-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EVBhhBJ33KwnchLHgjcK+v+p6LPNfgJ/z1K5QrOMUX4TY68DeRfp8dyjlo6mWkHM 3cX/k255T+asi8IvyZE5oA== 0000950136-98-000752.txt : 19980428 0000950136-98-000752.hdr.sgml : 19980428 ACCESSION NUMBER: 0000950136-98-000752 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19980427 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: L 3 COMMUNICATIONS CORP CENTRAL INDEX KEY: 0001039101 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 133937436 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-46983 FILM NUMBER: 98601217 BUSINESS ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 1216971111 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: L 3 COMMUNICATIONS ILEX SYSTEMS INC CENTRAL INDEX KEY: 0001059160 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 133992952 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-46983-01 FILM NUMBER: 98601218 BUSINESS ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126971111 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYGIENETICS ENVIRONMENTAL SERVICES CENTRAL INDEX KEY: 0001059161 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 133992505 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-46983-02 FILM NUMBER: 98601219 BUSINESS ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126971111 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CALIFORNIA MICROWAVE INC CENTRAL INDEX KEY: 0001059162 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 130478540 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-46983-03 FILM NUMBER: 98601220 BUSINESS ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126971111 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 S-1/A 1 AMENDED REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1998 REGISTRATION NOS. 333-46983, 333-46983-01, 333-46983-02 and 333-46983-03 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
L-3 COMMUNICATIONS HYGIENETICS ENVIRONMENTAL L-3 COMMUNICATIONS SOUTHERN CALIFORNIA CORPORATION SERVICES, INC. ILEX SYSTEMS, INC. MICROWAVE, INC. (Exact name of registrant (Exact name of registrant (Exact name of registrant (Exact name of registrant as specified in its charter) as specified in its charter) as specified in its charter) as specified in its charter) DELAWARE DELAWARE DELAWARE CALIFORNIA (State of incorporation) (State of incorporation) (State of incorporation) (State of incorporation) 3812, 3663, 3679 3812, 3663, 3679 3812, 3663, 3679 3812, 3663, 3679 (Primary Standard Industrial (Primary Standard Industrial (Primary Standard Industrial (Primary Standard Industrial Classification Code Number) Classification Code Number) Classification Code Number) Classification Code Number) 13-3937436 13-3992505 13-3992952 13-0478540 (I.R.S. Employer (I.R.S. Employer (I.R.S. Employer (I.R.S. Employer Identification Number) Identification Number) Identification Number) Identification Number) 600 THIRD AVENUE 600 THIRD AVENUE 600 THIRD AVENUE 600 THIRD AVENUE NEW YORK, NEW YORK 10016 NEW YORK, NEW YORK 10016 NEW YORK, NEW YORK 10016 NEW YORK, NEW YORK 10016 (212) 697-1111 (212) 697-1111 (212) 697-1111 (212) 697-1111 (Address, including zip (Address, including zip code, (Address, including zip code, (Address, including zip code, code, and telephone number, and telephone number, and telephone number, and telephone number, including area code, of including area code, of including area code, of including area code, of registrant's principal registrant's principal registrant's principal registrant's principal executive offices) executive offices) executive offices) executive offices)
CHRISTOPHER C. CAMBRIA L-3 COMMUNICATIONS CORPORATION 600 THIRD AVENUE NEW YORK, NEW YORK 10016 (212) 697-1111 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPIES TO:
Vincent Pagano Jr. Kirk A. Davenport Simpson Thacher & Bartlett Latham & Watkins 425 Lexington Avenue 885 Third Avenue New York, New York 10017 New York, New York 10022 (212) 455-2000 (212) 906-1200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. EXPLANATORY NOTE THIS REGISTRATION STATEMENT COVERS THE REGISTRATION OF $150,000,000 AGGREGATE PRINCIPAL AMOUNT OF % SENIOR SUBORDINATED NOTES DUE 2008 (THE "NOTES") OF L-3 COMMUNICATIONS CORPORATION AND THE GUARANTEE OF THE PAYMENT OBLIGATIONS UNDER THE NOTES BY THE GUARANTORS. THIS REGISTRATION STATEMENT ALSO COVERS THE REGISTRATION OF THE NOTES AND THE GUARANTEES FOR RESALE BY LEHMAN BROTHERS INC. IN MARKET-MAKING TRANSACTIONS. THE COMPLETE PROSPECTUS RELATING TO THE OFFER (THE "PROSPECTUS") FOLLOWS IMMEDIATELY AFTER THIS EXPLANATORY NOTE. FOLLOWING THE PROSPECTUS ARE CERTAIN PAGES OF THE PROSPECTUS RELATING SOLELY TO SUCH MARKET-MAKING TRANSACTIONS (THE "MARKET-MAKING PROSPECTUS"), INCLUDING ALTERNATE FRONT AND BACK COVER PAGES, AND ALTERNATE SECTIONS ENTITLED "PROSPECTUS SUMMARY--THE NOTES OFFERING", "USE OF PROCEEDS" AND "UNDERWRITING". IN ADDITION, THE MARKET-MAKING PROSPECTUS WILL NOT INCLUDE THE FOLLOWING CAPTIONS (OR THE INFORMATION SET FORTH UNDER SUCH CAPTIONS) IN THE PROSPECTUS: "PROSPECTUS SUMMARY--CONCURRENT COMMON STOCK OFFERING" AND "CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS". ALL OTHER SECTIONS OF THE PROSPECTUS WILL BE INCLUDED IN THE MARKET-MAKING PROSPECTUS. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. Subject to Completion, dated April 27, 1998 PROSPECTUS $150,000,000 [L-3 COMMUNICATIONS LOGO] L-3 COMMUNICATIONS CORPORATION % SENIOR SUBORDINATED NOTES DUE 2008 INTEREST PAYABLE AND The % Senior Subordinated Notes due 2008 (the "Notes") are being offered (the "Notes Offering") by L-3 Communications Corporation ("L-3 Communications"), a wholly-owned subsidiary of L-3 Communications Holdings, Inc. ("Holdings"). The payment of principal, premium, if any, and interest on the Notes will be guaranteed (the "Guarantees") on a senior subordinated basis by all of L-3 Communications' Restricted Subsidiaries, including Hygienetics Environmental Services, Inc., L-3 Communications ILEX Systems, Inc. and Southern California Microwave, Inc. (the "Guarantors"), other than Foreign Subsidiaries. Interest on the Notes will be payable semi-annually on and of each year, commencing , 1998. The Notes will be redeemable at the option of L-3 Communications, in whole or in part, at any time on or after , 2003, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to , 2001, L-3 Communications may redeem up to 35% of the aggregate principal amount of Notes at the redemption price set forth herein plus accrued and unpaid interest, if any, through the redemption date with the net cash proceeds of one or more Equity Offerings. The Notes will not be subject to any mandatory sinking fund. In the event of a Change of Control, each holder of Notes will have the right, at the holder's option, to require L-3 Communications to purchase such holder's Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. See "Description of the Notes". The Notes will be general unsecured obligations of L-3 Communications, subordinate in right of payment to all existing and future Senior Debt of L-3 Communications. As of March 31, 1998, after giving pro forma effect to the 1998 Acquisitions and the Offerings, and application of the net proceeds therefrom, L-3 Communications would have had approximately $415.2 million of indebtedness outstanding, of which $36.9 million would have been Senior Debt (excluding letters of credit). See "Capitalization". Concurrently with the Notes Offering, Holdings is publicly offering in the United States and internationally 5,500,000 shares of its Common Stock, par value $.01 per share (the "Common Stock"). The closing of the Notes Offering is conditioned upon the closing of the offering of Common Stock (the "Common Stock Offering" and, together with the Notes Offering, the "Offerings"). Prior to the consummation of the Common Stock Offering, affiliates of Lehman Brothers Inc. own 49.0% of the outstanding capital stock of Holdings. See "Ownership of Capital Stock". FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES, SEE "RISK FACTORS" BEGINNING ON PAGE 11. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -----------------------------------------------------------------------------
PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3) - ------------ ---------------- ----------------- ---------------- Per Note..... $ $ $ - ------------ ---------------- ----------------- ---------------- Total ....... $ $ $ - ------------ ---------------- ----------------- ----------------
- ----------------------------------------------------------------------------- (1) Plus accrued interest, if any, from the date of issuance to the date of delivery. (2) L-3 Communications has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting". (3) Before deducting expenses payable by L-3 Communications estimated at $ . The Notes are offered, subject to prior sale, when, as and if issued to and accepted by the Underwriters and subject to certain conditions. It is expected that delivery of the Notes will be made in book-entry form through the facilities of The Depository Trust Company, on or about , 1998, against payment therefor in immediately available funds. LEHMAN BROTHERS BANCAMERICA ROBERTSON STEPHENS , 1998 Photographs of L-3's products, including the aviation recorder, cockpit display, Narda catalog, dipping sonar, secure terminal equipment, telemetry system, satellite transmission systems, explosive detection systems, human patient simulator and fixed wireless loop equipment. L-3 Communications L-3 is well positioned for the future Experienced management team Favorable business mix Positive industry dynamics Leading market positions Strong performance record Solid financial structure Emerging commercial technologies CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED HEREBY AT LEVELS WHICH MIGHT NOT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING". IN ADDITION, LEHMAN BROTHERS INC.'S ABILITY TO MAKE A MARKET IN THE NOTES WILL BE SUBJECT TO THE AVAILABILITY OF A CURRENT MARKET-MAKING PROSPECTUS. AVAILABLE INFORMATION L-3 Communications and the Guarantors have filed with the Commission a Registration Statement on Form S-1 (together with all amendments, exhibits, schedules and supplements thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Notes and Guarantees being offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement. For further information with respect to L-3 Communications, the Guarantors, the Notes and Guarantees, reference is made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the Registration Statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made. L-3 Communications is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission"). The Registration Statement, such reports and other information can be inspected and copied at the Public Reference Section of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at regional public reference facilities maintained by the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material, including copies of all or any portion