schedule 3.1(h), to Seller's knowledge, no material Technology (other than
unregistered copyrights) included in the Acquired Assets has been used, divulged
or appropriated for the benefit of any Person other than Sellers, except where
such use, divulgence or appropriation would not, individually or in the
aggregate, reasonably be expected to have a material adverse
<PAGE>
effect on the business or financial condition of the Division. Sellers have not
made any claim in writing of a violation, infringement, misuse or
misappropriation by others of their rights to or in connection with any material
Intellectual Property or material Technology included in the Acquired Assets.
Except as set forth on Schedule 3.1(h), to Seller's knowledge, as of the date of
this Agreement, there is no pending or threatened claim by any third Person of a
violation, infringement, misuse or misappropriation by any of Sellers of any
Intellectual Property or Technology owned by any third Person, or of the
invalidity of any patent included in the Acquired Assets, which is reasonably
likely to be adversely determined and which if adversely determined would have a
material adverse effect on the business or financial condition of the Division.
There are no interferences or other contested inter partes proceedings, either
pending or, to the knowledge of Seller, threatened, in the United States
Copyright Office, the United States Patent and Trademark Office or any Federal,
state or local court or before any other Governmental Entity relating to any
pending application with respect to any material Intellectual Property included
in the Acquired Assets.
(i) Insurance. All the material properties and businesses
----------
constituting any part of the Acquired Assets are
<PAGE>
insured for Sellers' benefit, and will be so insured through the Closing, in
amounts and against risks consistent with Seller's corporate practice. Except as
set forth on Schedule 3.1(i), Seller does not self-insure any material risks
with respect to the Division other than employee benefit plans.
(j) Contracts. Except for Contracts listed on Schedule 3.1(g)-1,
----------
3.1(g)-2, 3.1(j) or 3.1(q), none of Sellers is a party to or bound by any
Contract relating primarily to the Division that is:
(i) a Contract for the employment of any Person with an annual base
salary in excess of $150,000 or any consulting agreement with any Person
involving payments by Sellers in excess of $200,000;
(ii) a Contract with any labor union;
(iii) other than Contracts in the ordinary course of business for the
purchase or sale of products or services from or to the Division and other
than arrangements between the Division and the Center, a Contract with any
director, officer, subsidiary or affiliate of Seller that will not be
terminated at or prior to the Closing;
(iv) other than any of the following entered into in the ordinary
course of business between the date of
<PAGE>
this Agreement and the Closing Date and other than letters of credit
obtained in the ordinary course of business, an indenture, note, loan or
credit agreement or other Contract relating to the borrowing of money in an
amount in excess of $1,000,000 by any of Sellers or to the direct or
indirect guarantee or assumption by any of Sellers of the obligations of
any other Person (other than one of Sellers) for borrowed money in an
amount in excess of $1,000,000, including any arrangement which has the
economic effect although not the legal form of such a guarantee;
(v) a power of attorney (other than powers of attorney given in the
ordinary course of the Division's business with respect to routine tax and
securities matters or with respect to the entering into or administration
of Contracts or joint ventures);
(vi) a covenant not to compete (other than those contained in teaming
agreements and those of which the Division is the beneficiary of the
covenant in employee-related agreements);
(vii) a lease or similar agreement under which (A) any of Sellers is a
lessee of, or holds or operates, any real property owned by any third
Person for an annual rent in excess of $150,000 or (B) any of Sellers
<PAGE>
is a lessor of, or makes available for use by any third Person, any real
property owned or held as lessee by Sellers for an annual rent in excess of
$250,000;
(viii) a lease or similar agreement under which (A) any of Sellers is
lessee of, or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by any third Person for an annual rent in
excess of $50,000 or (B) any of Sellers is a lessor of, or makes available
for use by any third Person, any tangible personal property owned
(including ownership for tax purposes) by Sellers having a fair market
value in excess of $50,000;
(ix) other than any of the following entered into in the ordinary
course of business between the date of this Agreement and the Closing Date,
a Contract (including purchase orders), involving the obligation of Sellers
to purchase products or services for payment by Sellers of more than
$2,000,000 (unless terminable by one of Sellers without payment or penalty
of not more than $250,000 upon no more than 60 days' notice);
(x) other than any of the following entered into in the ordinary
course of business between the date of this Agreement and the Closing Date,
a Contract (including sales orders) involving the obligation of
<PAGE>
Sellers to deliver products or services with an unfilled order balance of
more than $5,000,000, (unless terminable by one of Sellers without payment
or penalty of not more than $250,000 upon no more than 60 days' notice)
(the Contracts set forth on Schedule 3.1(j) pursuant to this clause (x)
representing approximately 70% of the backlog of the Division as reflected
in the records of the Division as of November 30, 1995);
(xi) other than any progress payment liens arising from progress
payments made by the United States Government or any agency thereof or any
other Governmental Entity on Government Contracts, a mortgage, pledge,
security agreement, deed of trust or other document granting a material
Lien (including Liens upon properties acquired under conditional sales,
capital lease or other title retention or security devices);
(xii) other than any of the following entered into in the ordinary
course of business between the date of this Agreement and the Closing Date,
a Contract providing for the formation of a joint venture, teaming
agreement or partnership;
(xiii) other than any of the following entered into in the ordinary
course of business between the date of this Agreement and the Closing Date,
any
<PAGE>
financing arrangement with any third Person with respect to the performance
of any Government Contract; or
(xiv) other than any of the following entered into in the ordinary
course of business between the date of this Agreement and the Closing Date,
a third party Contract that relates primarily to the Center.
Subject to Section 4.4 and except as disclosed in Schedule 3.1(g)-1, 3.1(g)-2
or 3.1(j), Sellers are not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect under any Contract
listed in Schedule 3.1(g)-1, 3.1(g)-2 or 3.1(j). To Seller's knowledge, except
as disclosed in Schedule 3.1(g)-1, 3.1(g)-2 or 3.1(j), as of the date of this
Agreement, none of the other parties to any such Contract is (with or without
the lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder. As of the date of this Agreement, Sellers have
not, except as disclosed in Schedule 3.1(g)-1, 3.1(g)-2 or 3.1(j), (i) received
any written notice of the intention of any party to terminate any Contract
listed in Schedule 3.1(g)-1, 3.1(g)-2 or 3.1(j), whether as a termination for
convenience or for default of any of Sellers thereunder, or (ii) since January
1, 1995, received any written cure notice
<PAGE>
or show cause notice (as defined in the Federal Acquisition Regulations Part 49,
(P) 49.607(a) and (b), respectively) in respect of any such Contract which is a
Government Contract. To Seller's knowledge, except as disclosed in Schedule
3.1(g)-1, 3.1(g)-2 or 3.1(j), as of the date of this Agreement, there is no
pending claim or request for equitable adjustment under any Government Contract
by any Governmental Entity which is reasonably likely to be adversely determined
and which if adversely determined would have a material adverse effect on the
business or financial condition of the Division. To Seller's knowledge, Sellers
have complied in all material respects with all of their obligations relating to
any equipment or fixtures owned by any Governmental Entity and loaned, bailed or
otherwise furnished to or held by any of Sellers, except where the failure to so
comply would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business or financial condition of the
Division. Complete and correct copies of all Contracts referred to in Schedule
3.1(g)-1, 3.1(g)-2 and 3.1(j), together with all amendments thereto (other than
any amendments thereto entered into after the date of this Agreement in the
ordinary course of business), have been delivered or made available to
Purchaser.
<PAGE>
(k) Investments. Schedule 3.1(k) is a list of all Investments (other
------------
than Investments that are Excluded Assets) owned by Sellers on the date of this
Agreement relating primarily to the Division.
(l) Suppliers. Schedule 3.1(l) contains a list of the names and
----------
addresses of the ten largest suppliers (indicating dollar volume of product
purchases for each) of products and services to the Division for the twelve
months ended December 31, 1995.
(m) Sufficiency of Acquired Assets. The Acquired Assets (including
-------------------------------
all contract and other rights included therein) comprise all the assets owned by
Sellers that (taking into account the assets of the Sold Subsidiaries and the
license to be granted pursuant to Section 4.9(b)) are necessary for the conduct
of the Division's business in all material respects as presently conducted,
except for the Excluded Assets.
(n) Absence of Certain Changes or Events. Except as set forth in the
------------------------------------
Schedules hereto or as contemplated by this Agreement, since the date of the
Financial Statements Sellers have conducted the business of the Division in all
material respects only in the ordinary course consistent with past practice.
Except as set forth in the Schedules hereto or as contemplated by this
Agreement, since the date of the Financial Statements there
<PAGE>
has not been any material adverse change in the business or financial condition
of the Division, other than seasonal changes, changes relating to the economy in
general or changes relating to the Division's industry in general. Purchaser
acknowledges that there may be disruptions to the Division's business as a
result of Purchaser's identity as the proposed acquiror of the Division, and
Purchaser agrees that such disruptions and any changes attributable thereto
shall not constitute a breach of this Section 3.1(n).
(o) Employee Benefits. (i) Schedule 3.1(o)(i) contains a list of
------------------
each "employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (hereinafter a
"Pension Plan"), "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) (hereinafter a "Welfare Plan") and each other material plan, arrangement
or policy relating to stock options, stock purchases, compensation, deferred
compensation, severance, fringe benefits or other employee benefits, in each
case currently maintained or contributed to by Sellers or their affiliates on
behalf of active employees of the Division or the Center who are employed in the
United States (all the foregoing being herein called "Benefit Plans") and, to
the knowledge of Seller, each employee benefit plan maintained or contributed to
by
<PAGE>
Sellers or their affiliates outside the United States on behalf of active
foreign employees of the Division who are employed outside the United States
("Foreign Plans"). Seller has made available (or, in the case of item (4) of
this sentence, shall make available as soon as practicable after the date of
this Agreement) to Purchaser copies of (1) each Benefit Plan, (2) the most
recent annual report on Form 5500 filed with the Internal Revenue Service with
respect to each Benefit Plan, (3) the most recent summary plan description (or
similar document) for each Benefit Plan and (4) all insurance policies and
material service agreements relating to the Benefit Plans. Each Benefit Plan and
each Foreign Plan which is currently maintained or contributed to by Sellers or
their affiliates solely on behalf of the Division (each, a "Free-Standing Plan")
is so indicated on Schedule 3.1(o)(i).
(ii) To the knowledge of Seller, except as disclosed in Schedule
3.1(o)(ii), there are no investigations by any governmental agency, termination
proceedings or other claims (except claims for benefits payable in the normal
operation of the Benefit Plans), suits or proceedings against or involving any
Benefit Plan or asserting any rights or claims to benefits under any Benefit
Plan that could give rise to any material liability to Purchaser.
<PAGE>
(iii) Except as disclosed in Schedule 3.1(o)(iii), (x) all
contributions to Benefit Plans that are Pension Plans (hereinafter "Business
Pension Plans") that were required to be made in accordance with Section 302 of
ERISA or Section 412 of the Code, have been timely made, (y) no Business Pension
Plan has applied for or received a waiver of the minimum funding standards
imposed by Section 412 of the Code and (z) no Business Pension Plan has an
"accumulated funding deficiency" within the meaning of Section 412(a) of the
Code as of its most recent plan year.
(iv) Except as disclosed in Schedule 3.1(o)(iv), all the Benefit
Plans, as adopted or as they may have been amended, to the knowledge of Seller,
comply in all material respects with currently applicable provisions of the Code
and ERISA and other applicable laws. Seller has made available to Purchaser a
copy of the most recent determination letter received with respect to each
Business Pension Plan for which such a letter has been issued.
(v) Except as disclosed in Schedule 3.1(o)(v), with respect to any
Business Pension Plan subject to Title IV of ERISA, to the knowledge of Seller,
no event has occurred, or is reasonably expected to occur as a result of the
transactions contemplated by this Agreement, which will result in any material
liability to any such plan or to the
<PAGE>
PBGC, other than for the payment of contributions or premiums, all of which have
been paid when due. Seller has made available to Purchaser the most recent
actuarial report or valuation with respect to each Business Pension Plan that is
a "defined benefit plan" (as defined in Section 3(35) of ERISA).
(vi) Except as disclosed in Schedule 3.1(o)(vi), to the knowledge of
Seller, Sellers comply in all material respects with the applicable requirements
of Section 4980B(f) of the Code with respect to each Benefit Plan that is a
"group health plan" (as such term is defined in Section 5000(b)(1) of the Code).
(vii) Except as disclosed in Schedule 3.1(o)(vii), neither the
Westinghouse Pension Plan nor any Benefit Plan disclosed in Schedule 3.1(o)(i)
which is a Welfare Plan that provides for post-retirement medical or dental
benefits has been amended in any material respect since September 30, 1995, that
has increased the benefits provided to individual participants or beneficiaries
thereunder.
(p) Environmental Matters. Except as disclosed to Purchaser prior to
----------------------
the execution of this Agreement or as disclosed on Schedule 3.1(p):
<PAGE>
(i) Sellers are in compliance with all Environmental Laws (as defined
below), except for violations of Environmental Laws that would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business or financial condition of the Division;
(ii) Sellers hold, and are in compliance with, all Permits required
under Environmental Laws for Sellers to conduct the business of the
Division conducted by them, except for the absence of, or noncompliance
with, such Permits that would not, in all such cases taken individually or
in the aggregate, reasonably be expected to have a material adverse effect
on the business or financial condition of the Division; and
(iii) prior to the date of this Agreement, (A) to Seller's knowledge,
there are no events, conditions, actions, or omissions relating to the
conduct of the business of the Division that have given or will give rise
to any Environmental Liability (as defined below) based on or related to
the use, processing, generation, treatment, storage, disposal, transport,
emission, discharge, release or threatened release of any Hazardous
Substance (as defined below), and (B) Seller
<PAGE>
has not received any written notice of the institution or pendency of any
lawsuit, action, proceeding, investigation or claim by any Person alleging
any Environmental Liability arising from or relating to the conduct of the
business of the Division, except for all such cases under (A) and (B) that
would not, taken individually or in the aggregate, reasonably be expected
to have a material adverse effect on the business or financial condition of
the Division.
(iv) As used herein:
"Environmental Laws" means any domestic or foreign, Federal, state,
interstate or local statute, law or regulation having the force of law and in
effect and promulgated as such as of the Closing Date (collectively "Pre-Closing
Environmental Laws and Regulations") or any order, injunction, judgment, decree,
common law or other enforceable requirement of any Governmental Entity, except
to the extent that it sets forth more stringent or additional requirements than
those authorized by Pre-Closing Environmental Laws and Regulations, and relating
to the protection of human health, safety or the environment, including any of
the foregoing related to: (i) Remedial Actions; (ii) the reporting, licensing,
permitting, or investigating of the emission, discharge, release or
<PAGE>
threatened release of Hazardous Substances into the air, surface water,
groundwater or land; (iii) the manufacture, release, distribution, use,
generation, treatment, storage, disposal, transport or handling of Hazardous
Substances; or (iv) the protection of the health and safety of employees or the
public.
"Environmental Liability" means any liability or obligation arising under
Environmental Laws in connection with the Acquired Assets or the business or
operation of the Division to the extent arising from any condition existing or
any act or omission of Seller at or prior to the Closing Date, including claims,
demands, assessments, judgments, orders, causes of action (including toxic tort
suits), notices of actual or alleged violations or liability (including such
notices regarding the disposal or release of Hazardous Substances on the
Premises or elsewhere), proceedings and any associated costs, assessments,
losses, damages (except consequential damages), obligations, liabilities,
awards, fines, sanctions, penalties, or amounts paid in settlement (including
reasonable costs, fees and expenses of attorneys, accountants, consultants and
other agents of such Person).
"Hazardous Substance" means any substance or material: (i) that is defined
as a "hazardous waste" or
<PAGE>
"hazardous substance" under any Environmental Law; (ii) that is considered
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
mutagenic or otherwise regulated under any Environmental Law; or (iii) that
contains gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated
biphenyls or asbestos.
"Remedial Action" means any response action, removal action, remedial
action, corrective action, monitoring program, sampling program, investigation
or other cleanup activity required by any Environmental Law to clean up, remove,
remediate, treat or abate any Hazardous Substance in the environment.
(q) Taxes. Except as set forth on Schedule 3.1(q):
------
(i) Seller and the Sold Subsidiaries have timely filed, after giving
effect to any applicable extensions, all material Tax Returns required to
be filed with respect to the Acquired Assets and the income or operations
of the Division, and all such Tax Returns were complete and correct at the
time of filing. Each of Seller and the Sold Subsidiaries has timely paid,
after giving effect to any applicable extensions, all material taxes
required to be paid by it with respect to the Acquired Assets and the
income
<PAGE>
or operations of the Division, or such taxes have been paid on its behalf.
(ii) No taxing authority is asserting in writing any material tax
deficiency that has not been adequately reserved for, and no liens for
material taxes exist (other than liens for taxes not yet due or for taxes
being contested in good faith), with respect to the Acquired Assets or the
income or operations of the Division.
(iii) All material amounts that are required to be collected or
withheld by Seller or the Sold Subsidiaries with respect to the Division
have been duly collected and withheld, and any such amounts that are
required to have been remitted to any taxing authority have been duly
remitted.
(iv) (A) No Acquired Asset or asset of any Sold Subsidiary is
property that is required to be treated as owned by any other person
pursuant to the "safe harbor lease" provisions of former Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and (B) to the knowledge
of Seller, no material Acquired Asset or material asset of any Sold
Subsidiary constitutes "tax exempt use property" within the meaning of
Section
<PAGE>
168(h) of the Code. The applicable safe harbor leases are set forth on
Schedule 3.1(q).
(v) To the knowledge of Seller, no material Acquired Asset or
material asset of any Sold Subsidiary secures any debt the interest on
which is tax exempt under Section 103 of the Code.
(vi) The statute of limitations (A) in respect of the Division's
Federal Income Taxes has closed for all taxable periods up to and including
the taxable year ended December 31, 1989 and (B) in respect of Seller's,
Xetron Corporation's and Perceptics Corporation's sales and use taxes
relating to the Division has not been extended.
(vii) No Sold Subsidiary is a party to any agreement providing
for the sharing of taxes among members of a group filing consolidated,
combined or unitary Tax Returns (or comparable Tax Returns for foreign
purposes).
(viii) No material contract of the Division that is a long-term
contract (for purposes of Section 460 of the Code) and that was entered
into after June 20, 1988 has been reported on a method of tax accounting
other than the 100 percent percentage of completion method for Income Tax
purposes.
<PAGE>
(r) Sold Subsidiaries. Each Sold Subsidiary is a corporation duly
------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the requisite power and authority to own
its assets and to carry on its business as now being conducted. Except as
disclosed to Purchaser prior to the execution of this Agreement, Seller has
heretofore delivered to Purchaser true and complete copies of the certificate of
incorporation and by-laws of each Sold Subsidiary, as amended through the date
of this Agreement. The authorized and outstanding capital stock of each Sold
Subsidiary is as set forth on Schedule 3.1(r), and, except as set forth on such
Schedule (and except for directors' qualifying shares), one of Sellers is the
record and beneficial owner of all such outstanding capital stock.
(s) Clearances. Except to the extent prohibited by the National
-----------
Industrial Security Program Operating Manual (NISPOM), Schedule 3.1(s) sets
forth, as of the date set forth therein, all facility security clearances held
by Sellers to the extent relating to the Acquired Assets and the number of
personnel holding security clearances at each such facility.
(t) Sales Representatives. To the knowledge of Seller, Schedule
----------------------
3.1(t) sets forth, as of the date set forth
<PAGE>
therein, the names of all sales representatives providing sales representation
services to the Division to the extent relating to the Acquired Assets.
SECTION 3.2. Representations and Warranties of Purchaser. Purchaser
--------------------------------------------
hereby represents and warrants to Seller as follows:
(a) Organization, Standing and Power. Purchaser is a corporation
---------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted.
(b) Authority. Purchaser has the requisite corporate power and
----------
authority to execute this Agreement and the agreements to be entered into by it
at the Closing pursuant hereto (the "Purchaser Ancillary Documents") and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Purchaser, or, in the case of Purchaser Ancillary Documents, will be duly
authorized by all necessary corporate action on the part of Purchaser prior to
the Closing, and do not and will not require the approval of
<PAGE>
the stockholders of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and constitutes, and each Purchaser Ancillary Document
will be duly executed and delivered by Purchaser at or prior to the Closing and
when so executed and delivered will constitute, a legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms. The execution
and delivery of this Agreement by Purchaser do not, and the consummation by
Purchaser of the transactions contemplated hereby and the compliance by
Purchaser with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of Purchaser's assets under, any provision of (i) the
General Corporation Law of the State of Delaware, (ii) the certificate of
incorporation or by-laws (or comparable organizational documents) of Purchaser
or (iii) subject to the filings and other matters referred to in the following
sentence, any law, judgment, order, decree, statute, ordinance, rule or
regulation applicable to Purchaser, other than, in the case of clause (iii)
above, any such conflicts, violations, defaults, rights or Liens that,
individually or
<PAGE>
in the aggregate, would not materially impair the ability of Purchaser to
perform its obligations under this Agreement. No consent, approval, license,
permit, order or authorization of, or registration, declaration or filing with,
any Governmental Entity is required to be obtained or made by or with respect to
Purchaser in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) compliance
with and filings under the HSR Act, (ii) compliance with and filings under
Section 13(a) of the Exchange Act, (iii) compliance with the facilities
clearance requirements of the DIS, as set forth in the DIS Industrial Security
Regulation and the DIS Industrial Security Manual, as amended from time to time,
(iv) consents or novations which may be required for the assignment of any
Intellectual Property, Technology or Contract as contemplated in Section 4.4,
(v) compliance with, and notices and filings under, environmental permits,
statutes and regulations, including the Connecticut Transfer Act, Conn. Gen.
Stat. (S) 22a-134 et seq. (1993), and the California Health and Safety Code (S)
25359.7 (1992), and (vi) those the failure of which to obtain or make,
individually or in the aggregate, would not materially impair the ability of
Purchaser to perform its obligations under this Agreement.
<PAGE>
(c) Security Clearance. Purchaser controls facilities classified for
-------------------
United States government security purposes as high as the level of "Top Secret",
and employs individuals holding United States government security clearances as
high as the level of "Top Secret".
(d) Financing. Purchaser has obtained from certain financial
----------
institutions (the "Banks") firm commitments pursuant to a commitment letter
dated January 2, 1996, (as in effect on the date of this Agreement, the
"Commitments") to provide financing sufficient to enable it to consummate the
transactions contemplated hereby. A true and complete copy of such commitment
letter has been provided to Seller.
ARTICLE IV
Covenants
---------
SECTION 4.1. Covenants of Seller Relating to Conduct of Business.
----------------------------------------------------
During the period from the date of this Agreement and continuing until the
Closing, Seller agrees (except as expressly provided in this Agreement or the
Schedules or to the extent that Purchaser shall otherwise consent in writing)
that:
(a) Ordinary Course. Sellers shall carry on the business of the
----------------
Division in the ordinary course in substantially the same manner as presently
conducted and use
<PAGE>
all reasonable efforts consistent with past practices (including as to levels
of capital expenditures) to preserve intact the Division's present business
organization, keep available the services of the Division's present officers and
employees and preserve the Division's relationships with customers, suppliers
and others having business dealings with the Division. Seller shall not sell,
assign or convey any material long term asset (other than as requested by
Purchaser pursuant to Section 4.14(l) or among any of Sellers or any Sold
Subsidiary) constituting an Acquired Asset. Seller shall not incur any long
term indebtedness for borrowed money (including purchase money financing) which
would constitute an Assumed Liability.
(b) No Other Bids. Seller shall not, nor shall it authorize or
--------------
permit any officer, director or employee of, or any investment banker, attorney,
accountant or other representative retained by, Seller to, (i) solicit or
encourage (including by way of furnishing non-public information) any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any "other acquisition" or (ii) engage in any discussions or
negotiations or enter into any agreement with respect to any other acquisition.
Seller shall promptly advise Purchaser orally and in writing of any such
inquiries or proposals. As
<PAGE>
used in this paragraph, "other acquisition" shall mean any transaction involving
the acquisition by a Person other than Purchaser in any manner of all or
substantially all the Division.
(c) Other Actions. Seller shall not take any action that would, or
--------------
that would reasonably be expected to, result in any of the conditions to the
Closing set forth in Article V not being satisfied.
(d) Advise of Changes. Seller shall promptly advise Purchaser in
------------------
writing of the occurrence of any material adverse change in the business or
financial condition of the Division.
SECTION 4.2. Access to Information. Seller shall afford to
----------------------
Purchaser and its accountants, counsel and other representatives reasonable
access during normal business hours during the period prior to the Closing to
all the properties, books, Contracts, commitments, tax returns and records of
the Division (other than the Excluded Assets), and, during such period shall
furnish promptly to Purchaser any information concerning the Division (other
than the Excluded Assets) as Purchaser may reasonably request; provided,
--------
however, that Seller is under no obligation to disclose to Purchaser any (i)
- -------
"Classified Information" other than in compliance with the DIS Industrial
Security
<PAGE>
Regulations, the DIS Industrial Security Manual and any other applicable
government security regulations, (ii) any information the disclosure of which is
restricted by Contract or applicable law except in strict compliance with the
applicable Contract or law and (iii) any information as to which the attorney-
client privilege may be available, until a mutually satisfactory joint defense
agreement has been executed by Purchaser and Seller. Purchaser acknowledges that
any information being provided to it or its representatives by Sellers pursuant
to or in connection with this Agreement is subject to the terms of a
confidentiality agreement between Purchaser and Seller dated December 7, 1995
(the "Confidentiality Agreement"), which terms are incorporated herein by
reference.
SECTION 4.3. Governmental Approvals, etc. (a) Each of Purchaser and
----------------------------
Seller shall as promptly as practicable, but in no event later than five
business days following the execution and delivery of this Agreement, file with
the United States Federal Trade Commission and the United States Department of
Justice, the notification and report form under the HSR Act required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act. Each of Purchaser and Seller shall
as promptly as
<PAGE>
practicable comply with any other laws of any country and the European Union
which are applicable to any of the transactions contemplated hereby and pursuant
to which any consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or any other Person in
connection with such transactions is necessary. Each of Purchaser and Seller
shall furnish to the other such necessary information and reasonable assistance
as the other may request in connection with its preparation of any filing,
registration or declaration which is necessary under the HSR Act or any other
such laws. Purchaser and Seller shall keep each other apprised of the status of
any communications with, and any inquiries or requests for additional
information from, any Governmental Entity, and shall comply promptly with any
such inquiry or request. Purchaser shall use its best efforts to obtain any
clearance under the HSR Act or any other consent, approval, order or
authorization of any Governmental Entity, necessary in connection with the
transactions contemplated hereby or to resolve any objections which may be
asserted by any Governmental Entity with respect to the transactions
contemplated hereby, including by executing agreements and submitting to
judicial or administrative orders to hold
<PAGE>
separate and divest any business or assets of the Division or of Purchaser or
any of its subsidiaries.
(b) Subject to the terms and conditions of this Agreement, each
party shall use its best efforts to cause the Closing to occur, including (i) as
contemplated by Section 4.3(a) or 4.4, (ii) defending against any lawsuits,
actions or proceedings, judicial or administrative, challenging this Agreement
or the consummation of the transactions contemplated hereby, including seeking
to have any preliminary injunction, temporary restraining order, stay or other
legal restraint or prohibition entered or imposed by any court or other
Governmental Entity that is not yet final and nonappealable vacated or reversed;
provided, however, that none of Sellers or their affiliates shall be
- -------- -------
required to make any material monetary expenditure, commence or be a plaintiff
in any litigation or offer or grant any material accommodation (financial or
otherwise) to any third Person. Without limiting the foregoing, each party
shall use its best efforts (subject to the proviso in the immediately preceding
sentence) to cause the Closing to occur by March 1, 1996.
SECTION 4.4. Novation of Government Contracts and Third Party
------------------------------------------------
Consents. (a) As soon as practicable following the Closing, Purchaser shall
- --------
prepare (with Seller's
<PAGE>
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 Seller to each Responsible Contracting Officer, for the United
States Government to (i) recognize Purchaser as Sellers' successor in interest
to all the Acquired Assets constituting Contracts made with the United States
Government (collectively, "Government Contracts"); and (ii) to enter into a
novation agreement (a "Novation Agreement") in form and substance reasonably
satisfactory to Purchaser and Seller 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 Sellers'
obligations and liabilities under, each such Government Contract shall be
validly conveyed, transferred and assigned and novated to Purchaser by all
parties thereto. Purchaser shall provide to Seller promptly any information
regarding Purchaser required in connection with such request. Seller and
Purchaser shall each use all reasonable efforts to obtain
<PAGE>
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.
(b) In the event that any and all novations, transfer or other
agreements, consents, approvals or waivers necessary for the assignment,
transfer or novation of any Acquired Asset constituting Intellectual Property,
Technology or a Contract, or any claim, right or benefit arising thereunder or
resulting therefrom, shall not have been obtained prior to the Closing Date,
then as of the Closing, this Agreement, to the extent permitted by law, shall
constitute full and equitable assignment by Sellers to Purchaser of all of
Sellers' right, title and interest in and to, and all of Sellers' obligations
and liabilities under, such Intellectual Property, Technology and Contracts,
and, in the
<PAGE>
case of Contracts, Purchaser shall be deemed Sellers' agent for purpose of
completing, fulfilling and discharging all of Sellers' liabilities under any
such Contract. The parties shall take all necessary steps and actions to provide
Purchaser with the benefits of such Intellectual Property, Technology and
Contracts, and, in the case of Contracts, to relieve Sellers of the performance
and other obligations thereunder, including entry into subcontracts for the
performance thereof. Purchaser agrees to pay, perform and discharge, and
indemnify Sellers against and hold Sellers harmless from, all obligations and
liabilities of Sellers relating to such performance or failure to perform under
such Contracts.
(c) In the event Sellers shall be unable to make the equitable
assignment described in Section 4.4(b), or if such attempted assignment would
give rise to any right of termination, or would otherwise adversely affect the
rights of Sellers or Purchaser under such Intellectual Property, Technology or
Contract, or would not assign all Sellers' rights thereunder at the Closing,
Sellers and Purchaser shall continue to cooperate and use all reasonable efforts
to provide Purchaser with all such rights. To the extent that any such consents
and waivers are not obtained, or until the impediments to such assignment are
resolved, Sellers shall use all reasonable efforts (without the expenditure, in
the aggregate, of any material sum) to (i) provide to Purchaser, at the request
of Purchaser, the benefits of any such Intellectual Property, Technology or
Contract to the extent related to the Division, (ii) cooperate in any lawful
arrangement designed to provide such
<PAGE>
benefits to Purchaser and (iii) enforce, at the request of and for the account
of Purchaser, any rights of Sellers arising from any such Intellectual Property,
Technology or Contract against any third Person (including any Governmental
Entity) including the right to elect to terminate in accordance with the terms
thereof upon the advice of Purchaser. To the extent that Purchaser is provided
the benefits of any Intellectual Property, Technology or Contract referred to
herein (whether from Sellers or otherwise), Purchaser shall perform at the
direction of Seller and for the benefit of any third Person (including any
Governmental Entity) the obligations of Sellers thereunder or in connection
therewith, and Purchaser agrees to pay, perform and discharge, and indemnify
Sellers against and hold Sellers harmless from, all obligations and liabilities
of Sellers relating to such performance or failure to perform, and in the event
of a failure of such indemnity, Sellers shall cease to be obligated under this
Agreement in respect of the Intellectual Property, Technology or Contract which
is the subject of such failure.
(d) In connection with obtaining the consents contemplated by this
Section 4.4, Sellers shall not consent to any modification of any Contract
included in the Acquired Assets which would adversely affect the rights of
Purchaser
<PAGE>
under such Contract without the prior written consent of Purchaser.
SECTION 4.5. (a) Employment.
-----------
(i) Continuation of Employment. Purchaser shall offer employment to
---------------------------
(x) each Division employee (including any individual whose principal place of
employment is on the Premises, who primarily renders services on behalf of the
Division and whose compensation cost is borne primarily by the Division) of
Sellers or their affiliates (a "Division Employee") who is actively at work on
the Closing Date and (y) each employee in the Center, but excluding any employee
in the Information Technology Group (each employee in the Center other than an
employee of the Information Technology Group being referred to herein as a
"Center Employee") who is actively at work on the Closing Date (Division
Employees and Center Employees being collectively referred to herein as "Active
Employees"). Purchaser shall also honor any legal obligation of Sellers or
Purchaser to reemploy any Division Employee and Center Employee who is not
actively at work on the Closing Date due to leave of absence, disability leave,
military leave or layoff with recall rights (collectively, "Inactive
Employees"). The period of such employment shall in the case of Active Employees
begin on the Closing Date and in the case of Inactive Employees on
<PAGE>
the date that they first become eligible for reemployment. For purposes hereof,
any Division Employee or Center Employee who is not actively at work on the
Closing Date due to a short-term absence (including due to vacation, holiday,
illness or injury of shorter duration than a short-term disability, jury duty or
death leave) in accordance with applicable policies of the Sellers or their
affiliates shall be deemed an Active Employee. For purposes of this Agreement,
Active Employees who immediately following the Closing continue their employment
with the Division or Center, as applicable, and Inactive Employees, whether or
not they become reemployed by Purchaser (but excluding any Division Employee or
Center Employee whose recall rights result solely from a scheduled reduction in
force) shall be referred to herein collectively as "Transferred Employees".
(ii) Terms of Offer/Continuation of Compensation and Benefits.
---------------------------------------------------------
Subject to subsections (b), (c), (d), (e) and (f) of this Section 4.5,
Purchaser's offer of employment under (i) above shall provide, and Purchaser
shall maintain, compensation and benefit plans and arrangements which in the
aggregate as to each Transferred Employee are comparable to the wages and
benefits in effect on the date of this Agreement for a period of not less than
two years following the Closing Date (or, in the case of Transferred Employees
<PAGE>
who are subject to a collective bargaining agreement, the period required
therein). Purchaser shall have welfare benefit plans in effect on the Closing
Date providing continuous uninterrupted medical and dental benefits, life
insurance and disability benefit coverage for the Transferred Employees and
their dependents who immediately prior to the Closing were covered under welfare
benefit plans by Sellers. Purchaser shall recognize each Transferred Employee's
eligibility service with Sellers or their affiliates as of the Closing Date as
eligibility service with Purchaser for purposes of determining eligibility and
benefit levels as applicable in Purchaser's welfare benefit plans, vacation,
disability, severance and similar benefits. Purchaser shall cause to be waived
any pre-existing condition limitation under the welfare plans applicable to
Transferred Employees or their dependents and shall recognize (or cause to be
recognized) the dollar amount of all expenses incurred by Transferred Employees
and their dependents during the 1996 calendar year for purposes of satisfying
the 1996 calendar year deductibles and co-payments limitations under the
relevant welfare benefit plans of Purchaser.
(b) Accrued Vacation. Purchaser shall credit each Transferred
-----------------
Employee with the unused vacation days and
<PAGE>
any personal and sickness days accrued in accordance with the vacation and
personnel policies and labor agreements of Sellers or their affiliates in effect
as of the Closing Date.
(c) Union Representation. Purchaser agrees to (i) recognize each
---------------------
union which at the Closing Date represents any of the Transferred Employees as
the collective bargaining representatives of such employees as of the Closing
Date and (ii) provide such employees with comparable wages and benefits as those
in effect on the date of this Agreement.
(d) Benefit Plans.
--------------
(i) Pension Plan. Purchaser shall, effective as of the Closing,
-------------
establish a defined benefit plan (or designate an existing defined benefit plan
of Purchaser), intended to qualify under Section 401(a) of the Code and
providing benefits to Transferred Employees who immediately prior to the Closing
were participating in, and accruing eligibility service under, the Westinghouse
Pension Plan (such new or existing defined benefit plan of Purchaser being
referred to herein as "Purchaser's Pension Plan"). Each Transferred Employee
participating in the Westinghouse Pension Plan prior to the Closing shall
thereupon become a participant in Purchaser's Pension Plan, with credit
<PAGE>
(without duplication) for all service with Sellers and their affiliates for
purposes of eligibility, vesting and benefit accrual (including eligibility for
early retirement and ancillary benefits).
As soon as practicable after the Closing, Seller shall cause to be
transferred from the Westinghouse Pension Plan to Purchaser's Pension Plan all
accrued benefits and other liabilities of the Westinghouse Pension Plan relating
to Transferred Employees (the "Transferred Benefits") in the form and manner
described below.
Following the transfer of assets and liabilities from the Westinghouse
Pension Plan to Purchaser's Pension Plan as provided herein, Sellers and their
affiliates shall have no further liability whatsoever (either under this
Agreement or otherwise) with respect to the Transferred Employees for benefits
under the Westinghouse Pension Plan.
Seller shall cause Kwasha Lipton ("Seller's Actuary") to determine the
amount of assets required by Section 414(l) of the Code for the Transferred
Benefits obligation based on allocating assets by priority categories described
in Section 4044(a) of ERISA (the "414(l) Amount"), to be transferred from the
Westinghouse Pension Plan to Purchaser's Pension Plan. The 414(l) Amount shall
be determined as of the Closing Date by Seller's Actuary on the
<PAGE>
basis of the PBGC's safe harbor assumptions set forth in Treasury Regulation
Section 1.414(l)-1(b)(5)(ii). The actuarial calculation of the liabilities by
PBGC priority categories underlying the 414(l) Amount determined by Seller's
Actuary shall be reviewed by an actuarial firm designated by Purchaser
("Purchaser's Actuary"). In the event of a dispute between Seller's Actuary and
Purchaser's Actuary as to whether the actuarial calculation so determined by
Seller's Actuary satisfies the requirements of Section 414(l) of the Code and
Section 4044 of ERISA, Seller's Actuary and Purchaser's Actuary shall jointly
select a third actuarial firm of national repute to review the calculation, and
the determination of such third firm shall be final and binding upon the
parties. Seller and Purchaser shall each pay the cost of its own actuary and the
cost of the third actuarial firm shall be shared equally by Seller and
Purchaser. As soon as practicable following (i) the Closing Date, and (ii)
receipt by Seller of an opinion of Purchaser's counsel, reasonably satisfactory
to Seller, that Purchaser's Pension Plan meets the requirements for
qualification under Section 401(a) of the Code, Seller shall cause to be
transferred from the Master Trust for the Westinghouse Pension Plan (the "Master
Trust") to the trust established for Purchaser's Pension Plan, in the form of
<PAGE>
cash and other assets mutually acceptable to Seller and Purchaser, the 414(1)
Amount, plus or minus any earnings and losses thereon (based upon the earnings
and losses of the Master Trust from the Closing Date through the date of
transfer to Purchaser's Pension Plan) and minus distributions, if any, from, and
expenses of administration under, the Westinghouse Pension Plan for benefits or
other purposes made with respect to Transferred Employees from the Closing Date
through the date of transfer.
(ii) Savings Plan. Effective as of the Closing Date, Purchaser shall
-------------
in effect a defined contribution plan that includes a qualified cash or
deferred arrangement within the meaning of Section 401(k) of the Code
("Purchaser's 401(k) Plan") providing benefits as of the Closing to Transferred
Employees participating in the Westinghouse Savings Program as of the Closing.
Each Transferred Employee who was participating in the Westinghouse Savings
Program as of the Closing shall become a participant in Purchaser's 401(k) Plan
as of the Closing. Transferred Employees shall receive credit for all service
with Sellers and their affiliates for purposes of eligibility and vesting under
Purchaser's 401(k) Plan. The Westinghouse Savings Program shall retain all
assets and liabilities with respect to the accounts of retirees or
<PAGE>
other former employees of the Division or Center ("Former Employees")
thereunder.
Upon receipt by Purchaser of a favorable determination letter to the
effect that Purchaser's 401(k) Plan is qualified under Section 401(a) of the
Code (or an opinion of Purchaser's counsel, reasonably satisfactory to Seller,
to such effect), Sellers shall cause to be transferred from the Westinghouse
Savings Program to Purchaser's 401(k) Plan assets having a fair market value
equal to the aggregate value of the account balances in the Westinghouse Savings
Program as of the date of transfer (such transfer to be in shares of common
stock of Seller to the extent of shares in the Westinghouse Common Stock Fund
applicable to Transferred Employees, in notes evidencing loans to Transferred
Employees from their account balances and the balance in cash), and shall also
transfer all qualified domestic relations orders, within the meaning of Section
414(p) of the Code. Purchaser's 401(k) Plan shall provide for the receipt of
such transfer. Purchaser's 401(k) Plan shall maintain a Westinghouse common
stock fund, in accordance with applicable law, for Transferred Employees who so
elect, for a period of not less than five years following the Closing.
<PAGE>
(iii) Medical and Disability Benefits; Life Insurance.
------------------------------------------------
(A) Sellers shall be responsible in accordance with their applicable
welfare plans in effect prior to the Closing for all medical and dental
claims for expenses incurred prior to the Closing Date by Transferred
Employees, Former Employees and their dependents. Reimbursement of
employees and their dependents for medical and dental expenses associated
with such claims (including claims submitted on behalf of disabled
employees and their dependents) shall be determined in accordance with the
terms of Sellers' medical and dental programs as in effect immediately
prior to the Closing Date. Sellers shall terminate coverage of Transferred
Employees and their dependents effective for claims for expenses incurred
on and after the Closing Date. Purchaser shall be responsible for all
medical and dental claims for expenses incurred on and after the Closing
Date (including, but not limited to, responsibility for post-retirement
medical and dental claims) by Transferred Employees and their dependents;
provided, however, that Purchaser's medical and dental programs shall not
-------- -------
contain a pre-existing condition clause and shall otherwise provide
sufficient
<PAGE>
medical and dental coverage that Sellers and their affiliates shall have no
obligation to provide "COBRA" continuation coverage under Section 4980B(f)
of the Code.
(B) Purchaser shall be responsible for all long-term disability
income benefits payable in respect of periods on or after the Closing Date
for Transferred Employees who become disabled on or after the Closing Date
and for short-term disability benefits payable in respect of periods on or
after the Closing Date regardless of when the Transferred Employee becomes
disabled. Sellers shall be responsible for long-term disability benefits
payable in respect of periods on or after the Closing Date for Transferred
Employees who become disabled prior to the Closing Date. Nothing herein
shall be construed as modifying Purchaser's obligation to reemploy certain
Division Employees and Center Employees on or after the Closing Date in
accordance with Section 4.5(a)(i).
(C) Purchaser shall be responsible for all life insurance claims
(including post-retirement life insurance claims) of Transferred Employees
and their dependents for losses incurred by such employees or dependents on
and after the Closing Date under group life, travel and
<PAGE>
accident, and accidental death and dismemberment insurance policies in
effect prior to or following the Closing. Sellers shall be responsible
solely for claims for such losses incurred prior to the Closing Date.