of the Registration Statement, can be obtained from the Public Reference Section of the Commission at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). So long as L-3 Communications is subject to the periodic reporting requirements of the Exchange Act, it is required to furnish the information required to be filed with the Commission to the Trustee and the holders of the Notes. L-3 Communications has agreed that, even if it is not required under the Exchange Act to furnish such information to the Commission, it will nonetheless continue to furnish information that would be required to be furnished by L-3 Communications by Section 13 of the Exchange Act to the Trustee and the holders of the Notes as if it were subject to such periodic reporting requirements. i PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this Prospectus. As used in this Prospectus, unless the context requires otherwise: (i) "Holdings" means L-3 Communications Holdings, Inc., (ii) "L-3" or the "Company" means Holdings, its wholly-owned operating subsidiary, L-3 Communications Corporation, their predecessors, and the businesses acquired in the 1998 Acquisitions, (iii) "L-3 Communications" means L-3 Communications Corporation, (iv) "L-3 Acquisition" means the purchase of the Company from Lockheed Martin Corporation in April 1997 described under "--History", (v) "1998 Acquisitions" means the recently completed acquisitions of STS, ILEX and Ocean Systems described under "--Recent Developments" and (vi) unless otherwise indicated, "pro forma" financial data reflect the L-3 Acquisition, the 1998 Acquisitions and the Offerings as if such transactions had occurred in the beginning of the period indicated. THE COMPANY L-3 is a leading merchant supplier of sophisticated secure communication systems and specialized communication products including secure, high data rate communication systems, microwave components, avionics and ocean systems, and telemetry, instrumentation and space products. These systems and products are critical elements of virtually all major communication, command and control, intelligence gathering and space systems. The Company's systems and specialized products are used to connect a variety of airborne, space, ground-and sea-based communication systems and are incorporated into the transmission, processing, recording, monitoring and dissemination functions of these communication systems. The Company's customers include the U.S. Department of Defense (the "DoD"), selected U.S. government (the "Government") intelligence agencies, major aerospace/defense prime contractors, foreign governments and commercial customers. In 1997, L-3 had pro forma sales of $894.0 million and pro forma EBITDA (as defined in footnote 5 under "Selected Financial Information") of $95.1 million. The Company's pro forma funded backlog as of December 31, 1997 was $638.1 million. These results reflect internal growth as well as the execution of the Company's strategy of acquiring businesses that complement or extend L-3's product lines. The Company's business areas enjoy proprietary technologies and capabilities and have leading positions in their respective primary markets. Management has organized the Company's operations into two primary business areas: Secure Communication Systems and Specialized Communication Products. In 1997, the Secure Communication Systems and Specialized Communication Products business areas generated approximately $456.0 million and $438.0 million of pro forma sales, respectively, and $52.3 million and $42.8 million of pro forma EBITDA, respectively. In addition, the Company is seeking to expand its products and technologies in commercial markets. See "--Emerging Commercial Products" below. SECURE COMMUNICATION SYSTEMS. L-3 is the established leader in secure, high data rate communications in support of military and other national agency reconnaissance and surveillance applications. The Company's Secure Communication Systems operations are located in Salt Lake City, Utah, Camden, New Jersey and Shrewsbury, New Jersey. These operations are predominantly cost plus, sole source contractors supporting long-term programs for the U.S. Armed Forces and classified customers. The Company's major secure communication programs and systems include: secure data links for airborne, satellite, ground-and sea-based information collection and transmission; strategic and tactical signal intelligence systems that detect, collect, identify, analyze and disseminate information and related support contracts for military and national agency intelligence efforts; as well as secure telephone and network equipment. The Company believes that it has developed virtually every high bandwidth data link used by the military for surveillance and reconnaissance in operation today. L-3 is also a leading supplier of communication software support services to military and related government intelligence markets. In addition to these core Government programs, L-3 is leveraging its technology base by 1 expanding into related commercial communication equipment markets, including applying its high data rate communications and archiving technology to the medical image archiving market and its wireless communication expertise to develop local wireless loop telecommunications equipment. SPECIALIZED COMMUNICATION PRODUCTS. This business area includes (i) Microwave Components, (ii) Avionics and Ocean Systems and (iii) Telemetry, Instrumentation and Space Products operations of the Company. Microwave Components. L-3 is the preeminent worldwide supplier of commercial off-the-shelf, high performance microwave components and frequency monitoring equipment. L-3's microwave products are sold under the industry-recognized Narda brand name through a standard catalog to wireless, industrial and military communication markets. L-3 also provides state-of-the-art communication components including channel amplifiers and frequency filters for the commercial communications satellite market. Approximately 76% of Microwave Components sales is made to commercial customers, including Loral Space & Communications, Ltd., Motorola, Inc. ("Motorola"), Lucent Technologies Inc. ("Lucent"), AT&T Corp. ("AT&T") and Lockheed Martin Corporation ("Lockheed Martin"). Avionics and Ocean Systems. Avionics and Ocean Systems include the Company's Aviation Recorders, Display Systems, Antenna Systems and Acoustic Undersea Warfare Systems operations. L-3 is the world's leading manufacturer of commercial cockpit voice and flight data recorders ("black boxes"). These recorders are sold under the Fairchild brand name both on an original equipment manufacturer ("OEM") basis to aircraft manufacturers as well as directly to the world's major airlines for their existing fleets of aircraft. L-3's aviation recorders are also installed on military transport aircraft throughout the world. L-3 provides military and high-end commercial displays for use on a number of DoD programs including the F-14, V-22, F-117 and E-2C. Further, L-3 manufactures high performance surveillance antennas and related equipment for U.S. Air Force, U.S. Army and U.S. Navy aircraft including the F-15, F-16, AWACS, E-2C and B-2, as well as the U.K.'s maritime patrol aircraft. L-3 is also one of the world's leading product suppliers of acoustic undersea warfare systems and airborne dipping sonar systems to the U.S. and over 20 foreign navies. Telemetry, Instrumentation and Space Products. The Company's Telemetry, Instrumentation and Space Products operations develop and manufacture commercial off-the-shelf, real-time data collection and transmission products and components for missile, aircraft and space-based electronic systems. These products are used to gather flight parameter data and other critical information and transmit it from air or space to the ground. Telemetry products are also used for range safety and training applications to simulate battlefield situations. L-3 is also a leading global satellite communications systems and services provider offering systems and services used in satellite transmission of voice, video and data. EMERGING COMMERCIAL PRODUCTS. Building upon its core technical expertise and capabilities, the Company is seeking to expand into several closely aligned commercial business areas and applications. Emerging Commercial Products currently include the following three niche markets: (i) medical archiving and simulation systems; (ii) local wireless loop telecommunications equipment; and (iii) airport security equipment. These commercial products were developed based on technology used in the Company's military businesses with relatively small incremental financial investments. The Company is applying its technical capabilities in high data rate communications and archiving technology developed in its Secure Communication Systems business area to the medical image archiving market jointly with the General Electric Company's ("GE") medical systems business ("GE Medical Systems"). Based on secure, high data rate communication technology also developed in its Secure Communication Systems business area, the Company has developed local wireless loop telecommunications equipment that is primarily designed for emerging market countries and rural areas where voice and data communication infrastructure is inadequate or non-existent. L-3 has completed the development phase for the local wireless loop telecommunications equipment and made its initial shipment in January 1998. In addition, the Federal Aviation Administration (the "FAA") has awarded the Company a development contract for next 2 generation airport security equipment for explosive detection. L-3 has shipped two prototype test units and FAA certification testing commenced in the first quarter of 1998. To date, revenues generated from L-3's Emerging Commercial Products have not been, in the aggregate, material to the Company. INDUSTRY OVERVIEW The defense industry has recently undergone significant changes precipitated by ongoing federal budget pressures and new roles and missions to reflect changing strategic and tactical threats. Since the mid-1980's, the overall U.S. defense budget has declined in real dollars. In response, the DoD has focused its resources on enhancing its military readiness, joint operations and digital command and control communications by incorporating advanced electronics to improve the performance, reduce operating cost and extend the life expectancy of its existing and future platforms. The emphasis on system interoperability, force multipliers and providing battlefield commanders with real-time data is increasing the electronics content of nearly all of the major military procurement and research programs. As a result, the DoD's budget for communications and defense electronics is expected to grow. According to Federal Sources, an independent private consulting group, the defense budget for command, control, communications and intelligence ("C(3)I") is expected to increase from $31.0 billion in the fiscal year ended September 30, 1997 to $42.0 billion in the fiscal year ended September 30, 2002, a compound annual growth rate of 6.3%. The industry has also undergone dramatic consolidation resulting in the emergence of three dominant prime system contractors (The Boeing Company ("Boeing"), Lockheed Martin and Raytheon Company ("Raytheon")). One outgrowth of this consolidation among the remaining major prime contractors is their desire to limit purchases of products and sub-systems from one another. However, there are numerous essential products, components and systems that are not economical for the major prime contractors to design, develop or manufacture for their own internal use which creates opportunities for merchant suppliers such as L-3. As the prime contractors continue to evaluate their core competencies and competitive position, focusing their resources on larger programs and platforms, the Company expects the prime contractors to continue to exit non-strategic business areas and procure these needed elements on more favorable terms from independent, commercially oriented merchant suppliers. Recent examples of this trend include divestitures of certain non-core businesses by AlliedSignal Inc. ("AlliedSignal"), Ceridian Corporation ("Ceridian"), Lockheed Martin and Raytheon. The prime contractors' focus on cost control is also driving increased use of commercial off-the-shelf products for upgrades of existing systems and in new systems. The Company believes the prime contractors will continue to be under pressure to reduce their costs and will increasingly seek to focus their resources and capabilities on major systems, turning to commercially oriented merchant suppliers to produce sub-systems, components and products. Going forward, successful merchant suppliers will use their resources to complement and support, rather than compete with the prime contractors. L-3 anticipates the relationship between the major prime contractors and their primary suppliers will, as in the automotive and commercial aircraft industry, develop into critical partnerships encompassing increasingly greater outsourcing of non-core products and systems by the prime contractors to their key merchant suppliers and increasing supplier participation in the development of future programs. Early involvement in the upgrading of existing systems and the design and engineering of new systems incorporating these outsourced products will provide merchant suppliers, including the Company, with a competitive advantage in securing new business and provide the prime contractors with significant cost reduction opportunities through coordination of the design, development and manufacturing processes. BUSINESS STRATEGY In 1997, management successfully integrated the business units of Lockheed Martin it acquired in the L-3 Acquisition and enhanced the Company's operating efficiency through reduced overhead expenses and facility rationalization. These efforts resulted in improvements in sales, profitability and competitive contract award win rates. Going forward, L-3 intends to leverage its market position, diverse program 3 base and favorable mix of cost plus to fixed price contracts to enhance its profitability and to establish itself as the premier merchant supplier of communication systems and products to the major prime contractors in the aerospace/defense industry as well as the Government. The Company's strategy to continue to achieve its objectives includes: o EXPAND MERCHANT SUPPLIER RELATIONSHIPS. Management has developed strong relationships with virtually all of the prime contractors, the DoD and other major government agencies, enabling L-3 to identify business opportunities and anticipate customer needs. As an independent merchant supplier, the Company anticipates its growth will be driven by expanding its share of existing programs and by participating in new programs. Management identifies opportunities where it believes it will be able to use its strong relationships to increase its business presence and allow its customers to reduce their costs. The Company also expects to benefit from increased outsourcing by prime contractors who in the past may have limited their purchases to captive suppliers and who are now expected to view L-3's capabilities on a more favorable basis given its status as an independent company. L-3's independent status positions it to be the desired merchant supplier to multiple bidders on prime contract bids. As an example of the Company's merchant supplier strategy, L-3 equipment is included in all three prime contractor bids for the Airborne Standoff Radar ("ASTOR") program in the United Kingdom and both prime contractor bids for the DoD's Joint Air Surface Standoff Missile ("JASSM") program. o SUPPORT CUSTOMER REQUIREMENTS. A significant portion of L-3's sales are derived from high-priority, long-term programs and from programs for which the Company has been the incumbent supplier, and in many cases acted as the sole provider, over many years. Approximately 65% of the Company's total pro forma 1997 sales were generated from sole source contracts. L-3's customer satisfaction and excellent performance record are evidenced by its performance-based award fees exceeding 90% on average over the past two years. Management believes prime contractors will increasingly award long-term, sole source, outsourcing contracts to the merchant supplier they believe is most capable on the basis of quality, responsiveness, design, engineering and program management support as well as cost. Reflecting L-3's strong competitive position, the Company (excluding the 1998 Acquisitions) has experienced a contract award win rate in 1997 in excess of 60% on new competitive contracts for which it competes and in excess of 90% on contracts for which it is the incumbent. The Company intends to continue to align its research and development, manufacturing and new business efforts to complement its customers' requirements and provide state-of-the-art products. o ENHANCE OPERATING MARGINS. Since the L-3 Acquisition in April 1997, management has reduced corporate administrative and facilities expenses, increased sales and improved competitive contract award win rates. Enhancement of operating margins was primarily due to efficient management and elimination of significant corporate expense allocations which existed prior to the L-3 Acquisition. Pro forma EBITDA (excluding the 1998 Acquisitions) as a percentage of sales improved from 12.5% in 1996 to 13.4% in 1997. Management intends to continue to enhance its operating performance by reducing overhead expenses, continuing consolidation and increasing productivity. o LEVERAGE TECHNICAL AND MARKET LEADERSHIP POSITIONS. L-3 has developed strong, proprietary technical capabilities that have enabled it to capture a number one or two market position in most of its key business areas, including secure, high data rate communications systems, solid state aviation recorders, telemetry, instrumentation and space products, advanced antenna systems and high performance microwave components. Over the past three years, the Company, on a pro forma basis, has invested over $150.0 million in Company-sponsored independent research and development, including bid and proposal costs, in addition to making substantial investments in its technical and manufacturing resources. Further, the Company has a highly skilled workforce including approximately 2,000 engineers. Management is applying the Company's technical expertise and capabilities into several closely aligned commercial business areas and applications, such as medical imaging archive management, wireless telephony and airport security equipment and will continue to explore other similar commercial opportunities. 4 o MAINTAIN DIVERSIFIED BUSINESS MIX. The Company enjoys a diverse business mix with a limited program exposure, a favorable balance of cost plus and fixed price contracts, a significant sole source follow-on business and an attractive customer profile. The Company's largest program, representing 13% of 1997 pro forma sales, is a long-term, sole source, cost plus contract for the U-2 Program. No other program represented more than 7% of pro forma 1997 sales. Further, the Company's pro forma sales mix of contracts in 1997 was 36% cost plus and 64% fixed price, providing the Company with a favorable mix of predictable profitability (cost plus) and higher margin (fixed price) business. L-3 also enjoys an attractive customer mix of defense and commercial business, with DoD related sales accounting for 62% and commercial and federal (non-DoD) sales accounting for 38% of 1997 pro forma sales. The Company intends to leverage this favorable business profile to expand its merchant supplier business base. o CAPITALIZE ON STRATEGIC ACQUISITION OPPORTUNITIES. Recent industry consolidation has essentially eliminated traditional middle-tier aerospace/defense companies. This level of consolidation is now beginning to draw the concern of the DoD and federal anti-trust regulators. In 1997, a number of mezzanine companies were sold: Computing Devices International division of Ceridian to General Dynamics Corp. ("General Dynamics"), Kaman Sciences Corp. ("Kaman Sciences") to ITT Industries, Inc. ("ITT"), BDM International, Inc. ("BDM") to TRW Inc. ("TRW") and TASC Inc., a subsidiary of Primark Corporation, to Litton Industries, Inc. ("Litton"). As a result, the Company anticipates that the consolidation of the smaller participants in the defense industry will create attractive complementary acquisition candidates for L-3 in the future as these companies continue to evaluate their core competencies and competitive position. L-3 intends to enhance its existing product base through internal research and development efforts as well as selective acquisitions and add new products to its product base through acquisitions in areas synergistic with L-3's present technology. The Company seeks to acquire potential targets with the following criteria: (i) significant market position in its business area, (ii) product offerings which complement and/or extend those of L-3 and (iii) positive future growth and earnings prospects. RECENT DEVELOPMENTS Since the formation of the Company in April 1997, the Company has actively pursued its acquisition strategy. The Company recently purchased the assets and liabilities of three businesses described below which collectively comprise the "1998 Acquisitions". The combined purchase price for the 1998 Acquisitions was $146.4 million of cash, subject to certain post-closing adjustments, and in one case certain additional consideration based on post-closing performance. The Company has financed these acquisitions through the use of its existing cash balances as well as through borrowings under the $375.0 million Senior Credit Facilities (as defined). See "Description of Certain Indebtedness -- Senior Credit Facilities". These three businesses complement and extend L-3's product offerings. Ocean