(e) Severance Obligations. Sellers and Purchaser agree that the
----------------------
transactions contemplated by this Agreement shall not constitute a severance of
employment of any Transferred Employee prior to the consummation of the
transactions contemplated hereby, and that such employees will have continuous
and uninterrupted employment before and immediately after the Closing.
Purchaser shall provide severance and other separation benefits to each
Transferred Employee terminated by Purchaser within two years following the
Closing Date (or, in the case of Transferred Employees who are subject to a
collective bargaining agreement, the period required therein) that are
comparable to the severance and other separation benefits provided by Sellers
and their affiliates in effect on the date of this Agreement. Purchaser shall
recognize service with Sellers and their affiliates prior to the Closing Date
for purposes of determining the amount of such severance and other separation
benefits. Purchaser shall indemnify and hold Sellers and their affiliates
harmless from any claims made
<PAGE>
by any Transferred Employee for severance or other contract and from any other
claims arising out of or in connection with the employment or the failure to
offer employment to, or the termination of employment of, any Transferred
Employee or the transactions contemplated hereby (excluding any claims for
wrongful termination with respect to which Section 7.4 is applicable).
(f) Executive Compensation. Without limiting the generality of
-----------------------
Section 4.5(a)(ii), effective as of the Closing, Purchaser shall assume all
liabilities and obligations relating to Transferred Employees under the
Westinghouse Executive Pension Plan.
(g) Cooperation. The parties agree to furnish each other with such
------------
information concerning employees and employee benefit plans, and to take all
such other action, as is necessary and appropriate to effect the transactions
contemplated by this Agreement.
(h) WARN Act. Purchaser agrees to provide any required notice under
---------
the Worker Adjustment and Retraining Notification Act, as amended (the "WARN
Act"), and any similar statute, and otherwise to comply with any such statute
with respect to any "plant closing" or "mass layoff" (as defined in the WARN
Act) or similar event affecting Transferred Employees or
<PAGE>
Former Employees and occurring on or after the Closing. Purchaser shall
indemnify and hold harmless Sellers with respect to any liability under the WARN
Act or similar statute arising from the actions of Purchaser on or after the
Closing.
(i) Workers Compensation. Sellers currently sponsor a program that
---------------------
provides workers compensation benefits for eligible current and former Division
Employees and Center Employees ("Sellers' Workers Compensation Program").
Sellers shall be responsible for all claims for workers compensation benefits
which are incurred prior to the Closing Date by such Division Employees and
Center Employees that are payable under the terms and conditions of Sellers'
Workers Compensation Program. Effective as of the Closing Date, Purchaser shall
take all necessary and appropriate action to adopt a workers compensation
program providing such workers compensation benefits as are provided under
Sellers' Workers Compensation Program for the Transferred Employees covered by
such program ("Purchaser's Workers Compensation Program"). Purchaser's Workers
Compensation Program shall be responsible for all claims for benefits which are
incurred from and after the Closing Date by Transferred Employees that are
payable under the terms and conditions of Purchaser's Workers Compensation
Program.
<PAGE>
For purposes of this Section 4.5(i), a claim for workers compensation benefits
shall be deemed to be incurred when the event giving rise to the claim occurs.
(j) Free-Standing Plans. Notwithstanding the foregoing provisions of
--------------------
this Section 4.5, effective as of the Closing, Purchaser shall assume and be
responsible for all liabilities and obligations under the Free-Standing Plans.
Sellers shall take all action necessary and appropriate to establish Purchaser
as successor to Sellers as to all rights, assets, duties, liabilities and
obligations under or with respect to such Free-Standing Plans.
(k) Compliance. Seller shall arrange for the corrective actions set
-----------
forth in Schedule 4.5(k), using its best efforts to complete such actions by the
Closing.
SECTION 4.6. Collection of Receivables. From and after the
--------------------------
Closing, Purchaser shall have the right and authority to collect for its own
account all accounts receivable and other items that are included in the
Acquired Assets and to endorse with the name of any of Sellers, any checks or
drafts received with respect to any such accounts receivable or other items and
Seller agrees promptly to deliver or cause to be delivered to Purchaser any cash
or other property received directly or indirectly by any of
<PAGE>
Sellers with respect to such receivables and other items, including any amounts
payable as interest.
SECTION 4.7. Expenses. Whether or not the Closing takes place, and
---------
except as otherwise specifically provided in this Agreement (including with
respect to Transfer Taxes as defined in Section 4.14(d)), all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs or expenses.
SECTION 4.8. Brokers or Finders. Each of Purchaser and Seller
-------------------
represents, as to itself and its affiliates, that no agent, broker, investment
banker or other Person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except, as to Seller and its affiliates,
Evercore Partners, L.L.C., J. P. Morgan Securities Inc. and Chemical Securities,
Inc., whose fees and expenses will be paid by Seller and, as to Purchaser and
its affiliates, Salomon Brothers Inc, whose fees and expenses will be paid by
Purchaser, and each of Purchaser and Seller respectively agrees to indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted
<PAGE>
by any Person on the basis of any act or statement alleged to have been made by
such party or its affiliate.
SECTION 4.9. License Agreement. (a) On the Closing Date, Purchaser
------------------
shall grant to Seller and its affiliates, pursuant to a license agreement on
terms reasonably acceptable to Purchaser and Seller, a nonexclusive, worldwide,
paid-up, royalty-free, perpetual license (with a right to sublicense suppliers,
customers and others) to use the Intellectual Property and Technology included
in the Acquired Assets, and any Intellectual Property and Technology developed
during the term of the Transitional Services Agreement referred to in Section
4.16(a) with the involvement of any Center Employee (to the extent derived from
work commenced prior to the Closing Date), in connection with any present or
future businesses of Seller and its affiliates that are not competitive with the
Division's current operations and subsequent extensions thereof falling within
the scope of such current operations with respect to the class of customers and
field of products or services (such current operations and extensions,
collectively, "Division Current Operations"); provided, that such license shall
--------
be exclusive with respect to the Division's silicon carbide technology, subject
to a retained right of Purchaser (with a right to sublicense suppliers,
<PAGE>
customers and others) to use such silicon carbide technology in connection with
Division Current Operations.
(b) On the Closing Date, Seller shall grant to Purchaser and its
affiliates, pursuant to a license agreement on terms reasonably acceptable to
Purchaser and Seller, a nonexclusive, worldwide, paid-up, royalty-free,
perpetual license (with a right to sublicense suppliers, customers and others)
to use any Intellectual Property of any of Sellers, existing as of the Closing
and used in the current operations of the Division (other than the Excluded
Assets described in Section 1.2(b)(vii) and the Excluded Assets specifically
identified as being exempt from this Section 4.9(b) in Schedule 1.2(b)) in
connection with Division Current Operations.
SECTION 4.10. Certain Information. After the Closing, upon
--------------------
reasonable written notice, Purchaser and Seller shall furnish or cause to be
furnished to each other and their respective accountants, counsel and other
representatives access, during normal business hours, to such information
(including records pertinent to the Division) and assistance relating to the
Division as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any returns, reports or forms or the
defense of, or response required under, or
<PAGE>
pursuant to, any lawsuit, action or proceeding (including any proceeding
involving Seller and any environmental matters related to the Acquired Assets).
Purchaser and Seller shall also furnish or cause to be furnished to each other
and their respective accountants, counsel and other representative's access,
during normal business hours, to such information for any other reasonable
business purpose. Purchaser and Seller shall, and shall cause their affiliates
to, retain until five years after the Closing Date all such records pertinent to
the Division which are owned by such Person immediately after the Closing
(excluding any Excluded Assets other than any books and records that constitute
Excluded Assets pursuant to Schedule 1.2(b) and which relate primarily to the
Division); after the end of such period, before disposing of any such records,
the applicable party shall give notice to such effect to the other, and shall
give the other, at the other's cost and expense, a reasonable opportunity to
remove and retain all or any part of such records as the other may select.
Cooperation with respect to tax matters shall be governed by Section 4.14(k).
SECTION 4.11. Bulk Transfer Laws. Purchaser hereby waives compliance
-------------------
by Sellers with the provisions of any so-called "bulk transfer law" of any
jurisdiction in connection with the sale of the Acquired Assets to
<PAGE>
Purchaser. Seller shall indemnify and hold harmless Purchaser against any and
all liabilities that may be asserted by third parties against Purchaser as a
result of noncompliance with any such bulk transfer law.
SECTION 4.12. Additional Agreements. Subject to the provisions of
----------------------
Section 4.4, each of Purchaser and Seller will use all reasonable efforts to
facilitate and effect the implementation of the transfer of the Acquired Assets
to Purchaser and the assumption of the Assumed Liabilities by Purchaser and, for
such purpose but without limitation, each of Purchaser and Seller promptly will
at and after the Closing execute and deliver or cause to be executed and
delivered to the other party such assignments, deeds, bills of sale, assumption
agreements, consents and other instruments of transfer or assumption as
Purchaser or its counsel or Seller or its counsel may reasonably request as
necessary or desirable for such purpose (it being understood that any such
assignment, deed, bill of sale, assumption agreement, consent or other
instrument of transfer or assumption shall not provide for any representations
or warranties or any obligations or liabilities that are not otherwise expressly
provided for in this Agreement). In addition, as soon as practicable after the
Closing, for such purpose but without limitation, Seller shall pay Purchaser,
<PAGE>
or Purchaser shall pay Seller, the amount, if any, by which the assets of the
Westinghouse Pension Plan transferred to Purchaser's Pension Plan shall be less
or greater, respectively, than the amount required to be transferred under
Section 4.5(d)(i).
SECTION 4.13. Certain Understandings. Purchaser acknowledges that
-----------------------
none of Sellers or any other Person has made any representation or warranty,
express or implied, as to the accuracy or completeness of any information
regarding the Division, the Acquired Assets or other matters not included in
this Agreement or the Schedules hereto, and none of Sellers or any other Person
will be subject to any liability to Purchaser or any other person resulting from
the distribution to Purchaser, or Purchaser's use of, any such information
(including the Descriptive Memorandum dated December 1995). Purchaser
acknowledges that, should the Closing occur, Purchaser will acquire the Acquired
Assets without any representation or warranty as to merchantability or fitness
for any particular purpose, in an "as is" condition and on a "where is" basis,
except as otherwise expressly represented or warranted herein.
SECTION 4.14. Allocation; Tax Matters.
------------------------
(a) Schedule 4.14 sets forth, on a country-by-country basis, the
allocation of the consideration hereunder for tax
<PAGE>
purposes. Prior to the Closing, Purchaser and Seller shall agree upon the
allocation of the consideration hereunder for tax purposes among the Acquired
Assets and the assets held by any Sold Subsidiary with respect to which a
Section 338 Election is made, in accordance with Schedule 4.14, and shall set
forth such allocation on a statement (the "Allocation Statement"). After the
Closing, from time to time, Purchaser and Seller shall agree upon revisions to
the Allocation Statement to reflect any adjustments to the consideration for tax
purposes. Purchaser and Seller shall report the tax consequences of the
transactions contemplated by this Agreement in a manner consistent with the
Allocation Statement, as it may be revised from time to time and shall not take
any position inconsistent therewith in any examination of any Tax Return, in any
refund claim or in any litigation or investigation, except as required by
applicable law.
(b) Purchaser and Seller shall file and cause to be filed all Tax
Returns and execute such other documents as may be required by any taxing
authority, in a manner consistent with the Allocation Statement, as it may be
revised from time to time. Seller shall prepare Internal Revenue Service Form
8594 pursuant to Section 1060 of the Code relating to the transactions
contemplated by this Agreement based on the Allocation Statement, as it may
<PAGE>
be revised from time to time, and deliver such form to Purchaser. Purchaser and
Seller shall file, or cause the filing of, such form with each relevant taxing
authority.
(c) With respect to the purchase of the capital stock of Sold
Subsidiaries that are U.S. corporations, Seller and Purchaser shall (i) jointly
make the election pursuant to Section 338(h)(10) of the Code and any comparable
election under state and local law (the "Section 338 Elections"), (ii) cooperate
with each other to take all actions necessary to effect and preserve timely
Section 338 Elections in accordance with Treasury Regulation Section
1.338(h)(10) (and any comparable provisions of state and local law and any
successor provisions thereto) and (iii) take no position inconsistent with
treating the purchases of the capital stock of such corporations as Section 338
Elections. Unless prohibited by applicable law, Seller and Purchaser shall
cause the Sold Subsidiaries to elect to end their taxable years as of the
Closing Date in states that do not recognize an election comparable to the
election under Section 338(h)(10) of the Code.
(d) Purchaser shall bear, and to the extent permitted by law shall
pay, all transfer, documentary, sales, use, registration, stamp, value-added and
other similar taxes (including all applicable real estate transfer
<PAGE>
taxes and real property gains taxes), including any penalties, interest and
additions to tax, incurred in connection with the transactions contemplated
hereby and any taxes or other costs relating to a transfer, or that would not
otherwise be payable in the absence of such transfer (including as a result of
the transactions contemplated by this Agreement and including the use of a tax
attribute to reduce taxes), made at Purchaser's request pursuant to Section
4.14(l) ("Transfer Taxes"), and Purchaser shall reimburse Seller for any
Transfer Taxes paid by Seller within five days of Seller's written request.
Seller and Purchaser shall cooperate in timely making and filing all Tax Returns
as may be required to comply with the provisions of any Transfer Tax laws and in
making arrangements that lawfully minimize Transfer Taxes without increasing
other taxes above the amount that would otherwise be payable in the absence of
such arrangements. To the extent legally able to do so, Purchaser shall deliver
to Seller exemption certificates satisfactory in form and substance to Seller
with respect to Transfer Taxes if such delivery would reduce the amount of
Transfer Taxes that would otherwise be imposed.
(e) Seller shall terminate and shall cause the termination by the
Closing of any agreement or practice
<PAGE>
relating to Taxes between Seller or any of its affiliates (other than any
Investment), on the one hand, and any Investment, on the other hand.
(f) At the Closing, Seller shall deliver to Purchaser duly executed
certificates certifying that the transactions contemplated hereby are exempt
from withholding under Section 1445 of the Code.
(g) For purposes of this Agreement, (i) "tax" means all Federal,
state, foreign or other governmental taxes, assessments duties, fees, levies or
similar charges of any kind, including all income, profit, franchise, excise,
property, use, intangibles, sales, payroll, employment, withholding and other
taxes, and including all interest and penalties imposed with respect to such
amounts, (ii) "Income Tax" means any tax on or determined by reference to net
income and (iii) "Tax Return" means any return, report, form or other
information filed with any taxing authority with respect to taxes.
(h) To the extent permitted by law, Purchaser shall not, and shall
cause each Sold Subsidiary not to, carry back any item of income, loss, credit
or deduction from any period beginning after the Closing Date to any period
including or ending prior to the Closing Date.
<PAGE>
(i) Seller shall file any amended consolidated, combined or unitary
tax returns that include any Sold Subsidiary for taxable years ending on or
prior to the Closing Date which are required as a result of examination
adjustments made by any taxing authority as finally determined. For those
jurisdictions in which separate returns are filed by any Sold Subsidiary, any
required amended returns resulting from such examination adjustments, as finally
determined, shall be prepared by Seller and furnished to such Sold Subsidiary,
for signature and filing at least ten days prior to the due date for filing such
returns.
(j) Seller shall cause to be prepared and duly filed all Federal
income Tax Returns and state and local Tax Returns with respect to the Acquired
Assets or the income or operations of the Division for taxable periods ending on
or before the Closing Date. In the case of any taxable period of any Sold
Subsidiary that includes but does not end on the Closing Date, Purchaser shall
cause to be prepared any required state and local Tax Returns, and after
providing Seller with copies no later than 30 days before the date due
(including extensions) and receiving Seller's approval to file (which approval
shall not be unreasonably withheld), shall cause such Tax Returns to be filed.
In the case of
<PAGE>
any foreign Sold Subsidiary, Purchaser shall cause to be prepared any required
Tax Returns for Pre-Closing Taxable Periods that have not been filed by the
Closing Date, and after providing Seller with copies no later than 20 days
before the date due (including extensions) and receiving Seller's approval to
file (which approval shall not be unreasonably withheld), shall cause such Tax
Returns to be filed. Each of Seller and Purchaser shall cause all Tax Returns
addressed in this Section 4.14(j) to be prepared in accordance with the
methodology used in prior taxable years.
(k) Seller and Purchaser shall each provide the other with such
assistance as may be reasonably requested (including making employees reasonably
available to provide information or testimony) in connection with the
preparation of any Tax Return, any Tax Controversy (as defined in Section
4.14(m)(ii)), or the determination of liability for taxes with respect to the
Acquired Assets or the income or operations of the Division. Purchaser shall
complete Seller's standard tax packages relating to Tax Returns that Seller is
responsible for filing pursuant to Section 4.14(j) and deliver them to Seller
within 90 days of Purchaser's receipt from Seller and shall cause its
affiliates to, cooperate with Seller in preparing and pursuing any claims for
refunds or credits of Income Taxes
<PAGE>
(including refunds or credits relating to any FSC for purposes of the Code,
investment tax credits, research credits and credits for prepayments of Income
Taxes). At Purchaser's request and expense, Seller shall file claims prepared by
Purchaser for refunds of taxes (other than items described in Section
1.3(b)(ii)) and promptly pay over the amount recovered to Purchaser (without any
interest, other than interest paid by the applicable taxing authority with
respect to such refund); provided, however, that Purchaser shall promptly
-------- -------
reimburse Seller to the extent that such refund is reclaimed by a taxing
authority (without any interest, other than interest due to the applicable
taxing authority with respect to such reclamation). Seller and Purchaser each
shall, and shall cause their affiliates to, retain until seven years after the
Closing Date all Tax Returns, schedules, work papers and other records that are
owned by such Person immediately after the Closing and that relate to the
Division or the Acquired Assets; after the end of such period, before disposing
of any such Tax Returns, schedules, work papers or other records, each shall
give notice to such effect to the other, and shall give the other, at the
other's cost and expense, a reasonable opportunity to remove and retain all or
any part of such Tax
<PAGE>
Returns, schedules, work papers or other records as the other may select.
(l) At Purchaser's written reasonable request received by Seller no
later than 30 days (or such later date as the parties may mutually agree) after
the date hereof, Seller shall, or shall cause the Selling Subsidiaries to,
transfer such of the Acquired Assets as designated in such request by Purchaser
to one or more newly formed subsidiaries prior to the Closing Date, which newly
formed subsidiaries shall be treated as Sold Subsidiaries for all purposes of
this Agreement.
(m) (i) Purchaser shall, in the event that Purchaser receives notice
(whether orally or in writing) of any examination, claim, proposed settlement,
proposed adjustment or related matter with respect to any taxes for which
Purchaser may be indemnified hereunder (the "Seller Tax Controversies") promptly
notify Seller thereof, provided, however that failure to give such notification
-------- -------
shall not affect the indemnification provided hereunder except to the extent
Seller shall have been actually prejudiced as a result of such failure (except
that the Seller shall not be liable for any expenses incurred during the period
in which the Purchaser failed to give such notice). Seller shall be entitled at
its sole discretion
<PAGE>
and expense to handle, control and compromise or settle the Seller Tax
Controversies, and shall reasonably inform Purchaser of the progress of the
Seller Tax Controversies.
(ii) Seller shall, in the event Seller receives notice (whether
orally or in writing) of any examination, claim, proposed settlement, proposed
adjustment or related matter with respect to taxes (other than Seller Tax
Controversies) (the "Purchaser Tax Controversies", and together with the Seller
Tax Controversies, the "Tax Controversies"), promptly notify Purchaser thereof,
provided, however that failure to give such notification shall not affect the
- -------- -------
indemnification provided hereunder except to the extent Purchaser shall have
been actually prejudiced as a result of such failure (except that the Purchaser
shall not be liable for any expenses incurred during the period in which Seller
failed to give such notice). Purchaser shall be entitled at its sole discretion
and expense to handle, control and compromise or settle the Purchaser Tax
Controversies, and shall reasonably inform Seller of the progress of the
Purchaser Tax Controversies.
(n) Seller shall use its best efforts to provide Purchaser within 30
days of the date hereof with a list of state and foreign jurisdictions where Tax
Returns for the
<PAGE>
Sold Subsidiaries are filed and with copies of the most recently filed foreign
Tax Returns.
(o) Seller shall cooperate with Purchaser in determining prior to the
Closing Date the extent to which any payments that may be required to be made by
Purchaser or the Sold Subsidiaries after the Closing to employees of the
Division would constitute excess parachute payments within the meaning of
Section 280G of the Code.
SECTION 4.15. Supplies. Purchaser shall not use any signs or
---------
stationery, purchase order forms, packaging or other similar paper goods or
supplies, or advertising and promotional materials, product, training and
service literature and materials, or computer programs or like materials
(collectively, the "Supplies"), that state or otherwise indicate thereon that
the Division is a division or unit of Seller or contain any trademarks,
servicemarks, trade names or corporate or business names, derived from or
including the words "Westinghouse Electric Corporation", "Westinghouse" or
"Circle W" (in logotype design or any other style or design) in whole or in
-
part; provided, that to the extent any Supplies included in the Acquired Assets
--------
so indicate, Purchaser may, for a period of 90 days after the Closing Date, use
such Supplies after first crossing out or marking over such statement or
indication or trademark,
<PAGE>
servicemark, trade name or corporate or business name and otherwise clearly
indicating on such Supplies that the Division is no longer a division or unit of
Seller. Purchaser shall not reorder or produce any Supplies which state or
otherwise indicate thereon that the Division is a division or unit of Seller or
contain any such trademarks, servicemarks, trade names or corporate or business
names.
(b) Purchaser agrees to use its best efforts to cause those entities
(the "Licensed Entities") listed on Schedule 3.1(j)(xii) that currently have
license agreements with Seller for the use of any trademarks, servicemarks,
trade names or corporate or business names derived from or including the words
"Westinghouse Electric Corporation", "Westinghouse" or "Circle W" (in logotype
-
design or any other style or design) in whole or in part ("Westinghouse-related
Marks") to cease using such Westinghouse-related Marks as soon as possible.
Seller agrees to continue any currently existing license agreement with a
Licensed Entity for the use of such Westinghouse-related Marks until six months
after the Closing Date. Seller further agrees, in the event that Purchaser has
used its best efforts to cause the Licensed Entities to cease using
Westinghouse-related Marks, but any such Licensed Entity has not so ceased
within six months after the Closing Date, to continue any currently
<PAGE>
existing license agreement with any such Licensed Entity for the use of
Westinghouse-related Marks for an additional six month period. In all cases,
any such continued license shall terminate when the Licensed Entity ceases to
use the Westinghouse-related Marks.
SECTION 4.16. Post-Closing Agreements. During the period prior
------------------------
to the Closing, Seller and Purchaser agree to negotiate in good faith and
enter into the following agreements:
(a) Transitional Services. The services to be provided by Seller
----------------------
to Purchaser shall be mutually agreed upon and shall consist of (i) services
which are currently provided to the Division by Seller and which are necessary
to conduct and operate the Division as presently conducted, (ii) technical
support provided in connection with the Center and (iii) services provided in
connection with the Contracts set forth in Schedule 3.1(j) pursuant to Section
3.1(j)(xiv). These services shall be provided during the period from the Closing
Date until 12 months after the Closing Date (except for (i) technical support
provided in connection with Center Employees, which shall be provided during
fiscal year 1996, and (ii) services provided in connection with the Contracts
set forth in Schedule 3.1(j) pursuant to Section 3.1(j)(xiv), which shall be
provided for
<PAGE>
the duration of such Contracts). Seller will provide these services in
substantially the same manner and consistent with the rates currently charged by
Seller or as adjusted on a uniform basis with respect to the provision of these
types of services to Seller's other non-Division businesses. All such services
shall be provided in accordance with the "Transitional Services Agreement"
substantially in the form set forth in Exhibit A-1 and on such additional terms
as shall be mutually agreeable.
(b) Sublease at the Center. Seller shall sublease to Purchaser
-----------------------
certain facilities at the Center in accordance with the "Center Sublease
Agreement" substantially in the form set forth in Exhibit A-2. Purchaser and
Seller agree that the terms of the covenants contained in the Center Sublease
Agreement will not be materially more restrictive to Purchaser than the terms of
the covenants contained in the master lease with respect to Sellers' Science and
Technology Center are to Seller. Seller further agrees to provide Purchaser with
a copy of the master lease with respect to Sellers' Science and Technology
Center.
(c) Facilities. Seller and Purchaser shall enter into mutually
-----------
agreeable arrangements relating to the use of facilities and equipment for
Transferred Employees currently
<PAGE>
located in Sellers' non-Division facilities (other than the Center).
SECTION 4.17. Audited Financials. Seller shall exercise its
-------------------
reasonable good faith efforts to provide to Purchaser prior to January 31, 1996,
but in no event later than February 15, 1996, shall provide audited combined
balance sheets of the Division as of December 31, 1994 and 1995, and audited
combined statements of income and cash flows of the Division for the three years
ended December 31, 1995, in each case prepared from the books and records of
Seller and its subsidiaries relating to the Division in accordance with
generally accepted accounting principles applied on a consistent basis, except
as described in the notes thereto, and Seller shall request from, and use its
reasonable good faith efforts to obtain from, Price Waterhouse a report thereon
prepared and certified by Price Waterhouse. In the event that such audited
financial statements have not been provided to Purchaser on or prior to January
31, 1996, Seller shall provide Purchaser with Seller's good faith estimates of
the information which would be included in such audited financial statements.
SECTION 4.18. Non-Solicitation; No-Hire. For a period of
--------------------------
eighteen months following the Closing Date, Seller shall not solicit for hire or
hire in any capacity any
<PAGE>
Transferred Employee (who continues at the time to be employed by Purchaser) for
employment by Seller in any capacity; provided, however, that this prohibition
-------- -------
shall not apply to:
(i) clerical or unionized employees or administrative employees who
do not hold executive titles;
(ii) Transferred Employees who, after the Closing Date, (A) have been
given notice of layoff or termination, (B) are, with or without such
notice, laid off or otherwise terminated by Purchaser or (C) have
voluntarily retired from active employment with Purchaser;
(iii) Transferred Employees who are employed in a facility, operation
or business segment divested by Purchaser after the Closing Date; and
(iv) any Transferred Employees who the Purchaser expressly agrees may
be excepted from the provisions of this Section 4.18. Placement by Seller
during such period of general employment advertisements in any medium,
including trade journals, newspapers and periodicals of general
circulation, electronic media or other public media where such
advertisements are customarily placed shall not operate or be construed as
<PAGE>
a breach of the no-solicitation provision of this Section 4.18, whether or
not responded to by any Transferred Employee.
SECTION 4.19. Administration of Insurance. During the period prior
----------------------------
to the Closing, Seller and Purchaser agree to negotiate in good faith and enter
into an Insurance Administration Agreement covering any insurance policy
maintained by any of Sellers applicable to the Acquired Assets providing that
Seller shall continue to administer all such policies consistent with Seller's
corporate practice (including any decision to terminate, commute or modify any
such policy), and shall include appropriate arrangements for the allocation of
deductibles under current coverage and claims processing.
ARTICLE V
Conditions Precedent
--------------------
SECTION 5.1. Conditions to Each Party's Obligation. The
--------------------------------------
obligation of Purchaser to purchase the Acquired Assets and the obligation of
Seller to sell, assign, transfer, convey and deliver the Acquired Assets to
Purchaser shall be subject to the satisfaction prior to the Closing of the
following conditions:
(a) Certain Waiting Periods. Any waiting period under the HSR Act
------------------------
applicable to any of the transactions
<PAGE>
contemplated hereby shall have expired or been earlier terminated.
(b) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect; provided, however, that each of Purchaser,
-------- -------
and, subject to the proviso in Section 4.3(b), Seller shall have used its best
efforts to prevent the entry of any such order, injunction or other restraint or
prohibition and to appeal as promptly as possible any such order, injunction or
other restraint or prohibition that may be entered.
SECTION 5.2. Conditions to Obligation of Purchaser. The obligation
--------------------------------------
of Purchaser to purchase the Acquired Assets is subject to the satisfaction at
and as of the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of Seller set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing as
though made at and as of the Closing, except as otherwise contemplated by this
Agreement, and Purchaser shall have received a certificate signed by an
authorized officer of Seller to such effect.
<PAGE>
(b) Performance of Obligations of Seller. Seller shall have
-------------------------------------
performed or complied in all material respects with all obligations, conditions
and covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing, and Purchaser shall have received a
certificate signed by an authorized officer of Seller to such effect.
(c) Opinion of Seller's Counsel. Purchaser shall have received (i)
----------------------------
an opinion dated the Closing Date of Cravath, Swaine & Moore, special counsel to
Seller, substantially in the form set forth in Exhibit B, and (ii) an opinion
dated the Closing Date of William F. Stoll, Vice President and Deputy General
Counsel of Seller, substantially in the form set forth in Exhibit C.
(d) Banking Moratorium. There shall not have occurred any
-------------------
declaration of a banking moratorium by Federal or New York state authorities
which results in the Banks failing to provide the financing for the transactions
contemplated hereby pursuant to the Commitments solely as a result of such
banking moratorium.
SECTION 5.3. Conditions to Obligation of Seller. The obligation of
-----------------------------------
Seller to sell, assign, transfer, convey, and deliver the Acquired Assets is
subject to the
<PAGE>
satisfaction at and as of the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of Purchaser set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing as
though made at and as of the Closing, except as otherwise contemplated by this
Agreement, and Seller shall have received a certificate signed by an authorized
officer of Purchaser to such effect.
(b) Performance of Obligations of Purchaser. Purchaser shall have
----------------------------------------
performed or complied in all material respects with all obligations, conditions
and covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing, and Seller shall have received a
certificate signed by an authorized officer of Purchaser to such effect.
(c) Opinion of Purchaser's Counsel. Seller shall have received (i)
-------------------------------
an opinion dated the Closing Date of Gibson, Dunn & Crutcher, special counsel to
Purchaser, substantially in the form set forth in Exhibit D, and (ii) an opinion
dated the Closing Date of Richard Molleur, General Counsel of Purchaser,
substantially in the form set forth in Exhibit E.
<PAGE>
ARTICLE VI
Termination, Amendment and Waiver
---------------------------------
SECTION 6.1. Termination. (a) Notwithstanding anything to the
------------
contrary in this Agreement, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Seller if any of the conditions set forth in Sections 5.1 or
5.3 shall have become incapable of fulfillment, and shall not have been
waived by Seller;
(iii) by Purchaser if any of the conditions set forth in Sections 5.1
or 5.2 shall have become incapable of fulfillment, and shall not have been
waived by Purchaser; or
(iv) by Seller or Purchaser if the Closing does not occur on or prior
to September 30, 1996;
provided, however, that the party seeking termination pursuant to clause (ii),
- -------- -------
(iii) or (iv) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
(b) In the event of termination by Seller, on the one hand, or
Purchaser, on the other hand, pursuant to this
<PAGE>
Section 6.1, written notice thereof shall forthwith be given to the other party
and the transactions contemplated by this Agreement shall be terminated, without
further action by any party. If the transactions contemplated by this Agreement
are terminated as provided herein:
(i) Purchaser shall return all documents and other material received
from Sellers relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to Seller; and
(ii) all confidential information received by Purchaser with respect
to the Division and the businesses of Sellers shall be treated in
accordance with the Confidentiality Agreement which shall remain in full
force and effect notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned pursuant to this Section 6.1 for any reason other than a
termination by Purchaser pursuant to this Section 6.1 as a result of a failure
to satisfy any condition set forth in Section 5.2(a), (b) or (c) (which failure
shall not have been cured within five business days (or, if earlier, September
30, 1996) following Seller's receipt of written notice of such failure from
Purchaser), Purchaser shall pay to Seller on
<PAGE>
demand a termination fee of $60,000,000, by wire transfer to an account
designated in writing by Seller of immediately available funds.
(d) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 6.1, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of (i) Section 4.2 relating to the obligation of Purchaser to keep
confidential certain information and data obtained by it from Seller, (ii) this
Agreement relating to expenses (including Sections 4.7 and 4.14(d)), (iii)
Section 4.8 relating to finder's fees and broker's fees, (iv) this Section 6.1
and (v) Article VIII. Nothing in this Section 6.1, including any payment of the
termination fee payable pursuant to Section 6.1(c), shall be deemed to release
either party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of either party to compel
specific performance by the other party of its obligations under this Agreement;
it being understood that such termination fee may be credited against any
damages payable by Purchaser to Seller as a result of a breach by Purchaser.
SECTION 6.2. Amendments and Waivers. This Agreement may not be
-----------------------
amended except by an instrument in
<PAGE>
writing signed on behalf of each of the parties hereto. By an instrument in
writing Purchaser, on the one hand, or Seller, on the other hand, may waive
compliance by the other party with any term or provision of this Agreement that
such other party was or is obligated to comply with or perform.
ARTICLE VII
Indemnification
---------------
SECTION 7.1. Indemnification by Seller. (a) Except with respect to
--------------------------
environmental matters (which are exclusively the subject of Section 7.3) and the
matters which are the subject of Sections 7.4 and 7.5, Seller hereby agrees to
indemnify Purchaser and its affiliates and their respective officers, directors,
employees, stockholders, agents and representatives against, and agrees to hold
them harmless from, any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses), as incurred (payable quarterly upon written
request, with interest from the date which is 30 days from the date of such
request to the date of actual payment, at the prime or base rate of Chase
Manhattan Bank N.A. announced from time to time), to the extent arising from,
relating to or otherwise in respect of (i) any breach of any representation or
warranty of Seller (other than that contained in Section 3.1(p)) which survives
the Closing contained in this Agreement, (ii) any
<PAGE>
breach of any covenant of any of Sellers contained in this Agreement or in any
Seller Ancillary Document requiring performance after the Closing or (iii) any
Excluded Liabilities; provided, however, that Seller shall not have any
-------- -------
liability under clause (i) above unless the aggregate of all losses,
liabilities, costs and expenses relating thereto for which Seller would, but for
this proviso, be liable under clause (i) above exceeds on a cumulative pre-tax
basis an amount equal to $50,000,000, and then only to the extent of any such
excess; provided further, however, that Seller shall not have any liability
---------------- -------
under this Section 7.1 to the extent the liability or obligation arises as a
result of the operation of the business of the Division or the Acquired Assets
after the Closing or any action taken or omitted to be taken by Purchaser or any
of its affiliates.
Purchaser acknowledges and agrees that 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 set forth in this
Article VII. In furtherance of the foregoing, Purchaser hereby waives, to the
fullest extent permitted under applicable law, any and all rights, claims and
causes of action it may have against Sellers, their affiliates and their
respective officers, directors, employees,
<PAGE>
stockholders, agents and representatives arising under or based upon any
Federal, state, local or foreign statute, law, ordinance, rule or regulation
(including any such relating to environmental matters or arising under or based
upon common law or otherwise) or otherwise (except pursuant to the
indemnification provisions set forth in this Article VII).
SECTION 7.2. Indemnification by Purchaser. Purchaser hereby agrees
-----------------------------
to indemnify Sellers, their affiliates and their respective officers, directors,
employees, stockholders, agents and representatives against, and agrees to hold
them harmless from, any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses), as incurred (payable quarterly upon written
request, with interest from the date which is 30 days from the date of such
request to the date of actual payment, at the prime or base rate of Chase
Manhattan Bank N.A. announced from time to time), to the extent arising from,
relating to or otherwise in connection with (i) any breach of any representation
or warranty of Purchaser contained in this Agreement, (ii) any breach of any
covenant of Purchaser contained in this Agreement or in any Purchaser Ancillary
Document requiring performance after the Closing, (iii) subject to Sections 7.3,
7.4 and 7.5, any Assumed
<PAGE>
Liabilities (including Pre-Closing Environmental Liabilities (as defined in
Section 7.3) for which Purchaser is liable pursuant to Section 7.3) or (iv)
subject to Section 7.3, the operation of the business of the Division or the
Acquired Assets, or any actions or omissions of Purchaser, its affiliates,
agents, contractors or subcontractors in connection therewith, after the
Closing.
SECTION 7.3. Environmental Liability. (a) Seller hereby agrees to
------------------------
indemnify Purchaser and its affiliates and their respective officers, directors,
employees, stockholders, agents and representatives against, and agrees to hold
them harmless from, any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses), as incurred (payable quarterly upon written
request, with interest from the date which is 30 days from the date of such
request to the date of actual payment, at the prime or base rate of Chase
Manhattan Bank N.A. announced from time to time), to the extent arising from,
relating to or otherwise in respect of, but not to the extent that Purchaser's
actions or omissions cause, contribute to or exacerbate (i) any breach of any
representation or warranty of Seller set forth in Section 3.1(p) of this
Agreement and (ii) any Environmental Liability (any of the matters described in
clauses (i) or
<PAGE>
(ii) above are collectively referred to as "Pre-Closing Environmental
Liabilities"); provided, however, that Seller shall not have any obligation or
-------- -------
liability for Pre-Closing Environmental Liabilities unless the aggregate of all
Pre- Closing Environmental Liabilities for which Seller, but for this proviso,
would be liable exceeds on a cumulative pre- tax basis an amount equal to $50
million, in which case Seller's liability shall be for sixty percent (60%) of
any such excess over $50 million and Purchaser's liability shall be for forty
percent (40%) of any such excess over $50 million; provided further, however,
---------------- -------
that Seller shall not have any further obligation or liability for Pre-Closing
Environmental Liabilities if and when the aggregate of all Pre-Closing
Environmental Liabilities for which Seller would be liable but for this proviso
and the immediately preceding proviso and but for Section 7.3(b) exceeds on a
cumulative pre-tax basis an amount equal to $150 million, in which case
Purchaser's liability shall be for one hundred percent (100%) of any such excess
over $150 million. For the purposes of the foregoing, any amount spent on
Remedial Actions with respect to the Division's Sunnyvale, California facility
shall not be counted as Pre-Closing Environmental Liabilities to the extent that
such amounts are attributable to the use of cleanup standards more stringent
than those
<PAGE>
consistent with industrial or commercial use of that property.
(b) For purposes of this Section 7.3, the aggregate of all Pre-
Closing Environmental Liabilities "on a cumulative pre-tax basis" is the actual
amount of such aggregate without regard to any tax benefit relating to the
accrual or payment of such aggregate; provided, however, that Seller's
-------- -------
indemnification obligation with respect to the amount of any Pre-Closing
Environmental Liability for which Seller is obligated to provide indemnification
under this Section 7.3 shall be subject to the provisions of Section 7.6.
(c) Purchaser acknowledges and agrees that its sole and exclusive
remedy with respect to any and all claims relating to environmental, health and
safety matters shall be pursuant to the indemnification provisions set forth in
this Section 7.3. In furtherance of the foregoing, Purchaser hereby waives, to
the fullest extent permitted under applicable law, any and all rights, claims
and causes of action it may have against Sellers, their affiliates and their
respective officers, directors, employees, stockholders, agents and
representatives arising under or based upon any Environmental Law or in
connection with any Environmental Liabilities.
<PAGE>
(d) Notwithstanding any other provision of this Agreement to the
contrary, Seller shall have no liability pursuant to this Section 7.3 for Pre-
Closing Environmental Liabilities not made known to Seller by Purchaser in a
written statement within three (3) years of the Closing Date. Such written
statement shall be in reasonable detail, including as to the nature and extent
of the Pre-Closing Environmental Liability.
(e) With respect to the first $50 million of Pre-Closing
Environmental Liabilities on a cumulative pre-tax basis for which Purchaser has
liability pursuant to this Section 7.3 and to the extent that such liability
involves the implementation of a Remedial Action, Seller shall have the right to
review and provide Purchaser with written comments in advance of (i) the
Purchaser's selection of consultants and contractors designated to perform the
Remedial Action and (ii) the development of the scope of work for, and type of,
the Remedial Action to be implemented. Purchaser shall review and reasonably
consider Seller's comments. Purchaser shall provide all plans, reports and
submissions to any Governmental Entity regarding any such Remedial Action in
draft form to Seller a reasonable time prior to transmission of such items to
such Governmental Entity and Purchaser shall review and
<PAGE>
reasonably consider any of Seller's comments on such plans, reports and
submissions.
(f) If the Pre-Closing Environmental Liabilities for which Seller has
actual liability pursuant to Section 7.3(a) involve the implementation of a
Remedial Action, then Seller shall have the right to review and provide
Purchaser with written comments in advance of (i) the Purchaser's selection of
consultants and contractors designated to perform the Remedial Action and (ii)
the development of the scope of work for, and type of, the Remedial Action to be
implemented. All plans, reports and submissions to any Governmental Entity
regarding any such Remedial Action (including those in connection with the scope
of work for and type of Remedial Action) shall be provided in draft form to
Seller a reasonable time prior to transmission to such Governmental Entity and
shall not be transmitted to such Governmental Entity unless and until Seller and
Purchaser agree as to the form and substance of such plans, reports and
submissions; provided, however, that if Seller and Purchaser, despite reasonable
-------- -------
good faith efforts, cannot agree as to the form and substance of such plans,
reports and submissions, then prior to transmission to the applicable
Governmental Entity, either party may elect to have the disputed matters
presented to an environmental
<PAGE>
consultant for a binding arbitration, which environmental consultant shall be
mutually acceptable to both parties and shall be jointly retained by the Seller
and Purchaser who shall share equally such environmental consultant's fees and
expenses; provided further, however, that any such arbitration shall be
---------------- -------
completed prior to any deadline set by the applicable Governmental Entity
relating to such plans, reports and submissions.
SECTION 7.4. Employment Liabilities. (a) Subject to Section 7.4(c),
-----------------------
Seller hereby agrees to indemnify Purchaser and its affiliates and their
respective officers, directors, employees, stockholders, agents and
representatives against, and agrees to hold them harmless from, any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses), as incurred (payable quarterly upon written request, with interest
from the date which is 30 days from the date of such request to the date of
actual payment, at the prime or base rate of Chase Manhattan Bank N.A. announced
from time to time), to the extent arising from, relating to or otherwise in
respect of (i) Andrew Herman et al. v. Westinghouse Electric Corporation (docket
---------------------------------------------------------
number MJG 93-285 U.S. Dist. Ct. Maryland filed January 28, 1993) and EEOC v.
-------
Westinghouse Electric Corporation (docket number Y 93-1004 U.S. Dist. Ct.