Systems On March 30, 1998, L-3 Communications purchased the assets of the Ocean Systems business ("Ocean Systems") of AlliedSignal for $67.5 million in cash. In 1997, Ocean Systems had sales of $73.0 million. Ocean Systems is one of the world's leading products suppliers of acoustic undersea warfare systems, having designed, manufactured and supported a broad range of compact, lightweight, high performance acoustic systems for navies around the world for over 40 years. Ocean Systems is the leading products supplier of airborne dipping sonar systems in the world with substantial market share of the sector and systems in service with the U.S. and 20 foreign navies. Ocean Systems also produces several sea systems products including towed array sonar, integrated side-looking sonar, acoustic jammers, mine detection and torpedo defense systems and supplies commercial navigation and hydrographic survey systems worldwide. Ocean Systems is further supported by its ELAC Nautik GmbH ("ELAC") operations located in Kiel, Germany. ELAC manufactures a broad range of naval defense products including submarine, torpedo and navigation sonars as well as survey and navigation systems for the 5 commercial nautical products industry. Ocean Systems expands L-3's leading products and capabilities into the undersea and anti-submarine warfare market place. ILEX Systems On March 4, 1998, L-3 Communications purchased the assets of ILEX Systems ("ILEX") for $51.9 million in cash, subject to adjustment based on closing net assets, plus additional consideration based on post-closing performance of ILEX, which could include the issuance of up to 540,000 shares of Common Stock over the next three years. In 1997, ILEX had sales of $63.5 million. ILEX is a leading supplier of communication software support services to military and related government intelligence markets. ILEX also provides environmental consulting, software and systems engineering services and complementary products to several commercial markets. ILEX complements L-3's Secure Communication Systems business area by adding software expertise in critical C(3)I programs and increasing the number of the Company's skilled workforce by adding approximately 500 software system engineers and scientists. Satellite Transmission Systems On February 5, 1998, L-3 Communications purchased the assets of the Satellite Transmission Systems division ("STS") of California Microwave, Inc. for $27.0 million, subject to adjustment based on closing net assets. For the fiscal year ended June 30, 1997, STS had sales of $68.0 million. STS is a leading global satellite communications systems and services provider. Its customers include foreign post, telephone and telegraph administrations, domestic and international prime communications infrastructure contractors, telecommunications and satellite service providers, broadcasters and media-related companies, government agencies and large corporations. STS expands L-3's ability to apply its products and provides networking capability to L-3's wireless communications products business. STS also opens new opportunities in broader, international markets. The Company considers and executes strategic acquisitions on an ongoing basis and may be evaluating acquisitions or engaged in acquisition negotiations at any given time. As of the date hereof, the Company has completed, has reached agreement on or is in discussions regarding certain acquisitions, in addition to the 1998 Acquisitions, that are either individually or in the aggregate not material to the financial condition or results of operations of the Company. HISTORY Holdings and L-3 Communications were formed in April 1997 by Mr. Frank C. Lanza, the former President and Chief Operating Officer of Loral Corporation ("Loral"), Mr. Robert V. LaPenta, the former Senior Vice President and Controller of Loral (collectively, "Senior Management"), Lehman Brothers Capital Partners III, L.P. and its affiliates (the "Lehman Partnership") and Lockheed Martin to acquire (the "L-3 Acquisition") substantially all of the assets and certain liabilities of (i) nine business units previously purchased by Lockheed Martin as part of its acquisition of Loral in April 1996 (the "Loral Acquired Businesses") and (ii) one business unit, Communication Systems -- East (formerly known as Communication Systems -- Camden), purchased by Lockheed Martin as part of its acquisition of the aerospace business of GE ("GE Aerospace") in April 1993 (collectively, the "Businesses"). L-3 Communications is a wholly-owned subsidiary of Holdings. Prior to the consummation of the Common Stock Offering, Messrs. Lanza and LaPenta and certain other members of management collectively own 17.8%; the Lehman Partnership owns 49.0%; and Lockheed Martin owns 33.2% of the outstanding capital stock of Holdings. 6 THE NOTES OFFERING Capitalized terms used under this heading "The Notes Offering" have been defined under the heading "Description of the Notes -- Certain Definitions." Securities Offered ............ $150,000,000 aggregate principal amount of % Senior Subordinated Notes due 2008 (the "Notes"). Maturity ...................... , 2008. Interest Payment Dates ........ and , commencing , 1998. Guarantees .................... The Notes will be unconditionally guaranteed on a senior subordinated basis by each Restricted Subsidiary (as defined), other than Foreign Subsidiaries (as defined). The Guarantees will be unsecured senior subordinated obligations of the Guarantors, and will be subordinated in right of payment to all existing and future Guarantor Senior Debt (as defined) and will rank on a parity or pari passu with any senior subordinated Indebtedness of the Guarantors and senior in right of payment to all subordinated obligations of the Guarantors. Optional Redemption ........... The Notes may be redeemed at the option of L-3 Communications, in whole or in part, on or after , 2003, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to , 2001, L-3 Communications may redeem up to an aggregate of 35% of the Notes originally issued at a redemption price of % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, with the net cash proceeds of one or more Equity Offerings (as defined); provided, however, that at least 65% in aggregate principal amount of the Notes originally issued remain outstanding following such redemption. Change of Control ............. In the event of a Change of Control (as defined), the holders of the Notes will have the right to require L-3 Communications to purchase their Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. Ranking ....................... The Notes will be general unsecured obligations of L-3 Communications, subordinate in right of payment to all current and future Senior Debt including all obligations of L-3 Communications and its subsidiaries under the Senior Credit Facilities (as defined). At March 31, 1998, on a pro forma basis after giving effect to the L-3 Acquisition, the 1998 Acquisitions and the Offerings, L-3 Communications would have had $415.2 million of indebtedness outstanding, of which $36.9 million would have been Senior Debt (excluding letters of credit). Borrowings under the Senior Credit Facilities will be 7 secured by substantially all of the assets of L-3 Communications as well as the capital stock of L-3 Communications and its subsidiaries. See "Risk Factors -- Substantial Leverage" and "--Subordination". Covenants ..................... The Indenture pursuant to which the Notes will be issued (the "Indenture") will contain certain covenants that, among other things, limit the ability of L-3 Communications and its Restricted Subsidiaries to incur additional Indebtedness and issue preferred stock, pay dividends or make other distributions, repurchase Equity Interests (as defined) or subordinated Indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets of L-3 Communications or its Restricted Subsidiaries, issue or sell Equity Interests of L-3 Communications' Restricted Subsidiaries or enter into certain mergers and consolidations. In addition, under certain circumstances, L-3 Communications will be required to offer to purchase Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, with the proceeds of certain Asset Sales (as defined). See "Description of the Notes". Taxation ...................... For a discussion relating to tax consequences of investment in the Notes, see "United States Federal Tax Considerations". Use of Proceeds ............... The Company intends to use the net proceeds from the Notes Offering, together with the net proceeds from the Common Stock Offering contributed to L-3 Communications, to repay a substantial portion of its existing indebtedness under the Senior Credit Facilities and for general corporate purposes, including potential acquisitions. See "Use of Proceeds". For a discussion of certain risk factors that should be considered in connection with an investment in the Notes, see "Risk Factors". CONCURRENT COMMON STOCK OFFERING Common Stock Offering ......... L-3 Communications' parent company, Holdings, is concurrently offering to the public 5,500,000 shares of its Common Stock (excluding underwriters' over-allotment option). The closing of the Notes Offering is conditioned upon the closing of the Common Stock Offering. 8 SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA AND HISTORICAL FINANCIAL DATA The summary unaudited pro forma data as of March 31, 1998 and for the three months ended March 31, 1998 and 1997 and for the year ended December 31, 1997 have been derived from, and should be read in conjunction with, the unaudited pro forma condensed consolidated financial statements included elsewhere herein. The unaudited pro forma statement of operations and other data reflect the L-3 Acquisition, the 1998 Acquisitions and the Offerings as if such transactions had occurred on January 1, 1997 for the statement of operations and other data. The unaudited pro forma balance sheet data reflect the Offerings as if they had occurred on March 31, 1998. The summary historical consolidated (combined) financial data as of and for the nine months ended December 31, 1997 and the years ended December 31, 1996, 1995 and 1994 and the three months ended March 31, 1997 have been derived from the audited financial statements for the respective periods. The summary consolidated (combined) financial data as of and for the three months ended March 31, 1998 have been derived from the unaudited condensed consolidated financial statements of the Company. In the opinion of the Company's management, such unaudited financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of results for the full year. The summary financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated (Combined) Financial Statements of the Company (Predecessor Company) and the Combined Financial Statements of the Loral Acquired Businesses included elsewhere herein. Prior to April 1, 1996, the Predecessor Company was only comprised of Communication Systems -- East.