- ---------------------------------
<PAGE>
Maryland) (collectively, "Herman") and (ii) any claim of wrongful or unlawful
termination (which shall not include "constructive termination" based solely on
the consummation of the transactions contemplated hereby) by any employee of the
Division whose employment was terminated on or prior to the Closing Date (any of
the matters described in clauses (i) or (ii) above are collectively referred to
as "Employment Liabilities"); provided, however, that Seller shall not have any
-------- -------
liability in respect of any Employment Liabilities unless the aggregate of all
Employment Liabilities for which Seller would, but for this proviso, be liable
exceeds on a cumulative pre-tax basis an amount equal to $10 million, in which
case Seller's liability shall be for fifty percent (50%) of any such excess over
$10 million and Purchaser's liability shall be for fifty percent (50%) of any
such excess over $10 million; provided further, however, that Purchaser shall
---------------- -------
not have any further obligation or liability for Employment Liabilities if and
when the aggregate of all Employment Liabilities for which Purchaser and Seller
would be liable but for this proviso and but for Section 7.4(b) exceeds on a
cumulative pre-tax basis an amount equal to $40 million, in which case Seller's
liability shall be for one hundred percent (100%) of any such excess over $40
million; and provided further, however,
---------------- -------
<PAGE>
that Seller shall not have any liability under this Section 7.4 to the extent
the liability or obligation arises as a result of the operation of the business
of the Division or the Acquired Assets after the Closing or any action taken or
omitted to be taken by Purchaser or any of its affiliates.
(b) For purposes of this Section 7.4, the aggregate of all
Employment Liabilities "on a cumulative pre-tax basis" is the actual amount of
such aggregate without regard to any tax benefit relating to the accrual or
payment of such aggregate; provided, however, that Seller's indemnification
-------- -------
obligation with respect to the amount of any Employment Liability for which
Seller is obligated to provide indemnification under this Section 7.4 shall be
subject to the provisions of Section 7.6.
(c) Seller shall not consent to any equitable remedy to be imposed
upon Purchaser without Purchaser's written consent, but Purchaser agrees to be
bound to any equitable relief to be imposed upon Purchaser by the final
unappealable order of any Governmental Entity (it being understood that expenses
associated with the implementation of such equitable relief shall not be deemed
to be an Employment Liability).
SECTION 7.5. Foreign Liabilities. (a) Seller hereby agrees
--------------------
to indemnify Purchaser and its affiliates and
<PAGE>
their respective officers, directors, employees, stockholders, agents and
representatives against, and agrees to hold them harmless from, any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses), as incurred (payable quarterly upon written request, with interest
from the date which is 30 days from the date of such request to the date of
actual payment, at the prime or base rate of Chase Manhattan Bank N.A. announced
from time to time), to the extent arising from, relating to or otherwise in
respect of the matters described in Schedule 7.5 (such matters, "Foreign
Liabilities"); provided, however, that Seller shall not have any liability in
-------- -------
respect of any Foreign Liabilities unless the aggregate of all Foreign
Liabilities for which Seller would be liable but for this proviso and but for
Section 7.5(b) exceeds on a cumulative pre-tax basis (net of any amounts
recovered or recoverable by Purchaser under any claim or counter-counterclaim
described in Schedule 7.5) an amount equal to $25 million and then only to the
extent of such excess; provided further, however, that Seller shall not have
---------------- -------
any liability under this Section 7.5 to the extent the liability or obligation
arises as a result of the operation of the business of the Division or the
Acquired Assets after the
<PAGE>
Closing or any action taken or omitted to be taken by Purchaser or any of its
affiliates.
(b) For purposes of this Section 7.5, the aggregate of all Foreign
Liabilities "on a cumulative pre-tax basis" is the actual amount of such
aggregate without regard to any tax benefit relating to the accrual or payment
of such aggregate; provided, however, that Seller's indemnification
-------- -------
obligation with respect to the amount of any Foreign Liability for which Seller
is obligated to provide indemnification under this Section 7.4 shall be subject
to the provisions of Section 7.6.
SECTION 7.6. Losses Net of Insurance; No Consequential Damages.
--------------------------------------------------
Subject to Sections 7.3(b), 7.4(b) and 7.5(b), the amount of any loss,
liability, claim, damage or expense for which indemnification is provided under
this Article VII shall be net of any amounts recovered or recoverable by the
indemnified party under insurance policies or Government Contracts (it being
understood that if any amount is recovered or recoverable by Purchaser under any
Government Contract, it shall not be subject to indemnification by Seller under
this Article VII) with respect to such loss, liability, claim, damage or expense
and shall be (i) increased to take account of any net tax cost incurred by the
indemnified party arising from the receipt of indemnity
<PAGE>
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any net tax benefit realized by the indemnified party arising from
the incurrence or payment of any such loss, liability, claim, damage or expense.
An indemnified party shall be deemed to have realized a net tax cost or a net
tax benefit to the extent that, and at such time as, the amount of taxes payable
by such indemnified party is increased above or reduced below, as the case may
be, the amount of taxes that such indemnified party would have been required to
pay but for receipt or accrual of the indemnity payment or the incurrence or
payment of such loss. Notwithstanding anything to the contrary contained herein,
no indemnification shall be provided for under this Article VII in respect of
any consequential damages.
SECTION 7.7. Termination of Indemnification. The obligations to
-------------------------------
indemnify and hold harmless any party, (x) pursuant to clause (i) of Section 7.1
and clause (i) of Section 7.2, shall terminate when the applicable
representation or warranty terminates pursuant to Section 8.3; provided,
--------
however, that such obligations to indemnify and hold harmless shall not
- -------
terminate with respect to any item as to which the Person to be indemnified
shall have, before the expiration of the applicable period, previously made a
claim by delivering a notice pursuant to Section 7.8
<PAGE>
(stating in reasonable detail the basis of such claim) to the party to be
providing the indemnification, (y) pursuant to the other clauses of Sections 7.1
and 7.2, and pursuant to Sections 7.4 and 7.5 shall not terminate and (z)
pursuant to Section 7.3 shall terminate as provided therein.
SECTION 7.8. Procedures Relating to Third Party Claims (other than
-----------------------------------------------------
Tax Controversies, Pre-Closing Environmental Liabilities, Employment Liabilities
- --------------------------------------------------------------------------------
and Foreign Liabilities). (a) In order for a Person (the "indemnified party"),
- ------------------------
to be entitled to any indemnification provided for under this Agreement in
respect of, arising out of or involving a claim made by any Person against the
indemnified party (other than a Tax Controversy a Pre-Closing Environmental
Liability, an Employment Liability or a Foreign Liability, procedures for which
are specified in Section 4.14(m) in the case of Tax Controversies and Section
7.10 in the case of such other matters (except, in the case of such other
matters, to the extent Section 7.10 provides that this Section 7.8 shall
govern)) (a "Third Party Claim"), such indemnified party must notify the
indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within 10 business days after receipt by such indemnified party of written
notice of the Third Party Claim; provided, however, that failure to give such
-------- -------
<PAGE>
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure (except that the indemnifying party shall not be liable
for any expenses incurred during the period in which the indemnified party
failed to give such notice). Thereafter, the indemnified party shall deliver to
the indemnifying party, promptly after the indemnified party's receipt thereof,
copies of all notices and documents (including court papers) received by the
indemnified party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, the indemnifying party will not be liable to the
indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party, it
<PAGE>
being understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Third Party Claim as
provided above). If the indemnifying party chooses to defend or prosecute a
Third Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
indemnifying party's request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. If the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
indemnified party will agree to any settlement, compromise or discharge of such
Third Party Claim which the indemnifying party may recommend and which by its
terms obligates the indemnifying party to pay the full amount of the liability
in connection with such Third Party Claim. Whether or not the indemnifying
party shall have assumed the defense of a Third Party Claim, the indemnified
<PAGE>
party shall not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the indemnifying party's prior written
consent (which consent shall not be unreasonably withheld).
SECTION 7.9. Procedures Relating to Non-Third Party Claims. In order
----------------------------------------------
for an indemnified party to be entitled to any indemnification provided for
under this Agreement in respect of a claim that does not involve a Third Party
Claim or Tax Controversy or Pre-Closing Environmental Liability, Employment
Liability or Foreign Liability being asserted against or sought to be collected
from such indemnified party, the indemnified party shall deliver notice of such
claim with reasonable promptness to the indemnifying party. The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such indemnified
party under this Agreement, except to the extent that the indemnifying party
shall have been actually prejudiced by such failure. If the indemnifying party
does not notify the indemnified party within 30 calendar days following its
receipt of such notice that the indemnifying party disputes its liability to the
indemnified party under this Agreement, such claim specified by the indemnified
party in such notice shall be conclusively
<PAGE>
deemed a liability of the indemnifying party under this Agreement and the
indemnifying party shall pay the amount of such liability to the indemnified
party on demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect to such claim,
as provided above, the indemnifying party and the indemnified party shall
proceed in good faith to negotiate a resolution of such dispute and, if not
resolved through negotiations, such dispute shall be resolved by litigation in
an appropriate court of competent jurisdiction.
SECTION 7.10. Procedures Relating Claims Constituting a Pre-Closing
-----------------------------------------------------
Environmental Liability, Employment Liability or Foreign Liability. (a) After
- -------------------------------------------------------------------
the Closing, each of Purchaser and Seller shall notify (the "Notifying Party")
the other in writing, and in reasonable detail, of any claim in respect of,
arising out of or involving a claim made by any Person against the Notifying
Party constituting a Pre-Closing Environmental Liability, an Employment
Liability or a Foreign Liability (a "Shared Claim") (it being agreed that such
notification obligation shall not apply to Herman or any Foreign Liability),
within
<PAGE>
10 business days after receipt by the Notifying Party of written notice of the
Shared Claim; provided, however, that failure to give such notification shall
-------- -------
not affect the indemnification provided hereunder except to the extent the other
party shall have been actually prejudiced as a result of such failure (except
that the other party shall not be liable for any expenses incurred during the
period in which the Notifying Party failed to give such notice). Thereafter,
each party shall deliver to the other party, promptly after such party's receipt
thereof, copies of all notices and documents (including court papers) received
by the such party relating to the Shared Claim.
(b) Subject to the provisions of Sections 7.3(e) and 7.3(f) with
respect to Remedial Actions, during the period from the date hereof to the
Closing Date, Purchaser and Seller shall negotiate in good faith and enter into
one or more agreements governing defense of Shared Claims, it being agreed that
any such agreement shall provide that:
(i) Purchaser and Seller will each be entitled to participate in the
defense of any Shared Claim; provided, that if either Purchaser or Seller
--------
shall have one hundred percent of the liability in respect thereof pursuant
to the second proviso to Section 7.3(a) or 7.4(a) or the first proviso to
Section 7.5(a), as
<PAGE>
applicable, such claim shall be treated as a Third Party Claim under
Section 7.8;
(ii) Purchaser and Seller will each cooperate in the defense or
prosecution of any Shared Claim, including the retention and (upon request)
the provision to the requesting party of records and information which are
reasonably relevant to such Shared Claim, and making employees (including
any Transferred Employees familiar with such Shared Claim) available on a
mutually convenient basis to provide additional information and explanation
of any such records and information;
(iii) Purchaser and Seller will consult with each other and shall
mutually agree on any significant strategic decisions in respect of any
Shared Claim;
(iv) Purchaser and Seller will consult with each other and shall
mutually agree on any settlement, compromise or discharge of any Shared
Claim;
(v) neither Purchaser nor Seller shall admit any liability with
respect to, or settle, compromise or discharge, any Shared Claim without
the other party's prior written consent (which consent shall not be
unreasonably withheld); and
<PAGE>
(vi) appropriate and mutually agreeable arrangements with respect to
day-to-day administration of any Shared Claim shall be provided for in such
agreements; provided, that Purchaser and Seller agree that Seller shall be
--------
entitled to control the day-to-day administration of Herman.
SECTION 7.11. Joint Defense Agreement. On the Closing Date, Seller
------------------------
and Purchaser shall enter into a Joint Defense Agreement substantially in the
form set forth in Exhibit F and on such additional terms as shall be mutually
agreeable.
SECTION 7.12. Acknowledgment. The indemnities provided for in
---------------
Sections 7.3, 7.4 and 7.5 shall not be construed as an admission or conclusion,
express or implied, as to liability or damages in respect of the subject-matter
of such indemnities.
ARTICLE VIII
General Provisions
------------------
SECTION 8.1. Notices. All notices and other communications hereunder
-------
shall be in writing (including telecopy or similar writing) and shall be sent,
delivered or mailed, addressed or telecopied:
(a) if to Purchaser, to
Office of General Counsel
Northrop Grumman Corporation
<PAGE>
1840 Century Park East
Los Angeles, CA 90067
Telecopy No.: (310) 556-4556
(b) if to Seller, to
Office of General Counsel
Westinghouse Electric Corporation
Westinghouse Building
11 Stanwix Street
Pittsburgh, PA 15222
Telecopy No.: (410) 993-2266
Each such notice or other communication shall be given (i) by hand delivery,
(ii) by nationally recognized courier service or (iii) by telecopy, receipt
confirmed. Each such notice or communication shall be effective (i) if
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 8.1 (or in accordance with the latest
unrevoked direction from such party) and (ii) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 8.1 (or
in accordance with the latest unrevoked direction from such party), and
confirmation is received.
SECTION 8.2. Interpretation. When a reference is made in this
---------------
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section of, or a Schedule or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any
<PAGE>
way the meaning or interpretation of this Agreement. For purposes of any
indemnification provision in this Agreement, the word "expenses" shall mean out-
of-pocket expenses, and shall not include any allocations of internal salaries
and other expenses. Whenever the words "included", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". Whenever the word "material" is used in this Agreement
(except when used with respect to the Purchaser), it shall mean material to the
business or financial condition of the Division. Whenever the phrase "reasonably
likely to be adversely determined" is used in this Agreement, it shall not
require a determination that it is more likely than not. Whenever reference is
made to "knowledge" of Seller, it shall mean the actual knowledge of the Persons
named on Schedule 8.2. Any matter set forth in any Schedule shall be deemed set
forth in all other Schedules to the extent relevant.
SECTION 8.3. Survival of Representations. The representations and
----------------------------
warranties contained in this Agreement and in any document delivered in
connection herewith shall survive the Closing solely for purposes of Article VII
and shall terminate at the close of business one year following the Closing
Date; provided, that the representations and
--------
<PAGE>
warranties contained in Section 3.1(p) shall terminate at the close of business
three years following the Closing Date and the representations and warranties in
Section 3.1(q) shall not survive the Closing.
SECTION 8.4. Severability. If any provision of this Agreement (or
-------------
any portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
SECTION 8.5. Counterparts. This Agreement may be executed in two or
-------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (including by telecopy) to the other party.
SECTION 8.6. Entire Agreement; No Third Party Beneficiaries. This
-----------------------------------------------
Agreement and the Confidentiality Agreement (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter
<PAGE>
hereof and (b) except as provided in Section 1.3(a) and Article VII, are not
intended to confer upon any Person other than the parties hereto (and the
Selling Subsidiaries) and their successors and permitted assigns any rights or
remedies hereunder.
SECTION 8.7. Governing Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely in the State of New York, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law.
SECTION 8.8. Consent to Jurisdiction. Each of Purchaser and Seller
------------------------
irrevocably submits to the non- exclusive jurisdiction of (a) the Supreme Court
of the State of New York, New York County, and (b) the United States District
Court for the Southern District of New York located in the Borough of Manhattan
in the City of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of Purchaser and Seller further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth in Section 8.1 shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters
<PAGE>
to which it has submitted to jurisdiction as set forth above in the immediately
preceding sentence. Each of Purchaser and Seller irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in (a) the
Supreme Court of the State of New York, New York County, or (b) the United
States District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
SECTION 8.9. Publicity. From the date of this Agreement through the
----------
Closing, neither Seller, on the one hand, nor Purchaser, on the other hand,
shall issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the consent of the other party, which consent shall not be unreasonably
withheld, except as such release or announcement may be required by law or the
rules or regulations of a national securities exchange in the United States, in
which case the party required to make the release or announcement shall allow
the other party
<PAGE>
reasonable time to comment on such release or announcement in advance of its
issuance.
SECTION 8.10. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations hereunder (including any rights, interests or
obligations under Article VII) shall be assigned by any party hereto without the
prior written consent of the other party, except that Purchaser may assign to
any wholly owned subsidiary of Purchaser the right to acquire part or all of the
business and assets of the Division hereunder; provided, however, that any such
-------- -------
assignment shall not release Purchaser from any obligation or liability
hereunder (including any right or obligation under Article VII). Subject to the
preceding
<PAGE>
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
WESTINGHOUSE ELECTRIC CORPORATION,
by /s/ Fredric G. Reynolds
__________________________________
Name: Fredric G. Reynolds
Title: Executive Vice President,
Chief Financial Officer
NORTHROP GRUMMAN CORPORATION,
by /s/ Albert Myers
__________________________________
Name: Albert Myers
Title: Corp. V.P. & Treasurer
<PAGE>
EXHIBIT 2.2
Westinghouse Electric Corporation
Westinghouse Building
11 Stanwix Street
Pittsburgh, Pa. 15222
February 28, 1996
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, Calif. 90067
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement dated as of January 3, 1996
(the "Asset Purchase Agreement") between WESTINGHOUSE ELECTRIC CORPORATION, a
Pennsylvania corporation ("Seller"), and NORTHROP GRUMMAN CORPORATION, a
Delaware Corporation ("Purchaser"). Seller and Purchaser (collectively, the
"Parties") agree that, due to circumstances not foreseen at the time that the
Asset Purchase Agreement was executed, certain provisions of the Asset Purchase
Agreement require clarification or modification to reflect these unforeseen
circumstances. Capitalized terms used herein without definition shall have the
respective meanings set forth in the Asset Purchase Agreement.
Each of the Undersigned hereby agree that the Asset Purchase Agreement shall be
construed, interpreted and deemed modified as follows:
A. DISABLED EMPLOYEES.
-------------------
The Parties desire to clarify their respective responsibilities with respect to
employees of the Division who are on disability leave. Accordingly,
1. The second sentence of Section 4.5(a)(i) of the Asset Purchase Agreement
shall be deemed modified, in its entirety, to read as follows:
"Purchaser shall also honor any legal obligation of Sellers or
Purchaser to re-employ any Division Employee and Center Employee who
is not actively at work on the Closing Date due to leave of absence
(not to include disability leave), military leave or layoff with
recall rights (collectively, "Inactive Employees")."
2. Section 4.5(a)(i) of the Asset Purchase Agreement shall be deemed modified
by adding the following provision at the end thereof, to read as follows:
"Any Division Employee or Center Employee who is on disability leave
on the Closing Date shall first be offered the opportunity to become a
Transferred Employee after the Closing Date, on the day that such
Employee's disability leave terminates if such termination of
disability leave occurs during the period of time the Purchaser must
honor any legal obligation of Sellers or Purchaser to re-employ
Division Employees and Center Employees who are not actively at work
on the Closing Date. If such Employee's disability leave does not
terminate within such time period, such Employee will remain an
Employee of Sellers and not become a Transferred Employee."
<PAGE>
3. Section 4.5(d)(iii)(B) of the Asset Purchase Agreement shall be deemed
modified, in its entirety, to read as follows:
"(B) Purchaser shall be responsible for all disability income
benefits payable in respect of periods on or after the Closing
Date for Transferred Employees who become disabled on or after
the Closing Date. Seller shall be responsible for all
disability income benefits until a Division or Center Employee
becomes a Transferred Employee pursuant to Section 4.5(a)(i)."
B. 401(K) PLAN.
-----------
The Parties have determined (i) to have assets transferred from the Westinghouse
Savings Program to Purchaser's 401(k) Plan in kind, rather than as contemplated
by the Asset Purchase Agreement and (ii) to have Transferred Employees' account
balances as of the Closing Date continue to be held under the Westinghouse
Savings Program for a period of time after the Closing Date. Accordingly,
1. The second paragraph of Section 4.5(d)(ii) of the Asset Purchase Agreement
shall be deemed modified, in its entirety, to read as follows:
"Upon receipt by Purchaser of a favorable determination letter to the
effect that Purchaser's 401(k) Plan is qualified under Section 401(a) of
the Code (or an opinion of Purchaser's counsel, reasonably satisfactory to
Seller, to such effect), Sellers shall cause to be transferred from the
Westinghouse Savings Program to Purchaser's 401(k) Plan assets having a
fair market value or (in the case of the Fixed Income Fund, the book value)
equal to the aggregate value of the account balances of the Transferred
Employees in the Westinghouse Savings Program as of the date of transfer,
and shall also transfer all qualified domestic relations orders, within the
meaning of Section 414(p) of the Code. With respect to Division Employees
and Center Employees who are on disability leave as of the date of transfer
described in the preceding sentence, additional transfers from the
Westinghouse Savings Program to the Purchaser's 401(k) Plan shall be made
in accordance with the preceding sentence as soon as practicable following
the respective dates on which such employees become Transferred Employees.
Purchaser's 401(k) Plan shall provide for the receipt of such transfers.
The transfers described in the preceding sentences of this paragraph shall
be in (i) shares and partial shares of common stock of Seller to the extent
of shares in the Westinghouse Common Stock Fund of the Westinghouse Savings
Program applicable to Transferred Employees, (ii) a portion of the
investments in the Fixed Income Fund of the Westinghouse Savings Program
which replicate as closely as possible the yield and market value of that
Fund and in shares and partial shares of each other mutual fund provided
under the Westinghouse Savings Program, in each case to the extent of those
funds
<PAGE>
applicable to the Transferred Employees' accounts and (iii) the balance in
notes evidencing loans to Transferred Employees from their account
balances. Purchaser's 401(k) Plan shall maintain a Westinghouse common
stock fund, in accordance with applicable law, for Transferred Employees
who so elect, for a period of not less than five years following the
Closing Date."
2. Section 4.5(d)(ii) shall be deemed further modified to add the following at
the end thereof:
"Individuals who become Transferred Employees on the Closing, and
individuals who become Transferred Employees after Closing and before
December 31, 1996 (for example, because of a return from a disability leave
of absence and subsequent employment by the Purchaser), shall be entitled
to full and continuing access to all of the rights, benefits, features and
services that they had as employees of Seller prior to Closing, with
respect to participation in the Westinghouse Savings Program, but only with
respect to their account balances as of February 29, 1996 (and any earnings
or losses thereon after such date). Such full access shall continue, and
the transfer of account balances provided for in the preceding paragraph
shall occur, no later than December 31, 1996. The access described in this
paragraph shall include, without limitation, the following services and
features, each to be permitted or administered in accordance with the
existing terms of the Westinghouse Savings Program (on the same basis
provided from time to time to other participants in the Westinghouse
Savings Program):
1. In-service withdrawals;
2. Termination distributions, rollovers and trust-to-trust transfers;
3. Loan requests and processing;
4. Loan repayments via payroll deduction, or via manual check for
participants on leave;
5. Dividend reinvestment in Westinghouse Stock Fund;
6. Daily fund transfers among all investment funds;
7. Participant statements as provided in the normal course;
8. Preparation of applicable Form 1099s, and tax withholdings
and deposits;
9. Qualified domestic relations order (QDRO) administration to be
provided at cost;
10. Tax lien administration;
11. Voting and tendering of Westinghouse stock in the Westinghouse
Stock Fund;
12. Investment communications (as provided accompanying the
participant statements);
13. All transactions or services, including any corrective action
taken in the normal course, otherwise provided to active
participants in the Westinghouse Savings Program either through
the Benefits Access Center or the Bankers Trust Service Center
(including the Bankers Trust voice response system), but only
with respect to the account balances as of February 29, 1996 (and
<PAGE>
any earnings or losses thereon after such date), of those
participants who become Transferred Employees at or after
Closing;
14. Forfeitures shall accrue to the benefit of Purchaser to the
extent permitted by applicable law."
C. REDUCTIONS-IN-FORCE.
--------------------
After the execution of the Asset Purchase Agreement, the Parties concluded
that several unanticipated employee transactions, specifically reductions in
force, should be initiated prior to the Closing Date presently set for March 1,
1996. The Parties also recognized that, although these transactions are being
initiated prior to the Closing Date, the transactions would not be completed
until after the Closing Date due to certain legal restrictions. Because the
reductions in force would straddle the Closing Date and were not contemplated
nor set forth in the Asset Purchase Agreement, the Parties had to agree to the
terms and conditions of the reductions in force before such actions could
commence. The Parties have, in fact, agreed to the terms and conditions of the
reductions in force and wish to reduce such terms and conditions to writing and
deem the Asset Purchase Agreement modified to reflect such agreement. Pursuant
to such agreement between the Parties, two reductions in force have been
announced and initiated. One reduction in force involves the Baltimore location
within the Division; it was announced, and the employees affected were notified,
on January 29, 1996 and involves approximately 200 employees. The other
reduction in force involves the Naval Systems group within the Division; it was
announced, and the employees affected were notified, on February 1, 1996 and
involves approximately 60 employees. Accordingly,
1. Section 4.5 of the Asset Purchase Agreement is hereby deemed modified
by adding a new Subsection 4.5(1) at the end thereof, to read as follows:
"(1) Reductions in Force. Notwithstanding the foregoing provisions of
-------------------
this Section 4.5, Seller and Purchaser agree that the
following terms and conditions will govern any reductions in
force which are initiated after the signature date of the
Agreement (January 3, 1996) and before the Closing Date;
(i) The employee benefits which Purchaser will provide to
the affected Division Employees ("RIF Employees") will
be identical to the employee benefits which would have
been provided by Seller had the
<PAGE>
termination of employment occurred on the date of the
announcement/notification of the reduction in force;
(ii) Purchaser shall be solely responsible for the cost of
all benefits provided to the RIF Employees;
(iii) The RIF Employees shall be treated as Transferred
Employees for all purposes pursuant to this Section 4.5
even if the Closing Date occurs after March 1, 1996 and
the actual termination of employment occurs before the
Closing Date; and
(iv) To the extent consistent with applicable law, the
414(1) Amount described in Section 4.5(d)(i) above
shall be computed on the basis that the Transferred
Benefits obligation includes all liabilities associated
with the RIF Employees regardless of when they
terminate employment.
* * *
This Letter Agreement is not intended to confer upon any person other than
the Parties and their successors and permitted assigns any rights or remedies
hereunder.
From time to time upon request and without further consideration, each of
the Parties hereto shall, and shall cause their subsidiaries and affiliates to,
execute, deliver and acknowledge any all such further documents and instruments
and do such further acts as any other of the Parties hereto may reasonably
require to evidence or effectuate more effectively the terms of and intent of
the Parties contemplated by this Letter Agreement.
This Letter Agreement, which may be executed in two or more counterparts,
each of which shall be considered one and the same agreement, shall be governed
by, and construed in accordance with, the laws of the State
<PAGE>
of New York applicable to contracts made and to be performed entirely in the
State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law.
<PAGE>
Please acknowledge your agreement with the foregoing by signing in the
space provided below.
Very truly yours,
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ William F. Stoll
--------------------------------
Name: William F. Stoll
Title: Vice President
Acknowledged and agreed to as of the date first above written:
NORTHROP GRUMMAN CORPORATION
By: /s/ Richard B. Waugh
------------------------------------
Name: Richard B. Waugh
Title: Corporate Vice President
7
<PAGE>
EXHIBIT 2.3
Westinghouse Electric Corporation
Westinghouse Building
11 Stanwix Street
Pittsburgh, PA 15222
February 29, 1996
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 90067
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement dated as of
January 3, 1996 (the "Asset Purchase Agreement") between Westinghouse Electric
Corporation ("Seller") and Northrop Grumman Corporation ("Purchaser").
Capitalized terms used herein without definition shall have the respective
meanings set forth in the Asset Purchase Agreement. Each of the undersigned
hereby agree to the following with respect to the Asset Purchase Agreement:
1. Determinations. The determinations pursuant to Section 2.3(a)
---------------
of the Asset Purchase Agreement of the Closing Balance Sheet, the Closing
Statement of Working Capital, the Restructuring Amount and the Norden
Amount shall each be as of 11:59 p.m. on February 29, 1996, rather than the
close of business on the Closing Date. References to the Closing Date in
Sections 2.3(d) and (e) of the Asset Purchase Agreement shall be deemed to
be references to 11:59 p.m. on February 29, 1996. Seller agrees that
pursuant to Section 1.2(a) of the Asset Purchase Agreement all assets set
forth on the Closing Balance Sheet shall be Acquired Assets, including any
proceeds of such assets received between 11:59 p.m. on February 29, 1996
and the Closing.
2. Allocations. The Allocation Statement referenced in Section
------------
4.14(a) of the Asset Purchase Agreement shall be agreed upon between
Purchaser and Seller within 60 days following the Closing.
3. Shared Claims; Insurance Administration. (a) To the extent
----------------------------------------
necessary or advisable following the Closing, Purchaser and Seller shall
negotiate in good faith and enter into one or more agreements governing
defense of Shared Claims on the terms set forth in Section 7.10(b) of the
Asset Purchase Agreement and such additional terms as shall be mutually
agreeable.
(b) Purchaser and Seller have agreed to waive the provisions of
Section 4.19 of the Asset Purchase Agreement to the extent relating to
entering into an Insurance Administration Agreement prior to Closing, it
being agreed that the remainder of the purposes and intent of such Section
4.19 shall remain in full force and effect.
4.1 Delayed Transfer. (a) Notwithstanding the provisions of
-----------------
Articles I and II of the Asset Purchase Agreement, the Acquired Assets
located at or constituting the Premises set forth on Schedule A attached
hereto (such Premises, the "Delayed Premises" and such Acquired Assets, the
"Delayed Assets") shall not be sold, assigned, transferred, conveyed or
delivered to Purchaser on the Closing Date. The Delayed Assets shall be
sold, assigned, transferred, conveyed and delivered to Purchaser (or its
designee(s)) on such date or dates as shall be no earlier than 30 days from
the date of written notice from Purchaser to Seller that Purchaser (or
its designee) is legally able, under applicable law,
1
<PAGE>
to accept Sellers' right, title and interest in, to and under the
Delayed Assets (any such date, a "Delayed Asset Transfer Date"). Purchaser
shall be entitled to deliver separate notices for each of the locations
listed on Schedule A in which event there shall be a separate Delayed Asset
Transfer Date for each such location. Purchaser agrees to deliver any and
all such notices no later than 120 days following the Closing Date. In the
event that Purchaser shall fail to deliver any such notice within such time
period, Sellers shall have no further obligations to Purchaser in respect
of the Delayed Assets which are the subject of such failure and Sellers
shall be entitled to dispose of any such Delayed Assets in any manner
whatsoever.
(b) Notwithstanding the provisions of Section 4.5 of the Asset
Purchase Agreement to the contrary, Division Employees whose principal
place of employment is at one of the Delayed Premises ("Delayed Transferred
Employees") will continue on Seller's (or a Subsidiary's) payroll and will
continue to participate in each of Seller's (or the applicable
Subsidiary's) employee benefit plans in which they are currently
participating until the applicable Delayed Asset Transfer Date. Purchaser
will offer employment with comparable wages and benefits on the applicable
Delayed Asset Transfer Date to each such Delayed Transferred Employee then
in employment with Sellers, and on and as of the applicable Delayed Asset
Transfer Date each such Delayed Transferred Employee will become a
Transferred Employee for all purposes of the Asset Purchase Agreement.
Purchaser will promptly reimburse Seller for 100% of the payroll, benefits
(including statutory benefits, severance and other termination benefits)
and other costs and expenses directly or indirectly relating to Delayed
Transferred Employees within 30 days following receipt of each written
notification from Seller of such payroll, benefits and other costs and
expenses.
(c) Notwithstanding the provisions of Articles I and II of the Asset
Purchase Agreement, the Acquired Assets constituting the Investments of
Sellers in Westinghouse Gulf, West*Quest Limited Partnership and West*Quest
II Limited Partnership (such Acquired Assets, the "Delayed Investments")
shall not be sold, assigned, transferred, conveyed or delivered to
Purchaser on the Closing Date. The Delayed Investments shall be sold,
assigned, transferred, conveyed and delivered to Purchaser (or its
designee(s)) upon receipt of any consents necessary as a condition to such
sale, assignment, transfer, conveyance or delivery.
4.2 Operation of Delayed Assets. (a) With respect to the Delayed
----------------------------
Assets at each of the locations listed on Schedule A, until the applicable
Delayed Asset Transfer Date (or, the termination of Seller's obligations
pursuant to the last sentence of Section 4.1(a)), Seller or one or more of
its Subsidiaries shall continue to conduct the business of the Division at
the Delayed Premises as agent of, and on behalf of, and at the expense of,
Purchaser, pursuant to the Transitional Services Agreement referenced in
Section 4.16(a) of the Asset Purchase Agreement; provided, that the
--------
Delayed Transferred Employees shall be under the supervision and control of
Purchaser.
2
<PAGE>
(b) Seller and its Subsidiaries and affiliates shall not be liable,
whether in contract, in tort (including, without limitation, negligence and
strict liability) or otherwise, for any direct, special, indirect,
incidental, consequential or other damages whatsoever which in any way
arise out of, relate to, or are a consequence of, its performance or
nonperformance hereunder, or the ownership or holding of the Delayed
Assets, the occupancy of the Delayed Premises, the employment of (and
severance and other termination benefit obligations in respect of) the
Delayed Transferred Employees or the operation of the business of the
Division at the Delayed Premises after the Closing, including, without
limitation, loss of profits, business interruptions and claims of
customers.
(c) Purchaser hereby releases Sellers, their affiliates and their
respective officers, directors, employees, stockholders, agents and
representatives (the "Seller Indemnitees") and agrees to indemnify the
Seller Indemnitees against and hold them harmless from, any loss,
liability, claim, damage or expense (including, without limitation,
reasonable legal fees and expenses) as incurred, arising from, relating to
or otherwise in respect of (A) the delayed transfer pursuant to Section 4.1
hereof and (B) the occupancy of the Delayed Premises, the employment of
(and severance and other termination benefit obligations in respect of) the
Delayed Transferred Employees and the operation of the business of the
Division at the Delayed Premises after the Closing pursuant to this Section
4.2 (including the acts or omissions of any employee at the Delayed
Premises).
5. Center Employees. Purchaser and Seller hereby agree that
----------------
Schedule B attached hereto sets forth the name of each Center Employee.
6. Limited Use of Westinghouse Name. Notwithstanding anything to
--------------------------------
the contrary in the Asset Purchase Agreement, from and after the Closing:
(a) Purchaser shall be permitted to use Seller's name and
logo (including, without limitation, on invoices and letterhead), as
reasonably necessary, with respect to any Contract included in the
Acquired Assets until such time as all novations, consents, approvals
or waivers contemplated by Section 4.4 of the Asset Purchase Agreement
have been obtained;
(b) Purchaser may use, or cause to be used, on business
stationary of the Division and business cards of employees of the
Division the phrase "... acquired from, and formerly known as, the
Westinghouse Electronic Systems Group," until December 31, 1996; and
(c) Seller hereby assigns to Purchaser those CAGE Codes
currently used by the Division.
7. Schedule 4.14. Purchaser and Seller hereby agree that a revised
-------------
Schedule 4.14 to the Asset Purchase Agreement, replacing the existing
Schedule 4.14, is attached hereto.
8. Clarification of Excluded Assets. Purchaser and Seller hereby
--------------------------------
agree that Micros Systems shall be an Excluded Asset and shall be
<PAGE>
deemed included on Schedule 1.2(b) to the Asset Purchase Agreement.
9. Further Assurances. From time to time upon the request of either
-------------------
party, each of Purchaser and Seller shall, and shall cause their respective
Subsidiaries and affiliates to, execute, deliver and acknowledge any and
all such further documents and instruments and do such further acts and
things as the other party hereto may reasonably request to evidence or
effectuate more effectively the terms of and intent of the parties
contemplated by this Letter Agreement.
4
<PAGE>
This Letter Agreement, which may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts made and to be performed entirely in the State of
New York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law.
Please acknowledge your agreement with the foregoing by signing in the
space provided below.
Very truly yours,
WESTINGHOUSE ELECTRIC CORPORATION,
By: /s/ William F. Stoll
-------------------------------
Name: William F. Stoll
Title: Vice President
Acknowledged and agreed to
as of the date first above
written:
NORTHROP GRUMMAN CORPORATION,
By: /s/ Richard B. Waugh
------------------------------
Name: Richard B. Waugh
Title: Corporate Vice President
<PAGE>
THE FOLLOWING SCHEDULES TO THE LETTER AGREEMENT DATED FEBRUARY 29, 1996 HAVE
BEEN OMITTED PURSUANT TO RULE 6.01(B)(2) OF REGULATION S-K. SUCH SCHEDULES ARE
DESCRIBED IN THE LETTER AGREEMENT.
SCHEDULES TO THE LETTER AGREEMENT
A Premises
B Personnel Included in Sale
4.14 Sold Assets
<PAGE>
EXHIBIT 2.4
[CONFORMED COPY]
________________________________________________________________________________
NORTHROP GRUMMAN CORPORATION
______________________
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 15, 1994
Amended and Restated as of March 1, 1996
______________________
$3,800,000,000
______________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Documentation Agent
CHEMICAL SECURITIES INC.,
as Syndication Agent
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Administrative Agent
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions and Accounting Matters....................................... 1
1.01 Certain Defined Terms................................................... 1
1.02 Accounting Terms and Determinations..................................... 28
1.03 Classes and Types of Loans.............................................. 29
Section 2. Commitments.............................................................. 30
2.01 Syndicated Loans........................................................ 30
2.02 Borrowings of Syndicated Loans.......................................... 30
2.03 Competitive Bid Loans................................................... 32
2.04 Changes of Commitments.................................................. 37
2.05 Fees.................................................................... 40
2.06 Lending Offices......................................................... 40
2.07 Several Obligations; Remedies Independent............................... 40
2.08 Notes................................................................... 41
2.09 Optional Prepayments and Conversions or
Continuations of Loans............................................... 42
2.10 Mandatory Prepayments................................................... 43
2.11 Swingline Loans......................................................... 44
Section 3. Payments of Principal and Interest....................................... 45
3.01 Repayment of Loans...................................................... 45
3.02 Interest................................................................ 46
Section 4. Payments; Pro Rata Treatment; Computations;
Etc.................................................................. 47
4.01 Payments................................................................ 47
4.02 Pro Rata Treatment...................................................... 48
4.03 Computations............................................................ 49
4.04 Non-Receipt of Funds by the Administrative
Agent................................................................ 49
4.05 Sharing of Payments, Etc................................................ 50
4.06 Minimum Amounts......................................................... 51
4.07 Certain Notices......................................................... 51
Section 5. Yield Protection and Illegality.......................................... 53
5.01 Additional Costs........................................................ 53
5.02 Limitation on Types of Loans............................................ 55
5.03 Illegality.............................................................. 56
5.04 Base Rate Loans Pursuant to Sections 5.01
and 5.03............................................................. 56
5.05 Compensation............................................................ 57
Section 6. Conditions Precedent..................................................... 58
6.01 Conditions to Effectiveness............................................. 58
6.02 Initial and Subsequent Loans............................................ 61
Section 7. Representations and Warranties........................................... 62
7.01 Corporate Existence..................................................... 62
</TABLE>
Credit Agreement
----------------
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.02 Certain Financial Information................................... 62
7.03 Litigation...................................................... 64
7.04 No Breach....................................................... 64
7.05 Corporate Action................................................ 64
7.06 Approvals....................................................... 65
7.07 Use of Proceeds, Etc............................................ 65
7.08 ERISA........................................................... 65
7.09 Taxes........................................................... 65
7.10 Funded Debt..................................................... 66
7.11 Properties...................................................... 66
7.12 Environmental Matters........................................... 67
7.13 True and Complete Disclosure.................................... 67
7.14 Acquisition..................................................... 68
7.15 Material Subsidiaries........................................... 68
7.16 Intercompany Debt............................................... 68
Section 8. Covenants of the Company.......................................... 68
8.01 Financial Statements............................................ 68
8.02 Existence, Payment of Taxes, ERISA, Etc......................... 70
8.03 Notice of Litigation............................................ 71
8.04 Insurance....................................................... 72
8.05 Access to Books and Properties.................................. 72
8.06 Restricted Payments............................................. 72
8.07 Dispositions.................................................... 72
8.08 Guarantees...................................................... 73
8.09 Fundamental Changes and Acquisitions............................ 73
8.10 Limitation on Liens............................................. 74
8.11 Investments..................................................... 75
8.12 Indebtedness.................................................... 76
8.13 Leverage Ratio.................................................. 77
8.14 Funded Debt to Cash Flow Ratio.................................. 77
8.15 Fixed Charge Coverage Ratio..................................... 78
8.16 Use of Proceeds................................................. 78
8.17 Margin Stock.................................................... 78
8.18 Interest Rate Protection Agreements............................. 78
8.19 Issuance of Subordinated Debt or Equity......................... 79
8.20 Modifications of Certain Documents.............................. 79
8.21 Subsidiary Equity Issuance...................................... 79
8.22 Ratings by Moody's and S&P...................................... 79
Section 9. Events of Default................................................. 79
Section 10. Agency Provisions................................................ 84
10.01 Appointment, Powers and Immunities.............................. 84
10.02 Reliance........................................................ 84
10.03 Defaults........................................................ 85
10.04 Rights as a Bank................................................ 85
10.05 Indemnification................................................. 85
10.06 Non-Reliance.................................................... 86
10.07 Failure to Act.................................................. 86
10.08 Resignation or Removal of Administrative
Agent......................................................... 86
</TABLE>
Credit Agreement
----------------
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
10.09 Agents, Etc..................................................... 87
Section 11. Miscellaneous.................................................... 87
11.01 Waiver.......................................................... 87
11.02 Notices......................................................... 87
11.03 Expenses, Etc................................................... 88
11.04 Amendments, Etc................................................. 89
11.05 Successors and Assigns.......................................... 89
11.06 Assignments and Participations.................................. 90
11.07 Survival........................................................ 92
11.08 Captions........................................................ 92
11.09 Counterparts.................................................... 92
11.10 Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial.......................................... 92
11.11 Confidentiality................................................. 92
</TABLE>
SCHEDULE I - Commitments
SCHEDULE II - Material Subsidiaries
SCHEDULE III - Litigation
SCHEDULE IV - Existing Indebtedness
EXHIBIT A-1 - Form of Series I Term Note
EXHIBIT A-2 - Form of Series II Term Note
EXHIBIT A-3 - Form of Revolving Note
EXHIBIT A-4 - Form of Competitive Bid Note
EXHIBIT A-5 - Form of Swingline Note
EXHIBIT B-1 - Form of Opinion of Sheppard, Mullin, Richter &
Hampton LLP, Special California Counsel to the
Company
EXHIBIT B-2 - Form of Opinion of General Counsel of the Company
EXHIBIT C - Form of Opinion of Milbank, Tweed, Hadley &
McCloy, Special New York Counsel to the Banks and
the Swingline Bank
EXHIBIT D - Form of Confidentiality Agreement
Credit Agreement
----------------
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 15,
1994, as amended and restated as of March 1, 1996, among: NORTHROP GRUMMAN
CORPORATION, a corporation duly organized and validly existing under the laws of
the State of Delaware (together with its successors and permitted assigns, the
"Company"); each of the banks that is a signatory hereto (together with its
-------
successors and permitted assigns, individually, a "Bank" and, collectively, the
----
"Banks"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as a Swingline
-----
Bank under Section 2.11 hereof (in such capacity, together with its successors
and permitted assigns in such capacity, the "Swingline Bank") and as
--------------
administrative agent for the Banks and the Swingline Bank (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
--------------------
The Company, certain of the Banks and the Administrative Agent are
party to the Credit Agreement dated as of April 15, 1994, as amended and
restated as of April 18, 1994, as further amended by Amendment No. 1 dated as of
May 11, 1994 and Amendment No. 2 dated as of December 9, 1994 (as in effect
immediately prior to the Amendment Effective Date referred to below, the
"Existing Credit Agreement").