COMPANY PREDECESSOR COMPANY ----------------------------------------------------- ----------------------------------------- NINE THREE THREE MONTHS ENDED YEAR ENDED MONTHS MONTHS MARCH 31, 1998 YEAR ENDED DECEMBER 31, DECEMBER 31, ENDED ENDED ------------------------- 1997 DEC. 31,(1) MARCH 31, ----------------------------- PRO FORMA HISTORICAL PRO FORMA 1997 1997 1996(2) 1995(3) 1994(3) ----------- ------------ -------------- ----------- ----------- --------- -------- -------- (IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Sales ...................... $207.3 $ 186.6 $894.0 $ 546.5 $158.9 $ 543.1 $166.8 $218.9 Operating income ........... 11.1 14.1 58.4 55.9 7.9 43.7 4.7 8.4 Interest expense, net(4) ... 10.6 9.8 42.4 28.5 8.4 24.2 4.5 5.5 Provision (benefit) for income taxes(4) ........... 0.6 1.7 4.7 10.7 (0.2) 7.8 1.2 2.3 Net income (loss) ........... (0.1) 2.6 11.2 16.7 (0.3) 11.7 (1.0) 0.6 BALANCE SHEET DATA: Working capital ............ $137.5 $ 92.6 $ 131.8 $ 98.8 $ 21.1 $ 19.3 Total assets ............... 926.8 880.4 703.4 593.3 228.5 233.3 Long-term debt .............. 415.2 459.6 392.0 Invested equity ............ 473.6 194.7 199.5 Shareholders' equity ........ 235.2 138.7 132.7 OTHER DATA: EBITDA(5) .................. $ 20.0 $ 21.6 $ 95.1 $ 78.1 $ 15.7 $ 71.8 $ 16.3 $ 19.9 Net cash from (used in) operating activities ....... 11.1 73.9 (16.3) 30.7 9.3 21.8 Net cash (used in) investing activities ................. (148.7) (457.8) (4.3) (298.0) (5.5) (3.7) Net cash from (used in) financing activities ....... 69.2 461.4 20.6 267.3 (3.8) (18.1) Depreciation expense ....... 5.3 4.6 22.0 13.3 4.5 14.9 5.5 5.4 Amortization expense ....... 3.6 2.9 14.7 8.9 3.3 13.2 6.1 6.1 Capital expenditures ....... 2.9 2.3 19.9 11.9 4.3 13.5 5.5 3.7 Ratios of: Earnings to fixed charges(6) ................ 1.0x 1.4x 1.3x 1.8x --(7) 1.7x 1.0x 1.4x EBITDA to cash interest expense(8)(9) ............. 2.7x 2.5x 2.4x Net debt to EBITDA(9)(10) .. 3.4x 4.6x 4.0x
(Footnotes on the following page) 9 - ------------ (1) Reflects the L-3 Acquisition effective April 1, 1997. (2) Reflects ownership of Loral's Communication Systems -- West and Specialized Communication Products businesses commencing April 1, 1996. (3) Reflects ownership of Communication Systems -- East by Lockheed Martin effective April 1, 1993. (4) For periods prior to April 1, 1997, interest expense and income tax (benefit) provision were allocated from Lockheed Martin. (5) EBITDA is defined as operating income plus depreciation expense and amortization expense (excluding the amortization of deferred debt issuance costs). EBITDA is not a substitute for operating income, net income and cash flow from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because management believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements. (6) For purposes of this computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest on indebtedness plus that portion of lease rental expense representative of the interest element. (7) Earnings were insufficient to cover fixed charges by $0.5 million for the three months ended March 31, 1997. (8) For purposes of this computation, cash interest expense consists of pro forma interest expense excluding amortization of deferred debt issuance costs. (9) These ratios as of and for the three months ended March 31, 1998 are based on the results of operations for the twelve month period ended March 31, 1998. The pro forma ratios have been calculated by adding the pro forma EBITDA and cash interest expense for the year ended December 31, 1997 and the three months ended March 31, 1998 and deducting the pro forma EBITDA and cash interest expense for the three months ended March 31, 1997. For purposes of computing pro forma EBITDA for the three months ended March 31, 1997, depreciation expense and amortization expense were $6.0 million and $2.7 million, respectively. The historical ratios have been calculated by adding historical EBITDA and cash interest expense for the nine months ended December 31, 1997 and the three months ended March 31, 1998. (10) Net debt is defined as long-term debt plus current portion of long-term debt less cash and cash equivalents. 10 RISK FACTORS Prospective investors should consider carefully, in addition to the other information contained in this Prospectus, the following factors before deciding to invest in the Notes. SUBSTANTIAL LEVERAGE The Company is highly leveraged as a result of substantial indebtedness incurred in connection with the L-3 Acquisition and the 1998 Acquisitions. After giving pro forma effect to the L-3 Acquisition, the 1998 Acquisitions and the Offerings, the Company would have had $415.2 million of indebtedness outstanding, of which $36.9 million would have been Senior Debt (excluding letters of credit), and the Company's ratio of earnings to fixed charges would have been 1.0x for the three months ended March 31, 1998. The Company may incur additional indebtedness in the future, subject to limitations imposed by its debt instruments, including the Senior Credit Facilities and the Indenture. Based upon the current level of operations and anticipated improvements, management believes that the Company's cash flow from operations, together with proceeds from the Offerings and available borrowings under the Revolving Credit Facility, will be adequate to meet its anticipated requirements for working capital, capital expenditures, research and development expenditures, program and other discretionary investments, interest payments and scheduled principal payments for the foreseeable future, at least for the next three years. There can be no assurance, however, that the Company's business will continue to generate cash flow at or above current levels or that currently anticipated improvements will be achieved. If the Company is unable to generate sufficient cash flow from operations in the future to service its debt, it may be required to sell assets, reduce capital expenditures, refinance all or a portion of its existing debt (including the 1997 Notes and the Notes) or obtain additional financing. The Company's ability to make scheduled principal payments of, to pay interest on or to refinance its indebtedness (including the 1997 Notes and the Notes) depends on its future performance and financial results, which, to a certain extent, are subject to general conditions in or affecting the defense industry and to general economic, political, financial, competitive, legislative and regulatory factors beyond its control. There can be no assurance that sufficient funds will be available to enable the Company to service its indebtedness, including the Notes, or make necessary capital expenditures and program and other discretionary investments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations". The degree to which the Company is leveraged could have important consequences to Holders of the Notes, including, but not limited to, the following: (i) a substantial portion of the Company's cash flow from operations will be required to be dedicated to debt service and will not be available for other purposes including capital expenditures, research and development expenditures, and program and other discretionary investments; (ii) the Company's ability to obtain additional financing in the future could be limited; (iii) certain of the Company's borrowings are at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates; (iv) the Company may be more vulnerable to downturns in its business or in the general economy and may be restricted from making acquisitions, introducing new technologies and products or exploiting business opportunities; and (v) the Senior Credit Facilities and the Indentures contain financial and restrictive covenants that limit, among other things, the ability of the Company to borrow additional funds, dispose of assets or pay cash dividends. Failure by the Company to comply with such covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on the Company. In addition, the degree to which the Company is leveraged could prevent it from repurchasing all Notes tendered to it upon the occurrence of a Change in Control, which would constitute an Event of Default under the Indenture. See "Description of the Notes" and "Description of Certain Indebtedness". ACQUISITION STRATEGY The Company's strategy includes pursuing additional acquisitions that will complement its business. There can be no assurance, however, that the Company will be able to identify additional acquisition candidates on commercially reasonable terms or at all or that, if consummated, any anticipated benefits 11 will be realized from such future acquisitions. In addition, the availability of additional acquisition financing cannot be assured and, depending on the terms of such additional acquisitions, could be restricted by the terms of the Senior Credit Facilities and/or the Indentures. The process of integrating acquired operations, including the 1998 Acquisitions, into the Company's existing operations may result in unforeseen operating difficulties and may require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of the Company's existing operations. Possible future acquisitions by the Company could result in the incurrence of additional debt, contingent liabilities and amortization expenses related to goodwill and other intangible assets, all of which could materially adversely affect the Company's financial condition and operating results. SIGNIFICANT CUSTOMERS The Company's sales are predominantly derived from contracts with agencies of, and prime contractors to, the Government. Although DoD procurement spending has declined from the mid-1980s resulting in delays for some new program starts, program stretch-outs and program cancellations, the U.S. defense budget began to stabilize in fiscal 1996. In 1997, the Company performed under approximately 150 contracts with value exceeding $1.0 million for the Government. Pro forma sales in 1997 to the Government, including pro forma sales to the Government through prime contractors, were $651.1 million, representing approximately 73% of the Company's corresponding sales. The Company's largest Government program, a cost plus, sole source contract for support of the U-2 Program of the DoD, contributed 13% of pro forma sales for 1997. No other program represented more than 7% of the Company's pro forma sales in 1997. The loss of all or a substantial portion of sales to the Government would have a material adverse effect on the Company's income and cash flow. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business -- Government Contracts". Pro forma sales by the Company to Lockheed Martin were $81.6 million in 1997 or 9.1% of the Company's total pro forma sales. The loss of all or a substantial portion of such sales to Lockheed Martin would have a material adverse effect on the Company's income and cash flow. RISKS INHERENT IN GOVERNMENT CONTRACTS The reduction in the U.S. defense budget in the early 1990s has caused most defense-related government contractors to experience declining revenues, increased pressure on operating margins and, in certain cases, net losses. The Company's businesses taken as a whole experienced a substantial decline in sales during such period. A significant decline in U.S. military expenditures in the future could materially adversely affect the Company's sales and earnings. The loss or significant curtailment of a material program in which the Company participates could also materially adversely affect the Company's future sales and earnings and thus the Company's ability to meet its financial obligations. Companies engaged primarily in supplying defense-related equipment and services to government agencies are subject to certain business risks peculiar to the defense industry. These risks include, among other things, the ability of the Government to: (i) suspend unilaterally the Company from receiving new contracts pending resolution of alleged violations of procurement laws or regulations, (ii) terminate existing contracts, (iii) audit the Company's contract-related costs and fees, including allocated indirect costs, and (iv) control and potentially prohibit the export of the Company's products. All of the Company's Government contracts are, by their terms, subject to termination by the Government either for its convenience or for default of the contractor. Termination for convenience provisions provide only for the recovery by the Company of costs incurred or committed, settlement expenses and profit on work completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the Government in procuring undelivered items from another source. In addition to the right of the Government to terminate, Government contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds for a given program on a fiscal-year basis even though contract performance may take 12 more than one year. Consequently, at the outset of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract by the procuring agency only if, as and when appropriations are made by Congress for future fiscal years. Foreign defense contracts generally contain comparable provisions relating to termination at the convenience of the government. The Company is subject to audit and review by the Government of its costs and performance on, and accounting and general business practices relating to, Government contracts. The Company's contract related costs and fees, including allocated indirect costs, are subject to adjustment based on the results of such audits. In addition, under Government purchasing regulations, certain of the Company's costs, including certain financing costs, goodwill, portions of research and development costs, and certain marketing expenses may not be reimbursable under Government contracts. Further, as a government contractor, the Company is also subject to investigation, legal action and/or liability that would not apply to a commercial company. The Company is subject to risks associated with the frequent need to bid on programs in advance of design completion (which may result in unforeseen technological difficulties and/or cost overruns), the substantial time and effort required for relatively unproductive design and development, design complexity and rapid obsolescence, and the constant necessity for design improvement. The Company obtains many of its Government contracts through a process of competitive bidding. There can be no assurance that the Company will continue to be successful in winning competitively awarded contracts or that awarded contracts will generate sufficient sales to result in profitability for the Company. See "Business -- Major Customers" and "--Government Contracts". In addition to these Government contract risks, many of the Company's products and systems require licenses from Government agencies for export from the United States, and certain of the Company's products currently are not permitted to be exported. There can be no assurance that the Company will be able to gain any and all licenses required to export its products, and failure to receive the required licenses could materially reduce the Company's ability to sell its products outside the United States. RISKS ASSOCIATED WITH FIXED PRICE CONTRACTS The Company's products and services are provided primarily through fixed price or cost plus contracts. Approximately 64% of the Company's pro forma sales in 1997 were attributable to fixed price contracts. The financial results of long-term fixed price contracts are recognized using the cost-to-cost percentage-of-completion method. As a result, revisions in revenues and profit estimates are reflected in the period in which the conditions that require such revisions become known and are estimable. The risks inherent in long-term fixed price contracts include the difficulty of forecasting costs and schedules, contract revenues that are related to performance in accordance with contract specifications and potential for component obsolescence in connection with long-term procurements. Failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed price contract may reduce the Company's profitability or cause a loss. Although the Company believes that adequate provisions for losses for its fixed price contracts are reflected in its financial statements, no assurance can be given that these provisions are adequate or that losses on fixed price and time-and-material contracts will not occur in the future. TECHNOLOGICAL CHANGE; NEW PRODUCT DEVELOPMENT The communication equipment industry for defense applications and in general is characterized by changing technology. The Company's ability to compete successfully in this market will depend on its ability to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis. The Company has historically obtained technology from substantial customer-sponsored research and development as well as from internally funded research and development; however, there can be no assurance that the Company will continue to maintain comparable levels of customer-sponsored research and development in the future. See "Business -- Research and Development". Substantial funds have been allocated to capital expenditures and programs and other discretionary investments in the past and will continue to be required in the future. See "Management's 13 Discussion and Analysis of Financial Condition and Results of Operations". There can be no assurance that the Company will successfully identify new opportunities and continue to have financial resources to develop new products in a timely or cost-effective manner, or that products and technologies developed by others will not render the Company's products and systems obsolete or non-competitive. ENTRY INTO COMMERCIAL BUSINESS The Company's revenues historically have been derived principally from business with the DoD and other government agencies. In addition to continuing to pursue this major market area, the Company intends to pursue a strategy that leverages its technical capabilities and expertise into related commercial markets. Certain of the Company's commercial products, such as local wireless loop telecommunications equipment, medical image archiving equipment and airport security equipment, have only been recently introduced or are in the early stages of development. As such, these new products are subject to certain risks, including the need to develop and maintain marketing, sales and customer support capabilities, to secure third-party manufacturing and distribution arrangements, to obtain certification, to respond to rapid technological advances and, ultimately, to customer acceptance of these products and product performance. The Company's efforts to expand its presence in the commercial market will require significant resources including capital and management time. There can be no assurance that the Company will be successful in addressing these risks or in developing these commercial business opportunities. COMPETITION The communications equipment industry for defense applications and as a whole is highly competitive. Declining defense budgets and increasing pressures for cost reductions have precipitated a major consolidation in the defense industry. The DoD's increased use of commercial off-the-shelf products and components in military equipment is expected to increase the entrance of new competitors. In addition, consolidation has resulted in delays in contract funding or awards and significant predatory pricing pressures associated with increased competition and reduced funding. The Company expects that the emergence of merchant suppliers will increase competition for OEM business. The Company's ability to compete for defense contracts depends to a large extent on the effectiveness and innovativeness of its research and development programs, its ability to offer better program performance than its competitors at a lower cost to the Government customer and its readiness in facilities, equipment and personnel to undertake the programs for which it competes. In some instances, programs are sole source or work directed by the Government to a single supplier. In such cases, there may be other suppliers who have the capability to compete for the programs involved, but they can only enter or reenter the market if the Government should choose to reopen the particular program to competition. Many of the Company's competitors are larger and have substantially greater financial and other resources than the Company. See "Business -- Competition". LIMITED OPERATING HISTORY Prior to the L-3 Acquisition, the Company's operations were conducted as divisions of Lockheed Martin, Loral, Unisys Corp. ("Unisys") and GE Aerospace. Following the L-3 Acquisition in April 1997, the Company has operated independently of Lockheed Martin and has provided many corporate services on a stand-alone basis that were previously provided by Lockheed Martin, including research and development, marketing, and general and administrative services including tax, treasury, management information systems, human resources and legal services. Lockheed Martin currently provides certain management information systems services to certain divisions of the Company. There can be no assurance that the actual corporate services costs incurred in operating the Company will not exceed historical charges or that the Company will be able to obtain similar services on comparable terms. DEPENDENCE ON KEY PERSONNEL The Company's success depends to a significant degree upon the continued contributions of the Company's management, including Messrs. Lanza and LaPenta, and its ability to attract and retain other 14 highly qualified management and technical personnel. Messrs. Lanza and LaPenta invested approximately $18 million to purchase 16.6% of the initial capital stock of Holdings. Holdings has entered into employment agreements with Messrs. Lanza and LaPenta. See "Management -- Employment Agreements". The Company also faces competition for management and technical personnel from other companies and organizations. There can be no assurance that the Company will continue to be successful in hiring and retaining key personnel. See "Management -- Directors and Executive Officers". ENVIRONMENTAL LIABILITIES The Company's operations are subject to various federal, state and local environmental laws and regulations relating to the