-------------------------
The Company has requested, and the Banks and the Administrative Agent
are willing, to amend and restate the Existing Credit Agreement to, among other
things, increase the aggregate amount of the Commitments, add certain Banks,
amend certain of the covenants and add an additional term loan facility, all on
the terms and conditions hereof.
Accordingly, the parties hereto agree to amend and restate the
Existing Credit Agreement so that, as amended and restated, it reads in its
entirety as herein provided.
Section 1. Definitions and Accounting Matters.
----------------------------------
1.01 Certain Defined Terms. As used herein, the following terms
---------------------
shall have the following meanings (all terms defined in this Section 1 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
---- -----
"Acquired Business" shall mean the Acquired Assets and the Assumed
-----------------
Liabilities, as such terms are defined in the Asset Purchase Agreement.
"Acquisition" shall mean the acquisition directly or indirectly by the
-----------
Company of the Acquired Business pursuant to the Asset Purchase Agreement.
Credit Agreement
----------------
<PAGE>
- 2 -
"Amendment Effective Date" shall mean the date on which the conditions
------------------------
precedent set forth in Section 6.01 hereof are satisfied.
"Applicable Facility Fee Rate" with respect to the Revolving Credit
----------------------------
Commitments shall mean: (a) during the period from the Restatement Date to
but excluding the first Business Day after the date on which the
Administrative Agent shall have received (i) the financial statements
described in Section 8.01(b) hereof as at and for the Quarterly Period
ending on March 31, 1996 and (ii) the accompanying certificate required to
be delivered under Section 8.01(h) hereof, 0.375% and (b) thereafter,
during the period from and including the first Business Day after the date
on which the Administrative Agent shall have received (i) the financial
statements described in Section 8.01 hereof as at and for the fiscal period
ending on the preceding Fiscal Date and (ii) the accompanying certificate
required to be delivered under Section 8.01(h) hereof to but excluding the
first Business Day after the date on which the Administrative Agent shall
have received (x) the financial statements described in Section 8.01 hereof
as at and for the fiscal period ending on the next Fiscal Date and (y) the
accompanying certificate required to be delivered under Section 8.01(h)
hereof, the respective rates set forth below opposite the range of the
Leverage Ratio set forth below which encompasses the Leverage Ratio set
forth in the certificate delivered under Section 8.01(h) hereof for such
preceding Fiscal Date (provided, further, that if the Company shall fail
--------
timely to deliver such financial statements or certificate, the "Applicable
Facility Fee Rate" with respect to the Revolving Credit Commitments during
the period from the date by which such financial statements and certificate
were required to be delivered to but excluding the first Business Day after
the date on which the Administrative Agent receives such financial
statements and certificate, shall be determined as if the relevant Leverage
Ratio were greater than 75%):
Credit Agreement
----------------
<PAGE>
- 3 -
<TABLE>
<CAPTION>
Applicable
Range of Leverage Ratio Facility Fee Rate
----------------------- -----------------
<S> <C>
Less than 50% .1500%
Greater than or equal
to 50% but less than 55% .1875%
Greater than or equal
to 55% but less than 60% .2000%
Greater than or equal
to 60% but less than 65% .2250%
Greater than or equal
to 65% but less than 70% .2750%
Greater than or equal
to 70% but less than 75% .3250%
Greater than or equal
to 75% .3750%
</TABLE>
Notwithstanding the foregoing, if at any time either Rating Level 1 or
Rating Level 2 is in effect, the Applicable Facility Fee Rate with respect
to the Revolving Credit Commitments shall be the respective rates set forth
below opposite the applicable Rating Level:
Applicable Rating Level Facility Fee Rate
----------------------- -----------------
Rating Level 1 .1500%
Rating Level 2 .2000%
"Applicable Lending Office" shall mean, (a) for each Bank and for each
-------------------------
Type of Loan, the "Lending Office" of such Bank (or of an affiliate of such
Bank) designated for such Type of Loan on the signature pages hereof or
such other office of such Bank (or of an affiliate of such Bank) as such
Bank may from time to time specify to the Administrative Agent and the
Company as the office by which its Loans of such Type are to be made and
maintained and (b) for the Swingline Bank, the Lending Office of the
Swingline Bank (or of an affiliate of the Swingline Bank) designated for
Swingline Loans on the signature pages hereof or such other office of the
Swingline Bank (or of an affiliate of the Swingline Bank) as the Swingline
Bank may from time to time specify to the Administrative Agent and the
Company as the office by which Swingline Loans are to be made and
maintained.
Credit Agreement
----------------
<PAGE>
- 4 -
"Applicable Margin" for each Type of Syndicated Loan shall be as
-----------------
follows: (a) during the period from the Restatement Date to but excluding
the first Business Day after the date on which the Administrative Agent
shall have received (i) the financial statements described in Section
8.01(b) hereof as at and for the Quarterly Period ending on March 31, 1996
and (ii) the accompanying certificate required to be delivered under
Section 8.01(h) hereof, the Applicable Margin for Revolving Loans that are
Base Rate Loans shall be 0.125% and for Revolving Loans that are Eurodollar
Loans shall be 1.375% and the Applicable Margin for Term Loans that are
Base Rate Loans shall be 0.50% and for Term Loans that are Eurodollar Loans
shall be 1.750% and (b) thereafter, during the period from and including
the first Business Day after the date on which the Administrative Agent
shall have received (i) the financial statements described in Section 8.01
hereof as at and for the fiscal period ending on the preceding Fiscal Date
and (ii) the accompanying certificate required to be delivered under
Section 8.01(h) hereof to but excluding the first Business Day after the
date on which the Administrative Agent shall have received (x) the
financial statements described in Section 8.01 hereof as at and for the
fiscal period ending on the next Fiscal Date and (y) the accompanying
certificate required to be delivered under Section 8.01(h) hereof, the
respective rates set forth opposite the range of the Leverage Ratio set
forth below which encompasses the Leverage Ratio set forth in such
certificate delivered under Section 8.01(h) hereof for such preceding
Fiscal Date (provided, further, that if the Company shall fail timely to
--------
deliver such financial statements or certificate, the "Applicable Margin"
for each Type of Syndicated Loan during the period from the date by which
such financial statements and certificate were required to be delivered to
but excluding the first Business Day after the date on which the
Administrative Agent receives such financial statements and certificate,
shall be determined as if the relevant Leverage Ratio were greater than
75%):
<TABLE>
<CAPTION>
Term Loans Revolving Credit Loans
---------- ----------------------
Range of Base Rate Eurodollar Base Eurodollar
Leverage Ratio Loans Loans Loans Loans
-------------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Less than 50% 0.0% .5000% 0.0% .3500%
Greater than or equal
to 50% but less than 55% 0.0% .6250% 0.0% .4375%
Greater than or equal
</TABLE>
Credit Agreement
----------------
<PAGE>
- 5 -
<TABLE>
<S> <C> <C> <C> <C>
to 55% but less than 60% 0.0% .7500% 0.0% .5500%
Greater than or equal
to 60% but less than 65% 0.0% 1.0000% 0.0% .7750%
Greater than or equal
to 65% but less than 70% 0.0% 1.2500% 0.0% .9750%
Greater than or equal
to 70% but less than 75% 0.25% 1.5000% 0.0% 1.1750%
Greater than or equal
to 75% 0.50% 1.7500% 0.125% 1.3750%
</TABLE>
Notwithstanding the foregoing, if at any time either Rating Level 1 or
Rating Level 2 is in effect, the Applicable Margin for each Type of
Syndicated Loan shall be the respective rates set forth below opposite the
applicable Rating Level:
<TABLE>
<CAPTION>
Term Loans Revolving Credit Loans
---------- ----------------------
Applicable Base Rate Eurodollar Base Rate Eurodollar
Rating Level Loans Loans Loans Loans
------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rating Level 1 0.0% .5000% 0.0% .3500%
Rating Level 2 0.0% .6250% 0.0% .4250%
</TABLE>
provided that, if (x) the ratings by S&P and Moody's are split by two or
--------
more rating levels or (y) either S&P or Moody's ceases to rate the Company
Senior Long-Term Debt and within 60 days after such cessation there is no
Substitute Rating therefor, a premium of .1250% will be added to the
Applicable Margins for Eurodollar Loans set forth above for the higher of
the two ratings (or the one rating in the case of a failure to rate).
"Asset Purchase Agreement" shall mean the Asset Purchase Agreement
------------------------
dated as of January 3, 1996, between the Seller and the Company and all
Exhibits and Schedules thereto, including, without limitation, the
Disclosure Schedule, as modified and supplemented and in effect from time
to time.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
---------------
amended from time to time.
"Base Rate" shall mean, with respect to any Base Rate Loan, for any
---------
day, the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1%
and (b) the Prime Rate for such day. Each change in any interest rate
provided for herein based upon the Base Rate resulting from a change in the
Base
Credit Agreement
----------------
<PAGE>
- 6 -
Rate shall take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean (a) Syndicated Loans which bear interest
---------------
at rates based upon the Base Rate and (b) Swingline Loans.
"Basle Accord" shall mean the proposals for risk-based capital
------------
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended,
supplemented and otherwise modified and in effect from time to time, or any
replacement thereof.
"Business Day" shall mean any day (a) on which commercial banks are
------------
not authorized or required to close in New York City and (b) where such
term is used in the definition of "Quarterly Date" in this Section 1.01 and
if such day relates to the giving of notices or quotes in connection with a
LIBOR Auction or to a borrowing of, a payment or prepayment of principal of
or interest on, a Conversion of or into, or an Interest Period for, a
Eurodollar Loan or a LIBOR Bid Loan or a notice by the Company with respect
to any such borrowing, payment, prepayment, Conversion or Interest Period
for a Eurodollar Loan or a LIBOR Bid Loan, which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Capital Expenditures" shall mean, for any period, expenditures
--------------------
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Company or any of the
Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with GAAP.
"Capital Lease Obligations" shall mean, for any Person, all
-------------------------
obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of
this Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Cash Flow" shall mean, for any period, the sum, for the Company and
---------
its Subsidiaries (determined on a
Credit Agreement
----------------
<PAGE>
- 7 -
consolidated basis without duplication in accordance with GAAP), of the
following: (a) operating margin (net sales minus cost of sales) for such
period plus (b) depreciation, amortization and any other non-cash expense
----
items (to the extent deducted in determining operating margin) for such
period minus (c) any non-cash income items (to the extent included in
-----
determining operating margin) for such period.
"Chase" shall mean The Chase Manhattan Bank (National Association),
-----
and its successors.
"CIBC Receivables Sale Agreements" shall mean, collectively, (a) the
--------------------------------
Receivables Sale Agreement dated December 15, 1995 among the Company, as a
seller and as collection agent, Vought Aircraft Company, as a seller, Asset
Securitization Cooperative Corporation, as purchaser, and Canadian Imperial
Bank of Commerce ("CIBC"), as servicing agent, and (b) the Receivables Sale
----
Agreement dated as of December 15, 1995 among the Company, as a seller and
as collection agent, Vought Aircraft Company, as a seller, and CIBC, as
purchaser, in each case as in effect on the Amendment Effective Date, and
as modified and supplemented thereafter as permitted by Section 8.20
hereof.
"Class" shall have the meaning assigned to such term in Section 1.03
-----
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Commitments" shall mean the Revolving Credit Commitments and the Term
-----------
Loan Commitments.
"Company Senior Long-Term Debt" shall mean Indebtedness of the Company
-----------------------------
that (a) is not contractually subordinated to any other Indebtedness of the
Company, (b) is considered under GAAP to be "long-term" debt, (c) is not
secured by a Lien on any Property of the Company or any of the Subsidiaries
or, if secured, is secured only by a pledge of the capital stock of one or
more Subsidiaries on a pari passu basis with the Indebtedness of the
---- -----
Company hereunder and (d) is not Guaranteed by a Person or, if Guaranteed,
is Guaranteed only by one or more Subsidiaries on a pari passu basis with
---- -----
the Indebtedness of the Company hereunder.
"Competitive Bid Borrowing" shall have the meaning assigned to such
-------------------------
term in Section 2.03(b) hereof.
"Competitive Bid Loan Limit" shall have the meaning assigned to such
--------------------------
term in Section 2.03(c) hereof.
Credit Agreement
----------------
<PAGE>
- 8 -
"Competitive Bid Loans" shall mean the loans provided for by Section
---------------------
2.03 hereof.
"Competitive Bid Margin" shall have the meaning assigned to such term
----------------------
in Section 2.03(c)(ii)(C) hereof.
"Competitive Bid Notes" shall mean the promissory notes provided for
---------------------
by Section 2.08(b) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be
modified and supplemented and in effect from time to time.
"Competitive Bid Quote" shall mean an offer by a Bank to make a
---------------------
Competitive Bid Loan in accordance with Section 2.03(c) hereof.
"Competitive Bid Quote Request" shall have the meaning assigned to
-----------------------------
such term in Section 2.03(b) hereof.
"Competitive Bid Rate" shall have the meaning assigned to such term in
--------------------
Section 2.03(c)(ii)(D) hereof.
"Consolidated Net Income Available for Restricted Payments" shall mean
---------------------------------------------------------
an amount equal to (i) the sum of $225,000,000 plus 80% (or minus 100% in
case of consolidated net loss) of Net Income for the period (taken as one
accounting period) commencing January 1, 1996 and terminating on the Fiscal
Date immediately preceding the date of any proposed Restricted Payment,
less (ii) the sum of (A) the aggregate amount of all dividends (except
stock dividends) and other distributions paid or declared by the Company on
any class of its stock on and after January 1, 1996 and (B) the excess (if
any) of the aggregate amount expended, directly or indirectly, on and after
January 1, 1996 for the redemption, purchase or other acquisition of any
shares of its stock, over the aggregate amount received on and after said
date as the Net Available Proceeds of the sale of any shares of its stock.
"Consolidated Shareholders' Equity" shall mean the amount of
---------------------------------
shareholders' equity of the Company and the Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) plus
----
$196,000,000 (being the after-tax non-cash charges to income on or before
December 31, 1995 in connection with (i) the Company's early retirement
incentive program implemented on October 1, 1994 and (ii) the sale of plant
and equipment).
"Consolidating Financial Statements" shall mean, for any fiscal
----------------------------------
period, the unaudited consolidating statements of financial position and
income for the corporate office and
Credit Agreement
----------------
<PAGE>
- 9 -
principal operating centers of the Company and the Subsidiaries
substantially in the form of the consolidating financial statements for
such corporate office and principal operating centers as at and for the
Company's fiscal year ended December 31, 1995 heretofore delivered to the
Banks.
"Continue", "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan as a
Eurodollar Loan from one Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 2.09 hereof of one Type of Syndicated Loans into
another Type of Syndicated Loans, which may be accompanied by the transfer
by a Bank (at its sole discretion) of a Loan from one Applicable Lending
Office to another.
"Credit Documents" shall mean this Agreement and the Notes.
----------------
"Debt Service" shall mean, for any period, the sum, for the Company
------------
and the Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all regularly
scheduled payments of principal of Indebtedness (including, without
limitation, the principal component of any payments in respect of Capital
Lease Obligations but excluding amounts repaid under Working Capital Credit
Lines) made during such period plus (b) all Interest Expense for such
----
period.
"Default" shall mean an Event of Default or an event which with notice
-------
or lapse of time or both would become an Event of Default.
"Disclosure Schedule" shall mean the Disclosure Schedule to the Asset
-------------------
Purchase Agreement, dated as of January 3, 1996, as modified and
supplemented and in effect from time to time.
"Disposition" shall mean any sale, assignment, transfer or other
-----------
disposition of any Property (whether now owned or hereafter acquired) by
the Company or any of the Subsidiaries to any other Person excluding (i)
any sale, assignment, transfer or other disposition of any inventory sold
or disposed of in the ordinary course of business and on ordinary business
terms and (ii) sales of ownership interests in receivables pursuant to a
Permitted Receivables Sale Agreement. The term "Dispose" shall have a
-------
correlative meaning.
Credit Agreement
----------------
<PAGE>
- 10 -
"Dollars" and "$" shall mean lawful money of the United States of
------- -
America.
"Environmental Laws" shall mean any and all Federal, state, local and
------------------
foreign laws, rules or regulations, and any orders or decrees, in each case
as now or hereafter in effect, relating to the regulation or protection of
human health, safety or the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes.
"Equity" shall mean (i) any capital stock or any warrants, options or
------
rights exercisable in respect of capital stock, including any capital stock
issued upon the exercise of any such warrants, options or rights (other
than any capital stock, warrants, options or rights issued to directors,
officers or employees of the Company or any of the Subsidiaries pursuant to
employee benefit plans, stock option plans or long-term incentive plans
established in the ordinary course of business and any capital stock of the
Company issued upon the exercise of such warrants, options or rights) or
(ii) any other security or instrument representing an equity interest in
the Company or any of the Subsidiaries.
"Equity Issuance" shall mean (a) any issuance or sale (including,
---------------
without limitation, issuance or sale as a result of a conversion or
exchange of debt securities) by the Company of Equity or (b) the receipt by
the Company of any capital contribution (whether or not evidenced by any
equity security issued by the Company).
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
---------------
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Company or is under common
control (within the meaning of Section 414(c) of the Code) with the
Company.
"Eurodollar Loans" shall mean Syndicated Loans the interest rates on
----------------
which are determined on the basis of rates
Credit Agreement
----------------
<PAGE>
- 11 -
referred to in the definition of "Fixed Base Rate" in this Section 1.01.
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 9 hereof.
"Excess Cash Flow" shall mean, for any fiscal year of the Company, the
----------------
excess of (a) Cash Flow for such fiscal year over (b) the sum of (i)
Capital Expenditures made during such fiscal year plus (ii) the aggregate
----
amount of Debt Service for such fiscal year plus (iii) cash taxes on or
----
measured by income paid in such fiscal year plus (iv) the amount by which
----
Working Capital as at the last day of such fiscal year exceeds Working
Capital as at the later of March 31, 1996 and the last day of the
immediately preceding fiscal year (or minus the amount by which Working
-----
Capital as at the later of March 31, 1996 and the last day of the
immediately preceding fiscal year exceeds Working Capital as at the last
day of such fiscal year).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
------------
together with the Rules and Regulations of the SEC thereunder, as amended.
"Existing Credit Agreement" shall have the meaning given to such term
-------------------------
in the preamble hereto.
"Existing Banks" shall mean the lenders party to the Existing Credit
--------------
Agreement.
"Facility" shall mean the Revolving Credit Facility, the Series I Term
--------
Loan Facility and the Series II Term Loan Facility.
"Federal Funds Rate" shall mean, for any day, the rate per annum
------------------
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day
and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Chase on such day on
such transactions as determined by the Administrative Agent.
Credit Agreement
----------------
<PAGE>
- 12 -
"Fees" shall mean commitment fees and facility fees payable pursuant
----
to Section 2.05 hereof.
"Final Risk-Based Capital Guidelines" shall mean (a) the Final Risk-
-----------------------------------
Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A and 12 C.F.R. Part 225, Appendix A)
and (b) the Final Risk-Based Capital Guidelines of the Office of the
Comptroller of the Currency (12 C.F.R. Part 3, Appendix A), and any
successor or supplemental regulations to either (a) or (b), in each case,
as amended, supplemented and otherwise modified and in effect from time to
time.
"Fiscal Dates" shall mean the last day of each March, June, September
------------
and December in each year, the first of which shall be the first such day
after the Restatement Date.
"Fixed Base Rate" shall mean, with respect to any Fixed Rate Loan for
---------------
any Interest Period therefor:
(a) the rate per annum appearing on the Telerate Screen Page 3750 (or
such other page as may replace that page in that service) as of 11:00 a.m.
London time two Business Days prior to the first day of such Interest
Period for such Loan as the London Interbank Offered Rate for Dollar
deposits having a term comparable to such Interest Period and (if
applicable) in an amount of $1,000,000 or more; or
(b) if no such rate appears on the Telerate Screen Page 3750 or, if
said page shall cease to be publicly available or if the information
contained on said page, in the reasonable judgment of the Managing Banks,
shall cease accurately to reflect the rate offered by leading banks in the
London interbank market ("London Interbank Offered Rate") (as reported by
-----------------------------
any publicly available source of similar market data selected by the
Managing Banks that, in the reasonable judgment of the Managing Banks,
accurately reflects the London Interbank Offered Rate), the arithmetic mean
(rounded, if necessary, to the nearest 1/16 of 1%), as determined by the
Administrative Agent, of the rate per annum quoted by each Reference Bank
at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two Business Days prior to the first day of such
Interest Period for such Loan for the offering by such Reference Bank to
leading banks in the London interbank market of Dollar deposits having a
term comparable to such Interest Period and in an amount comparable to the
principal amount of the Eurodollar Loan or LIBOR Bid Loan to be made by
such Reference Bank for such
Credit Agreement
----------------
<PAGE>
- 13 -
Interest Period; provided that (i) if any Reference Bank is not
--------
participating in any Fixed Rate Loans during any Interest Period therefor,
the Fixed Base Rate for such Loan shall be determined by reference to the
amount of the Loan which such Reference Bank would have made had it been
participating in such Loan during such Interest Period; (ii) in determining
the Fixed Base Rate with respect to any LIBOR Bid Loan, each Reference Bank
shall be deemed to have made a LIBOR Bid Loan in an amount equal to
$10,000,000; and (iii) if any Reference Bank does not timely furnish such
information for determination of any Fixed Base Rate, the Administrative
Agent shall determine such Fixed Base Rate on the basis of information
timely furnished by the remaining Reference Banks.
"Fixed Charge Coverage Ratio" shall mean, as at any date, the ratio of
---------------------------
(a) the sum of (i) Cash Flow for the period of four (or, if less, the
number of full fiscal quarters of the Company since the Amendment Effective
Date) consecutive fiscal quarters of the Company ending on or most recently
ended prior to such date minus (ii) Capital Expenditures during such period
to (b) the sum of (i) Interest Expense for such period plus (ii) Restricted
----
Payments made during such period.
"Fixed Rate Loans" shall mean Eurodollar Loans and, for the purposes
----------------
of the definition of "Fixed Base Rate" herein and Section 5 hereof, LIBOR
Bid Loans.
"Funded Debt" shall mean any obligation of the Company or any
-----------
Subsidiary for borrowed money or the purchase price of Property which is
shown on the financial statements as a liability, including (a) Capital
Lease Obligations and (b) Guarantees which are deemed Funded Debt under
Section 8.08 hereof but excluding (i) items customarily reflected as
current liabilities and classified as other than debt (it being understood
that progress payments, trade accounts payable, obligations under leases
which are not capitalized leases and income taxes payable are excluded from
"Funded Debt" under this definition), (ii) deferred income taxes and (iii)
obligations under a Permitted Receivables Sale Agreement.
"Funded Debt to Cash Flow Ratio" shall mean, as at any date, the ratio
------------------------------
of (a) Funded Debt as at such date to (b) (x) prior to the completion of
four full fiscal quarters of the Company since the Amendment Effective
Date, Cash Flow for the period of such number of full fiscal quarters of
the Company since the Amendment Effective Date multiplied by a fraction,
the numerator of which is four (4) and the denominator of which shall be
such number of full fiscal
Credit Agreement
----------------
<PAGE>
- 14 -
quarters of the Company since the Amendment Effective Date and (y)
thereafter, Cash Flow for the period of four consecutive fiscal quarters of
the Company ending on or most recently ended prior to such date.
"GAAP" shall mean generally accepted accounting principles applied on
----
a basis consistent with those that, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for the
purposes of determining compliance with this Agreement.
"Government" shall mean the United States of America or any department
----------
or agency thereof.
"Grumman" shall mean Grumman Corporation, a New York corporation and,
-------
on the Restatement Date, a Wholly-Owned Subsidiary of the Company, or any
successor thereto.
"Guarantee" shall mean, with respect to any Person, a guarantee, an
---------
endorsement, a contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become contingently liable
under or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any other Person, or a guarantee of the
payment of dividends or other distributions upon the stock or equity
interests of any other Person, or an agreement to purchase, sell or lease
(as lessee or lessor) Property, products, materials, supplies or services
primarily for the purpose of enabling any other Person to make payment of
its obligations or an agreement to assure a creditor of such Person against
loss, and including, without limitation, causing a bank or other financial
institution to issue a standby letter of credit or other similar instrument
supporting the obligations of another Person, but excluding (i)
endorsements for collection or deposit in the ordinary course of business
and (ii) obligations of such Person under a Permitted Receivables Sale
Agreement. The amount of any Guarantee in respect of Indebtedness shall be
deemed to be an amount equal to the stated or determinable amount of the
related Indebtedness (unless the Guarantee is limited by its terms to a
lesser amount, in which case, to the extent of such amount) or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative
--------- ----------
meaning.
"Indebtedness" shall mean, for any Person: (a) obligations created,
------------
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another
Person
Credit Agreement
----------------
<PAGE>
- 15 -
subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person
to pay the deferred purchase or acquisition price of Property or services,
other than trade accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business so long
as such trade accounts payable are payable within 180 days of the date the
respective goods are delivered or the respective services are rendered; (c)
Indebtedness of others secured by a Lien on the Property of such Person,
whether or not the respective indebtedness so secured has been assumed by
such Person (but only to the extent of the fair market value of such
Property if not assumed by such Person); (d) obligations (contingent or
otherwise) in respect of letters of credit, banker's acceptances and
similar instruments issued or accepted for account of such Person; (e)
Capital Lease Obligations of such Person; (f) Guarantees by such Person of
Indebtedness of others; and (g) Interest Rate Protection Agreements. The
term "Indebtedness" shall not include the obligations of such Person under
a Permitted Receivables Sale Agreement.
"Information Memorandum" shall mean the Confidential Information
----------------------
Memorandum dated January 1996 distributed to the Banks.
"Interest Expense" shall mean, for any period, the sum, for the
----------------
Company and the Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Funded Debt (including, without limitation, the interest
component of any payments in respect of Capital Lease Obligations) accrued
or capitalized during such period (whether or not actually paid during such
period) plus (b) the net amount payable (or minus the net amount
---- -----
receivable) under Interest Rate Protection Agreements during such period
(whether or not actually paid or received during such period) minus (c) all
-----
interest income accrued during such period (whether or not actually
received during such period).
"Interest Period" shall mean:
---------------
(a) With respect to any Eurodollar Loan, the period commencing
on the date such Eurodollar Loan is made or Converted from a Loan of
another Type or the last day of the next preceding Interest Period for
such Loan and ending on the numerically corresponding day in the
first, second, third, sixth or (with the consent of all Banks) twelfth
calendar month thereafter, as the Company may select as provided in
Section 2.02 hereof,
Credit Agreement
----------------
<PAGE>
- 16 -
except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate
subsequent calendar month.
(b) With respect to any Set Rate Loan, the period commencing on
the date such Set Rate Loan is made and ending on any Business Day up
to and including 360 days thereafter, as the Company may select as
provided in Section 2.03(b) hereof.
(c) With respect to any LIBOR Bid Loan, the period commencing on
the date such LIBOR Bid Loan is made and ending on the numerically
corresponding day in the first, second, third, sixth or twelfth
calendar month thereafter, as the Company may select as provided in
Section 2.03(b) hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or any day for
which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period for any Revolving
Loan may end after the Revolving Commitment Termination Date and no
Interest Period for any Series I Term Loan may end after the Series I Term
Loan Final Maturity Date; (ii) no Interest Period for any Series II Term
Loan may commence before and end after any Series II Principal Payment Date
unless, after giving effect thereto, the aggregate principal amount of the
Series II Term Loans having Interest Periods that end after such Series II
Principal Payment Date shall be equal to or less than the aggregate
principal amount of the Series II Term Loans scheduled to be outstanding
after giving effect to the payments of principal required to be made on
such Series II Principal Payment Date; (iii) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (or, in the case of an Interest Period for
Eurodollar Loans or LIBOR Bid Loans, if such next succeeding Business Day
falls in the next succeeding calendar month, on the next preceding Business
Day); (iv) notwithstanding clauses (i) and (ii) above, no Interest Period
for any Eurodollar Loans or LIBOR Bid Loans shall have a duration of less
than one month and, if the Interest Period for any Eurodollar Loans would
otherwise be a shorter period, such Loans shall not be available hereunder.
Credit Agreement
----------------
<PAGE>
- 17 -
"Interest Rate Protection Agreement" shall mean, for any Person, an
----------------------------------
interest rate swap, cap or collar agreement or similar arrangement between
such Person and one or more financial institutions providing for the
transfer or mitigation of interest rate risks either generally or under
specific contingencies and entered into as bona fide hedges (and not for
---------
speculative purposes) against such interest rate risks.
"Investment" shall mean, for any Person: (a) the acquisition (whether
----------
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by the Person
entering into such sale); (b) the making of any deposit with, or advance,
loan or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such
Person), but excluding any such advance, loan or extension of credit having
a term not exceeding 180 days arising in connection with the sale of
inventory or supplies by such Person in the ordinary course of business; or
(c) the entering into of any Guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of any other Person and
(without duplication) any amount committed to be advanced, lent or extended
to such Person.
"Investment Grade Rating Period" shall mean, after (i) the
------------------------------
consummation of the Acquisition (or the express statement by Moody's and
S&P that the same has been taken into account in reaffirming or announcing
the ratings referred to in clause (ii) below) and (ii) the date on which
both Moody's and S&P shall have first either reaffirmed or announced
revised ratings for the Company Senior Long-Term Debt, any period during
which the rating of Company Senior Long-Term Debt is BBB- or higher by S&P
(or a Substitute Rating is at the corresponding rating level or higher) or
Baa3 or higher by Moody's (or a Substitute Rating is at the corresponding
rating level or higher).
"Leverage Ratio" shall mean, at any time, the ratio of (a) the
--------------
aggregate amount (determined without duplication on a consolidated basis)
of all Funded Debt outstanding at such time to (b) the sum of (i)
Consolidated Shareholders' Equity at such time plus (ii) all Funded Debt
outstanding at such time.
Credit Agreement
----------------
<PAGE>
- 18 -
"LIBO Rate" shall mean, for any LIBOR Bid Loan, a rate per annum
---------
determined by the Administrative Agent to be equal to the rate of interest
specified in the definition of "Fixed Base Rate" in this Section 1.01 for
the Interest Period for such Loan.
"LIBOR Auction" shall mean a solicitation of Competitive Bid Quotes
-------------
setting forth Competitive Bid Margins based on the LIBO Rate pursuant to
Section 2.03 hereof.
"LIBOR Bid Loans" shall mean Competitive Bid Loans the interest rates
---------------
on which are determined on the basis of LIBO Rates pursuant to a LIBOR
Auction.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. The term "Lien" shall not include the ownership interests in
----
receivables acquired by a purchaser under a Permitted Receivables Sale
Agreement.
"Loans" shall mean Competitive Bid Loans, Syndicated Loans and
-----
Swingline Loans.
"Majority Banks" shall mean Banks holding more than 50% of the
--------------
aggregate amount of (a) the Revolving Credit Commitments or, if the
Revolving Credit Commitments shall have terminated, the sum of (i) the
aggregate unpaid principal amount of the Revolving Loans plus (ii) the
aggregate unpaid principal amount of the Competitive Bid Loans plus (b) the
Series I Term Loan Commitments or, if the Series I Term Loan Commitments
shall have terminated, the aggregate principal amount of the Series I Term
Loans plus (c) the Series II Term Loan Commitments or, if the Series II
Term Loan Commitments shall have terminated, the aggregate principal amount
of the Series II Term Loans.
"Managing Banks" shall mean Chase, Chemical Bank and Bank of America
--------------
N.T. & S.A.
"Mandatory Prepayment Period" shall mean any period during which one
---------------------------
or more of the following conditions is satisfied: (a) any principal of the
Series I Term Loans is outstanding; or (b) the Leverage Ratio is greater
than 50%; or (c) an Investment Grade Rating Period does not exist; or (d)
the Administrative Agent shall not have received the financial statements
and certificate referred to in clause (a) of the definition of the term
"Applicable Margin" in this Section 1.01.
Credit Agreement
----------------
<PAGE>
- 19 -
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, operations, condition (financial or otherwise) or prospects
of the Company and the Subsidiaries taken as a whole, (b) the consummation
of the Acquisition, (c) the ability of the Company to perform its
obligations under any of the Credit Documents, (d) the validity or
enforceability of any of the Credit Documents, (e) the rights and remedies
of the Banks and the Administrative Agent under any of the Credit Documents
or (f) the timely payment of the principal of or interest on the Loans or
other amounts payable in connection therewith.
"Material Subsidiary" shall mean, at any time, any Subsidiary if, at
-------------------
such time, such Subsidiary would qualify as a "significant subsidiary"
under Regulation S-X of the SEC as in effect on the Restatement Date.
Notwithstanding the foregoing so long as Vought Aircraft Company is a
Subsidiary, it shall be deemed to be a Material Subsidiary for purposes of
this Agreement.
"Moody's" shall mean Moody's Investors Service, Inc., or any successor
-------
thereto.
"Moody's Rating" shall mean, as at any date, the rating most recently
--------------
published by Moody's relating to the Company Senior Long-Term Debt.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
------------------
in Section 3(37) of ERISA to which contributions have been made by the
Company or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Available Proceeds" shall mean:
----------------------
(a) in the case of any Disposition, the amount of Net Cash Payments
received in connection with such Disposition; and
(b) in the case of any Equity Issuance, the aggregate amount of all
cash or cash equivalents received by the Company and the Subsidiaries in
respect of such Equity Issuance net of all expenses incurred by the Company
and the Subsidiaries in connection therewith.
"Net Cash Payments" shall mean, with respect to any Disposition, the
-----------------
aggregate amount of all cash payments, and the fair market value of any
non-cash consideration, received by the Company and the Subsidiaries
directly or indirectly in connection with such Disposition; provided that
--------
(a) Net Cash Payments shall be net of (i) the amount of any legal,
title and recording tax expenses, commissions and
Credit Agreement
----------------
<PAGE>
- 20 -
other fees and expenses paid by the Company and the Subsidiaries in
connection with such Disposition and (ii) any Federal, state and local
income or other taxes estimated in good faith to be payable by the Company
and the Subsidiaries as a result of such Disposition, (b) Net Cash Payments
shall not include any cash payments plus the fair market value of any non-
cash consideration of less than $5,000,000 in the aggregate from any one
Disposition or a series of related Dispositions and (c) Net Cash Payments
shall be net of any repayments by the Company or any of the Subsidiaries of
Indebtedness to the extent that (i) such Indebtedness is secured by a Lien
on the Property that is the subject of such Disposition and (ii) the
transferee of (or holder of a Lien on) such Property requires that such
Indebtedness be repaid as a condition to the purchase of such Property;
provided further that Net Cash Payments with respect to any Disposition
that is made during any period that is not a Mandatory Prepayment Period
shall be equal to zero.
"Net Income" shall mean, for the Company and the Subsidiaries
----------
(determined on a consolidated basis without duplication in accordance with
GAAP) for any fiscal period, an amount equal to the consolidated net income
for such fiscal period.
"Notes" shall mean the Syndicated Notes, the Competitive Bid Notes and
-----
the Swingline Note.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
entity succeeding to any or all of its functions under ERISA.
"Permitted Buyer Indebtedness" shall mean, in connection with the
----------------------------
Disposition of real Property only, Indebtedness of the purchaser(s)
thereof, secured by a Lien on such Property and having a final maturity not
exceeding five years from the date of such Disposition, to the extent that
the amount of such Indebtedness permitted by the Company and the
Subsidiaries to be created after the Amendment Effective Date does not
exceed $100,000,000 in the aggregate.
"Permitted Receivables Sale Agreements" shall mean (a) the CIBC
-------------------------------------
Receivables Sale Agreements and (b) any other receivables sale agreement
that replaces the CIBC Receivables Sale Agreements; provided that (i) the
--------
operative provisions thereof conform in all material respects to those
contained in the CIBC Receivables Sale Agreements and (ii) the aggregate
"Investment" (as defined in the CIBC Receivables Sale Agreements) does not
exceed at any one time
Credit Agreement
----------------
<PAGE>
- 21 -
outstanding $75,000,000 in the aggregate as to all Permitted Receivable
Sale Agreements.
"Person" shall mean an individual, a corporation, a company, a
------
voluntary association, a partnership, a limited liability company, a trust,
an unincorporated organization or a government or any agency,
instrumentality or political subdivision thereof.
"Plan" shall mean an employee benefit or other plan established or
----
maintained by the Company or any ERISA Affiliate and which is covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of any
-----------------
Loan or any other amount payable by the Company under this Agreement or any
Note which is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period commencing
on the due date until such amount is paid in full equal to 2% plus the Base
Rate as in effect from time to time plus the Applicable Margin (if any)
(provided that, if such amount in default is principal of a Eurodollar Loan
--------
or a Competitive Bid Loan and the due date is a day other than the last day
of the Interest Period therefor, the "Post-Default Rate" for such principal
shall be, for the period commencing on the due date and ending on the last
day of the Interest Period therefor, 2% plus the interest rate for such
Loan as provided in Section 3.02 hereof and, thereafter, the rate otherwise
provided in this definition).
"Prime Rate" shall mean the arithmetic mean (rounded, if necessary, to
----------
the nearest 1/16 of 1%), as determined by the Administrative Agent, of the
rate of interest from time to time announced by each Reference Bank at its
principal office as its prime commercial lending rate.
"Principal Office" shall mean the principal office of Chase, located
----------------
on the Restatement Date at 1 Chase Manhattan Plaza, New York, New York
10081.
"Projections" shall have the meaning provided in Section 7.02(d)
-----------
hereof.
"Property" shall mean any right or interest in or to property of any
--------
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" shall mean each quarterly anniversary of the
---------------
Restatement Date, the first of which shall be the first such day after the
Restatement Date; provided that if
--------
Credit Agreement
----------------
<PAGE>
- 22 -
any such day is not a Business Day, the relevant Quarterly Date shall be
the immediately succeeding Business Day.
"Quarterly Period" shall mean the period from but excluding one Fiscal
----------------
Date through and including the next succeeding Fiscal Date.
"Quotation Date" shall have the meaning assigned to such term in
--------------
Section 2.03(b) hereof.
"Rating Level 1" shall mean, (a) no Default has occurred and is
--------------
continuing and (b) the Moody's Rating is at Baa2 or higher (or a Substitute
Rating is at the corresponding rating level or higher) or the S&P Rating is
at BBB or higher (or a Substitute Rating is at the corresponding rating
level or higher); "Rating Level 2" shall mean (a) no Default has occurred
--------------
and is continuing, (b) the Moody's Rating is at Baa3 or higher (or a
Substitute Rating is at the corresponding rating level or higher) or the
S&P Rating is at BBB- or higher (or a Substitute Rating is at the
corresponding rating level or higher) and (c) Rating Level 1 is not in
effect; provided that (A) neither Rating Level 1 nor Rating Level 2 shall
--------
exist at any time before (i) the consummation of the Acquisition or (ii)
the date on which both Moody's and S&P shall have first either reaffirmed
or announced revised ratings for the Company Senior Long-Term Debt, and (B)
for purposes of both Rating Level 1 and Rating Level 2, in the event that
the rating levels are split, the higher of the two rating levels shall
apply.
"Reference Banks" shall mean Chase, Chemical Bank, Bank of America
---------------
National Trust and Savings Association and Morgan Guaranty Trust Company of
New York (or their Applicable Lending Offices, as the case may be).
"Regulation A", "Regulation D", "Regulation U" and "Regulation X"
---------------------------------------------------------------
shall mean, respectively, Regulation A, Regulation D, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System (or
any successor), as the same may be modified and supplemented and in effect
from time to time.
"Regulatory Change" shall mean, with respect to any Bank, any change
-----------------
after the Restatement Date in United States Federal, state or foreign law
or regulations (including Regulation D) or the adoption or making after
such date of any interpretations, directives or requests applying to a
class of banks including such Bank of or under any United States Federal,
state or foreign law or regulations (whether or not having the force of
law) by any court or governmental
Credit Agreement
----------------
<PAGE>
- 23 -
or monetary authority charged with the interpretation or administration
thereof.
"Restatement Date" shall mean March 1, 1996.
----------------
"Restricted Payment" shall mean any dividend (other than dividends
------------------
payable solely in stock of the Company) or any other distribution with
respect to any stock of the Company, whether now or hereafter outstanding,
or any payment on account of the purchase, acquisition, redemption or other
retirement, directly or indirectly, of any shares of such stock.
"Restricted Subsidiary" shall have the meaning assigned to such term
---------------------
in the Senior Indenture.
"Revolving Commitment Termination Date" shall mean the Quarterly Date
-------------------------------------
falling on or nearest to the date six years after the Restatement Date.
"Revolving Credit Banks" shall mean (a) on the Amendment Effective
----------------------
Date, the Banks having Revolving Credit Commitments in Schedule I hereto
and (b) thereafter, the Banks from time to time holding Revolving Loans
and/or Revolving Credit Commitments after giving effect to any assignments
thereof permitted by Section 11.06 hereof.
"Revolving Credit Commitment" shall mean, for each Revolving Credit
---------------------------
Bank, the obligation of such Bank to make Revolving Loans in an aggregate
principal amount at any one time outstanding up to but not exceeding the
amount set opposite the name of such Bank on Schedule I hereto under the
caption "Revolving Credit Commitment" (as the same may be reduced from time
to time pursuant to Section 2.04 hereof or reduced or increased pursuant to
Section 11.06 hereof). The aggregate amount of the Revolving Credit
Commitments on the Amendment Effective Date is $1,800,000,000.
"Revolving Credit Facility" shall mean the Facility constituted by the
-------------------------
Revolving Credit Commitments.
"Revolving Loans" shall mean the loans provided for by Section 2.01(c)
---------------
hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Revolving Notes" shall mean the promissory notes provided for by
---------------
Section 2.08(a)(iii) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be
modified and supplemented and in effect from time to time.
Credit Agreement
----------------
<PAGE>
- 24 -
"S&P" shall mean Standard & Poor's Ratings Group, or any successor
---
thereto.
"S&P Rating" shall mean, as at any date, the rating most recently
----------
published by S&P relating to the Company Senior Long-Term Debt.
"SEC" shall mean the Securities and Exchange Commission or any
---
successor thereto.
"Securities Act" shall mean the Securities Act of 1933, together with
--------------
the Rules and Regulations of the SEC thereunder, as amended.
"Seller" shall mean Westinghouse Electric Corporation, a Pennsylvania
------
corporation.
"Senior Indenture" shall mean the Indenture dated as of October 15,
----------------
1994 between the Company and Chase, as trustee, as supplemented by the
Officers' Certificate dated as of February 27, 1996 pursuant to Sections
201, 301 and 303 of such Indenture, and as the same shall be further
modified and supplemented and in effect from time to time.
"Series I Term Loans" shall mean the loans provided for by Section
-------------------
2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Series I Term Loan Banks" shall mean (a) on the Amendment Effective
------------------------
Date, the Banks having Series I Term Loan Commitments in Schedule I hereto
and (b) thereafter, the Banks from time to time holding Series I Term Loans
and/or Series I Term Loan Commitments after giving effect to any
assignments thereof permitted by Section 11.06 hereof.
"Series I Term Loan Commitment" shall mean, for each Series I Term
-----------------------------
Loan Bank, the obligation of such Bank to make one or more Series I Term
Loans in an aggregate amount up to but not exceeding the amount set
opposite the name of such Bank on Schedule I hereto under the caption
"Series I Term Loan Commitment" (as the same may be reduced from time to
time pursuant to Section 2.04 hereof or reduced or increased pursuant to
Section 11.06 hereof). The aggregate amount of the Series I Term Loan
Commitments on the Amendment Effective Date is $500,000,000.
"Series I Term Loan Facility" shall mean the Facility constituted by
---------------------------
the Series I Term Loan Commitments.
Credit Agreement
----------------
<PAGE>
- 25 -
"Series I Term Loan Final Maturity Date" shall mean the Quarterly Date
--------------------------------------
falling on or nearest to the date two years after the Restatement Date.
"Series II Principal Payment Date" shall mean each Quarterly Date of
--------------------------------
each year, commencing with the first such Quarterly Date following the
Restatement Date through and including the Series II Term Loan Final
Maturity Date.
"Series II Term Loan Banks" shall mean (a) on the Amendment Effective
-------------------------
Date, the Banks having Series II Term Loan Commitments in Schedule I hereto
and (b) thereafter, the Banks from time to time holding Series II Term
Loans and/or Series II Term Loan Commitments after giving effect to any
assignments thereof permitted by Section 11.06 hereof.
"Series II Term Loan Commitment" shall mean, for each Series II Term
------------------------------
Loan Bank, the obligation of such Bank to make one or more Series II Term
Loans in an aggregate amount up to but not exceeding the amount set
opposite the name of such Bank on Schedule I hereto under the caption
"Series II Term Loan Commitment" (as the same may be reduced from time to
time pursuant to Section 2.04 hereof or reduced or increased pursuant to
Section 11.06 hereof). The aggregate amount of the Series II Term Loan
Commitments on the Amendment Effective Date is $1,500,000,000.
"Series II Term Loan Facility" shall mean the Facility constituted by
----------------------------
the Series II Term Loan Commitments.
"Series II Term Loan Final Maturity Date" shall mean the Quarterly
---------------------------------------
Date falling on or nearest to the date six years after the Restatement
Date.
"Series II Term Loans" shall mean the loans provided for by Section
--------------------
2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Set Rate Auction" shall mean a solicitation of Competitive Bid Quotes
----------------
setting forth Competitive Bid Rates pursuant to Section 2.03 hereof.
"Set Rate Loans" shall mean Competitive Bid Loans the interest rates
--------------
on which are determined on the basis of Competitive Bid Rates pursuant to a
Set Rate Auction.
"Subordinated Indebtedness" shall mean, with respect to the Company,
-------------------------
(a) Indebtedness issued pursuant to the Subordinated Indenture (i) that
does not have any principal or sinking fund payment due prior to the
Revolving
Credit Agreement
----------------
<PAGE>
- 26 -
Commitment Termination Date or the Series II Term Loan Final Maturity Date
and (ii) in respect of which interest is payable not more often than semi-
annually and (b) Indebtedness (i) for which the Company is directly and
primarily liable, (ii) in respect of which none of the Subsidiaries is
contingently or otherwise obligated, (iii) that does not have any principal
or sinking fund payment due prior to the Revolving Commitment Termination
Date or the Series II Term Loan Final Maturity Date, (iv) in respect of
which interest is payable not more often than semi-annually and (v) that is
subordinated to the obligations of the Company to pay principal of and
interest on the Loans and Notes and Fees and other amounts payable
hereunder on terms, and pursuant to documentation containing other terms
(including covenants and events of default), that are no less favorable to
the Banks than those contained in the Subordinated Indenture.
"Subordinated Indenture" shall mean the form of Indenture filed as
----------------------
Exhibit 4-6 to the Company's Registration Statement on Form S-3 filed with
the SEC on August 19, 1994, as amended by the Company's Form 8-K filed with
the SEC on February 28, 1996.
"Subsidiary" shall mean any corporation, partnership or other entity
----------
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect (whether
immediately or ultimately) a majority of the board of directors or other
Persons performing similar functions of such corporation, partnership or
other entity (irrespective of whether or not at the time securities or
other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by the Company or one or more of
the Subsidiaries or by the Company and one or more of the Subsidiaries.
"Wholly-Owned Subsidiary" shall mean any such corporation, partnership or
-----------------------
other entity of which all of the equity securities or other ownership
interests (other than, in the case of a corporation, directors' qualifying
shares) are so owned or controlled.
"Substitute Rating" shall mean, as at any date, the rating most
-----------------
recently published by a Substitute Rating Agency relating to the Company
Senior Long-Term Debt; provided that, for all purposes of the Credit
Documents, the same Substitute Rating may not be substituted for both the
Moody's Rating and the S&P Rating.
Credit Agreement
----------------
<PAGE>
- 27 -
"Substitute Rating Agency" shall mean any rating agency (other than
------------------------
Moody's or S&P) proposed by the Company and acceptable to the Managing
Banks in their reasonable determination.
"Swingline Borrowing Notice" shall have the meaning assigned to such
--------------------------
term in Section 2.11(b) hereof.
"Swingline Commitment" shall mean the obligation of the Swingline Bank
--------------------
to make Swingline Loans pursuant to Section 2.11 hereof in an aggregate
amount at any one time outstanding up to but not exceeding the amount set
opposite the Swingline Bank's name on the signature pages hereof under the
caption "Swingline Commitment" (as the same may be reduced, assigned or
otherwise transferred at any time or from time to time pursuant to Section
2.04 or 11.06 hereof).
"Swingline Loans" shall mean the loans provided for by Section 2.11
---------------
hereof.
"Swingline Maturity Date" shall have the meaning assigned to such term
-----------------------
in Section 3.01(e) hereof.
"Swingline Note" shall mean the promissory note provided for by
--------------
Section 2.08(c) hereof, as the same shall be modified and supplemented and
in effect from time to time.
"Syndicated Loans" shall mean the loans provided for by Section 2.01
----------------
hereof.
"Syndicated Notes" shall mean the promissory notes provided for by
----------------
Section 2.08(a) hereof and all promissory notes delivered in substitution
or exchange therefor, in each case as the same shall be modified and
supplemented and in effect from time to time.
"Term Loan Banks" shall mean the Series I Term Loan Banks and the
---------------
Series II Term Loan Banks.
"Term Loans" shall mean the Series I Term Loans and the Series II Term
----------
Loans.
"Term Loan Commitments" shall mean the Series I Term Loan Commitments
---------------------
and the Series II Term Loan Commitments.
"Term Loan Commitment Termination Date" shall mean March 29, 1996.
-------------------------------------
"Term Notes" shall mean the promissory notes provided for by Section
----------
2.08(a)(i) and (ii) hereof and all promissory notes delivered in
substitution or exchange therefor, in
Credit Agreement
----------------
<PAGE>
- 28 -
each case as the same shall be modified and supplemented and in effect from
time to time.
"Type" shall have the meaning assigned to such term in Section 1.03
----
hereof.
"Working Capital" shall mean, at any time, for the Company and the
---------------
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), the amount by which (i) total current assets
(excluding cash and cash equivalents) exceeds (ii) total current
liabilities.
"Working Capital Credit Lines" shall mean uncommitted short-term
----------------------------
unsecured credit facilities (including, without limitation, commercial
paper facilities) extended to the Company for working capital purposes.
1.02 Accounting Terms and Determinations.
-----------------------------------
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Banks hereunder shall (unless otherwise disclosed to the Banks in writing at the
time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest
corresponding financial statements furnished to the Banks hereunder after the
Restatement Date (or, until such financial statements are furnished, consistent
with those used in the preparation of the financial statements referred to in
Section 7.02(a) hereof). All calculations made for the purposes of determining
compliance with the provisions of this Agreement shall (except as otherwise
expressly provided herein) be made by application of generally accepted
accounting principles applied on a basis consistent with those used in the
preparation of the latest corresponding annual or quarterly financial statements
furnished to the Banks pursuant to Section 8.01 hereof (or, until such financial
statements are furnished, consistent with those used in the preparation of the
financial statements referred to in Section 7.02(a) hereof) unless (i) the
Company shall have objected to determining such compliance on such basis at the
time of delivery of such financial statements or (ii) the Majority Banks shall
so object in writing within 30 days after delivery of such financial statements,
in either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 8.01 hereof,
Credit Agreement
----------------
<PAGE>
- 29 -
shall mean the financial statements referred to in Section 7.02(a) hereof).
(b) The Company shall deliver to the Banks at the same time as the
delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
paragraph (a) above (which, in the case of the first financial statements
delivered under Section 8.01 hereof, shall mean the financial statements
referred to in Section 7.02(a) hereof) and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
(c) If, under the last sentence of paragraph (a) above, the Company
or the Majority Banks shall object to determining compliance with the covenants
contained herein based upon the latest financial statements delivered under
Section 8.01 hereof, and if the Company and the Banks (or the Majority Banks, as
the case may be) shall enter into an amendment or other modification of the
covenants and other terms and conditions of this Agreement which, in their sole
respective discretion, makes adequate adjustments for any material variation of
the type described in clause (i) of Section 1.02(b) hereof, then neither the
Company nor the Banks shall thereafter have any right to object to determining
compliance with the covenants contained herein based upon said financial
statements.
(d) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 8 hereof, the Company will not change
the last day of its fiscal year from December 31 of each year, or the last days
of the first three fiscal quarters in each of its fiscal years from March 31,
June 30 and September 30 of each year, respectively.
1.03 Classes and Types of Loans. Loans hereunder are distinguished
--------------------------
by "Class" and by "Type". The "Class" of a Loan (or of a Commitment to make a
Loan) refers to whether such Loan is a Competitive Bid Loan, a Revolving Loan, a
Series I Term Loan, a Series II Term Loan or a Swingline Loan, each of which
constitutes a Class. The "Type" of a Loan refers to whether such Loan is a Base
Rate Loan, a Eurodollar Loan, a Set Rate Loan or a LIBOR Bid Loan, each of which
constitutes a Type. Loans may be identified by both Class and Type.
Credit Agreement
----------------
<PAGE>
- 30 -
Section 2. Commitments.
-----------
2.01 Syndicated Loans. Subject to and upon the terms and conditions
----------------
herein set forth, each Bank severally agrees to make loans (each a "Syndicated
----------
Loan" and, collectively, the "Syndicated Loans") to the Company in Dollars up to
- ---- ----------------
but not exceeding the amount of such Bank's Commitment under each of the Series
I Term Loan Facility, the Series II Term Loan Facility and the Revolving Credit
Facility, as set forth below:
(a) Series I Term Loans. Syndicated Loans under the Series I Term
-------------------
Loan Facility shall be available at any time and from time to time from and
after the Amendment Effective Date to and including the Term Loan Commitment
Termination Date. Subject to the terms and conditions of this Agreement, Series
I Term Loans may, at the option of the Company, be borrowed and maintained as,
and/or Converted into, Base Rate Loans or Eurodollar Loans.
(b) Series II Term Loans. Syndicated Loans under the Series II Term
--------------------
Loan Facility shall be available at any time and from time to time from and
after the borrowing of the full amount of the Series I Term Loans to and
including the Term Loan Commitment Termination Date. Subject to the terms and
conditions of this Agreement, Series II Term Loans may, at the option of the
Company, be borrowed and maintained as, and/or Converted into, Base Rate Loans
or Eurodollar Loans.
(c) Revolving Loans. Syndicated Loans under the Revolving Credit
---------------
Facility shall be available at any time and from time to time from and after the
Amendment Effective Date to and including the Revolving Commitment Termination
Date. Subject to the terms and conditions of this Agreement, during such period,
Revolving Loans may be borrowed, repaid and reborrowed and may, at the option of
the Company, be borrowed and maintained as, and/or Converted into, Base Rate
Loans or Eurodollar Loans. Notwithstanding the foregoing, no Revolving Loan
shall be made if the sum of (i) such Revolving Loan (together with all other
Revolving Loans and Competitive Bid Loans to be made on the same day as such
Revolving Loan) plus (ii) the aggregate principal amount of all outstanding
Competitive Bid Loans plus (iii) the aggregate principal amount of all
outstanding Revolving Loans plus (iv) the aggregate principal amount of all
outstanding Swingline Loans exceeds the aggregate amount of the Revolving Credit
Commitments at such time.
2.02 Borrowings of Syndicated Loans.
------------------------------
(a) The Company shall give the Administrative Agent (which shall
promptly notify the Banks) notice of each borrowing of Syndicated Loans
hereunder as provided in Section 4.07 hereof.
Credit Agreement
----------------
<PAGE>
- 31 -
Not later than 1:00 p.m. New York time on the date specified for each Syndicated
Loan borrowing hereunder, each Bank shall make available the amount of the
Syndicated Loan to be made by it on such date to the Administrative Agent, at
account number NYAO-DI-900-9-000002 maintained by the Administrative Agent with
Chase at the Principal Office, in immediately available funds, for account of
the Company. The amount so received by the Administrative Agent shall, subject
to the terms and conditions of this Agreement, be made available to the Company
by depositing the same, in immediately available funds, in an account of the
Company maintained with Chase at the Principal Office designated by the Company.
(b) At any time after the making of any Swingline Loan by the
Swingline Bank until the unpaid principal amount of such Swingline Loan shall
have been paid in full, the Swingline Bank may, and the Company hereby
irrevocably authorizes and empowers (which power is coupled with an interest)
the Swingline Bank to, deliver, on behalf of the Company, to the Administrative
Agent under Section 2.02(a) hereof a notice of borrowing of Syndicated Loans
that are Base Rate Loans in an amount equal to the then unpaid principal amount
of such Swingline Loan. In the event that the power of the Swingline Bank to
give such notice of borrowing on behalf of the Company is terminated for any
reason whatsoever (including, without limitation, a termination resulting from
the occurrence of an event specified in clause (f) or (g) of Section 9 hereof
with respect to the Company), or the Swingline Bank is otherwise precluded for
any reason whatsoever from giving a notice of borrowing on behalf of the Company
as provided in the preceding sentence, each Revolving Credit Bank shall, upon
notice from the Swingline Bank, promptly purchase from the Swingline Bank a
participation in (or, if and to the extent specified by the Swingline Bank, an
assignment of) such Swingline Loan in the amount of the Base Rate Loan it would
have been obligated to make pursuant to such notice of borrowing. Each Revolving
Credit Bank shall, not later than 4:00 p.m. New York time on the Business Day on
which such notice is given (if such notice is given by 2:15 p.m. New York time)
or 9:00 a.m. New York time on the next succeeding Business Day (if such notice
is given after 2:15 p.m., but before 5:00 p.m., New York time), make available
the amount of the Base Rate Loan to be made by it (or the amount of the
participation or assignment to be purchased by it, as the case may be) to the
Administrative Agent at the account specified in Section 2.02(a) hereof and the
amount so received by the Administrative Agent shall promptly be made available
to the Swingline Bank by remitting the same, in immediately available funds, to
the Swingline Bank. Promptly following its receipt of any payment in respect of
such Swingline Loan, the Swingline Bank shall pay to each Revolving Credit Bank
that has acquired a participation in such Swingline Loan such Revolving Credit
Bank's proportionate share of such payment.
Credit Agreement
----------------
<PAGE>
- 32 -
Anything in this Agreement to the contrary notwithstanding (including, without
limitation, in Section 6.02 hereof), the obligation of each Revolving Credit
Bank to make its Base Rate Loan (or purchase its participation in or assignment
of such Swingline Loan, as the case may be) pursuant to this Section 2.02(b) is
unconditional under any and all circumstances whatsoever and shall not be
subject to set-off, counterclaim or defense to payment that such Revolving
Credit Bank may have or have had against the Company, the Administrative Agent,
the Swingline Bank or any other Bank and, without limiting any of the foregoing,
shall be unconditional irrespective of (i) the occurrence of any Default, (ii)
the financial condition of the Company, any Subsidiary, the Administrative
Agent, the Swingline Bank or any other Bank or (iii) the termination or
cancellation of the Revolving Credit Commitments; provided that the Revolving
--------
Credit Banks shall not be obligated to make such Base Rate Loans (or to purchase
participations or direct interests in the Swingline Loan) (i) if, at the time of
the making of such Swingline Loan, the Swingline Bank had actual knowledge that
a Default had occurred and was continuing or (ii) to the extent (and only to the
extent) that such Base Rate Loans, together with all other Revolving Credit
Loans, Competitive Bid Loans and Swingline Loans (other than the Swingline Loan
to be repaid with the proceeds of such Base Rate Loans) then outstanding, would
exceed the then aggregate amount of the Revolving Credit Commitments. The
Company agrees that any Revolving Credit Bank so purchasing a participation (or
assignment) in such Swingline Loan may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Revolving Credit Bank were a direct holder of a Swingline Loan in the
amount of such participation.
2.03 Competitive Bid Loans.
---------------------
(a) In addition to borrowings of Revolving Loans, at any time and
from time to time during an Investment Grade Rating Period and prior to the
Revolving Commitment Termination Date the Company may, as set forth in this
Section 2.03, request the Banks to make offers to make Competitive Bid Loans to
the Company. The Banks may, but shall have no obligation to, make such offers
and the Company may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section 2.03. Competitive Bid Loans may be LIBOR
Bid Loans or Set Rate Loans (each a "Type" of Competitive Bid Loan), provided
--------
that:
(i) there may be no more than fifteen different Interest Periods for
both Syndicated Loans and Competitive Bid Loans outstanding at the same
time (for which purpose Interest Periods described in different lettered
clauses of the definition of the term "Interest Period" shall be deemed
Credit Agreement
----------------
<PAGE>
- 33 -
to be different Interest Periods even if they are coterminous); and
(ii) the aggregate principal amount of all Competitive Bid Loans,
together with the aggregate principal amount of all Revolving Loans and all
Swingline Loans, at any one time outstanding shall not exceed the aggregate
amount of the Revolving Credit Commitments at such time.
(b) When the Company wishes to request offers to make Competitive Bid
Loans, it shall give the Administrative Agent (which shall promptly notify the
Banks) notice (a "Competitive Bid Quote Request") so as to be received no later
-----------------------------
than 11:00 a.m. New York time on (x) the fourth Business Day prior to the date
of borrowing proposed therein, in the case of a LIBOR Auction or (y) the
Business Day next preceding the date of borrowing proposed therein, in the case
of a Set Rate Auction (or, in any such case, such other time and date as the
Company and the Administrative Agent, with the consent of the Majority Banks,
may agree with notice by the Administrative Agent to the Banks of such
agreement), specifying:
(i) the proposed date of such borrowing (a "Competitive Bid
---------------
Borrowing"), which shall be a Business Day;
---------
(ii) the aggregate amount of such Competitive Bid Borrowing, which
shall be $10,000,000 or an integral multiple of $5,000,000 in excess
thereof, but shall not cause the limits specified in Section 2.03(a) hereof
to be violated;
(iii) the duration of the Interest Period applicable thereto;
(iv) whether the Competitive Bid Quotes requested are to set forth a
Competitive Bid Margin or a Competitive Bid Rate;
(v) if the Competitive Bid Quotes requested are to set forth a
Competitive Bid Rate, the date on which the Competitive Bid Quotes are to
be submitted (which may not be earlier than the Business Day next
succeeding the date of the Competitive Bid Quote Request) if it is before
the proposed date of borrowing (the date on which such Competitive Bid
Quotes are to be submitted is called the "Quotation Date" and if no such
--------------
date is specified, the Quotation Date is the proposed date of borrowing);
and
(vi) the aggregate principal amount of all Competitive Bid Loans and
Revolving Loans outstanding at the date of such Competitive Bid Quote
Request.
Credit Agreement
----------------
<PAGE>
- 34 -
The Company may request offers to make Competitive Bid Loans with both
Competitive Bid Margins and Competitive Bid Rates, and with different Interest
Periods, in a single request; provided that (aa) the request for each separate
--------
Type and maturity shall be deemed to be a separate Competitive Bid Quote Request
for a separate Competitive Bid Borrowing and (bb) the Company may not make more
than 5 Competitive Bid Quote Requests at the same time. Except as otherwise
provided in the preceding sentence, no Competitive Bid Quote Request shall be
given within five Business Days (or such other number of days as the Company and
the Administrative Agent, with the consent of the Majority Banks, may agree with
notice by the Administrative Agent to the Banks of such agreement) of any other
Competitive Bid Quote Request.
(c) (i) Each Bank may submit a Competitive Bid Quote containing an
offer to make a Competitive Bid Loan in response to any Competitive Bid Quote
Request; provided that, if the Company's request under Section 2.03(b) hereof
--------
specified more than one Interest Period and/or Type of Competitive Bid Loan,
such Bank may make a single submission containing a separate offer for each such
Interest Period and for each such Type and each such separate offer shall be
deemed to be a separate Competitive Bid Quote. Each Competitive Bid Quote must
be submitted to the Administrative Agent not later than (x) 2:00 p.m. New York
time on the fourth Business Day prior to the proposed date of borrowing, in the
case of a LIBOR Auction or (y) 10:00 a.m. New York time on the Quotation Date,
in the case of a Set Rate Auction (or, in any such case, such other time and
date as the Company and the Administrative Agent, with the consent of the
Majority Banks, may agree with notice by the Administrative Agent to the Banks
of such agreement); provided that any Competitive Bid Quote submitted by Chase
--------
(or its Applicable Lending Office) may be submitted, and may only be submitted,
if Chase (or such Applicable Lending Office) notifies the Company of the terms
of the offer contained therein not later than (x) 1:00 p.m. New York time on the
fourth Business Day prior to the proposed date of borrowing, in the case of a
LIBOR Auction or (y) 9:45 a.m. New York time on the Quotation Date, in the case
of a Set Rate Auction. Subject to Sections 5.02(b), 5.03, 6.02 and 9 hereof, any
Competitive Bid Quote so made shall be irrevocable except with the written
consent of the Administrative Agent given on the instructions of the Company.
(ii) Each Competitive Bid Quote shall specify:
(A) the proposed date of borrowing and the Interest Period
therefor;
Credit Agreement
----------------
<PAGE>
- 35 -
(B) the principal amount of the Competitive Bid Loan for which
each such offer is being made, which principal amount (x) may be
greater than or less than the unused Revolving Credit Commitment of
the quoting Bank, (y) shall be $10,000,000 or an integral multiple of
$5,000,000 in excess thereof and (z) may not exceed the principal
amount of the Competitive Bid Borrowing for which offers were
requested;
(C) in the case of a LIBOR Auction, the margin above or below
the applicable LIBO Rate (the "Competitive Bid Margin") offered for
----------------------
each such Competitive Bid Loan, expressed as a percentage (rounded
upwards, if necessary, to the nearest 1/10,000th of 1%) to be added to
or subtracted from the applicable LIBO Rate;
(D) in the case of a Set Rate Auction, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/10,000th of 1%)
(the "Competitive Bid Rate") offered for each such Competitive Bid
--------------------
Loan; and
(E) the identity of the quoting Bank.
No Competitive Bid Quote shall contain qualifying, conditional or similar
language or propose terms other than or in addition to those set forth in the
applicable Competitive Bid Quote Request and, in particular, no Competitive Bid
Quote may be conditioned upon acceptance by the Company of all (or some
specified minimum) of the principal amount of the Competitive Bid Loan for which
such Competitive Bid Quote is being made; provided that the submission by any
--------
Bank containing more than one Competitive Bid Quote may be conditioned on offers
contained in such submission not being accepted to the extent that it would
result in such Bank making Competitive Bid Loans pursuant thereto in excess of a
specified aggregate amount (the "Competitive Bid Loan Limit").
--------------------------
(d) The Administrative Agent shall (x) in the case of a Set Rate
Auction, as promptly as practicable after the Competitive Bid Quote is submitted
(but in any event not later than 10:15 a.m. New York time) or (y) in the case of
a LIBOR Auction, by 4:00 p.m. New York time on the day a Competitive Bid Quote
is submitted, notify the Company of the terms (i) of any Competitive Bid Quote
submitted by a Bank that is in accordance with Section 2.03(c) hereof and (ii)
of any Competitive Bid Quote that amends, modifies or is otherwise inconsistent
with a previous Competitive Bid Quote submitted by such Bank with respect to the
same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote
shall be disregarded by the Administrative Agent unless such subsequent
Competitive Bid Quote is submitted solely to correct a manifest error in such
Credit Agreement
----------------
<PAGE>
- 36 -
former Competitive Bid Quote. The Administrative Agent's notice to the Company
shall specify (A) the aggregate principal amount of the Competitive Bid
Borrowing for which offers have been received and (B) the respective principal
amounts and Competitive Bid Margins or Competitive Bid Rates, as the case may
be, so offered by each Bank (identifying the Bank that made each Competitive Bid
Quote).
(e) Not later than (x) 11:00 a.m. New York time on the third Business
Day prior to the proposed date of borrowing, in the case of a LIBOR Auction or
(y) 11:00 a.m. New York time on the Quotation Date, in the case of a Set Rate
Auction (or, in any such case, such other time and date as the Company and the
Administrative Agent, with the consent of the Majority Banks, may agree with
notice by the Administrative Agent to the Banks of such agreement), the Company
shall notify the Administrative Agent of its acceptance or nonacceptance of the
offers so notified to it pursuant to Section 2.03(d) hereof (and the failure by
the Company to notify the Administrative Agent of its acceptance of an offer as
provided above shall be deemed to be nonacceptance by the Company of such
offer), and the Administrative Agent shall promptly notify each affected Bank.
In the case of acceptance, such notice by the Administrative Agent shall specify
the aggregate principal amount of offers for each Interest Period that are
accepted and the lowest and highest Competitive Bid Margins and Competitive Bid
Rates that were accepted for each Interest Period. The Company may accept any
Competitive Bid Quote in whole or in part (provided that any Competitive Bid
--------
Quote accepted in part from any Bank shall be $10,000,000 or an integral
multiple of $5,000,000 in excess thereof); provided that:
--------
(i) the aggregate principal amount of each Competitive Bid Borrowing
may not exceed the applicable amount set forth in the related Competitive
Bid Quote Request;
(ii) the aggregate principal amount of each Competitive Bid Borrowing
shall be $10,000,000 or an integral multiple of $5,000,000 in excess
thereof, but shall not cause the limits specified in Section 2.03(a) hereof
to be violated;
(iii) acceptance of offers may only be made in ascending order of
Competitive Bid Margins or Competitive Bid Rates, as the case may be, in
each case beginning with the lowest rates so offered;
(iv) the Company may not accept any offer if the Administrative Agent
has advised the Company that such offer fails to comply with Section
2.03(c)(ii) hereof or otherwise fails to comply with the requirements of
this Agreement (including, without limitation, Section 2.03(a) hereof); and
Credit Agreement
----------------
<PAGE>
- 37 -
(v) the aggregate principal amount of each Competitive Bid Borrowing
from any Bank may not exceed any applicable Competitive Bid Loan Limit of
such Bank.
If offers are made by two or more Banks with the same Competitive Bid Margins or
Competitive Bid Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which offers are permitted to be accepted
for the related Interest Period, the principal amount of Competitive Bid Loans
in respect of which such offers are accepted shall be allocated by the Company
among such Banks as nearly as possible (in integral multiples of $5,000,000) in
proportion to the aggregate principal amount of such offers. Determinations by
the Company of the amounts of Competitive Bid Loans shall be conclusive in the
absence of manifest error.
(f) Any Bank whose offer to make any Competitive Bid Loan has been
accepted shall, not later than 1:00 p.m. New York time on the date specified for
the making of such Loan, make the amount of such Loan available to the
Administrative Agent at the Principal Office in immediately available funds. The
amount so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Company on such date by
depositing the same, in immediately available funds, in an account of the
Company maintained with Chase at the Principal Office designated by the Company.
(g) Except for the purpose and to the extent expressly stated in
Section 2.04(a) hereof, the amount of any Competitive Bid Loan made by any Bank
shall not constitute a utilization of such Bank's Revolving Credit Commitment.
2.04 Changes of Commitments.
----------------------
(a) Voluntary Reduction of Commitments. The Company shall have the
----------------------------------
right to terminate or reduce the unused amount of the Commitments (solely for
which purpose the amount of any Competitive Bid Borrowing and outstanding
Swingline Loans shall be deemed to be a pro rata (based upon Commitments)
utilization of each Revolving Credit Bank's Revolving Credit Commitment) at any
time or from time to time upon not less than three Business Days' prior notice
to the Administrative Agent (which shall promptly notify the Banks) of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction (which shall be $25,000,000 or an integral
multiple of $5,000,000 in excess thereof) and shall be irrevocable and effective
only upon receipt by the Administrative Agent; provided that (i) the aggregate
--------
amount of the Revolving Credit Commitments shall at no time be less than the
amount of the Swingline Commitment as then in effect and (ii) the aggregate
Credit Agreement
----------------
<PAGE>
- 38 -
amount of the Revolving Credit Commitments shall at no time be less than the
aggregate unpaid principal amount of all Revolving Loans, Swingline Loans and
Competitive Bid Loans.
(b) Termination of Commitments. The Revolving Credit Commitments and
--------------------------
the Swingline Commitment shall terminate on the Revolving Commitment Termination
Date and the Series I Term Loan Commitments and the Series II Term Loan
Commitments shall terminate on the Term Loan Commitment Termination Date.
(c) Reduction of Swingline Commitment. The Company shall have the
---------------------------------
right to terminate or reduce the unused amount of the Swingline Commitment at
any time or from time to time upon not less than three Business Days' prior
notice to the Administrative Agent (which shall promptly notify the Swingline
Bank and each Bank) of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction (which
shall be at least $25,000,000 and in integral multiples of $5,000,000) and shall
be irrevocable and effective only upon receipt by the Administrative Agent;
provided that the Swingline Commitment shall at no time be less than the
- --------
aggregate unpaid principal amount of the Swingline Loans.
(d) No Reinstatement. The Commitments and the Swingline Commitment
----------------
once terminated or reduced may not be reinstated.
(e) Bank Replacement. If any Bank requests compensation pursuant to
----------------
Section 5.01 hereof (other than compensation requested under Section 5.01(e)
hereof), the Company may, so long as no Default shall have occurred and be
continuing, require that such Bank transfer all or a portion of its rights and
obligations (including, without limitation, its Loans and Commitments) as a
"Bank" under this Agreement and such Bank's Notes to one or more banks (such
bank or banks being herein referred to as the "Replacement Bank(s)") identified
-------------------
by the Company in a notice (the "Replacement Notice") to the Administrative
------------------
Agent (which shall promptly notify the affected Bank) specifying the date on
which such transfer is to occur and whether all or a portion of said rights and
obligations are proposed to be transferred, which notice shall be given not less
than 10 Business Days prior to the date on which such transfer is to occur;
provided that no such transfer shall be made unless (i) the Administrative Agent
- --------
shall have consented to the identity of the Replacement Bank(s), which consent
shall not be unreasonably withheld or delayed, (ii) the aggregate amount of
compensation that would be requested by the Replacement Bank(s) under Section
5.01 hereof would be less than the aggregate amount of compensation requested by
the affected Bank in respect of the rights and obligations proposed to be
transferred, (iii) the Commitments proposed to be transferred to the Replacement
Credit Agreement
----------------
<PAGE>
- 39 -
Bank(s), together with the aggregate amount of the Commitments transferred
pursuant to this Section 2.04(e) during the preceding period of 12 months shall
not exceed 17.5% of the aggregate amount of the Commitments as in effect on the
date of the proposed transfer and (iv) the amount of the Commitments proposed to
be transferred to any Replacement Bank shall be at least $10,000,000 (or, if
less than $10,000,000, the entire Commitments of the affected Bank). On the date
of any transfer permitted under this Section 2.04(e), (x) the affected Bank
shall sell, assign and transfer to the Replacement Bank(s), and the Replacement
Bank(s) shall acquire and assume from the affected Bank, all (or the lesser
portion specified in the Replacement Notice) of the rights and obligations of
the affected Bank as a "Bank" under this Agreement and under the affected Bank's
Notes (collectively, the "Transferred Interest") and (y) the Company and/or the
--------------------
Replacement Bank(s) shall pay to the affected Bank an amount equal to all
principal, interest, fees and other amounts then owing under this Agreement and
the affected Bank's Notes in respect of the Transferred Interest (including,
without limitation, any amounts which would be payable in respect of the
Transferred Interest under Sections 5.01 and 5.05 hereof as if the affected
Bank's Loans were being prepaid in full on such date), whereupon the Replacement
Bank(s) shall become "Bank(s)" for all purposes of this Agreement having all the
rights and obligations, including, without limitation, Commitment(s), under this
Agreement of "Bank(s)" holding the Transferred Interest, and the obligations of
the affected Bank in respect of the Transferred Interest (including, if such
Bank is the Swingline Bank, its Swingline Commitment) shall terminate (provided
--------
that the obligations of the Company under Sections 5.01, 5.05 and 11.03 hereof
to the affected Bank in respect of the Transferred Interest shall survive such
transfer as provided in Section 11.07 hereof). If the Commitments of any Bank
that is a Reference Bank (or whose Applicable Lending Office is a Reference
Bank, as the case may be) shall terminate (other than pursuant to Section 9
hereof), such Reference Bank shall thereupon cease to be a Reference Bank and,
if as a result of the foregoing, there shall be only two Reference Banks
remaining, then the Administrative Agent (after consultation with the Company)
shall, by notice to the Company and the Banks, designate another Bank as a
Reference Bank.
Credit Agreement
----------------
<PAGE>
- 40 -
2.05 Fees.
----
(a) The Company shall pay to the Administrative Agent for account of
each Term Loan Bank a commitment fee on the daily average unused amount of such
Bank's Term Loan Commitment for the period from and including the Restatement
Date to but excluding the earlier of the date such Term Loan Commitment is
terminated or the Term Loan Commitment Termination Date at a rate equal to
0.375% per annum. Accrued commitment fee shall be payable on the earlier of the
date the Term Loan Commitments are terminated or the Term Loan Commitment
Termination Date.
(b) The Company shall pay to the Administrative Agent for account of
each Revolving Credit Bank a facility fee on the daily average amount of such
Bank's Revolving Credit Commitment (whether or not utilized) for the period from
and including the Restatement Date to but excluding the earlier of the date such
Commitment is terminated or the Revolving Commitment Termination Date at a rate
per annum equal to the Applicable Facility Fee Rate. Accrued facility fee shall
be payable on each Quarterly Date and on the earlier of the date the Revolving
Credit Commitments are terminated or the Revolving Commitment Termination Date.
(c) The Company shall pay to the Administrative Agent for the
Administrative Agent's account a fee of $3,000 for each Competitive Bid Quote
Request (for which purpose multiple Competitive Bid Quote Requests contained in
a single request shall be deemed to be a single Competitive Bid Quote Request
notwithstanding the provisions of the second sentence of Section 2.03(b)
hereof), such fees to be payable in arrears on the last Business Day of each
month.
2.06 Lending Offices. The Loans of each Type made by each Bank shall
---------------
be made and maintained at such Bank's Applicable Lending Office for Loans of
such Type. The Swingline Loans shall be made and maintained at the Applicable
Lending Office of the Swingline Bank for Swingline Loans.
2.07 Several Obligations; Remedies Independent. The failure of any
-----------------------------------------
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make any Loan to be made by such
other Bank on such date, but no Bank shall be responsible for the failure of any
other Bank to make a Loan to be made by such other Bank. The amounts payable by
the Company at any time hereunder and under the Notes to each Bank shall be a
separate and independent debt and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement and the Notes, and it shall not
be necessary for any other Bank or the Administrative Agent to
Credit Agreement
----------------
<PAGE>
- 41 -
consent to, or be joined as an additional party in, any proceedings for such
purposes.
2.08 Notes.
-----
(a) The Syndicated Loans made by each Bank shall be evidenced (i) if
Series I Term Loans, by a single promissory note of the Company in substantially
the form of Exhibit A-1 hereto, dated the Restatement Date, payable to such Bank
in a principal amount equal to its Series I Term Loan Commitment and otherwise
duly completed (each a "Series I Term Note" and collectively the "Series I Term
------------------ -------------
Notes"), (ii) if Series II Term Loans, by a single promissory note of the
- -----
Company in substantially the form of Exhibit A-2 hereto, dated the Restatement
Date, payable to such Bank in a principal amount equal to its Series II Term
Loan Commitment and otherwise duly completed (each a "Series II Term Note",
-------------------
collectively the "Series II Term Notes" and, together with the Series I Term
--------------------
Notes, the "Term Notes") and (iii) if Revolving Loans, by a single promissory
----------
note of the Company substantially in the form of Exhibit A-3 hereto, dated the
Restatement Date, payable to such Bank in a principal amount equal to its
Revolving Credit Commitment as originally in effect and otherwise duly completed
(each a "Revolving Note" and collectively the "Revolving Notes"). The date,
-------------- ---------------
amount, Type and interest rate of each Series I Term Loan, each Series II Term
Loan and each Revolving Loan made by each Bank, and all payments made on account
of the principal thereof, shall be recorded by such Bank on its books and, prior
to any transfer of the Note evidencing the same, endorsed by such Bank on the
schedule attached to such Note or any continuation thereof; provided that the
--------
failure by such Bank to make such recordation or endorsement shall not relieve
the Company of any of its obligations hereunder or under such Note.
(b) The Competitive Bid Loans made by each Bank shall be evidenced by
a single promissory note of the Company in substantially the form of Exhibit A-4
hereto, dated the Restatement Date, payable to such Bank and otherwise duly
completed. The date, amount, Type, interest rate and maturity date of each
Competitive Bid Loan made by any Bank, and all payments made on account of the
principal thereof, shall be recorded by such Bank on its books and, prior to any
transfer of such Note held by it, endorsed by such Bank on the schedule attached
to such Note or any continuation thereof; provided that the failure by such Bank
--------
to make such recordation or endorsement shall not relieve the Company of any of
its obligations hereunder or under such Note.
(c) The Swingline Loans made by the Swingline Bank shall be evidenced
by a single promissory note of the Company in substantially the form of Exhibit
A-5 hereto, dated the
Credit Agreement
----------------
<PAGE>
- 42 -
Restatement Date, payable to the Swingline Bank in a principal amount equal to
the amount of its Swingline Commitment as originally in effect and otherwise
duly completed. The date and amount of each Swingline Loan and each payment made
on account of the principal thereof, shall be recorded by the Swingline Bank on
its books and, prior to any transfer of its Swingline Note, endorsed by the
Swingline Bank on the schedule attached to the Swingline Note or any
continuation thereof; provided that the failure by the Swingline Bank to make
any such recordation or endorsement shall not affect any of the obligations of
the Company hereunder or under the Swingline Note.
(d) No Note may be subdivided, by exchange for promissory notes of
lesser denominations or otherwise, except in connection with a permitted
assignment of all or any portion of such Bank's Commitments, Loans and Notes
pursuant to Sections 11.06(b) and 11.06(f) hereof. The Swingline Note may not be
subdivided, by exchange for promissory notes of lesser denominations or
otherwise, except in connection with an assignment permitted pursuant to Section
11.06(c) hereof of all or any portion of the Swingline Bank's Swingline
Commitment, the Swingline Loans and the Swingline Note.
2.09 Optional Prepayments and Conversions or Continuations of Loans.
--------------------------------------------------------------
Subject to Sections 4.06, 4.07 and 5.05 hereof, the Company shall have the right
to prepay Syndicated Loans or Swingline Loans, or to Convert Syndicated Loans of
one Type into Syndicated Loans of another Type or Continue Syndicated Loans of
one Type as Syndicated Loans of the same Type, at any time or from time to time,
provided that: (a) the Company shall give the Administrative Agent notice of
- --------
each such prepayment, Conversion or Continuation as provided in Section 4.07
hereof (and, upon the date specified in any such notice of prepayment, the
amount to be prepaid shall become due and payable hereunder); (b) Eurodollar
Loans may be prepaid or Converted only on the last day of an Interest Period for
such Loans; (c) Syndicated Loans may not be prepaid at any time that any
Swingline Loan is outstanding and (d) prepayments of the Term Loans shall be
applied first, to the then-remaining installments of the Series II Term Loans in
-----
the direct order of their maturities and second, to the aggregate outstanding
------
principal amount of the Series I Term Loans. No Competitive Bid Loan may be
prepaid without the consent of the Bank holding such Competitive Bid Loan
(provided that this sentence shall not affect the Company's obligation to pay
--------
Loans pursuant to Section 9 hereof). Notwithstanding the foregoing, and without
limiting the rights and remedies of the Banks under Section 9 hereof, in the
event that any Event of Default specified in Section 9(a) or 9(b)(i) hereof
shall have occurred and be continuing, the Administrative Agent may (and at the
request of the Majority Banks shall) suspend the right of the Company to Convert
any Syndicated Loan into a Eurodollar Loan, or
Credit Agreement
----------------
<PAGE>
- 43 -
to Continue any Syndicated Loan as a Eurodollar Loan, in which event all
Syndicated Loans shall be Converted into (on the last day(s) of the respective
Interest Periods therefor) or Continued as Base Rate Loans.
2.10 Mandatory Prepayments.
---------------------
(a) Equity Issuance. Upon any Equity Issuance during a Mandatory
---------------
Prepayment Period after the Amendment Effective Date, the Company shall prepay
the Term Loans in an aggregate amount equal to 100% of the Net Available
Proceeds thereof, such prepayment to be effected in the manner and to the extent
specified in paragraph (f) of this Section 2.10.
(b) Excess Cash Flow. If on the last day of any fiscal year of the
----------------
Company ending after the Amendment Effective Date a Mandatory Prepayment Period
is in effect, then not later than the date 105 days after the end of such fiscal
year, the Company shall prepay the Term Loans in an aggregate amount equal to
the excess of (A) 50% of Excess Cash Flow for such fiscal year over (B) the
aggregate amount of voluntary prepayments of Term Loans made during such fiscal
year after the Term Loan Commitment Termination Date pursuant to Section 2.09
hereof, such prepayment to be effected in each case in the manner and to the
extent specified in paragraph (f) of this Section 2.10; provided that the
--------
Company shall not be required to make such prepayment if such excess amount is
less than $10,000,000.