discharge, storage, treatment, handling, disposal and remediation of certain materials, substances and wastes used in its operations. The Company continually assesses its obligations and compliance with respect to these requirements. Management believes that the Company's current operations are in substantial compliance with all applicable environmental laws and permits. The Company does not believe that its environmental compliance expenditures will have a material adverse effect on its financial condition or the results of its operations. In connection with the L-3 Acquisition, the Company has agreed to assume certain on-site and off-site environmental liabilities related to events or activities occurring prior to the L-3 Acquisition. Lockheed Martin has agreed to retain all environmental liabilities for all facilities no longer used by the Businesses and to indemnify fully the Company for such prior site environmental liabilities. Lockheed Martin has also agreed, for the first eight years following April 1997, to pay 50% of all costs incurred by the Company above those reserved for on the Company's balance sheet at April 1997 relating to certain Company-assumed environmental liabilities and, for the seven years thereafter, to pay 40% of certain reasonable operation and maintenance costs relating to any environmental remediation projects undertaken in the first eight years. The Company is aware of environmental contamination at two of the facilities acquired from Lockheed Martin that will require ongoing remediation. In November 1997, the Company sold one such facility located in Sarasota, Florida, while retaining a leasehold interest in a portion of that facility, to Dames & Moore/Brookhill LLC ("DMB") in a transaction in which DMB contractually agreed to assume responsibility for further remediation of the Sarasota site. Management believes that the Company has established adequate reserves for the potential costs associated with the assumed environmental liabilities. However, there can be no assurance that any costs incurred will be reimbursable from the Government or covered by Lockheed Martin under the terms of the L-3 Acquisition Agreement or that the Company's environmental reserves will be sufficient. BACKLOG The Company's backlog represents orders under contracts which are primarily with the Government. The Government enjoys broad rights to modify unilaterally or terminate such contracts. Accordingly, most of the Company's backlog is subject to modification and termination at the Government's will. There can be no assurance that the Company's backlog will become revenues in any particular period or at all. Further, there can be no assurance that the margins on any contract included in backlog that does become revenue will be profitable. OWNERSHIP OF HOLDINGS AND L-3 COMMUNICATIONS After giving effect to the Common Stock Offering, the Lehman Partnership will own 38.6% of the outstanding voting stock of Holdings (or 37.4% if the Underwriters' over-allotment option is exercised in full), which owns all of the outstanding common stock of L-3 Communications. By virtue of such ownership, the Lehman Partnership will have the power to influence significantly the business and the affairs of Holdings and L-3 Communications because of its significant voting power with respect to actions requiring stockholder approval. The concentration in ownership of Holdings may preclude Holdings from being acquired in a transaction not supported by Holdings' principal stockholders, may render more difficult or discourage a proposed merger or tender offer, may preclude a successful proxy contest or may otherwise have an adverse effect on the market price of the Notes. See "Ownership of Capital Stock". 15 PENSION PLAN LIABILITIES Pursuant to the L-3 Acquisition Agreement, Holdings and L-3 Communications assumed certain liabilities relating to defined benefit pension plans for present and former employees and retirees of certain businesses which were transferred from Lockheed Martin to Holdings and L-3 Communications. Prior to the consummation of the L-3 Acquisition, Lockheed Martin received a letter from the Pension Benefit Guaranty Corporation (the "PBGC") which requested information regarding the transfer of such pension plans and indicated that the PBGC believed certain of such pension plans were underfunded using the PBGC's actuarial assumptions (which assumptions resulted in a larger liability for accrued benefits than the assumptions used for financial reporting under Statement of Financial Accounting Standards Board No. 87, "Accounting for Pension Costs" ("FASB 87")). The PBGC underfunding is related to the Communication Systems--West, Aviation Recorders and Hycor pension plans (collectively, the "Subject Plans"). As of December 31, 1997, the Company calculated the net funding position of the Subject Plans and believes them to be overfunded by approximately $5.9 million under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), assumptions, underfunded by approximately $10.2 million under FASB 87 assumptions and, on a termination basis, underfunded by as much as $57.5 million under PBGC assumptions. L-3 Communications, Lockheed Martin and the PBGC entered into certain agreements dated as of April 30, 1997 that include Lockheed Martin providing a commitment to the PBGC with regard to the Subject Plans and L-3 Communications providing certain assurances to Lockheed Martin regarding such plans. See "Business -- Pension Plans". The Company expects, based in part upon discussions with its consulting actuaries, that any increase in pension expenses or future funding requirements from those previously anticipated for the Subject Plans would not be material. However, there can be no assurance that the impact of any increased pension expenses or funding requirements under this arrangement would not be material to the Company. SUBORDINATION Obligations of L-3 Communications and the Guarantors under the Notes and the Guarantees, respectively, are subordinate and junior in right of payment to all existing and future Senior Debt of L-3 Communications and the Guarantors, respectively. As of March 31, 1998, on a pro forma basis after giving effect to the L-3 Acquisition, the 1998 Acquisitions and the Offerings, L-3 Communications would have had approximately $415.2 million of indebtedness outstanding, of which $36.9 million would have been Senior Debt (excluding letters of credit) all of which would have been guaranteed by the Guarantors on a senior basis. Additional Senior Debt may be incurred by L-3 Communications from time to time, subject to certain restrictions. By reason of such subordination, in the event of an insolvency, liquidation, or other reorganization of L-3 Communications or the Guarantors, the lenders under the Senior Credit Facilities and other creditors who are holders of Senior Debt must be paid in full before the holders of the Notes and the Guarantees may be paid; accordingly, there may be insufficient assets remaining after payment of prior claims to pay amounts due on the Notes or the Guarantees. In addition, under certain circumstances, no payments may be made with respect to the Notes or the Guarantees if a default exists with respect to certain Senior Debt. The Notes and the Guarantees rank on a parity or pari passu with the L-3 Communications' 10 3/8% Senior Subordinated Notes due 2007 and the guarantees thereof. See "Description of the Notes -- Subordination". RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITIES AND THE INDENTURES The Senior Credit Facilities and the Indentures contain a number of significant covenants that, among other things, restrict the ability of L-3 Communications to dispose of assets, incur additional indebtedness, repay other indebtedness, pay dividends, make certain investments or acquisitions, repurchase or redeem capital stock, engage in mergers or consolidations, or engage in certain transactions with subsidiaries and affiliates and otherwise restrict corporate activities. There can be no assurance that such restrictions will not adversely affect the Company's ability to finance its future operations or capital needs or engage in other business activities that may be in the interest of the Company. In addition, the Senior Credit Facilities also require L-3 Communications to maintain compliance with certain financial 16 ratios, including total EBITDA to total interest expense and total debt to total EBITDA, and limit capital expenditures by L-3 Communications. The ability of L-3 Communications to comply with such ratios and limits may be affected by events beyond L-3 Communications' control. A breach of any of these covenants or the inability of L-3 Communications to comply with the required financial ratios or limits could result in a default under the Senior Credit Facilities. In the event of any such default, the lenders under the Senior Credit Facilities could elect to declare all borrowings outstanding under the Senior Credit Facilities, together with accrued interest and other fees, to be due and payable, to require L-3 Communications to apply all of its available cash to repay such borrowings or to prevent L-3 Communications from making debt service payments on other indebtedness (including the 1997 Notes), any of which would be an Event of Default under the Notes. If L-3 Communications were unable to repay any such borrowings when due, the lenders could proceed against their collateral. In connection with the Senior Credit Facilities, L-3 Communications has granted the lenders thereunder a first priority lien on substantially all of its assets. The lenders under the Senior Credit Facilities will also have a first priority security interest in all of the capital stock of L-3 Communications and its subsidiaries. If the indebtedness under the Senior Credit Facilities, the 1997 Notes or the Notes were to be accelerated, there can be no assurance that the assets of L-3 Communications would be sufficient to repay such indebtedness in full. See "Description of the Notes" and "Description of Certain Indebtedness". FRAUDULENT CONVEYANCE A portion of the indebtedness under the Notes and the Guarantees is being incurred to repay the interim financing for the 1998 Acquisitions and to repay the indebtedness incurred under the Senior Credit Facilities in connection with the L-3 Acquisition. Management believes that the indebtedness of L-3 Communications represented by the Notes and the indebtedness of the Guarantors represented by the Guarantees is being incurred for proper purposes and in good faith, and that, based on present forecasts and other financial information, after the issuance of the Notes and the Guarantees, L-3 Communications and the Guarantors will be solvent, will have sufficient capital for carrying on its business and will be able to pay its debts as they mature. Notwithstanding management's belief, however, under federal and state fraudulent transfer laws, if a court of competent jurisdiction in a suit by an unpaid creditor or a representative of creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to find that, at the time of the incurrence of such indebtedness, any of L-3 Communications and the Guarantors was insolvent, was