(c) Sale of Assets. Without limiting the obligation of the Company
--------------
to obtain the consent of the Majority Banks pursuant to Section 8.09 hereof to
any Disposition not otherwise permitted under Section 8.09 hereof, in the event
of any Disposition made after the Amendment Effective Date while a Mandatory
Prepayment Period is in effect (or, if after giving effect to any such
Disposition, a Mandatory Prepayment Period would exist), (i) no later than five
Business Days prior to the occurrence of such Disposition resulting in Net
Available Proceeds of $5,000,000 or more, the Company will deliver to the Banks
a statement, certified by a senior financial officer of the Company, in form and
detail satisfactory to the Administrative Agent, of the aggregate amount of the
Net Available Proceeds of such Disposition and (ii) the Company shall prepay the
Term Loans in an aggregate amount equal to 100% of the Net Available Proceeds
received from such Disposition (except that Net Available Proceeds consisting of
Permitted Buyer Indebtedness need not be applied to such prepayment until the
earlier of any payment or Disposition of such Permitted Buyer Indebtedness and
then only to the extent of such payment or the Net Available Proceeds of such
Disposition), such prepayment to be effected in each case in the manner and to
the extent specified in paragraph (f) of this Section 2.10.
Credit Agreement
----------------
<PAGE>
- 44 -
(d) Funded Debt Incurrence. Upon the creation, incurrence or
----------------------
issuance by the Company or any of the Subsidiaries after the Amendment Effective
Date of any Funded Debt (other than (i) the Loans, (ii) Working Capital Credit
Lines, (iii) Capital Lease Obligations and (iv) Indebtedness secured by Liens
permitted by Section 8.10(f) hereof) during a Mandatory Prepayment Period (or,
if after giving effect to any such creation, incurrence or issuance of Funded
Debt, a Mandatory Prepayment Period would exist), the Company shall prepay the
Term Loans in an aggregate amount equal to 100% of all cash received by the
Company and the Subsidiaries in respect of such Funded Debt (net of expenses
incurred by the Company and the Subsidiaries in connection therewith), such
prepayment to be effected in the manner and to the extent specified in paragraph
(f) of this Section 2.10.
(e) Purchase Price Adjustments. During a Mandatory Prepayment
--------------------------
Period, the Company shall prepay the Term Loans in an aggregate amount equal to
any purchase price adjustments received by the Company from the Seller under
Section 2.3 of the Asset Purchase Agreement, such prepayment to be effected in
the manner and to the extent specified in paragraph (f) of this Section 2.10;
provided that the Company shall not be required to make such prepayment if such
- --------
adjustments aggregate less than $10,000,000.
(f) Application.
-----------
(i) Prepayments of Term Loans described in paragraphs (a), (c), (d)
and (e) above shall be applied first to the aggregate outstanding principal
amount of the Series I Term Loans and second to the then-remaining
------
installments of the Series II Term Loans ratably.
(ii) Prepayments of Term Loans described in paragraph (b) above shall
be applied first to the then-remaining installments of the Series II Term
-----
Loans in the direct order of their maturities and second to the aggregate
------
outstanding principal amount of the Series I Term Loans.
(iii) If any such prepayment would obligate the Company to make a
payment under Section 5.05 hereof, such prepayment may, so long as no
Default shall have occurred and be continuing, be delayed until the earlier
of (i) the last day of any then current Interest Period and (ii) 30 days
after such prepayment would otherwise have to have been made.
2.11 Swingline Loans.
---------------
Credit Agreement
----------------
<PAGE>
- 45 -
(a) The Swingline Bank hereby agrees, on the terms and conditions
of this Agreement, to make loans ("Swingline Loans") to the Company in Dollars
---------------
during the period from and including the Amendment Effective Date to but not
including the Revolving Commitment Termination Date in an aggregate amount at
any one time outstanding up to but not exceeding its Swingline Commitment;
provided that the aggregate unpaid principal amount of all Swingline Loans,
- --------
together with the aggregate unpaid principal amount of all Revolving Loans and
all Competitive Bid Loans, at any one time outstanding may not exceed the
aggregate amount of the Revolving Credit Commitments. Subject to the terms of
this Agreement, the Company may borrow, repay and reborrow the amount of the
Swingline Commitment by means of Base Rate Loans; provided that, unless the
Swingline Bank shall otherwise agree, (i) Swingline Loans may not be borrowed
more than ten (10) times per year and (ii) no Swingline Loans may be outstanding
on the last day of any calendar quarter.
(b) The Company shall, not later than 2:00 p.m. New York time on
the date on which the Company proposes to borrow a Swingline Loan, give the
Administrative Agent (which shall promptly notify the Swingline Bank and the
Banks) notice of such borrowing (a "Swingline Borrowing Notice"), which notice
--------------------------
shall be irrevocable and effective only upon receipt by the Administrative Agent
and shall specify the principal amount of the Swingline Loan to be borrowed
(which shall be at least $5,000,000 and in integral multiples of $1,000,000).
Not later than 3:00 p.m. New York time, on the date specified in each Swingline
Borrowing Notice hereunder, the Swingline Bank shall, subject to the terms of
this Agreement, make the amount of the Swingline Loan to be made by it on such
date available to the Administrative Agent in account number NYAO-DI-900-9-
000002 maintained by the Administrative Agent with Chase at the Principal Office
in immediately available funds, for account of the Company. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Company on such date by depositing
the same, in immediately available funds, in an account of the Company
maintained with Chase at the Principal Office designated by the Company.
Section 3. Payments of Principal and Interest.
----------------------------------
3.01 Repayment of Loans.
------------------
(a) The Company hereby promises to pay to the Administrative Agent
for account of each Bank the entire outstanding principal amount of such Bank's
Revolving Loans, and each Revolving Loan shall mature, on the Revolving
Commitment Termination Date.
Credit Agreement
----------------
<PAGE>
- 46 -
(b) The Company hereby promises to pay to the Administrative Agent
for account of each Bank that makes any Competitive Bid Loan the principal
amount of such Competitive Bid Loan, and such Competitive Bid Loan shall mature,
on the last day of the Interest Period for such Competitive Bid Loan.
(c) The Company hereby promises to pay to the Administrative Agent
for account of each Bank the entire outstanding principal amount of such Bank's
Series I Term Loans, and each Series I Term Loan shall mature, on the Series I
Term Loan Final Maturity Date.
(d) The Company hereby promises to pay to the Administrative Agent
for account of the Banks the aggregate principal amount of the Series II Term
Loans in 24 equal consecutive quarterly installments payable on the Series II
Principal Payment Dates.
(e) The Company hereby promises to pay to the Administrative Agent
for account of the Swingline Bank the principal of each Swingline Loan at or
prior to, and such Swingline Loan shall mature at, 1:00 p.m. New York time on
the fifth Business Day immediately following the day on which such Swingline
Loan was made (the "Swingline Maturity Date").
-----------------------
3.02 Interest.
--------
(a) Syndicated Loans and Competitive Bid Loans. The Company hereby
------------------------------------------
promises to pay to the Administrative Agent for account of each Bank interest on
the unpaid principal amount of each Loan made by such Bank for the period
commencing on the date of such Loan to but excluding the date such Loan shall be
paid in full, at the following rates per annum:
(i) during such period as such Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) plus the Applicable Margin (if any);
(ii) during such period as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Fixed Base Rate for such Loan for
such Interest Period plus the Applicable Margin;
(iii) if such Loan is a LIBOR Bid Loan, the LIBO Rate for such Loan
for the Interest Period therefor plus (or minus) the Competitive Bid Margin
quoted by the Bank making such Loan in accordance with Section 2.03 hereof;
and
(iv) if such Loan is a Set Rate Loan, the Competitive Bid Rate for
such Loan for the Interest Period therefor
Credit Agreement
----------------
<PAGE>
- 47 -
quoted by the Bank making such Loan in accordance with Section 2.03 hereof.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Bank interest at the applicable Post-
Default Rate on any principal of any Loan made by such Bank, and on any other
amount payable by the Company hereunder or under any Note held by such Bank to
or for account of such Bank, which shall not be paid in full when due (whether
at stated maturity, by acceleration or otherwise), for the period commencing on
the due date thereof until the same is paid in full. Accrued interest on each
Loan shall be payable (i) in the case of a Base Rate Loan, quarterly on the
Quarterly Dates, (ii) in the case of a Eurodollar Loan or a Competitive Bid
Loan, on the last day of each Interest Period therefor and, if such Interest
Period is longer than 90 days (in the case of a Set Rate Loan) or three months
(in the case of a Eurodollar Loan or a LIBOR Bid Loan), at 90-day or three-month
intervals, respectively, following the first day of such Interest Period, and
(iii) in the case of any Loan, upon the payment or prepayment thereof or the
Conversion of such Loan to a Loan of another Type (but only on the principal
amount so paid, prepaid or Converted), except that interest payable at the Post-
Default Rate shall be payable from time to time on demand. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Administrative Agent shall notify the Banks to which such interest is
payable and the Company thereof.
(b) Swingline Loans. The Company hereby promises to pay to the
---------------
Administrative Agent for account of the Swingline Bank interest on the unpaid
principal amount of each Swingline Loan for the period from and including the
day such Swingline Loan is made to but excluding the Swingline Maturity Date
applicable thereto at the Base Rate (as in effect from time to time) plus the
Applicable Margin (if any) for Revolving Loans that are Base Rate Loans, which
interest shall be payable on such Swingline Maturity Date. The Company hereby
promises to pay to the Administrative Agent for account of the Swingline Bank
interest at the applicable Post-Default Rate on any principal of or interest on
any Swingline Loan that shall not be paid in full when due for the period from
and including the Swingline Maturity Date thereof to but excluding the date the
same is paid in full. Interest payable at the Post-Default Rate shall be payable
from time to time on demand of the Swingline Bank.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
-----------------------------------------------
4.01 Payments. Except to the extent otherwise provided herein, all
--------
payments of principal, interest and other amounts to be made by the Company
under this Agreement and the
Credit Agreement
----------------
<PAGE>
- 48 -
Notes shall be made in Dollars, in immediately available funds, to the
Administrative Agent at account number NYAO-DI-900-9-000002 maintained by the
Administrative Agent with Chase at the Principal Office, not later than 1:00
p.m. New York time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Any Bank or the Swingline Bank for whose
account any such payment is to be made, may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Company with such Bank or the Swingline Bank, as
the case may be (with notice to the Company and the Administrative Agent
provided that such Bank's failure to give such notice shall not affect the
- --------
validity of any such debit). The Company shall, at the time of making each
payment under this Agreement or any Note for account of any Bank or the
Swingline Bank, specify to the Administrative Agent the Loans or other amounts
payable by the Company hereunder to which such payment is to be applied (and in
the event that it fails to so specify, or if an Event of Default has occurred
and is continuing, the Administrative Agent shall distribute such payment first
-----
to the Swingline Bank (to the extent any amounts are then due and payable to the
Swingline Bank on account of the Swingline Loans) and then to the Banks pro rata
----
(based on the amounts then due and payable hereunder to the Banks) and each Bank
or the Swingline Bank, as the case may be, may apply the portion of such payment
received by it to such amounts then due and payable hereunder to such Bank or
the Swingline Bank, as the case may be, as such Bank or the Swingline Bank, as
the case may be, may determine). Each payment received by the Administrative
Agent under this Agreement or any Note for account of a Bank or the Swingline
Bank shall be paid promptly to such Bank or the Swingline Bank, as the case may
be, in immediately available funds, and, in the case of principal or interest on
any Loan, for account of such Bank's or the Swingline Bank's, as the case may
be, Applicable Lending Office for such Loan. If the due date of any payment
under this Agreement or any Note would otherwise fall on a day which is not a
Business Day such date shall be extended to the next succeeding Business Day,
and interest shall be payable for any principal so extended for the period of
such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (a) each borrowing of Syndicated Loans of a particular Class from the
Banks under Section 2.01 hereof shall be made from the Banks, each payment of
Fees under Sections 2.05(a) and (b) hereof shall be made for account of the
Banks, and each termination or reduction of the amount of the Commitments under
Section 2.04 hereof shall be applied to the respective Commitments of the Banks,
pro rata according to the amounts of their respective Commitments; (b) the
making, Conversion and Continuation of Revolving Loans, Series I Term Loans and
Series II Term Loans of a particular Type (other than Conversions provided for
by Section 5.04 hereof) shall be made pro rata among the relevant Banks
according to the amounts of their respective Revolving Credit, Series I Term
Loan and Series II Term Loan Commitments (in the case of making of Loans) or
their respective Revolving Credit, Series I Term
Credit Agreement
----------------
<PAGE>
- 49 -
Loans and Series II Term Loans of a particular Type (other than Conversions
provided for by Section 5.04 hereof) shall be made pro rata among the relevant
Banks according to the amounts of their respective Revolving Credit, Series I
Term Loan and Series II Term Loan Commitments (in the case of making of Loans)
or their respective Revolving Credit, Series I Term Loan and Series II Term
Loans (in the case of Conversions and Continuations of Loans); (c) except as
otherwise provided in Section 5.04 hereof, Eurodollar Loans having the same
Interest Period shall be allocated pro rata among the Banks according to the
amounts of their respective Commitments; (d) each payment or prepayment of
principal of Syndicated Loans of any Class and Type by the Company shall be made
for account of the Banks pro rata in accordance with the respective unpaid
principal amounts of the Syndicated Loans of such Class and Type held by the
Banks; and (e) each payment of interest on Syndicated Loans of any Class and
Type by the Company shall be made for account of the Banks pro rata in
accordance with the amounts of interest on Syndicated Loans of such Class and
Type due and payable to the respective Banks.
4.03 Computations. Interest on Competitive Bid Loans and Eurodollar
------------
Loans, and Fees payable pursuant to Section 2.05 hereof, respectively, shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable, and interest on Base Rate Loans shall be computed on the basis of a
year of 365 or 366 days, as the case may be (or, for each day the interest on
Base Rate Loans is calculated by reference to the Federal Funds Rate, on a year
of 360 days), and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable.
4.04 Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have been notified by a Bank or the Company (each, a
"Payor") prior to the date on which the Payor is to make payment to the
-----
Administrative Agent of (in the case of a Bank) the proceeds of a Loan to be
made by it hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Banks hereunder (such
payment being herein called the "Required Payment"), which notice shall be
----------------
effective upon receipt, that it does not intend to make the Required Payment to
the Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date; and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day
Credit Agreement
----------------
<PAGE>
- 50 -
during the period commencing on the date such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day.
4.05 Sharing of Payments, Etc. The Company agrees that, in addition
------------------------
to (and without limitation of) any right of set-off, bankers' lien or
counterclaim a Bank or the Swingline Bank may otherwise have, each Bank and the
Swingline Bank shall be entitled, at its option, to offset balances held by it
or any of its affiliates at any of its respective offices for account of the
Company, in Dollars or in any other currency, against any principal of or
interest on any of such Bank's or the Swingline Bank's Loans, or any other
amount payable to such Bank or the Swingline Bank (as the case may be)
hereunder, which is not paid when due (regardless of whether such balances are
then due to the Company), in which case it shall promptly notify the Company and
the Administrative Agent thereof, provided that such Bank's or the Swingline
--------
Bank's failure to give such notice shall not affect the validity thereof. If any
Bank shall obtain payment of any principal of or interest on any Syndicated Loan
of any Class owing to it by the Company, or in respect of its interest in any
Swingline Loan, through the exercise of any right of set-off, bankers' lien or
counterclaim or similar right or otherwise, and, as a result of such payment,
such Bank shall have received a greater percentage of the principal of or
interest on its Syndicated Loans of such Class, or in respect of its interest in
any Swingline Loan, then due hereunder by the Company than the percentage
received by any other Bank, it shall promptly purchase from such other Banks
participations in (or, if and to the extent specified by such Bank, direct
interests in) the Syndicated Loans of such Class or Swingline Loans,
respectively, owing to such other Banks (or in interest due thereon, as the case
may be) in such amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all the Banks shall share the benefit of
such excess payment (net of any expenses which may be incurred by such Bank in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Syndicated Loans of such Class or
Swingline Loans, respectively, owing to each of the Banks. To such end all the
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. The Company agrees that any Bank so purchasing such a participation
(or direct interest) in the Syndicated Loans made by other Banks (or in interest
due thereon, as the case may be) may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation (or
direct interest) as fully as if such Bank were a direct holder of Loans in the
amount of such participation. Nothing contained herein shall require any Bank to
exercise any such right of set-off, banker's lien or
Credit Agreement
----------------
<PAGE>
- 51 -
counterclaim or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Company. If under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section 4.05 applies, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Banks entitled under this Section 4.05 to share in the
benefits of any recovery on such secured claim.
4.06 Minimum Amounts. Except for mandatory prepayments pursuant to
---------------
Section 2.10 hereof and Conversions or prepayments made pursuant to Section 5.04
hereof, each borrowing, Conversion and partial prepayment of principal of Base
Rate Loans shall be in an aggregate amount at least equal to $10,000,000 or in
integral multiples of $1,000,000 in excess thereof and each borrowing,
Conversion and partial prepayment of principal of Eurodollar Loans shall be in
an aggregate amount at least equal to $25,000,000 or in integral multiples of
$5,000,000 in excess thereof (borrowings, Conversions and prepayments of or into
Loans of different Types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings,
Conversions and prepayments for purposes of the foregoing, one for each Type or
Interest Period). Anything in this Agreement to the contrary notwithstanding,
the aggregate principal amount of Eurodollar Loans having the same Interest
Period shall be in an amount at least equal to $25,000,000 or in integral
multiples of $1,000,000 in excess thereof and, if any Eurodollar Loans would
otherwise be in a lesser principal amount for any period, such Loans shall be
Base Rate Loans during such period.
4.07 Certain Notices. Except as otherwise provided in Section 2.03
---------------
hereof with respect to Competitive Bid Loans, notices by the Company to the
Administrative Agent of terminations or reductions of the Commitments, of
borrowings, Conversions, Continuations and optional prepayments of Loans and of
Classes of Loans, of Types of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 11:00 a.m. New York time on the number of
Business Days prior to the date of the relevant termination, reduction,
Conversion, Continuation or prepayment or the first day of such Interest Period
specified below:
Credit Agreement
----------------
<PAGE>
- 52 -
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Termination or reduction
of Commitments 3
Borrowing or prepayment of, or Conversions
into, Base Rate Loans 1
Borrowing or optional prepayment of,
Conversions into, Continuations as, or
duration of Interest Period
for, Eurodollar Loans 3
</TABLE>
provided that, with respect to the Syndicated Loans made on the Amendment
Effective Date, notice of the borrowing of, and the duration of Interest Periods
for, Eurodollar Loans may be given prior to the Amendment Effective Date so long
as the Company shall have indemnified the Banks on terms comparable to those
contained in Section 5.05 hereof.
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class of Loans to be borrowed, Converted, Continued or prepaid and the amount
(subject to Section 4.06 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid (and, in the case of a Conversion, the Type of
Loan to result from such Conversion) and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the Banks of the contents of each such notice. In the event that the
Company fails to select the Type of Loan, or the duration of any Interest Period
for any Eurodollar Loan, within the time period and otherwise as provided in
this Section 4.07, such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.
Credit Agreement
----------------
<PAGE>
- 53 -
Section 5. Yield Protection and Illegality.
-------------------------------
5.01 Additional Costs.
----------------
(a) The Company shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
costs which such Bank determines are attributable to its making or maintaining
of any Fixed Rate Loans or its obligation to make any Fixed Rate Loans
hereunder, or any reduction in any amount receivable by such Bank hereunder in
respect of any of such Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
----------------
resulting from any Regulatory Change which: (i) changes the basis of taxation of
any amounts payable to such Bank under this Agreement or its Notes in respect of
any of such Loans (other than taxes imposed on the overall net income of such
Bank or of its Applicable Lending Office for any of such Loans by the
jurisdiction in which such Bank has its principal office or such Applicable
Lending Office); or (ii) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank (including any of such Loans or any deposits referred
to in the definition of "Fixed Base Rate" in Section 1.01 hereof), or any
Commitment of such Bank; or (iii) imposes any other condition affecting this
Agreement or its Notes (or any of such extensions of credit or liabilities) or
Commitment. Each Bank will designate a different Applicable Lending Office for
the Loans of such Bank affected by such event if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Bank, be disadvantageous to such Bank, provided that such Bank
--------
shall have no obligation to so designate an Applicable Lending Office located in
the United States. If any Bank requests compensation from the Company under this
Section 5.01(a), the Company may, by notice to such Bank (with a copy to the
Administrative Agent), suspend the obligation of such Bank to make additional or
Continue Loans of the Type with respect to which such compensation is requested,
or to Convert Loans of any Type into Loans of such Type, until the Regulatory
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 5.04 hereof shall be applicable).
(b) Without limiting the effect of the provisions of Section 5.01(a)
hereof, in the event that, by reason of any Regulatory Change, any Bank either
(i) incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of such Bank
which includes deposits by reference to which the interest rate on Eurodollar
Loans is determined as provided in this
Credit Agreement
----------------
<PAGE>
- 54 -
Agreement or a category of extensions of credit or other assets of such Bank
which includes Eurodollar Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold, then, if
such Bank so elects by notice to the Company (with a copy to the Administrative
Agent), the obligation of such Bank to make additional or Continue, or to
Convert Loans of any other Type into, Loans of such Type hereunder shall be
suspended until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 5.04 hereof shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank or any corporation controlling such Bank for
any costs which such Bank determines are attributable to the maintenance by such
Bank (or any Applicable Lending Office), pursuant to any law or regulation or
any interpretation, directive or request (whether or not having the force of
law) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or other
requirement issued after the Restatement Date by any government or governmental
authority implementing at the national level the Basle Accord (including,
without limitation, the Final Risk-Based Capital Guidelines), of capital in
respect of its Commitment (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Bank (or any Applicable Lending Office) or any corporation controlling such Bank
to a level below that which such Bank (or any Applicable Lending Office) or such
corporation could have achieved but for such law, regulation, interpretation,
directive or request). Each Bank will notify the Company that it is entitled to
compensation pursuant to this Section 5.01(c) as promptly as practicable after
it determines to request such compensation.
(d) Each Bank will furnish the Company with a certificate setting
forth the basis, calculation and amount of each request by such Bank for
compensation under paragraph (a), (c) or (e) of this Section 5.01.
Notwithstanding anything in this Section 5.01 to the contrary, compensation with
respect to any event entitling any Bank to compensation under paragraph (a) or
(c) of this Section 5.01 shall be payable to such Bank only for costs incurred
by such Bank from and after the date 30 days after the date that such Bank
furnishes to the Company notice of its intention to request the payment of
compensation with respect to such event. Determinations and allocations by any
Bank for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to Section 5.01(a) or (b) hereof, or of the effect of capital
maintained pursuant to Section 5.01(c) hereof,
Credit Agreement
----------------
<PAGE>
- 55 -
on its costs or rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Bank under this Section 5.01, shall be conclusive,
provided that such determinations and allocations are made on a reasonable
- --------
basis.
(e) Without limiting the effect of the foregoing, the Company shall
pay to each Bank on the last day of each Interest Period (or, if later, on the
date of the notice provided for below) so long as such Bank is maintaining
reserves against "Eurocurrency liabilities" under Regulation D (or, unless the
provisions of paragraph (b) above are applicable, so long as such Bank is, by
reason of any Regulatory Change, maintaining reserves against any other category
of liabilities which includes deposits by reference to which the interest rate
on Eurodollar Loans is determined as provided in this Agreement or against any
category of extensions of credit or other assets of such Bank which includes any
Eurodollar Loans) an additional amount (determined by such Bank and notified to
the Company through the Administrative Agent within 45 days after the last day
of such Interest Period) equal to the product of the following for each
Eurodollar Loan for each day during such Interest Period:
(i) the principal amount of such Eurodollar Loan outstanding on such
day; and
(ii) the remainder of (x) a fraction the numerator of which is the
rate (expressed as a decimal) at which interest accrues on such Eurodollar
Loan for such Interest Period as provided in this Agreement (less the
Applicable Margin) and the denominator of which is one minus the effective
-----
rate (expressed as a decimal) at which such reserve requirements are
imposed on such Bank on such day minus (y) such numerator; and
-----
(iii) 1/360.
5.02 Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if, on or prior to the determination of any Fixed Base Rate for
any Interest Period:
(a) the Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Fixed Base Rate" in Section 1.01 hereof
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for any Type of
Fixed Rate Loans as provided herein; or
Credit Agreement
----------------
<PAGE>
- 56 -
(b) the Majority Banks determine (or any Bank that has outstanding a
Competitive Bid Quote with respect to a LIBOR Bid Loan determines), which
determination shall be conclusive, and notify (or notifies, as the case may
be) the Administrative Agent that the relevant rates of interest referred
to in the definition of "Fixed Base Rate" in Section 1.01 hereof upon the
basis of which the rate of interest for Eurodollar Loans (or LIBOR Bid
Loans, as the case may be) for such Interest Period is to be determined are
not likely adequately to cover the cost to such Banks (or to such quoting
Bank) of making or maintaining such Type of Loans;
then the Administrative Agent shall give the Company and each Bank prompt notice
thereof, and so long as such condition remains in effect, the Banks (or such
quoting Bank) shall be under no obligation to make additional Loans of such
Type.
5.03 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans and
LIBOR Bid Loans hereunder, then such Bank shall promptly notify the Company
thereof (with a copy to the Administrative Agent) and such Bank's obligation to
make Eurodollar Loans shall be suspended until such time as such Bank may again
make and maintain Eurodollar Loans (in which case the provisions of Section 5.04
hereof shall be applicable), and such Bank shall no longer be obligated to make
any LIBOR Bid Loan that it has offered to make.
5.04 Base Rate Loans Pursuant to Sections 5.01 and 5.03. If the
--------------------------------------------------
obligation of any Bank to make Fixed Rate Loans shall be suspended pursuant to
Section 5.01 or 5.03 hereof (Loans of such Type being herein called "Affected
--------
Loans" and such Type being herein called the "Affected Type"), all Loans (other
- ----- -------------
than Competitive Bid Loans) which would otherwise be made by such Bank as Loans
of the Affected Type shall be made instead as Base Rate Loans (and, if an event
referred to in Section 5.01(b) or 5.03 hereof has occurred and such Bank so
requests by notice to the Company with a copy to the Administrative Agent, all
Affected Loans of such Bank then outstanding shall be automatically Converted
into Base Rate Loans on the last day(s) of the then current Interest Period(s)
for Affected Loans (or, in the case of a Conversion required by Section 5.01(b)
or 5.03 hereof, on such earlier date as such Bank may specify to the Company
with a copy to the Administrative Agent)) and, unless and until such Bank gives
notice as provided below that the circumstances specified in Section 5.01 or
5.03 hereof that gave rise to such Conversion no longer exist:
Credit Agreement
----------------
<PAGE>
- 57 -
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Bank's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Bank
as Loans of the Affected Type shall be made or Continued instead as Base
Rate Loans, and all Loans of such Bank that would otherwise be Converted
into Loans of the Affected Type shall be Converted instead into (or shall
remain as) Base Rate Loans.
If such Bank gives notice to the Company with a copy to the Administrative Agent
that the circumstances specified in Section 5.01 or 5.03 hereof that gave rise
to the Conversion of such Bank's Affected Loans pursuant to this Section 5.04 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other Banks
are outstanding, such Bank's Base Rate Loans shall be automatically Converted,
on the first day(s) of the next succeeding Interest Period(s) for such
outstanding Loans of the Affected Type, to the extent necessary so that, after
giving effect thereto, all Loans held by the Banks holding Loans of the Affected
Type and by such Bank are held pro rata (as to principal amounts, Types and
Interest Periods) in accordance with their respective Commitments.
5.05 Compensation. The Company shall pay to the Administrative Agent
------------
for account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
which such Bank determines is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion of a
Fixed Rate Loan or a Set Rate Loan for any reason (including, without
limitation, under Section 5.04 hereof or by reason of the acceleration of
the Loans pursuant to Section 9 hereof) on a date other than the last day
of the Interest Period for such Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 6 hereof to be satisfied) to borrow a Fixed Rate Loan or a Set Rate
Loan (with respect to which, in the case of a Competitive Bid Loan, the
Company has accepted a Competitive Bid Quote) from such Bank on the date
for such borrowing specified in the relevant notice of borrowing given
pursuant to Section 2.02 or 2.03(b) hereof.
Credit Agreement
----------------
<PAGE>
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Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion or
failure to borrow to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date specified for such borrowing) at the applicable rate
of interest for such Loan provided for herein over (ii) the interest component
of the amount such Bank would have bid in the London interbank market (if such
Loan is a Eurodollar Loan or a LIBOR Bid Loan) or the United States certificate
of deposit market for issuance at face value of certificates of deposit (if such
Loan is a Set Rate Loan) for Dollar deposits in amounts comparable to such
principal amount and with maturities comparable to such period (as reasonably
determined by such Bank).
Section 6. Conditions Precedent.
--------------------
6.01 Conditions to Effectiveness. The effectiveness of the amendment
---------------------------
and restatement of the Existing Credit Agreement provided for hereby is subject
to the receipt by the Administrative Agent of the following documents (with, in
the case of paragraphs (d) and (e) below, sufficient signed copies for each Bank
and the Administrative Agent) and the occurrence of the following events, as the
case may be, each of which shall be satisfactory to the Administrative Agent
(and to the extent specified below, to the Majority Banks or to each Bank) in
form and substance:
(a) Corporate Documents. Certified copies of the Company's charter
-------------------
and by-laws and of all corporate action taken by the Company approving each
Credit Document and the borrowings by the Company hereunder (including,
without limitation, a certificate setting forth the resolutions of the
Company's Board of Directors adopted in respect of the transactions
contemplated thereby).
(b) Incumbency Certificate. A certificate of the Secretary of the
----------------------
Company, dated the Amendment Effective Date, in respect of the incumbency
and specimen signature of each of the officers (i) who is authorized to
sign the Credit Documents on the Company's behalf and (ii) who will, until
replaced by another officer or officers duly authorized for that purpose,
act as the Company's representative for the purposes of signing documents
and giving notices and other communications in connection with the Credit
Documents and the transactions contemplated thereby. The Administrative
Agent and each of the Banks may
Credit Agreement
----------------
<PAGE>
- 59 -
conclusively rely on such certificate until it receives notice in writing
from the Company to the contrary.
(c) Officer's Certificate. A certificate of a senior officer of the
---------------------
Company, dated the Amendment Effective Date, to the effect set forth in
clauses (a) and (b) of Section 6.02 hereof (after giving effect to the
consummation of the Acquisition).
(d) Opinions. (i) An opinion of Sheppard, Mullin, Richter & Hampton
--------
LLP, special California counsel to the Company, dated the Amendment
Effective Date, substantially in the form of Exhibit B-1 hereto and (ii) an
opinion of Richard R. Molleur, Esq., Corporate Vice President and General
Counsel of the Company, dated the Amendment Effective Date, substantially
in the form of Exhibit B-2 hereto (and the Company hereby instructs each
such counsel to deliver such opinions to the Banks and the Administrative
Agent).
(e) Opinion. An opinion of Milbank, Tweed, Hadley & McCloy, special
-------
New York counsel to the Banks and the Swingline Bank, dated the Amendment
Effective Date, substantially in the form of Exhibit C hereto.
(f) Notes. The Notes, duly completed and executed and delivered.
-----
(g) CIBC Receivables Sale Agreements. A true and complete copy of
--------------------------------
the CIBC Receivables Sale Agreements as in effect on the Amendment
Effective Date.
(h) Asset Purchase Agreement. (i) A true and complete copy of the
------------------------
Asset Purchase Agreement (which shall include copies of all amendments,
schedules, exhibits and other attachments thereto and contain terms and
conditions in form and substance satisfactory to the Managing Banks in
their reasonable determination), together with true and complete copies of
each document, certificate and opinion referred to in or delivered in
connection with such Asset Purchase Agreement, and (ii) a certificate of a
senior officer of the Company, dated the Amendment Effective Date, to the
effect that (x) the Asset Purchase Agreement has been duly executed and
delivered by each of the parties thereto and is in full force and effect on
the Amendment Effective Date and (y) the Asset Purchase Agreement has not
been amended or otherwise modified, or executed and delivered in a form
other than the form heretofore delivered to the Administrative Agent prior
to the Restatement Date.
Credit Agreement
----------------
<PAGE>
- 60 -
(i) Consummation of the Acquisition. A certificate of a senior
-------------------------------
officer of the Company, dated the Amendment Effective Date, to the effect
that (i) the Acquisition has been (or will concurrently be) consummated in
accordance with the Asset Purchase Agreement, (ii) the representations and
warranties contained in the Asset Purchase Agreement (including, without
limitation, in all certificates and other writings, if any, delivered
pursuant thereto) by the Company are true and correct on and as of the
Amendment Effective Date as if made on and as of the Amendment Effective
Date (or if such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date), and (iii) all
conditions to the consummation of the Acquisition as set forth in the Asset
Purchase Agreement have been (or will concurrently be) fulfilled or waived
by the parties thereto (which waiver, in the case of any waiver by the
Company, shall be given only with the consent of the Managing Banks, and
which conditions, in the case of conditions to be fulfilled to the
satisfaction of the Company, shall be fulfilled to the satisfaction of the
Managing Banks).
(j) Terms of Acquisition. A certificate of a senior officer of the
--------------------
Company, dated the Amendment Effective Date to the effect that (i) the cash
portion of the purchase price paid by the Company for the Acquisition does
not exceed $3,000,000,000 plus or minus the aggregate purchase price
adjustment as provided in the Asset Purchase Agreement, (ii) assuming that
the Acquisition had been consummated on September 30, 1995, the amount of
pension liabilities that would have been assumed by the Company in
connection with the Acquisition (excluding those arising under the Seller's
"Executive Plan" up to $33,000,000) would not have exceeded $478,000,000
and the amount of other post-retirement benefits liabilities that would
have been assumed by the Company in connection with the Acquisition would
not have exceeded $110,000,000, in each case as reflected on the balance
sheet of the Acquired Business as at September 30, 1995 (subject to
adjustments at the closing of the Acquisition and to the restatement
thereof on the books of the Company) and (iii) the fees and expenses
relating to the Acquisition will not exceed $135,000,000.
(k) Approvals and Consents. A certificate of a senior officer of the
----------------------
Company, dated the Amendment Effective Date, to the effect that all
necessary governmental and third party filings, licenses, permits, consents
and approvals in connection with the Acquisition and the transactions
contemplated hereby have been obtained by the Company and are in full force
and effect on the Amendment Effective Date, except that consents of the
Government are required
Credit Agreement
----------------
<PAGE>
- 61 -
with respect to the assignment to the Company of contracts between the
Acquired Business and the Government, which consents the Company has no
reason to believe will not be obtained in due course.
(l) Payment of Fees and Expenses. Evidence that (i) all principal of
----------------------------
and interest on the loans made by the Existing Banks under the Existing
Credit Agreement shall have been (or will concurrently be) paid in full and
(ii) all fees and expenses payable to the Existing Banks and the
Administrative Agent under the Existing Credit Agreement accrued to the
Amendment Effective Date and unpaid and all costs, fees and expenses, and
all other compensation contemplated by the Credit Documents and by the Fee
Letter dated January 2, 1996 between the Company and the Agents and the Co-
Arrangers identified therein (including, without limitation, legal fees and
expenses) shall have been (or will concurrently be) paid by the Company to
the extent due.
(m) Financial Information. Not less than five Business Days prior to
---------------------
the Restatement Date, true, correct and complete copies of the financial
statements and opinions referred to in clauses (a) and (b) of Section 7.02
hereof.
(n) Litigation. Except as set forth on Schedule III hereto, no
----------
litigation by any entity (private or governmental) shall be pending or
threatened against the Company or the Acquired Business (a) with respect to
this Agreement or any other Credit Document or (b) which the Majority Banks
shall reasonably determine would be likely to have a Material Adverse
Effect.
(o) Solvency Certificate. A certificate of a senior financial
--------------------
officer of the Company, dated the Amendment Effective Date, to the effect,
to the best of his or her actual knowledge, set forth in clause (d) of
Section 7.02 hereof.
(p) Miscellaneous. Such other documents as the Administrative Agent,
-------------
any Bank, the Swingline Bank or special New York counsel to the Banks and
the Swingline Bank may reasonably request.
The Administrative Agent shall promptly notify each Bank of the occurrence of
the Amendment Effective Date.
6.02 Initial and Subsequent Loans. The obligation of any Bank to
----------------------------
make any Loan (including, without limitation, any Competitive Bid Loan and its
initial Syndicated Loan) and the obligation of the Swingline Bank to make any
Swingline Loan (including its initial Swingline Loan) to the Company upon the
Credit Agreement
----------------
<PAGE>
- 62 -
occasion of each borrowing hereunder is subject to the further conditions
precedent that, as of the date of such Loan and after giving effect thereto:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by the Company in Section
7 hereof shall be true in all material respects on and as of the date of
the making of such Loan with the same force and effect as if made on and as
of such date.
Each notice of borrowing by the Company hereunder and each Swingline Borrowing
Notice shall constitute a certification by the Company to the effect set forth
in the preceding sentence (both as of the date of such notice and, unless the
Company otherwise notifies the Administrative Agent prior to the date of such
borrowing, as of the date of such borrowing).
Section 7. Representations and Warranties.
------------------------------
7.01 Corporate Existence. Each of the Company and the Material
-------------------
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals, necessary to own its assets and carry on
its business as now being conducted; and (c) is qualified to do business and is
in good standing in all jurisdictions in which the failure to so qualify would
have a Material Adverse Effect.
7.02 Certain Financial Information.
-----------------------------
(a) Company Financial Condition. The consolidated statement of
---------------------------
financial position of the Company and the Subsidiaries as at December 31, 1995
and the related consolidated statements of operations, changes in shareholders'
equity and cash flows of the Company and the Subsidiaries for the fiscal year
ended on said date, with the opinion thereon of Deloitte & Touche LLP,
heretofore furnished to each of the Banks, are complete and present fairly, in
all material respects, the consolidated financial condition of the Company and
the Subsidiaries as at said date and the consolidated results of their
operations for such fiscal year, all in accordance with generally accepted
accounting principles and practices applied on a consistent basis. Neither the
Company nor any of the Subsidiaries had on said dates any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any
Credit Agreement
----------------
<PAGE>
- 63 -
any unfavorable commitments, except as referred to or reflected or provided for
in said statements of financial position as at said dates. Except as expressly
disclosed in writing to the Banks prior to the Restatement Date, since December
31, 1995, there has been no material adverse change in the consolidated
financial condition or operations, or the prospects or business taken as a
whole, of the Company and the Subsidiaries from that set forth in said financial
statements as at said date.
(b) Acquired Business Financial Condition. The Company has
-------------------------------------
heretofore furnished to the Banks the combined statement of financial position
of the Acquired Business as at December 31, 1994 and as at December 31, 1995 and
the respective related combined statements of earnings, cash flows and changes
in invested equity of the Acquired Business for the period ended on such dates
and for the period ended on December 31, 1993, with the opinion thereon of Price
Waterhouse LLP. As of the Restatement Date, except as expressly disclosed in
writing to the Banks prior to the Restatement Date, since December 31, 1995,
there has been no material adverse change in the combined financial condition or
operations, or the prospects or business taken as a whole, of the Acquired
Business from that set forth in said financial statements as at December 31,
1995.
(c) Projections. The Company has heretofore furnished to each of the
-----------
Banks projected consolidated financial statements of the Company and the
Subsidiaries, on an annual basis for the fiscal years of the Company ending in
each of 1996, 1997, 1998, 1999, 2000, 2001 and 2002. Such projected financial
statements set forth projected consolidated balance sheets of the Company and
the Subsidiaries and projected consolidated statements of operations, changes in
shareholders' equity and cash flows of the Company and the Subsidiaries (after
giving effect to the Acquisition and the related financing thereof, assuming the
consummation of the Acquisition on March 31, 1996) for the respective fiscal
periods covered thereby, subject to the caveats and explanations set forth in
the Information Memorandum. Such projected financial statements are based upon
assumptions believed by the Company to be reasonable as of the Restatement Date,
which assumptions are expressly disclosed therein.
(d) Solvency, Etc. On and as of the Amendment Effective Date on a
--------------
pro forma basis after giving effect to the consummation of the Acquisition and
all liabilities assumed and incurred and to be assumed and incurred by the
Company in connection therewith, (x) the sum of the assets of the Company, at a
fair valuation, will exceed its debts, (y) the Company will not have assumed and
incurred nor intended to, or believes that it will not, assume and incur debts
beyond its ability to pay such debts as such debts mature and (z) the Company
will have sufficient capital with which to conduct its business. For
Credit Agreement
----------------
<PAGE>
- 64 -
purposes of this Section 7.02(d), "liability" means any liability on a claim,
and "claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
7.03 Litigation. There are no legal or arbitral proceedings or any
----------
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Company) threatened against the Company or
any Material Subsidiary which, if adversely determined, would result, in the
opinion of the Company, in any Material Adverse Effect except as heretofore
disclosed to the Banks in the Company's Annual Report on Form 10-K for the
calendar year ended December 31, 1995, copies of which have been furnished to
the Banks or in Schedule III hereto.
7.04 No Breach. Except as expressly disclosed in writing to the
---------
Banks on or before the Restatement Date, none of the execution and delivery of
any of the Credit Documents, the borrowing of the Loans hereunder, the
consummation of the Acquisition and the other transactions herein contemplated
and compliance with the terms and provisions hereof will conflict with or result
in a breach of, or require any consent under, the charter or by-laws of the
Company, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or
instrument to which the Company or any Material Subsidiary or the Acquired
Business is a party or by which any of them is bound or to which any of them is
subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of the revenues or
assets of the Company or any Material Subsidiary or the Acquired Business
pursuant to the terms of any such agreement or instrument.
7.05 Corporate Action. The Company has all necessary corporate power
----------------
and authority to execute, deliver and perform its obligations under the Credit
Documents and to borrow the Loans hereunder; and the execution, delivery and
performance by the Company of the Credit Documents and the borrowing of the
Loans hereunder have been duly authorized by all necessary corporate action on
its part; and this Agreement has been duly and validly executed and delivered by
the Company and constitutes, and each of the other Credit Documents (assuming in
the case of the Notes, execution and delivery thereof for value) will
constitute, legal, valid and binding obligations of the Company, enforceable in
accordance with its terms, except as such enforceability may be
Credit Agreement
----------------
<PAGE>
- 65 -
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
7.06 Approvals. Except as expressly disclosed in writing to the
---------
Banks prior to the Restatement Date, no authorizations, approvals, consents or
licenses of, and no filings or registrations with, any governmental or
regulatory authority or agency are necessary to authorize or are necessary in
connection with (i) the execution, delivery and performance of any Credit
Document, (ii) the legality, validity, binding effect or enforceability of any
Credit Document or (iii) for the borrowing of the Loans hereunder.
7.07 Use of Proceeds, Etc. Neither the making of any Loan hereunder,
--------------------
nor the use of the proceeds thereof, will violate the provisions of Regulation
G, U or X of the Board of Governors of the Federal Reserve System and no part of
the proceeds of any Loan will be used to purchase or carry any Margin Stock in
violation of Regulation U or X or to extend credit for the purpose of purchasing
or carrying any Margin Stock in violation of Regulation U or X.
7.08 ERISA. Each of the Company and the ERISA Affiliates has
-----
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan, is in compliance in all material respects with
the presently applicable provisions of ERISA and the Code and has not incurred
any liability to the PBGC or any Plan or Multiemployer Plan (other than a
liability to make payments or contributions in the ordinary course of business).
No Termination Event has occurred and is continuing. As used in this Agreement,
the term "Termination Event" shall mean any event or condition which might
-----------------
constitute grounds under Section 4042 of ERISA for the termination of, or for
the appointment of a trustee to administer, any Plan and which involves a
liability of the Company to PBGC in excess of $25,000,000.
7.09 Taxes. United States Federal income tax returns of the
-----
Company and the Subsidiaries have been examined and reported on by the Internal
Revenue Service or closed by applicable statutes and satisfied through the
fiscal year of the Company ended December 31, 1985. Each of the Company and the
Subsidiaries has filed all United States Federal and State income tax returns
which, to the knowledge of the officers of the Company, are required to be filed
by it and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company or any Subsidiary to the extent that such
Credit Agreement
----------------
<PAGE>
- 66 -
taxes have become due (except as to such taxes which are being contested in good
faith by appropriate proceedings). The charges, accruals and reserves on the
books of the Company and the Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of the Company, adequate. The
California Franchise tax returns of the Company have been examined and reported
on by the California Franchise Tax Board or closed by applicable statutes and
satisfied for all fiscal years prior to, and including, the fiscal year ended
December 31, 1985.
7.10 Funded Debt. As of the Amendment Effective Date, no default
-----------
exists under the provisions of any instrument evidencing Funded Debt or of any
agreement relating thereto.
7.11 Properties. The Company has, and each of the Material
----------
Subsidiaries has, good and marketable title to its respective properties and
assets, including the properties and assets reflected in the balance sheet as at
December 31, 1995 hereinabove described in Section 7.02(a) hereof (other than
Properties disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by Section 8.10 hereof.
Credit Agreement
----------------
<PAGE>
- 67 -
7.12 Environmental Matters.
---------------------
(a) Except as disclosed in the Company's Annual Report on Form 10-K
for the calendar year ended December 31, 1995 or in the Disclosure Schedule,
neither the Company nor any Subsidiary nor the Acquired Business (i) has
received notice or otherwise obtained knowledge of any claim, demand, action,
event, condition, report or investigation indicating or concerning any potential
or actual liability which would individually or in the aggregate have a Material
Adverse Effect arising in connection with: (1) any non-compliance with or
violation of the requirements of any applicable Federal, state and local
environmental health and safety statutes and regulations or (2) the release or
threatened release of toxic or hazardous waste, substance or constituent, or
other substance into the environment, (ii) has any threatened or actual
liability in connection with the release or threatened release of any toxic or
hazardous waste, substance or constituent, or other substance into the
environment which would individually or in the aggregate have a Material Adverse
Effect, (iii) has received notice or otherwise obtained knowledge of any Federal
or state investigation evaluating whether any remedial action is needed to
respond to a release or threatened release of any toxic or hazardous waste,
substance or constituent or other substance into the environment for which the
Company or any Subsidiary, or the Acquired Business, is or may be liable, which
remedial action would have a Material Adverse Effect or (iv) has received notice
that the Company or any Subsidiary, or the Acquired Business, is or may be
liable to any Person under the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C. (S) 9601 et seq.
-- ---
("CERCLA"), or any analogous state law, which liability would have a Material
Adverse Effect.
(b) Each of the Company, each Subsidiary and the Acquired Business is
in compliance with the financial responsibility requirements of all
Environmental Laws, including, without limitation, those contained in 40 C.F.R.,
Parts 264 and 265, Subpart H, and any similar state law requirements.
7.13 True and Complete Disclosure. All factual information (taken
----------------------------
as a whole) furnished on or before the Amendment Effective Date by or on behalf
of the Company or the Subsidiaries in writing to the Administrative Agent or any
Bank (including, without limitation, all factual information contained in the
Information Memorandum) for purposes of or in connection with this Agreement or
any transaction contemplated herein is, and all other such factual information
(taken as a whole) furnished after the Amendment Effective Date by or on behalf
of the Company or the Subsidiaries in writing to any Bank will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete
Credit Agreement
----------------
<PAGE>
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by omitting to state any material fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances under
which such information was provided. There is no fact known to the Company which
has, or is reasonably likely to have, a Material Adverse Effect which has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
7.14 Acquisition. On and as of the Amendment Effective Date, all
-----------
material consents and approvals of, and filings and registrations with, and all
other actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Acquisition, or
otherwise required in connection with the Acquisition, will have been obtained,
given, filed or taken and are or will be in full force and effect (or effective
judicial relief with respect thereto has been obtained), except that consents of
the Government are required with respect to the assignment to the Company of
contracts between the Acquired Business and the Government, which consents the
Company has no reason to believe will not be obtained in due course. All actions
pursuant to or in furtherance of the Acquisition have been and will be taken in
compliance with all applicable laws.
7.15 Material Subsidiaries. On and as of the Amendment Effective
---------------------
Date on a pro forma basis after giving effect to the consummation of the
Acquisition, set forth in Schedule II hereto are all of the Material
Subsidiaries of the Company.
7.16 Intercompany Debt. On and as of the Restatement Date, the
-----------------
Indebtedness of the Subsidiaries owing to the Company does not exceed
$80,000,000 in the aggregate.
Section 8. Covenants of the Company. The Company agrees that, so
------------------------
long as any of the Commitments or the Swingline Commitment are in effect and
until payment in full of all Loans hereunder, all interest thereon and all other
amounts payable by the Company hereunder:
8.01 Financial Statements. The Company shall deliver to each of the
--------------------
Banks and to the Administrative Agent:
(a) within 105 days after the end of each fiscal year of the Company,
(i) a consolidated statement of financial position of the Company and the
Subsidiaries as at the close of such fiscal year and consolidated
statements of operations, changes in shareholders' equity and cash flows of
the Company and the Subsidiaries for such year, certified by Deloitte &
Touche LLP or by other independent public accountants selected by the
Company and reasonably
Credit Agreement
----------------
<PAGE>
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satisfactory to the Administrative Agent and (ii) the Consolidating Financial
Statements for such year;
(b) within 60 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, (i) an unaudited consolidated
statement of financial position of the Company and the Subsidiaries as at the
end of such quarter and unaudited consolidated statements of operations, changes
in shareholders' equity and cash flows of the Company and the Subsidiaries for
such quarter and for the period from the beginning of the fiscal year to the end
of such quarter, certified by an authorized financial or accounting officer of
the Company and (ii) the Consolidating Financial Statements for such fiscal
quarter;
(c) [Intentionally Omitted];
(d) promptly upon becoming available, copies of all financial
statements, reports, notices, proxy statements and final prospectuses sent by
the Company to shareholders or the SEC or any governmental agency successor to
any or all of the functions of said Commission;
(e) subject to Government restrictions, such other statement or
statements of the position and affairs of the Company and of the Subsidiaries
and the status of their contracts, open accounts and budgets or forecasts, and
other financial information, as may be reasonably requested by the
Administrative Agent;
(f) with each of the audited financial statements required to be
delivered under Section 8.01(a) hereof, a certificate by the independent public
accountants certifying such statements to the effect that they are familiar with
the provisions of this Agreement and that, in making the examination necessary
for their opinion on such financial statements, nothing came to their attention
that caused them to believe that the Company was not in compliance with this
Agreement insofar as it relates to accounting matters or, if the contrary is the
case, specifying the nature of such non-compliance;
(g) with each of the financial statements required to be delivered
under Section 8.01(a) or Section 8.01(b) hereof, a statement by an authorized
financial or accounting officer of the Company to the effect that no Default has
occurred and is continuing, or if any Default has occurred and is continuing,
describing such Default and the action taken or proposed to be taken by the
Company with respect thereto, and a detailed computation, in form and substance
satisfactory to the Administrative Agent, of the financial
Credit Agreement
----------------
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calculations required in Sections 8.06, 8.08, 8.10, 8.12(b), 8.13, 8.14 and
8.15 hereof;
(h) with each of the financial statements required to be delivered
under Section 8.01(a) or 8.01(b) hereof, a certificate of an authorized
financial or accounting officer of the Company, in form and substance
satisfactory to the Administrative Agent, setting forth the Leverage Ratio
as at the last day of the fiscal period of the Company as to which such
financial statements relate;
(i) (x) promptly after each of Moody's and S&P first either reaffirms
or announces revised ratings for the Company Senior Long-Term Debt after
the consummation of the Acquisition and (y) thereafter, promptly after (1)
either Moody's or S&P first announces or publishes a revised rating for the
Company Senior Long-Term Debt or (2) either Moody's or S&P ceases to rate
the Company Senior Long-Term Debt, notice thereof;
(j) promptly after any purchase price adjustments under Section 2.3
of the Asset Purchase Agreement, notice thereof setting forth a calculation
thereof in reasonable detail; and
(k) promptly after the Company knows or has reason to know that any
Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
is reasonably practicable, a description of the action that the Company has
taken or proposes to take with respect thereto in such detail as the
Company reasonably believes to be appropriate.
8.02 Existence, Payment of Taxes, ERISA, Etc. The Company shall, and
---------------------------------------
shall cause each of the Material Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (provided that nothing in this
--------
Section 8.02 shall prohibit any transaction expressly permitted under
Section 8.07 or 8.09 hereof);
(b) comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of governmental or
regulatory authorities if failure to comply with such requirements is
reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
Credit Agreement
----------------
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(c) promptly pay and discharge all taxes, assessments and
governmental charges prior to the date on which material penalties attach
thereto, but only to the extent that such taxes, assessments and charges
shall not be contested in good faith and by appropriate proceedings by the
Company or such Material Subsidiary; and
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted.
The Company shall furnish to the Administrative Agent the following:
(i) As soon as possible and in any event within 30 days after the
Company knows or has reason to know that any Termination Event (as defined
in Section 7.08 hereof) has occurred, a statement of a senior financial or
accounting officer of the Company describing such Termination Event and the
action, if any, which the Company proposes to take with respect thereto;
(ii) Promptly after receipt thereof by the Company, copies of each
notice received from the PBGC of its intention to terminate any Plan or to
have a trustee appointed to administer any Plan; and
(iii) Promptly after request therefor, such other documents and
information relating to any Plan as the Administrative Agent may reasonably
request from time to time.
8.03 Notice of Litigation. The Company shall promptly give notice
--------------------
in writing to the Administrative Agent (which shall promptly notify the Banks)
of any litigation or proceeding against the Company or any Subsidiary if in the
opinion of the General Counsel of the Company (or any individual acting in such
capacity) such action or proceeding is reasonably likely to have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Company
shall give notice in writing to the Administrative Agent (which will promptly
notify each Bank) of the assertion of any claim by any Person of violation of or
non-compliance with any Environmental Laws against, or with respect to the
activities of, the Company or any Subsidiary, and notice of any alleged
violation of or non-compliance with any Environmental Laws or any permits,
licenses or authorizations under Environmental Laws if in the opinion of the
General Counsel of the Company (or any individual acting in such capacity) such
claim or violation or non-compliance is reasonably likely (either individually
or in the aggregate) to have a Material Adverse Effect.
Credit Agreement
----------------
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8.04 Insurance. The Company shall maintain, and cause each
---------
Subsidiary to maintain, insurance with responsible companies in such amounts and
against such risks as is usually carried by owners of similar businesses and
Property in the same general area in which the Company or such Subsidiary
operates, including reasonable war, comprehensive and commercial risk insurance,
when and if available, subject to such deductibles, retentions and self-
insurance programs as the Company deems appropriate.
8.05 Access to Books and Properties. The Company shall:
------------------------------
(a) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistentwillly applied; and
(b) as may be reasonably requested, give any representatives of the
Banks access, subject to Government restrictions, during normal business
hours to, and permit them to examine, copy or make extracts from, any and
all books, records and documents in the possession of the Company or any
Subsidiary relating to its affairs and to inspect any Properties of the
Company or any Subsidiary.
8.06 Restricted Payments. The Company shall not declare, pay or
-------------------
authorize any Restricted Payment if (a) any such Restricted Payment is not paid
out of Consolidated Net Income Available for Restricted Payments, (b) at the
time of, and immediately after, the making of any such Restricted Payment (or
the declaration of any dividend except a stock dividend) a Default has occurred
or (c) the making of any such Restricted Payment would cause the Leverage Ratio
to exceed the percentage which the Company is required to maintain pursuant to
Section 8.13 hereof.
8.07 Dispositions. The Company shall not, and shall not permit any
------------
Subsidiary to, Dispose of Property having a book value which, together with the
book value of all Property theretofore Disposed of since January 1, 1996, equals
or exceeds 10% of the total book value of all Property of the Company and the
Subsidiaries as at the last day of the Quarterly Period ending on or most
recently ended prior to such Disposition, excluding from the operation of this
clause: (a) Dispositions between the Company and any Subsidiary or between
Subsidiaries in each case for full and adequate consideration, (b) Dispositions
of Investments permitted by Section 8.11(e) hereof, (c) Dispositions of obsolete
or worn-out Property, (d) Dispositions of Property determined by the Chief
Financial Officer of the Company to be no longer useful in the business of
Credit Agreement
----------------
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the Company or any Subsidiary and (e) Dispositions of Property for not less than
the fair market value thereof as determined by the Board of Directors of the
Company.
8.08 Guarantees. The Company shall not, and shall not permit any
----------
Subsidiary to, Guarantee any obligation of any Person, or suffer to exist any
Guarantee, except that:
(a) the Company may Guarantee any obligation of any Subsidiary;
(b) any Subsidiary may Guarantee any obligation of the Company or any
other Subsidiary; and
(c) the Company or any Subsidiary may issue a Guarantee of any
obligation of a Person other than the Company or any Subsidiary, or assume
an obligation of any such Person;
provided that (i) the excess (if any) of (x) the aggregate amount of all
- --------
obligations referred to in clause (c) above (to the extent said obligations do
not otherwise constitute Funded Debt) over (y) 5% of Consolidated Shareholders'
Equity shall be deemed Funded Debt for the purposes of this Agreement.
8.09 Fundamental Changes and Acquisitions. The Company will not,
------------------------------------
nor will it permit any of the Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution).
The Company will not, nor will it permit any of the Subsidiaries to,
acquire any business from or all or any significant part of the Property of, or
all or any significant part of the capital stock of, or be a party to any
acquisition of, any Person.
Notwithstanding the foregoing:
(a) any Subsidiary may be merged or consolidated with or into: (i)
the Company if the Company shall be the continuing or surviving corporation
or (ii) any other Subsidiary; provided that if any such transaction shall
--------
be between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned
Subsidiary shall be the continuing or surviving corporation;
(b) during any Investment Grade Rating Period, the Company or any
Subsidiary may merge or consolidate with any other Person if (i) in the
case of a merger or consolidation of the Company, the Company is the
surviving corporation
Credit Agreement
----------------
<PAGE>
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and, in any other case, the surviving corporation is a Wholly-Owned
Subsidiary and (ii) after giving effect thereto no Default would exist;
(c) the Company may consummate the Acquisition; and
(d) the Company or any of the Subsidiaries may acquire the business
of, or all or any significant part of the Property of, or all or any
significant part of the capital stock of, or be a party to any acquisition
of, any Person engaged in the same or a related line of business as the
Company (whether directly or through the merger of a Wholly-Owned
Subsidiary with that Person) subject to the following:
(i) so long as the Series I Term Loan remains outstanding, the
aggregate cash consideration paid for all such acquisitions since
the Amendment Effective Date shall not exceed $500,000,000;
(ii) at the time of such acquisition, and after giving effect thereto,
no Default shall exist; and
(iii) the Company would have been in compliance with Sections 8.14
and 8.15 hereof on a pro forma basis if such acquisition had
--- -----
occurred at the beginning of the most recently-ended period of
four consecutive fiscal quarters of the Company, and the Company
shall have delivered a certificate of a senior accounting or
financial officer of the Company to the Administrative Agent
prior to such acquisition demonstrating such compliance;
provided that, during any period which is not an Investment Grade Rating
--------
Period, and notwithstanding the provisions of clause (i) above, the
consideration for any such acquisition shall consist exclusively of Equity
of the Company.
8.10 Limitation on Liens. The Company shall not, and shall not permit
-------------------
any Subsidiary to, create, assume or suffer to exist any Lien on any of its
Property, whether now owned or hereafter acquired, except:
(a) deposits or pledges to secure payments of workers' compensation,
unemployment insurance, old age pensions or other social security, or in
connection with or to secure the performance of bids, tenders, contracts
(other than contracts for the repayment of borrowed money) or leases, or to
secure statutory obligations or surety or appeal bonds, or other pledges or
deposits for purposes of like nature in the ordinary and normal operation
of its business;
Credit Agreement
----------------
<PAGE>
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(b) Liens created in favor of the Government or any other contracting
party or customer in connection with advance or progress payments;
(c) mechanics', carriers', workers', repairmen's or other like Liens
arising in the ordinary course of business in respect of obligations which
are not overdue;
(d) Liens for taxes which at the particular time are not due, or
remain payable without penalty, or which are being contested in good faith
and by proper proceedings;
(e) Liens already existing on Property acquired after the Restatement
Date, and securing obligations assumed, in connection with a transaction
permitted by Section 8.09 hereof (and not created in anticipation thereof);
and
(f) purchase money Liens on fixed assets (including trust deeds or
first mortgages) given substantially concurrently with (or within 90 days
after) the acquisition of the fixed assets and Liens existing on such fixed
assets at the time of acquisition thereof, conditional sales agreements or
other title retention agreements with respect to fixed assets hereafter
acquired, and extensions and renewals of any of the same; provided that (i)
--------
the Indebtedness secured by any such Lien shall be reasonably related to
the fair market value of the related asset acquired by the Company or a
Subsidiary, as the case may be, and (ii) no such Lien shall extend to any
Property other than that then being acquired;
provided that the aggregate amount of Indebtedness or obligations (whether or
- --------
not assumed by the Company or a Subsidiary) secured by all Liens and agreements
permitted by clauses (e) and (f) of this Section 8.10 shall not at any time
exceed $250,000,000.
8.11 Investments. The Company shall not, and shall not permit any
-----------
Subsidiary to, make any Investment except:
(a) Investments in any Person existing on the Amendment Effective
Date;
(b) Investments in prime quality short-term money market instruments
and direct obligations of the United States and agencies thereof, having a
remaining term to maturity of not more than five years;
(c) Investments made in the ordinary and normal operation of its
business as presently conducted;
Credit Agreement
----------------
<PAGE>
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(d) reasonable advances to its subcontractors and suppliers in
anticipation of deliveries;
(e) Investments in any Person or Persons, whether domestic or
foreign, to the extent covered by Guarantees or insurance covering all
political and credit risks issued by the Overseas Private Investment
Corporation or another agency of the United States acceptable to the
Administrative Agent or by an agency of a foreign government which is rated
investment grade by Moody's or S&P; and
(f) other Investments in any Person or Persons, whether domestic or
foreign, in amounts which do not exceed in the aggregate at any time
outstanding 5% of the consolidated total assets of the Company and the
Subsidiaries as at the last day of the most recently completed Quarterly
Period, so long as the aggregate amount of Investments in Person(s) that
are not Wholly-Owned Subsidiaries does not as at such day exceed 2% of the
consolidated total assets of the Company and the Subsidiaries.
8.12 Indebtedness. (a) The Company will not, nor will it permit
------------
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(i) Indebtedness to the Banks hereunder;
(ii) Indebtedness outstanding on the Restatement Date and listed in
Schedule IV hereto and refinancings and extensions of any thereof that do
not increase the amount of such Indebtedness;
(iii) Subordinated Indebtedness;
(iv) Indebtedness of (x) Subsidiaries to the Company to the extent the
Company is permitted by Section 8.11 hereof to make Investments in
Subsidiaries or (y) Subsidiaries to other Subsidiaries;
(v) Guarantees permitted by Section 8.08 hereof;
(vi) Indebtedness under Working Capital Credit Lines;
(vii) Indebtedness in respect of letters of credit, banker's
acceptances and similar instruments issued or accepted for account of the
Company or any Subsidiary in the ordinary course of its business;
(viii) Indebtedness issued pursuant to the Senior Indenture;
Credit Agreement
----------------
<PAGE>
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(ix) Indebtedness under Interest Rate Protection Agreements permitted
or required by Section 8.18 hereof; and
(x) additional Indebtedness of the Company and the Subsidiaries
(including, without limitation, Capital Lease Obligations and other
Indebtedness secured by Liens permitted under clauses (e) and (f) of
Section 8.10 hereof) up to but not exceeding $250,000,000 in the aggregate
at any one time outstanding.
(b) The Company will not permit the Indebtedness of all of the
Subsidiaries (other than Indebtedness owing to the Company or another
Subsidiary) to exceed $100,000,000 in the aggregate at any one time outstanding.
8.13 Leverage Ratio. The Company shall not permit the Leverage
--------------
Ratio to exceed the following respective percentages at any time during the
following respective periods:
<TABLE>
<CAPTION>
TABLE USED HERE AND IN NEXT TWO
PARAGRAPHS.
Period Percentage
------ ----------
<S> <C>
Amendment Effective Date to
December 30, 1996 76.0%
December 31, 1996 to
December 30, 1997 74.0%
December 31, 1997 to
December 30, 1998 70.0%
December 31, 1998 to
December 30, 1999 67.5%
December 31, 1999 to
December 30, 2000 62.5%
December 31, 2000 and
thereafter 60.0%
</TABLE>
8.14 Funded Debt to Cash Flow Ratio. The Company will not permit the
------------------------------
Funded Ratio Debt to Cash Flow Ratio to exceed the following respective ratios
at any time during the following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Amendment Effective Date to 5.00 to 1
December 30, 1997
December 31, 1997 to
</TABLE>
Credit Agreement
----------------
<PAGE>
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<TABLE>
<S> <C>
December 30, 1998 4.75 to 1
December 31, 1998 to
December 30, 1999 4.50 to 1
December 31, 1999 to
December 30, 2000 4.25 to 1
December 31, 2000 to
December 30, 2001 3.75 to 1
December 31, 2001 and
thereafter 3.25 to 1
</TABLE>
8.15 Fixed Charge Coverage Ratio. The Company will not permit the
---------------------------
Fixed Ratio Charge Coverage Ratio to be less than the following respective
ratios at any time during the following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Amendment Effective Date to
March 31, 1998 1.70 to 1
From April 1, 1998 to
March 31, 1999 2.00 to 1
From April 1, 1999 to
March 31, 2001 2.25 to 1
From April 1, 2001 and
thereafter 2.50 to 1
</TABLE>
8.16 Use of Proceeds. The Company shall use the proceeds of the
---------------
Loans hereunder to finance the Acquisition, to refinance Indebtedness of the
Company under the Existing Credit Agreement, to make Capital Expenditures, to
finance acquisitions permitted by Section 8.09 hereof and for working capital
and in compliance with all applicable legal and regulatory requirements,
including, without limitation, Regulations U and X, the Securities Act and the
Exchange Act; provided that the proceeds of any Swingline Loan may not be used
--------
to repay any other Swingline Loan.
8.17 Margin Stock. The Company shall not permit more than 25% of the
------------
value (as determined by any reasonable method) of the Property of the Company
and the Subsidiaries subject to the restrictions of Section 8.07, 8.09 or 8.10
hereof (or any similar restriction) to be represented by margin stock (within
the meaning of Regulation U or X).
8.18 Interest Rate Protection Agreements.
-----------------------------------
Credit Agreement
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(a) The Company will not permit any of its Subsidiaries to enter into
or become obligated in respect of any Interest Rate Protection Agreement.
(b) Not later than 120 days after the Amendment Effective Date, the
Company shall cause, and thereafter maintain, through a combination of Interest
Rate Protection Agreements and fixed rate Funded Debt, the effective fixed rate
component of its Funded Debt to be approximately equal to or greater than 50%.
8.19 Issuance of Subordinated Debt or Equity. On or before the Series
---------------------------------------
I Term Loan Final Maturity Date, the Company shall issue for not less than
$500,000,000 in cash either (a) Subordinated Indebtedness, (b) Equity or (c) a
combination of Subordinated Indebtedness and Equity, the net available proceeds
of which shall be applied as provided in Section 2.10(f)(i) hereof.
8.20 Modifications of Certain Documents. The Company will not consent
----------------------------------
to any modification, supplement or waiver of any of the provisions of a
Permitted Receivables Sale Agreement, the Senior Indenture or any agreement,
instrument or other document evidencing or relating to Subordinated
Indebtedness, in each case without the prior consent of the Managing Banks.
8.21 Subsidiary Equity Issuance. The Company shall not permit any
--------------------------
Subsidiary to issue Equity to any Person other than the Company or a Wholly-
Owned Subsidiary except (a) directors' qualifying shares and (b) in connection
------
with the establishment or capitalization of a bona fide joint venture with the
---- ----
Person or Persons to whom such Equity is issued.
8.22 Ratings by Moody's and S&P. The Company will at all times use
--------------------------
its best efforts to cause Moody's and S&P to rate the Company Senior Long-Term
Debt.
Section 9. Events of Default. If one or more of the following
-----------------
events (herein called "Events of Default") shall occur and be continuing:
-----------------
(a) The Company shall default in the payment of any principal of any
Loan when due; or the Company shall default in the payment of any interest
on any Loan or any other amount payable by it hereunder to any Bank or the
Administrative Agent when due which nonpayment shall have continued for a
period of two Business Days or more; or
(b) (i) Default by the Company or any Subsidiary in the payment of
any Indebtedness of the Company or any
Credit Agreement
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<PAGE>
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Subsidiary, (ii) any event specified in any note, agreement, indenture or
other document evidencing or relating to any Indebtedness shall occur if
the effect of such event is to cause, or (with the giving of any notice or
the lapse of time or both) to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due prior to its stated maturity or
(iii) any event specified in any Interest Rate Protection Agreement shall
occur if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit, termination or liquidation
payment or payments to become due; except, in each case that may otherwise
be covered by clauses (i) or (ii) of this paragraph (b), for a default on
Indebtedness or payments not exceeding $50,000,000 in an aggregate amount;
or
(c) Any representation, warranty or certification made or deemed made
in any of the Credit Documents by the Company or in the Asset Purchase
Agreement by any of the parties thereto, or any certificate furnished to
any Bank or the Administrative Agent or the Swingline Bank pursuant to the
provisions hereof, shall prove to have been false or misleading as of the
time made or deemed made or furnished in any material respect; or
(d) The Company shall default in the performance of any of its
obligations under Section 8.01(k) or Sections 8.06 through 8.19 (inclusive)
hereof; or the Company shall default in the performance of any of its other
obligations in this Agreement, under the Asset Purchase Agreement or under
the Permitted Receivables Sale Agreements and such default shall continue
unremedied for a period of 30 days after notice thereof to the Company by
the Administrative Agent or any Bank (through the Administrative Agent); or
(e) The Company or any Subsidiary having total assets of $50,000,000
or more shall admit in writing its inability to, or be generally unable to,
pay its debts as such debts become due; or
(f) The Company or any Subsidiary having total assets of $50,000,000
or more shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or
of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary
case under the Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating to bankruptcy,
Credit Agreement
----------------
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insolvency, reorganization, winding-up, or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Company or any Subsidiary having total assets of
$50,000,000 or more, in any court of competent jurisdiction, seeking (i)
its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Company or such
Subsidiary or of all or any substantial part of its assets, or (iii)
similar relief in respect of the Company or such Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 days; or an order for relief against the Company or such
Subsidiary shall be entered in an involuntary case under the Bankruptcy
Code; or
(h) If (i) a final judgment which, with other outstanding final
judgments against the Company and all Subsidiaries, exceeds an aggregate of
$100,000,000 shall be rendered against the Company or any Subsidiary and
(ii) within 60 days after entry thereof, such judgment shall not have been
discharged, vacated or reversed or execution thereof stayed pending appeal
or within 60 days after the expiration of any such stay, such judgment
shall not have been discharged, vacated or reversed; or
(i) An event or condition (i) which might constitute grounds under
Section 4042 of ERISA for the termination of, or for the appointment of a
trustee to administer, any Plan or Multiemployer Plan and which involves a
liability of the Company to PBGC in excess of $25,000,000 or (ii) leading
to the receipt by the Company from the PBGC of a notice of its intention to
terminate any Plan or Multiemployer Plan or to have a trustee appointed to
administer any such Plan or Multiemployer Plan shall occur or exist and, as
a result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Majority Banks shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of
the foregoing) which is, in the determination of the Majority
Credit Agreement
----------------
<PAGE>
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Banks, material in relation to the consolidated financial position of the
Company and the Subsidiaries; or
(j) Any person or group of persons (within the meaning of Section 13
or 14 of the Exchange Act, it being agreed that an employee of the Company
or any Subsidiary for whom shares are held under an employee stock
ownership, employee retirement, employee savings or similar plan and whose
shares are voted in accordance with the instructions of such employee shall
not be a member of a group of persons within the meaning of said Section 13
or 14 solely because such employee's shares are held by a trustee under
said plan) shall acquire, directly or indirectly, beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the SEC under said Act, as
amended) of more than 50% of the outstanding shares of stock of the Company
having by the terms thereof ordinary voting power to elect (whether
immediately or ultimately) a majority of the board of directors of the
Company (irrespective of whether or not at the time stock of any other
class or classes of stock of the Company shall have or might have voting
power by reason of the happening of any contingency); or
(k) During any period of 25 consecutive calendar months, a majority
of the Board of Directors of the Company shall no longer be composed of
individuals (i) who were members of said Board on the first day of such
period, (ii) whose election or nomination to said Board was approved by
individuals referred to in clause (i) above constituting at the time of
such election or nomination at least a majority of said Board or (iii)
whose election or nomination to said Board was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of said Board; or
(l) The combined statement of financial position of the Acquired
Business as at December 31, 1995 and the respective related combined
statements of earnings, cash flows and changes in invested equity of the
Acquired Business for the period ended on such date, with the opinion
thereon of Price Waterhouse LLP, furnished to the Banks before the
Restatement Date, shall prove to have failed to present fairly, in any
material respect, the financial position of the Acquired Business as at
such date or the combined results of its operations for the period covered
thereby;
THEREUPON: (i) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 9, (x) the Administrative Agent, upon request
of the Majority Banks or, with respect to the Swingline Commitment, of the
Swingline Bank,
Credit Agreement
----------------
<PAGE>
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shall, by notice to the Company, cancel the Commitments and/or the Swingline
Commitment (and upon any such cancellation of the Swingline Commitment, the
Administrative Agent shall give notice thereof to the Banks) and (y) the
Administrative Agent, upon request of one or more Banks holding more than 50% of
the aggregate outstanding principal amount of Loans or, with respect to the
Swingline Loans, upon request of the Swingline Bank, shall, by notice to the
Company, declare the principal amount then outstanding of and the accrued
interest on such Loans and all other amounts payable by the Company hereunder
and under the Notes to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Company; and (ii) in the case of the occurrence of an Event of Default referred
to in clause (f) or (g) of this Section 9, the Commitments and the Swingline
Commitment shall be automatically canceled and the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Company hereunder and under the Notes shall become automatically
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
Without limiting Section 11.04 hereof, the Majority Banks may, on
behalf of all the Banks, waive, for the period and on the conditions (if any)
specified in such waiver, any Event of Default arising from the failure by the
Company to perform any of its obligations under Section 8 hereof and any
consequences thereof (including any termination of the Commitments and/or any
declaration that the principal of and interest on the Loans and all other
amounts payable by the Company hereunder and under the Notes shall be forthwith
due and payable). In the case of any such waiver, the Company, the Banks and
the Administrative Agent, for said period and on said conditions, shall be
restored to their respective former positions and rights hereunder and under the
Notes, and any Event of Default so waived shall, for said period and on said
conditions, be deemed not to be continuing for the purposes of this Agreement;
provided that no such waiver shall extend to any subsequent or other Event of
- --------
Default or impair any other right of any Bank or the Administrative Agent
hereunder or under the Notes.
Credit Agreement
----------------
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Section 10. Agency Provisions.
-----------------
10.01 Appointment, Powers and Immunities. Each Bank and the
----------------------------------
Swingline Bank hereby irrevocably appoints and authorizes the Administrative
Agent to act as its agent hereunder with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto. The Administrative
Agent (which term as used in this sentence and in Section 10.05 hereof shall
include reference to its affiliates and its own and its affiliates' officers,
directors, employees and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Agreement and shall
not by reason of this Agreement be a trustee for any Bank or the Swingline Bank;
(b) shall not be responsible to the Banks or the Swingline Bank for any
recitals, statements, representations or warranties contained in this Agreement,
or in any certificate or other document referred to or provided for in, or
received by any of them under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any Note or any other document referred to or provided for herein or for any
failure by the Company or any other Person to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in connection
herewith, except for its own gross negligence or willful misconduct. The
Administrative Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or attorneys-in-
fact selected by it in good faith. The Administrative Agent may deem and treat
the payee of any Note as the holder thereof for all purposes hereof unless and
until (except in the case of an assignment pursuant to Section 11.06(f) hereof)
a written notice of the assignment or transfer thereof shall have been filed
with the Administrative Agent, together with the written consent of the Company
to such assignment or transfer.
10.02 Reliance. The Administrative Agent shall be entitled to rely
--------
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by it; and as to any matters not expressly provided for
by this Agreement, it shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Majority Banks, and such instructions and any action taken or
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----------------
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failure to act pursuant thereto shall be binding on all of the Banks.
10.03 Defaults. The Administrative Agent shall not be deemed to have
--------
knowledge of the occurrence of a Default unless it has received notice from a
Bank or the Company specifying such Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice of the occurrence of a Default, it shall give prompt notice thereof to
the Banks. The Administrative Agent shall (subject to Sections 10.01, 10.07 and
11.04 hereof) take such action under the Credit Documents with respect to such
Default as shall be directed by the Majority Banks, provided that, unless and
--------
until it shall have received such directions, it may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the Banks.
10.04 Rights as a Bank and as the Swingline Bank. With respect to its
------------------------------------------
Commitment, its Swingline Commitment and the Loans made by it, Chase (and any
successor acting as Administrative Agent) in its capacity as a Bank or the
Swingline Bank hereunder shall have the same rights and powers hereunder as any
other Bank or the Swingline Bank and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Bank" or "Banks" or "Swingline
Bank" shall, unless the context otherwise indicates, include each of the
Administrative Agent in its individual capacity. Chase (and any successor
acting as Administrative Agent) and its affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to and generally
engage in any kind of banking, trust or other business with the Company (and any
of its affiliates) as if it were not acting as the Administrative Agent, and
Chase and its affiliates may accept fees and other consideration from the
Company for services in connection with this Agreement or otherwise without
having to account for the same to the Banks.
10.05 Indemnification. The Banks agree to indemnify the
---------------
Administrative Agent (to the extent not reimbursed under Section 11.03 hereof,
but without limiting the obligations of the Company under said Section 11.03),
ratably in accordance with their respective Commitments (or, if the Commitments
shall have terminated, ratably in accordance with the outstanding principal
amounts of the Loans held by the respective Banks), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against it in any way relating to or arising out of
this Agreement or any other Credit Document, or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (including, without
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----------------
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limitation, the costs and expenses which the Company is obligated to pay under
Section 11.03 hereof but excluding, unless a Default has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
of any other Credit Document or of any such other documents, provided that no
--------
Bank shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the party to be indemnified.
10.06 Non-Reliance. Each Bank agrees that it has, independently and
------------
without reliance on either the Administrative Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents) or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Company and the Subsidiaries and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Company of this Agreement or any other document
referred to or provided for herein or to inspect the properties or books of the
Company or any Subsidiary. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Company or any
Subsidiary (or any of their affiliates) which may come into its possession or
the possession of any of its affiliates.
10.07 Failure to Act. Except for action expressly required of the
--------------
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Banks of their indemnification
obligations under Section 10.05 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
10.08 Resignation or Removal of Administrative Agent. Subject to the
----------------------------------------------
appointment and acceptance of a successor as provided below, the Administrative
Agent may resign at any time by giving notice thereof to the Banks and the
Company and the Administrative Agent may be removed at any time with or without
cause by the Majority Banks. Upon any such resignation or
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----------------
<PAGE>
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removal, the Majority Banks shall, after consultation with the Company, have the
right to appoint a successor. If no successor shall have been so appointed by
the Majority Banks and shall have accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation or the Majority Banks'
removal of the Administrative Agent, then the retiring Administrative Agent may,
on behalf of the Banks, after consultation with the Company, appoint a
successor, which shall be a bank with a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance of any appointment hereunder by a successor,
such successor shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder, the provisions of this Section 10 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting hereunder.
10.09 Agents, Etc. The Documentation Agent and the Syndication Agent
-----------
identified on the cover page of this Agreement shall have no duties or
responsibilities hereunder other than as Banks hereunder or, in the case of
Chase, as Swingline Bank and as Administrative Agent. Each Managing Bank acts
hereunder in its individual capacity and not as agent for the Banks and shall
have no duties or responsibilities hereunder to any other Bank (except, in the
case of Chase, when it is acting in its capacity as Administrative Agent).
Section 11. Miscellaneous.
-------------
11.01 Waiver. No failure on the part of the Administrative Agent,
------
any Bank or the Swingline Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Agreement or any other Credit Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under this
Agreement or any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
11.02 Notices. All notices and other communications provided for
-------
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telecopy or in writing
(or, with respect to notices given pursuant to Sections 2.02, 2.03 and 4.07
hereof, by telephone, confirmed in writing by telecopy by the close of business
on the day the notice is given); and
Credit Agreement
----------------
<PAGE>
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telecopied, mailed or delivered (or telephoned, as the case may be) to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Officers of the
Company authorized to give such telephone notices shall be designated by the
Company in writing to the Administrative Agent and notices given by anyone
purporting to be any one of the designated officers may be honored by the
Administrative Agent. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
11.03 Expenses, Etc. The Company agrees to pay or reimburse each of
-------------
the Banks, the Swingline Bank and the Administrative Agent for paying: (a) the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New
York counsel to the Banks and the Swingline Bank, in connection with (i) the
preparation, execution and delivery of this Agreement and the other Credit
Documents and the making of the Loans hereunder and (ii) any amendment,
modification or waiver of any of the terms of this Agreement or any of the other
Credit Documents; (b) all reasonable costs and expenses of the Administrative
Agent (including, without limitation, telephone, telex and courier expenses and
printing and publishing costs) in connection with the negotiation, syndication
and execution of this Agreement and the other Credit Documents; (c) all
reasonable costs and expenses of the Banks, the Swingline Bank and the
Administrative Agent (including reasonable counsels' fees and allocated expenses
of in-house lawyers) in connection with the enforcement of this Agreement or any
of the other Credit Documents; and (d) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement, any of the other Credit Documents or any
other document referred to herein or therein.
The Company hereby agrees to indemnify the Administrative Agent and
each Bank and their respective directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
incurred by the Administrative Agent to any Bank, whether or not the
Administrative Agent or any Bank is a party thereto) arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
Loans hereunder or any actual or proposed use by the Company or any of its
Subsidiaries of the proceeds of any of
Credit Agreement
----------------
<PAGE>
- 89 -
the Loans hereunder, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).
11.04 Amendments, Etc. Any provision of this Agreement may be
---------------
amended, waived or otherwise modified only by an instrument signed by the
Company and the Majority Banks, or by the Company and the Administrative Agent
acting with the consent of the Majority Banks, and, if the rights or obligations
hereunder of the Swingline Bank are affected thereby, the Swingline Bank, and
any provision of this Agreement may be waived by the Majority Banks or by the
Administrative Agent acting with the consent of the Majority Banks and, if the
rights or obligations hereunder of the Swingline Bank are affected thereby, the
Swingline Bank; provided that (a) no amendment, waiver or other modification
--------
shall, unless by an instrument signed by all of the Banks or by the
Administrative Agent acting with the consent of all of the Banks: (i) increase
or extend the term, or extend the time or waive any requirement for the
reduction or termination, of any of the Commitments or the Swingline Commitment,
(ii) extend the date fixed for the payment of principal of or interest on any
Loan, (iii) reduce the amount of any payment of principal thereof or the rate at
which interest is payable thereon or any Fee is payable hereunder, (iv) alter
the terms of clause (f) or (g) of Section 9 hereof, the paragraph of Section 9
hereof beginning with the word "THEREUPON" or this Section 11.04, (v) amend the
definition of the term "Majority Banks" or modify in any other manner the number
or percentage of the Banks required to make any determinations or waive any
rights hereunder or to modify any provision hereof, (vi) waive any of the
conditions precedent set forth in Section 6 hereof, (vii) alter any provision of
this Agreement insofar as such provision requires the consent or approval of all
of the Banks or (viii) alter any provision of this Agreement that would have the
effect set forth in any of the foregoing clauses (i) through (vii), (b) any
amendment of Section 10 hereof, or any provision which increases the obligations
of the Administrative Agent hereunder, shall require the consent of the
Administrative Agent and (c) any modification of any of the rights or
obligations of the Swingline Bank shall require the consent of the Swingline
Bank.
11.05 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Credit Agreement
----------------
<PAGE>
- 90 -
11.06 Assignments and Participations.
------------------------------
(a) The Company may not assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the Banks and
the Administrative Agent and the Swingline Bank.
(b) A Bank may assign any of its Loans, its Notes, its Commitments or
its interest acquired under Section 2.02(b) hereof in Swingline Loans to any
other Person only with the prior consent of the Company and the Administrative
Agent and, in the case of its Revolving Credit Commitment or its interest in any
Swingline Loans, the Swingline Bank (which consent, in each case, may not be
unreasonably withheld or delayed; it being agreed that the Company, in
determining whether to give such consent, may reasonably consider, without
limitation of other factors that the Company may reasonably consider, the
financial capability, financial rating and location of a proposed assignee and
any prior business relationships between the Company and a proposed assignee,
provided that any such determination shall be made by the Company in good faith
- --------
and after consideration of all relevant factors); provided that (x) any Bank may
--------
assign to another Bank all or any portion of its Commitments or Loans and (y)
unless the Company and the Administrative Agent shall otherwise consent, any
such partial assignment (other than to another Bank) shall be in an aggregate
principal amount equal to $10,000,000 or any integral multiple of $1,000,000 in
excess thereof. For purposes of making the determination described in the first
sentence of this Section 11.06(b) of whether to give its consent to an
assignment by any Bank, the Company (i) recognizes that the initial aggregate
amount of the Commitments of such Bank may exceed significantly the final amount
that such Bank intends to hold on a long term basis and (ii) agrees to consider
the targeted final hold amount of such Bank as disclosed to the Company by such
Bank. Upon written notice to the Company and the Administrative Agent and (if
necessary) the Swingline Bank of an assignment permitted by the provisos of the
preceding sentence (which notice shall identify the assignee Bank, the amount of
the assignor Bank's Commitments and Loans assigned in detail reasonably
satisfactory to the Administrative Agent) and upon the effectiveness of any
assignment consented to by the Company and the Administrative Agent and (if
necessary) the Swingline Bank, the assignee shall have, to the extent of such
assignment (unless otherwise provided in such assignment with the consent of the
Company and the Administrative Agent and the Swingline Bank), the obligations,
rights and benefits of a Bank hereunder holding the Commitments and Loans and
interests in Swingline Loans (or portions thereof) assigned to it (in addition
to the Commitments and Loans, if any, theretofore held by such assignee). Upon
the effectiveness of any assignment of any of its Commitments or Loans, the
assignor Bank or the assignee (as agreed between them)
Credit Agreement
----------------
<PAGE>
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shall pay to the Administrative Agent a transfer fee in an amount equal to
$3,000; provided that the assignee Bank shall pay any transfer fee payable in
--------
connection with any assignment effected pursuant to Section 2.04(e) hereof.
(c) The Swingline Bank may not (except as provided in Section 2.02(b)
hereof) assign or sell participations in all or any part of its Swingline Loans,
its Swingline Note or its Swingline Commitment; provided that the Swingline Bank
may assign to another Bank all of its obligations, rights and benefits in
respect of its Swingline Loans, its Swingline Note and its Swingline Commitment.
Upon the effectiveness of any such assignment, the assignee shall have the
obligations, rights and benefits of the Swingline Bank hereunder holding the
Swingline Commitment and Swingline Loans assigned to it, and the assigning
Swingline Bank shall be released from its Swingline Commitment so assigned.
(d) A Bank may sell to one or more other Persons a participation in
all or any part of any Loan held or to be made by it or in any of its
Commitments, in which event each such participant shall not have any rights or
benefits under this Agreement or any Note (the participant's rights against such
Bank in respect of such participation to be those set forth in the agreement
(the "Participation Agreement") executed by such Bank in favor of the
-----------------------
participant). All amounts payable by the Company to any Bank under Section 5
hereof shall be determined as if such Bank had not sold any participations in
such Loan and in such Commitment and as if such Bank were funding all of such
Loan in the same way that it is funding the portion of such Loan and such
Commitment in which no participations have been sold. In no event shall a Bank
that sells a participation be obligated to the participant under the
Participation Agreement to take or refrain from taking any action hereunder or
under such Bank's Note(s) except that such Bank may agree in the Participation
Agreement that it will not, without the consent of the participant, agree to (i)
the increase or the extension of the term, or the extension of the time or waive
any requirement for the reduction or termination, of such Bank's Commitment,
(ii) the extension of any date fixed for the payment of principal of or interest
on the related Loan or Loans, (iii) the reduction of any payment of principal
thereof, (iv) the reduction of the rate at which either interest is payable
thereon or (if the participant is entitled to any part thereof) commitment fee
or facility fee is payable hereunder to a level below the rate at which the
participant is entitled to receive interest or commitment fee or facility fee
(as the case may be) in respect of such participation or (v) take any other
action that, under this Agreement, requires the consent or approval of all of
the Banks.
Credit Agreement
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<PAGE>
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(e) A Bank may furnish any information concerning the Company or any
Subsidiary in the possession of such Bank from time to time to any of its
affiliates or its assignees and participants (including prospective assignees
and participants), subject to the provisions of Section 11.11 hereof.
(f) Any Bank may at any time assign and pledge to any Federal Reserve
Bank (or to an affiliate of such Bank for the purpose of permitting such
affiliate to assign and 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 Loans and its Notes. No such
assignment shall release the assigning Bank from its obligations hereunder.
11.07 Survival. The obligations of the Company under Sections 5.01,
--------
5.05 and 11.03 hereof shall survive the repayment of the Loans and the
termination of the Commitments.
11.08 Captions. Captions and section headings appearing herein are
--------
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
11.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.10 Governing Law; Submission to Jurisdiction; Waiver of Jury
---------------------------------------------------------
Trial. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
- -----
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK COUNTY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Confidentiality. Each Bank and the Administrative Agent agrees
---------------
(on behalf of itself and each of its
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----------------
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affiliates, directors, officers, employees and representatives) to keep
confidential, in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by the Company
pursuant to this Agreement which is identified by the Company as being
proprietary, private and/or confidential at the time the same is delivered to
the Banks or the Administrative Agent, provided that nothing herein shall limit
--------
the disclosure of any such information (a) to the extent required by statute,
rule, regulation or judicial process, (b) to counsel for any of the Banks or the
Administrative Agent, (c) to bank examiners, auditors or accountants, (d) to the
Administrative Agent or any other Bank, (e) in connection with any litigation to
which any one or more of the Banks or the Administrative Agent is a party or (f)
to any assignee or participant (or prospective assignee or participant) SO LONG
AS SUCH ASSIGNEE OR PARTICIPANT (OR PROSPECTIVE ASSIGNEE OR PARTICIPANT) FIRST
EXECUTES AND DELIVERS TO THE RESPECTIVE BANK A CONFIDENTIALITY AGREEMENT IN
SUBSTANTIALLY THE FORM OF EXHIBIT D HERETO (WHEREUPON SUCH BANK SHALL PROMPTLY
DELIVER A COPY OF SUCH CONFIDENTIALITY AGREEMENT TO THE COMPANY); provided,
--------
further, that (i) unless specifically prohibited by applicable law or court
order, each Bank and the Administrative Agent shall, prior to disclosure
thereof, notify the Company of any request for disclosure of any such non-public
information (x) by any governmental agency or representative thereof (other than
any such request in connection with an examination of the financial condition of
such Bank by such governmental agency) or (y) pursuant to legal process and (ii)
in no event shall any Bank or the Administrative Agent be obligated or required
to return any materials furnished by the Company; and, provided, finally, that
--------
no Bank shall, without the Company's prior consent, provide any information
relating to projections of the Company's financial performance to any
participant or any prospective assignee or participant (other than any bank or
other financial institution identified to the Company as a participant under the
Existing Credit Agreement in a notice given to the Company prior to the
Restatement Date), and, in lieu thereof, the Company shall, promptly following
the request of any Bank and at the Company's expense, provide to a participant
(or prospective assignee or participant) of such Bank any information relating
to projections of the Company's financial performance that has been made
available to such Bank. Each Bank agrees that money damages would not be a
sufficient remedy for any breach of such Bank's obligations under this Section
11.11 and that, in addition to all other remedies available to the Company at
law or in equity, the Company shall be entitled to injunctive relief against
such Bank as a remedy for such breach.
Credit Agreement
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NORTHROP GRUMMAN CORPORATION
By /s/ James L. Sanford
--------------------------
Name: James L. Sanford
Title: Assistant Treasurer
Address for Notices:
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, California 90067
Attention: Albert Myers
Corporate Vice President and
Treasurer
Telecopier No.: 310-553-2076
Telephone No.: 310-201-3070
Credit Agreement
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SWINGLINE COMMITMENT THE BANKS
- -------------------- ---------
$100,000,000 THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ Richard C. Smith
---------------------
Title: Vice President
Lending Office for all Loans:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Richard C. Smith
Telecopier No.: 212-552-1457
Telephone No.: 212-552-0667
Credit Agreement
----------------
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CHEMICAL BANK
By /s/ James B. Treger
---------------------
Title: Vice President
Lending Office for all Loans:
Chemical Bank
270 Park Avenue
New York, New York 10017
Address for Notices:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: James Treger
Telecopier No.: 212-270-7138
Telephone No.: 212-270-2567
Credit Agreement
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Lori Y. Kannegieter
-----------------------
Title: Vice President
Lending Office for all Loans:
Bank of America National Trust
and Savings Association
Global Payment Operations #5693
1850 Gateway Blvd. 4th Floor
Concord, California 94520
Address for Notices:
Bank of America National Trust
and Savings Association
Credit Products LA II #5618
11th Floor
555 South Flower Street
Los Angeles, California 90071
Attention: Lori Y. Kannegieter
Telecopier No.: 213-228-2756
Telephone No.: 213-228-6379
Credit Agreement
----------------
<PAGE>
- 98 -
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Robert M. Osieski
---------------------
Title: Vice President
Lending Office for Base
Rate Loans:
Morgan Guaranty Trust Company
of New York
60 Wall Street Branch
c/o J.P Morgan Securities Inc.
Loan Operations - 3rd Floor
500 Stanton-Christiana Road
Newark, Delaware 19713
Lending Office for
Eurodollar Loans:
Morgan Guaranty Trust Company
of New York
Nassau, Bahamas Office
c/o J.P Morgan Securities Inc.
Euro-Loan Servicing Unit
500 Stanton-Christiana Road
Newark, Delaware 19713
Address for Notices:
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Attention: Robert M. Osieski
Diana H. Imhof
Telecopier No.: 212-648-5014
Telephone No.: 212-648-7173
212-648-6948
Credit Agreement
----------------
<PAGE>
- 99 -
BANK OF MONTREAL
By /s/ Claudia C. Heldring
-----------------------
Title: Director
Lending Office for all Loans:
Bank of Montreal
115 S. LaSalle Street
Chicago, Illinois 60606
Address for Notices:
Bank of Montreal
115 S. LaSalle Street
Chicago, Illinois 60606
Attention: Claudia Heldring
Telecopier No.: 312-750-3798
Telephone No.: 312-750-3854
Credit Agreement
----------------
<PAGE>
- 100 -
THE BANK OF NEW YORK
By /s/ Lisa Y. Brown
---------------------
Title: Vice President
Lending Office for all Loans:
The Bank of New York
10990 Wilshire Boulevard
Suite 1125
Los Angeles, CA 90024
Address for Notices:
The Bank of New York
One Wall Street
22nd Floor
New York, NY 10286
Attention: Ms. Dawn Hertling
Telecopier No.: 212-635-6877
Telephone No.: 212-635-6742
Credit Agreement
----------------
<PAGE>
- 101 -
THE BANK OF NOVA SCOTIA
By /s/ Maarten Van Otterloo
--------------------------
Title: Senior Relationship
Manager
Lending Office for all Loans:
The Bank of Nova Scotia
101 California Street
48th Floor
San Francisco, California 94111
Address for Notices:
The Bank of Nova Scotia
Suite 2700
600 Peachtree N.E.
Atlanta, Georgia 30308
Attention: George Wong
Telecopier No.: 404-888-8998
Telephone No.: 404-877-1553
with a copy to:
The Bank of Nova Scotia
101 California Street
48th Floor
San Francisco, California 94111
Credit Agreement
----------------
<PAGE>
- 102 -
BANKERS TRUST COMPANY
By /s/ Dana Klein
---------------------
Title: Vice President
Lending Office for all Loans:
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Address for Notices:
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Attention: Gina Thompson
Telecopier No.: 212-250-7218
Telephone No.: 212-250-7356
Credit Agreement
----------------
<PAGE>
- 103 -
CANADIAN IMPERIAL BANK OF
COMMERCE
By /s/ Robert J. Wagner
------------------------
Title: Managing Director
Lending Office for all Loans:
Canadian Imperial Bank of
Commerce
350 S. Grand Avenue #2600
Los Angeles, CA 90071
Address for Notices:
Canadian Imperial Bank of
Commerce
Two Paces West
2727 Paces Ferry Road
Atlanta, GA 30339
Attention: Kathryn S. McGovern
Telecopier No.: 770-319-4950
Telephone No.: 770-319-4817
Credit Agreement
----------------
<PAGE>
- 104 -
CITICORP USA, INC.
By /s/ Carolyn R. Bodmer
---------------------
Title: Vice President
Lending Office for all Loans:
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Address for Notices:
Citicorp USA, Inc.
One Court Square
7th Floor
Long Island City, NY 11120
Attention: Jim Stave
Telecopier No.: 718-248-4844
Telephone No.: 718-248-5698
Credit Agreement
----------------
<PAGE>
- 105 -
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By /s/ Thierry Vincent
---------------------------
Title: Authorized Signatory
Lending Office for all Loans:
Credit Lyonnais Cayman
Island Branch
c/o Credit Lyonnais
Los Angeles Branch
515 South Flower Street
22nd Floor
Los Angeles, California 90071
Address for Notices:
Credit Lyonnais Cayman
Island Branch
c/o Credit Lyonnais
Los Angeles Branch
515 South Flower Street
22nd Floor
Los Angeles, California 90071
Attention: Pierre Bury
Telecopier No.: 213-623-3437
Telephone No.: 213-362-5953
Credit Agreement
----------------
<PAGE>
- 106 -
CREDIT SUISSE
By /s/ Marilou Palenzuela
-----------------------
Title: Member of Senior
Management
By /s/ Lori Jenner
----------------------
Title: Associate
Lending Office for all Loans:
Credit Suisse
633 West Fifth Street
64th Floor
Los Angeles, California 90071
Address for Notices:
Credit Suisse
633 West Fifth Street
64th Floor
Los Angeles, California 90071
Attention: Rita Asa
Telecopier No.: 213-955-8245
Telephone No.: 213-955-8284
Credit Agreement
----------------
<PAGE>
- 107 -
DRESDNER BANK AG
By /s/ Jon M. Bland
----------------------------
Title: Senior Vice President
By /s/ Sidney S. Jordan
---------------------------
Title: Vice President
Lending Office for all Loans:
Dresdner Bank AG
725 South Figueroa Street
Suite 3950
Los Angeles, California 90017
Address for Notices:
Dresdner Bank AG
Credit Services
75 Wall Street
New York, New York 10005-2889
Attention: Robert Reddington
Telecopier No.: 212-429-2130
Telephone No.: 212-429-2269
Credit Agreement
----------------
<PAGE>
- 108 -
THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ L. Gene Beube
----------------------------
Title: Senior Vice President
Lending Office for all Loans:
The First National Bank of
Chicago
777 South Figueroa Street
4th Floor
Los Angeles, CA 90017-5800
Address for Notices:
The First National Bank of
Chicago
One First National Plaza
10th Floor
Chicago, IL 60670
Attention: James Graham
Telecopier No.: 312-732-4840
Telephone No.: 312-732-7112
Credit Agreement
----------------
<PAGE>
- 109 -
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By /s/ Henry R. Biedrzycki
-----------------------
Title: Vice President
Lending Office for all Loans:
First Union National Bank
of North Carolina
301 S. College Street
TW-18
Charlotte, NC 28288-0737
Address for Notices:
First Union National Bank
of North Carolina
301 S. College Street
TW-18
Charlotte, NC 28288-0737
Attention: Hank Biedrzycki
Telecopier No.: 704-374-3300
Telephone No.: 704-375-4914
Credit Agreement
----------------
<PAGE>
- 110 -
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By /s/ Motokazu Uematsu
-----------------------------
Title: Deputy General Manager
Lending Office for all Loans:
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency
444 South Flower Street
Suite 3700
Los Angeles, California 90071-
2938
Address for Notices:
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency
444 South Flower Street
Suite 3700
Los Angeles, California 90071-
2938
Attention: Cindy Ly
Wing Y. Wong
Telecopier No.: 213-689-6247
213-689-6246
Telephone No.: 213-626-1067
Credit Agreement
----------------
<PAGE>
- 111 -
MELLON BANK, N.A.
By /s/ Lawrence C. Ivey
---------------------
Title: Vice President
Lending Office for all Loans:
Mellon Bank, N.A.
Three Mellon Bank Center
Room #2304
Pittsburgh, PA 15259
Address for Notices:
Mellon Bank, N.A.
Three Mellon Bank Center
Room #2304
Pittsburgh, PA 15259
Attention: Damon Carr
Telecopier No.: 412-234-5049
Telephone No.: 412-234-1872
Credit Agreement
----------------
<PAGE>
- 112 -
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Hachiro Hosoda
----------------------------
Title: Senior Vice President
Lending Office for all Loans:
The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue
26th Floor
New York, New York 10022
Address for Notices:
The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue
26th Floor
New York, New York 10022
Attention: Susan LeFevre
Telecopier No.: 212-644-6825 or
212-593-4691
Telephone No.: 212-891-8243
Credit Agreement
----------------
<PAGE>
- 113 -
NATIONSBANK OF TEXAS, N.A.
By /s/ Tom F. Scharfenberg
-----------------------
Title: Vice President
Lending Office for all Loans:
NationsBank of Texas, N.A.
901 Main Street
TX1-492-14-06
Dallas, Texas 75202
Address for Notices:
NationsBank of Texas, N.A.
444 South Flower Street
Suite 4100
Los Angeles, California 90071
Attention: Tom F. Scharfenberg
Telecopier No.: 213-624-5815
Telephone No.: 213-236-4923
Credit Agreement
----------------
<PAGE>
- 114 -
NATIONAL WESTMINSTER BANK PLC NEW
YORK AND/OR NASSAU BRANCHES
By /s/ Phillip Krall
---------------------
Title: Vice President
Lending Office for all Loans:
National Westminster Bank Plc
New York and/or Nassau Branches
175 Water Street
26th Floor
New York, NY 10038
Address for Notices:
National Westminster Bank Plc
New York and/or Nassau Branches
175 Water Street
19th Floor
New York, NY 10038
Attention: Gary Tenner
Telecopier No.: 212-602-4118
Telephone No.: 212-602-4180/4149
Credit Agreement
----------------
<PAGE>
- 115 -
ROYAL BANK OF CANADA
By /s/ Michael Korine
---------------------
Title: Senior Manager
Lending Office for all Loans:
Royal Bank of Canada
Financial Square
New York, New York 10005-3531
Address for Notices:
Royal Bank of Canada
Financial Square
New York, New York 10005-3531
Attention: Michael Korine
Telecopier No.: 212-428-2372
Telephone No.: 212-428-6258
Credit Agreement
----------------
<PAGE>
- 116 -
SOCIETE GENERALE
By /s/ J. Staley Stewart
---------------------
Title: Vice President
Lending Office for all Loans:
SOCIETE GENERALE
2029 Century Park East
Suite 2900
Los Angeles, CA 90067
Address for Notices:
SOCIETE GENERALE
2029 Century Park East
Suite 2900
Los Angeles, CA 90067
Attention: Tulinh Wu
Telecopier No.: 310-203-0539
Telephone No.: 310-788-7117
Credit Agreement
----------------
<PAGE>
- 117 -
THE SUMITOMO BANK, LIMITED
By /s/ Hiroshi Amano
----------------------
Title: General Manager
Lending Office for all Loans:
The Sumitomo Bank, Limited
777 S. Figueroa Street #2600
Los Angeles, California 90017
Address for Notices:
The Sumitomo Bank, Limited
The Los Angeles Branch
777 S. Figueroa Street #2600
Los Angeles, California 90017
Attention: Alicia Romo
Telecopier No.:
Telephone No.: 213-955-0854
Credit Agreement
----------------
<PAGE>
- 118 -
TORONTO DOMINION (TEXAS), INC.
By /s/ Frederic B. Hawley
----------------------
Title: Vice President
Lending Office for all Loans:
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Address for Notices:
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Attention: Frederic B. Hawley
Telecopier No.: 713-951-9921
Telephone No.: 713-653-8281
Credit Agreement
----------------
<PAGE>
- 119 -
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ David K. Alexander
----------------------------
Title: Senior Vice President
Lending Office for all Loans:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street
Atlanta, GA 30303
Address for Notices:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street
Atlanta, GA 30303
Attention: Andre Jackson
Telecopier No.: 404-332-6898
Telephone No.: 404-332-1112
Credit Agreement
----------------
<PAGE>
- 120 -
ABN AMRO BANK N.V., LOS ANGELES
INTERNATIONAL BRANCH
By ABN AMRO North America, Inc.,
as agent
By /s/ Paul K. Stimpfl
----------------------
Title: Vice President
By /s/ David J. Stassel
----------------------
Title: Vice President
Lending Office for all Loans:
ABN Amro Bank N.V., Los Angeles
International Branch
300 South Grand Avenue
Suite 1115
Los Angeles, California 90071
Address for Notices:
ABN Amro Bank N.V., Los Angeles
International Branch
300 South Grand Avenue
Suite 1115
Los Angeles, California 90071
Attention: Ellen Coleman
John Miller
Telecopier No.: 213-687-2061
Telephone No.: 213-687-2306
213-687-2072
Credit Agreement
----------------
<PAGE>
- 121 -
THE MITSUBISHI BANK, LTD.
By /s/ Corinne Heyning
---------------------
Title: Vice President
Lending Office for all Loans:
The Mitsubishi Bank, Ltd.
c/o The Bank of California, N.A.
550 S. Hope Street
3rd Floor
Los Angeles, CA 90071
Address for Notices:
The Mitsubishi Bank, Ltd.
c/o The Bank of California, N.A.
550 S. Hope Street
3rd Floor
Los Angeles, CA 90071
Attention: Corinne Heyning
Telecopier No.: 213-629-0147
Telephone No.: 213-243-3510
Credit Agreement
----------------
<PAGE>
- 122 -
BANQUE PARIBAS
By /s/ Lynne A. Lueders
---------------------------
Title: Vice President
By /s/ John Cate
---------------------------
Title: Group Vice President
Lending Office for all Loans:
Banque Paribas
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
Address for Notices:
Banque Paribas
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
Attention: Lynne Lueders
Telecopier No.: 310-556-8759
Telephone No.: 310-551-7319
Credit Agreement
----------------
<PAGE>
- 123 -
BZW DIVISION OF BARCLAYS BANK PLC
By /s/ John Giannone
-----------------
Title: Director
Lending Office for all Loans:
BZW Division of Barclays Bank PLC
222 Broadway
New York, New York 10038
Address for Notices:
BZW Division of Barclays Bank PLC
222 Broadway
New York, New York 10038
Attention: John Giannone
Telecopier No.: 212-412-7511
Telephone No.: 212-412-3276
Address for Funding:
Anand Chau-sui
Client Services Unit
Barclays Group Inc.
222 Broadway
New York, New York 10038
Telecopier No.: 212-412-1098/1099
Telephone No.: 212-412-1352
Credit Agreement
----------------
<PAGE>
- 124 -
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/ Brian O'Leary
---------------------
Title: Vice President
By /s/ Marcus Edward
---------------------
Title: Vice President
Lending Office for all Loans:
Compagnie Financiere de Cic et de
L'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Address for Notices:
Compagnie Financiere de Cic et de
L'union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Attention: Brian O'Leary
Telecopier No.: 212-715-4535
Telephone No.: 212-715-4422
Credit Agreement
----------------
<PAGE>
- 125 -
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By /s/ Tomohiro Nozaki
-----------------------------
Title: Senior Vice President &
Joint General Manager
Lending Office for all Loans:
The Dai-Ichi Kangyo Bank, Ltd.,
Los Angeles Agency
555 West 5th Street
5th Floor
Los Angeles, California 90013
Address for Notices:
The Dai-Ichi Kangyo Bank, Ltd.,
Los Angeles Agency
555 West 5th Street
5th Floor
Los Angeles, California 90013
Attention: Israel Carmeli
Telecopier No.: 213-624-5258
Telephone No.: 213-243-4740
Credit Agreement
----------------
<PAGE>
- 126 -
DEUTSCHE BANK AG
LOS ANGELES BRANCH AND/OR
CAYMAN ISLANDS BRANCH
By /s/ J. Scott Jessup
---------------------
Title: Vice President
By /s/ Ross A. Howard
---------------------
Title: Vice President
Lending Office for Base Rate
Loans:
Deutsche Bank AG
Los Angeles Branch
550 S. Hope Street
Suite 1850
Los Angeles, CA 90071
Lending Office for Eurodollar
Loans:
Deutsche Bank AG
Cayman Islands Branch
c/o Los Angeles Branch
550 S. Hope Street
Suite 1850
Los Angeles, CA 90071
Address for Notices:
Deutsche Bank AG
Los Angeles Branch and/or
Cayman Island Branch
c/o Los Angeles Branch
550 S. Hope Street
Suite 1850
Los Angeles, CA 90071
Attention: Anne Norwood
Telecopier No.: 213-630-3436
Telephone No.: 213-630-7682
Credit Agreement
----------------
<PAGE>
- 127 -
THE FUJI BANK, LIMITED
LOS ANGELES AGENCY
By /s/ Nobuhiro Umemura
----------------------------
Title: Joint General Manager
Lending Office for all Loans:
The Fuji Bank, Limited
Los Angeles Agency
333 South Grand Avenue
Suite 2500
Los Angeles, California 90071
Address for Notices:
The Fuji Bank, Limited
Los Angeles Agency
333 South Grand Avenue
Suite 2500
Los Angeles, California 90071
Attention: Ching Lim
Telecopier No.: 213-253-4198
Telephone No.: 213-253-4179
Credit Agreement
----------------
<PAGE>
- 128 -
MIDLAND BANK PLC
By /s/ Gina Sidorsky
-----------------
Title: Director
Lending Office for all Loans:
Midland Bank Plc
140 Broadway
5th Floor
New York, NY 10005
Address for Notices:
Midland Bank Plc
140 Broadway
5th Floor
New York, NY 10005
Attention: Adriana Vicuna
Telecopier No.: 212-658-2586
Telephone No.: 212-658-2752
Credit Agreement
----------------
<PAGE>
- 129 -
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/ Kazutaka Kiyoto
----------------------------
Title: Senior Vice President
Lending Office for all Loans:
The Industrial Bank of Japan,
Limited, Los Angeles Agency
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Address for Notices:
The Industrial Bank of Japan,
Limited, Los Angeles Agency
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Carl-Eric
Henzinger
Telecopier No.: 213-488-9840
Telephone No.: 213-893-6422
Credit Agreement
----------------
<PAGE>
- 130 -
MERITA BANK LTD.
By /s/ Frank Maffei
------------------------------
Title: Assistant Vice President
By /s/ Charles Poer
------------------------------
Title: Vice President
Lending Office for all Loans:
Merita Bank Ltd.
437 Madison Avenue
New York, NY 10022
Address for Notices:
Merita Bank Ltd.
437 Madison Avenue
New York, NY 10022
Attention: Frank Maffei
Telecopier No.: 212-421-4420
Telephone No.: 212-318-9561
Credit Agreement
----------------
<PAGE>
- 131 -
THE NIPPON CREDIT BANK, LTD. -
LOS ANGELES AGENCY
By/s/ Helen Y. Rhee
-------------------------------
Title: Assistant Vice President
By/s/ Bernardo E. Correa-Henschke
--------------------------------
Title: Vice President &
Senior Manager
Lending Office for all Loans:
The Nippon Credit Bank, Ltd. -
Los Angeles Agency
550 South Hope Street
Suite 2500
Los Angeles, California 90071
Address for Notices:
The Nippon Credit Bank, Ltd. -
Los Angeles Agency
550 South Hope Street
Suite 2500
Los Angeles, California 90071
Attention: Araceli Figueroa
Telecopier No.: 213-892-0111
Telephone No.: 213-243-5726
Credit Agreement
----------------
<PAGE>
- 132 -
BANCA COMMERCIALE ITALIANA
LOS ANGELES FOREIGN BRANCH
By /s/ Iacopo Navone
------------------------------
Title: Vice President & Manager
By /s/ Richard E. Iwanicki
------------------------------
Title: Vice President
Lending Office for all Loans:
Banca Commerciale Italiana
Los Angeles Foreign Branch
555 South Flower Street
43rd Floor
Los Angeles, CA 90071
Address for Notices:
Banca Commerciale Italiana
Los Angeles Foreign Branch
555 South Flower Street
43rd Floor
Los Angeles, CA 90071
Attention: Richard Iwanicki
Vice President
Telecopier No.: 213-624-0457
Telephone No.: 213-624-0440
Credit Agreement
----------------
<PAGE>
- 133 -
BANCA DI ROMA, SAN FRANCISCO
By /s/ Richard G. Dietz
------------------------------
Title: Assistant Vice President
By /s/ Claudio De Luca
-----------------------------
Title: Senior Vice President &
Manager
Lending Office for all Loans:
Banca di Roma, San Francisco
One Montgomery Street
Telesis Tower
Suite 2200
San Francisco, CA 94104
Address for Notices:
Banca di Roma, San Francisco
One Montgomery Street
Telesis Tower
Suite 2200
San Francisco, CA 94104
Attention: Mr. Augusto Bianchi
First Vice President
Telecopier No.: 415-433-6725
Telephone No.: 415-765-8202
Credit Agreement
----------------
<PAGE>
- 134 -
BAYERISCHE VEREINSBANK AG
LOS ANGELES BRANCH
By /s/ Jarunee Hanpachern
------------------------------
Title: Assistant Vice President
By /s/ Chrisine A. Taylor
------------------------------
Title: Vice President & Manager
Lending Office for all Loans:
Bayerische Vereinsbank AG
Los Angeles Branch
800 Wilshire Blvd.
Suite 1600
Los Angeles, CA 90017
Address for Notices:
Bayerische Vereinsbank AG
Los Angeles Branch
800 Wilshire Blvd.
Suite 1600
Los Angeles, CA 90017
Attention: Jarunee Hanpachern
Christine Taylor
Telecopier No.: 213-622-6341
Telephone No.: 213-629-1821
Credit Agreement
----------------
<PAGE>
- 135 -
BANQUE NATIONALE DE PARIS
By /s/ Clive Bettles
-----------------------------
Title: Senior Vice President &
Manager
By /s/ Margaret Mudd
-----------------------------
Title: Vice President
Lending Office for all Loans:
Banque Nationale de Paris
725 South Figueroa Street
Suite 2090
Los Angeles, CA 90017
Address for Notices:
Banque Nationale de Paris
180 Montgomery Street
San Francisco, CA 94126
Attention: Don Hart
Vice President
Telecopier No.: 415-989-9041
Telephone No.: 415-956-2511
with a copy to:
--------------
BNP Los Angeles
725 South Figueroa Street
Suite 2090
Los Angeles, CA 90017
Attention: Margaret Mudd
Vice President
Telecopier No.: 213-488-9682
Telephone No.: 213-688-6436
Credit Agreement
----------------
<PAGE>
- 136 -
CARIPLO-CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE S.P.A.
GRAND CAYMAN BRANCH
By /s/ Barbara Eppolito
------------------------------
Title: Assistant Vice President
By /s/ Renato Bassi
------------------------------
Title: First Vice President
Lending Office for all Loans:
Cariplo-Cassa di Risparmio delle
Provincie Lombarde S.p.A.
10 East 53rd Street
New York, NY 10022
Address for Notices:
Cariplo-Cassa di Risparmio delle
Provincie Lombarde S.p.A.
10 East 53rd Street
New York, NY 10022
Attention: Anthony F. Giobbi
Telecopier No.: 212-527-8777
Telephone No.: 212-527-8737
Credit Agreement
----------------
<PAGE>
- 137 -
CORESTATES BANK, N.A.
By /s/ Carol Williams
----------------------------
Title: Senior Vice President
Lending Office for all Loans:
Corestates Bank
Commercial Loan Accounting
FC: 1-3-17-70
Philadelphia, PA 19101
Address for Notices:
Corestates Bank
Commercial Loan Accounting
FC: 1-3-17-70
Philadelphia, PA 19101
Attention: Sharon Burgess
Telecopier No.: 215-973-2045
Telephone No.: 215-973-4448
Credit Agreement
----------------
<PAGE>
- 138 -
FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ William J. Baird
----------------------------
Title: Senior Vice President
Lending Office for all Loans:
First Interstate Bank of California
707 Wilshire Boulevard
W16-13
Los Angeles, California 90017
Address for Notices:
First Interstate Bank of California
Loan Servicing Center
P.O. Box 2899
Portland, OR 97208-2899
Attention: Sunil Singh
Telecopier No.: 503-614-5878
Telephone No.: 503-614-6436
Credit Agreement
----------------
<PAGE>
- 139 -
GULF INTERNATIONAL BANK B.S.C.
By /s/ Abdel-Fattah Tahoun
----------------------------
Title: Senior Vice President
By /s/ William B. Shepard
----------------------------
Title: Vice President
Lending Office for all Loans:
Gulf International Bank B.S.C.
380 Madison Avenue
21st Floor
New York, NY 10017
Address for Notices:
Gulf International Bank B.S.C.
380 Madison Avenue
21st Floor
New York, NY 10017
Attention: William B. Shepard
Vice President
Telecopier No.: 212-922-2309
Telephone No.: 212-922-2323
Credit Agreement
----------------
<PAGE>
- 140 -
KREDIETBANK NV
By /s/ Robert Shauffer
---------------------
Title: Vice President
By /s/ Raymond F. Murray
---------------------
Title: Vice President
Lending Office for all Loans:
Kredietbank NV
125 West 55th Street
10th Floor
New York, NY 10019
Address for Notices:
Kredietbank NV
125 West 55th Street
10th Floor
New York, NY 10019
Attention: Lynda Resuma
Telecopier No.: 212-956-5580
Telephone No.: 212-541-0657
Credit Agreement
----------------
<PAGE>
- 141 -
LLOYDS BANK PLC
By /s/ Theodore R. Walser
-------------------------------
Title: Senior Vice President
By /s/ Stephen J. Attree
-------------------------------
Title: Assistant Vice President
Lending Office for Base Rate
Loans:
Lloyds Bank Plc
199 Water Street
New York, NY 10031
Lending Office for Eurodollar
Loans:
Lloyds Bank Plc
199 Water Street
New York, NY 10031
Address for Notices:
Lloyds Bank Plc
199 Water Street
New York, NY 10031
Attention: Paul Briamonte
Telecopier No.: 212-607-4999
Telephone No.: 212-607-4965
Credit Agreement
----------------
<PAGE>
- 142 -
PNC BANK, NATIONAL ASSOCIATION
By /s/ Anthony L. Trunzo
-------------------------------
Title: Vice President & Manager
Lending Office for all Loans:
PNC Bank, National Association
55 S. Lake Avenue
Suite 650
Pasadena, CA 91101
Address for Notices:
PNC Bank, National Association
55 S. Lake Avenue
Suite 650
Pasadena, CA 91101
Attention: Pamela J. Fox
Telecopier No.: 818-568-0653
Telephone No.: 818-568-8950
Credit Agreement
----------------
<PAGE>
- 143 -
THE ROYAL BANK OF SCOTLAND plc
By /s/ David Dougan
---------------------
Title: Vice President
Lending Office for all Loans:
The Royal Bank of Scotland plc
Wall Street Plaza
88 Pine Street
26th Floor
New York, NY 10005
Address for Notices:
The Royal Bank of Scotland plc
Wall Street Plaza
88 Pine Street
26th Floor
New York, NY 10005
Attention: Helaine Griffin
Telecopier No.: 212-269-8929
Telephone No.: 212-269-1700
Credit Agreement
----------------
<PAGE>
- 144 -
THE SANWA BANK, LIMITED
By /s/ John Merhaut
----------------------------
Title: First Vice President &
Manager
Lending Office for all Loans:
The Sanwa Bank, Limited
Los Angeles Branch
601 S. Figueroa (W5-4)
Los Angeles, CA 90017
Address for Notices:
The Sanwa Bank, Limited
Los Angeles Branch
601 S. Figueroa (W5-4)
Los Angeles, CA 90017
Attention: John Merhaut
First Vice President
Telecopier No.: 213-623-4912
Telephone No.: 213-896-7862
Credit Agreement
----------------
<PAGE>
- 145 -
THE SAKURA BANK, LIMITED
By /s/ Fernando Buesa
-------------------------------
Title: Vice President
By /s/ Ofusa Sato
-------------------------------
Title: Senior Vice President &
Assistant General Manager
Lending Office for all Loans:
The Sakura Bank, Limited
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Address for Notices:
The Sakura Bank, Limited
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: Fernando Buesa
Telecopier No.: 213-623-8692
Telephone No.: 213-489-6295
Credit Agreement
----------------
<PAGE>
- 146 -
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By /s/ Masahiko Saito
--------------------------------
Title: Assistant General Manager
Lending Office for all Loans:
The Tokai Bank, Ltd.
Los Angeles Agency
300 South Grand Avenue
Los Angeles, CA 90071
Address for Notices:
The Tokai Bank, Ltd.
Los Angeles Agency
300 South Grand Avenue
Los Angeles, CA 90071
Attention: Stanley Leung
Telecopier No.: 213-689-3200
Telephone No.: 213-972-8660
Credit Agreement
----------------
<PAGE>
- 147 -
AUSTRALIA AND NEW ZEALAND
BANKING GROUP, LIMITED
By /s/ Stephen V. Christenson
--------------------------
Title: Vice President
Lending Office for all Loans:
Australia and New Zealand
Banking Group, Limited
1177 Avenue of the Americas
New York, NY 10036
Address for Notices:
Australia and New Zealand
Banking Group, Limited
1177 Avenue of the Americas
New York, NY 10036
Attention: Stephen V. Christenson
Telecopier No.: 212-801-9131
Telephone No.: 212-801-9122
Credit Agreement
----------------
<PAGE>
- 148 -
BANK OF IRELAND, GRAND CAYMAN
BRANCH
By /s/ Randolph M. Ross
--------------------
Title: Vice President
Lending Office for all Loans:
Bank of Ireland, Grand Cayman
Branch
640 Fifth Avenue
New York, NY 10019
Address for Notices:
Bank of Ireland, Grand Cayman
Branch
640 Fifth Avenue
New York, NY 10019
Attention: Patrick Dowling
Telecopier No.: 212-307-5559
Telephone No.: 212-397-1747
Credit Agreement
----------------
<PAGE>
- 149 -
THE FIRST NATIONAL BANK OF MARYLAND
By /s/ Carol A. Dalton
--------------------
Title: Vice President
Lending Office for all Loans:
First National Bank of Maryland
25 South Charles Street
MC 101-745
Baltimore, MD 21201
Address for Notices:
First National Bank of Maryland
25 South Charles Street
MC 101-745
Baltimore, MD 21201
Attention: Peg Micdzianowski
Telecopier No.: 410-244-4294
Telephone No.: 410-244-4839
Credit Agreement
----------------
<PAGE>
- 150 -
NATIONAL CITY BANK
By /s/ David A. Burns
--------------------
Title: Vice President
Lending Office for all Loans:
National City Bank
1900 E. Ninth Street
LOC 2102
Cleveland, OH 44114
Address for Notices:
National City Bank
1900 E. Ninth Street
Cleveland, OH 44114
Attention: Wendy Pollarine
Telecopier No.: 216-575-3207
Telephone No.: 216-575-2156
Credit Agreement
----------------
<PAGE>
- 151 -
UNION BANK
By /s/ Pasha Moghaddam
--------------------
Title: Vice President
By /s/ Linda L. Beaven
--------------------
Title: Vice President
Lending Office for all Loans:
Union Bank
1980 Saturn Street
Monterey Park, CA 91754
Address for Notices:
Union Bank
445 South Figueroa Street
Los Angeles, CA 90071-1602
Attention: Addie Manzo
Telecopier No.: 213-236-5112
Telephone No.: 213-236-5240
Credit Agreement
----------------
<PAGE>
- 152 -
THE SWINGLINE BANK
------------------
SWINGLINE COMMITMENT THE CHASE MANHATTAN BANK
- -------------------- (NATIONAL ASSOCIATION),
$100,000,000 as the Swingline Bank
By /s/ Richard C. Smith
---------------------
Title: Vice President
Lending Office for all Loans:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices to Chase
as the Swingline Bank:
The Chase Manhattan Bank
(National Association)
4 Metrotech Center -- 13th Floor
Brooklyn, New York 11245
Attention: New York Agency
Telecopier No.: 718-242-6910
Telephone No.: 718-242-7979
Credit Agreement
----------------
<PAGE>
- 153 -
THE ADMINISTRATIVE AGENT
------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By /s/ Richard C. Smith
--------------------
Title: Vice President
Address for Notices to Chase
as Administrative Agent:
The Chase Manhattan Bank
(National Association)
4 Metrotech Center -- 13th Floor
Brooklyn, New York 11245
Attention: New York Agency
Telecopier No.: 718-242-6910
Telephone No.: 718-242-7969
Credit Agreement
----------------
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 33-55143) and Form S-8 (Nos. 2-73293, 2-98614,
33-15764, 33-49667, 33-55141, 33-59815 and 33-59853) of Northrop Grumman
Corporation of our report regarding Electronic Systems (a unit of Westinghouse
Electric Corporation) dated January 31, 1996 appearing on page 4 of this Current
Report on Form 8-K for Northrop Grumman Corporation.
PRICE WATERHOUSE LLP
Baltimore, Maryland
March 15, 1996
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
---------------------
NORTHROP GRUMMAN COMPLETES ACQUISITION OF
- -----------------------------------------
WESTINGHOUSE DEFENSE AND ELECTRONICS SYSTEMS BUSINESS
- -----------------------------------------------------
LOS ANGELES -- March 1, 1996 -- Northrop Grumman Corporation announced
today that it has completed the acquisition of Westinghouse's defense and
electronics systems business, which is headquartered in Baltimore, Md.
Northrop Grumman purchased the business for $3 billion in cash. The company
also assumed approximately $500 million in unfunded pension liability and other
post-retirement benefits for the unit's current employees.
The transaction was financed through a combination of bank credit
facilities and a $1 billion Rule 144A debt offering due in 10, 20 and 30 years.
Northrop Grumman said it will operate the Westinghouse business as a
separate division, which will be known as the Electronic Sensors and Systems
Division. The unit employs nearly 12,000 people worldwide at 15 operating
locations, primarily in the United States. Its revenues in 1995 were
approximately $2.6 billion, and its business backlog at year-end was
approximately $3.6 billion.
"This growth acquisition represents a major strategic step forward in the
transformation of our company from primarily a builder of airplanes to an
electronics and systems integration company with healthy military aircraft,
commercial aircraft, and
-more-
<PAGE>
Page 2
NORTHROP GRUMMAN COMPLETES ACQUISITION OF
- -----------------------------------------
WESTINGHOUSE DEFENSE AND ELECTRONICS SYSTEMS BUSINESS
- -----------------------------------------------------
information systems businesses," said Kent Kresa, Northrop Grumman chairman,
president and chief executive officer.
ESSD is a world leader in the development and production of sophisticated
electronic systems for the nation's defense, civil aviation, and other
international and domestic applications.
It produces radars and electronics for combat aircraft and battlespace
management systems, including those for the F-22 and F-16 fighters, B-1B bomber,
C-130 transport, and the E-3 AWACS and E-8 Joint STARS surveillance aircraft.
ESSD also is involved in military space and undersea programs, electronic
countermeasures, tactical communications, and marine products.
In addition to its information systems business, the division is also a
leading supplier of air traffic control radars to the Federal Aviation
Administration and to countries in Europe, the Middle East, Africa, Asia and
South America.
Note: The securities offered and sold pursuant to Rule 144A have not been
registered under the Securities Act of 1933, as amended, or qualified under the
securities laws of any state, and may not be offered or sold in the United
States absent registration or qualification or an applicable exemption from the
registration or qualification requirements.
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