rendered insolvent by reason of such incurrence, was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital, intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, or intended to hinder, delay or defraud its creditors, and that the indebtedness was incurred for less than reasonably equivalent value, then such court could, among other things, (i) void all or a portion of L-3 Communications' obligations to the Holders of the Notes or the Guarantors' obligations under the Guarantees, the effect of which would be that the Holders of the Notes and the Guarantees might not be repaid in full and/or (ii) subordinate obligations of L-3 Communications or the Guarantors to the Holders of the Notes and the Guarantees to other existing and future indebtedness of L-3 Communications or the Guarantors, as the case may be, to a greater extent than would otherwise be the case, the effect of which would be to entitle such other creditors to which the Notes and the Guarantees were not previously subordinated to be paid in full before any payment could be made on the Notes and the Guarantees. See "--Substantial Leverage" above. LIMITATION ON CHANGE OF CONTROL The Indentures provide that, upon the occurrence of a Change of Control of L-3 Communications or Holdings, L-3 Communications will make an offer to purchase all of the Notes and the 1997 Notes at a price in cash equal to 101% of the aggregate principal amount thereof together with accrued and unpaid interest to the date of purchase. The Senior Credit Facilities currently prohibit L-3 Communications from repurchasing any Notes or 1997 Notes except with the proceeds of one or more Equity Offerings. The Senior Credit Facilities also provide that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which L-3 Communications becomes a party may contain similar restrictions and 17 provisions. In the event a Change of Control event occurs at a time when L-3 Communications is prohibited from purchasing the Notes or the 1997 Notes, or if L-3 Communications is required to make a Net Proceeds Offer (as defined under "Description of the Notes") pursuant to the terms of the Notes or the 1997 Notes, L-3 Communications could seek the consent of its lenders to the purchase of the Notes or the 1997 Notes or could attempt to refinance the borrowings that contain such prohibition. If L-3 Communications does not obtain such a consent or repay such borrowings, L-3 Communications will remain prohibited from purchasing the Notes or the 1997 Notes. In such case, L-3 Communications' failure to make such an offer or to purchase tendered Notes or the 1997 Notes would constitute an Event of Default under the Indenture or the 1997 Indenture. If, as a result thereof, a default occurs with respect to any Senior Debt, the subordination provisions in the Indenture would likely restrict payments to the holders of the Notes. Finally, L-3 Communications' ability to pay cash to the holders of Notes or the 1997 Notes upon a purchase may be limited by L-3 Communications' then-existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. Furthermore, the Change of Control provisions may in certain circumstances make more difficult or discourage a takeover of the Company. See "Description of the Notes --Repurchase at the Option of Holders -- Change of Control". LACK OF MARKET FOR THE NOTES There is no existing trading market for the Notes, and there can be no assurance regarding the future development of a market for the Notes or the ability of the Holders of the Notes to sell their Notes or the price at which such Holders may be able to sell their Notes. If such market were to develop, the Notes could trade at prices that may be higher or lower than their initial offering price depending on many factors, including prevailing interest rates, the Company's operating results and the market for similar securities. The Underwriters have advised the Company that they currently intend to make a market with respect to the Notes. However, the Underwriters are not obligated to do so, and any market making with respect to the Notes may be discontinued at any time without notice. Because Lehman Brothers Inc. is an affiliate of the Company, Lehman Brothers Inc. will be required to deliver a current "market-maker" prospectus and otherwise comply with the registration requirements of the Securities Act in connection with any secondary market sale of the Notes, which may affect its ability to continue market-making activities. See "Underwriting". No assurance can be given as to the liquidity of or the trading market for the Notes. FORWARD LOOKING STATEMENTS This Prospectus contains forward looking statements concerning the Company's operations, economic performance and financial condition, including in particular, the likelihood of the Company's success in developing and expanding its business and the realization of sales from backlog. These statements are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect the Company's future results. All such forward looking statements are qualified by reference to matters discussed under this section entitled "Risk Factors". 18 USE OF PROCEEDS The net proceeds to the Company from the Notes Offering, are estimated to be approximately $ , after deducting underwriting discounts, commissions and estimated offering expenses. The Company intends to use the net proceeds of the Notes Offering, together with the net proceeds of the Common Stock Offering contributed to L-3 Communications, to repay a substantial portion of its existing indebtedness under the Senior Credit Facilities and for general corporate purposes, including potential acquisitions. The borrowings under the Senior Credit Facilities had been used by the Company to fund in part the L-3 Acquisition and the 1998 Acquisitions. The weighted average interest rate under the Term Loan Facilities was 7.91% at April 15, 1998. Amounts repaid under the Revolving Credit Facility will be available to be reborrowed by the Company from time to time for, among other reasons, general corporate purposes or to finance future acquisitions. Affiliates of the Underwriters are lenders under the Senior Credit Facilities and will receive a portion of the net proceeds of the Offerings in repayment of amounts outstanding thereunder. See "Description of Certain Indebtedness -- Senior Credit Facilities". SOURCES AND USES OF FUNDS ($ in millions)
SOURCES OF FUNDS AMOUNT USES OF FUNDS AMOUNT - ----------------------------------------- -------- ---------------------------------------- -------- Notes Offering .......................... $150.0 Cash on hand ............................ $ 40.9 Common Stock Offering(1)................. 104.5 Repayment of Term Loan Facilities ...... 132.3 Repayment of Revolving Credit Facility(2). 67.8 Expenses of the Offerings(3)............. 13.5 -------- -------- Total Sources............................ $254.5 Total Uses .............................. $254.5 ======== ========
- ------------ (1) At an assumed initial offering price of $19.00 per share, which is the midpoint of the range of the estimated offering price per share and assumes no exercise of the over-allotment option by the Underwriters. (2) Availability under the Revolving Credit Facility at any given time is $200.0 million, less the amount of outstanding borrowings and outstanding letters of credit. Upon consummation of the Offerings, the Company will have available under its Revolving Credit Facility $200.0 million less amounts outstanding for letters of credit (which amounted to $17.8 million at March 31, 1998). (3) Expenses are estimated and include the underwriting discounts and commissions of the Offerings. CAPITALIZATION The following table sets forth the capitalization of the Company at March 31, 1998 and as adjusted to give effect to the Offerings (at an assumed initial public offering price for the Common Stock Offering of $19.00 per share, which is the midpoint of the range of the estimated offering price per share and assuming no exercise of the over-allotment option by the Underwriters) and the application of the net proceeds therefrom as if these transactions had occurred on March 31, 1998. See "Use of Proceeds" and "Unaudited Pro Forma Condensed Consolidated Financial Information".
MARCH 31, 1998 -------------------- AS ACTUAL ADJUSTED -------- ---------- ($ IN MILLIONS) Cash and cash equivalents............... $ 9.1 $ 50.0 ======== ========== Current portion of long-term debt ...... 5.7 1.8 Revolving Credit Facility(1) ........... 67.8 -- Term Loan Facilities ................... 165.3 36.9 10 3/8% Senior Subordinated Notes due 2007 .................................. 225.0 225.0 % Senior Subordinated Notes due 2008 -- 150.0 Industrial development bond ............ 1.5 1.5 -------- ---------- Total debt ........................... $465.3 $415.2 -------- ---------- Shareholders' equity Common Stock .......................... 128.4 $224.9 Retained earnings...................... 19.3 19.3 Deemed distribution.................... (9.0) (9.0) -------- ---------- Total shareholders' equity............ 138.7 235.2 -------- ---------- Total capitalization.................. $604.0 $650.4 ======== ==========
- ------------ (1) Availability under the Revolving Credit Facility at any given time is $200.0 million, less the amount of outstanding borrowings and outstanding letters of credit. Upon consummation of the Offerings, the Company will have available under its Revolving Credit Facility $200.0 million less amounts outstanding for letters of credit (which amounted to $17.8 million at March 31, 1998). 19 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma financial information gives effect to the L-3 Acquisition, the 1998 Acquisitions and the Offerings (collectively, the "Transactions"). The Offerings include the Notes Offering and the contribution by Holdings to the Company of the proceeds of the Common Stock Offering. The pro forma financial information is based on (i) the unaudited condensed consolidated financial statements of the Company for the three-month period ended March 31, 1998, (ii) the consolidated financial statements of the Company for the nine-month period ended December 31, 1997, (iii) the Combined Statement of Operations of the Predecessor Company for the three-month period ended March 31, 1997 and (iv) the financial statements of the 1998 Acquisitions for the year ended December 31, 1997, using the purchase method of accounting and the assumptions and adjustments in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The pro forma adjustments are based upon preliminary estimates for the 1998 Acquisitions. Actual adjustments will be based on final appraisals and other analyses of fair values which are in process and adjustment of the final purchase prices. Management does not expect that differences between the preliminary and final allocations will have a material impact on the Company's pro forma financial position or results of operations. The pro forma statement of operations does not reflect any cost savings that management of the Company believes would have resulted had the Transactions occurred on January 1, 1997. The pro forma financial information should be read in conjunction with (i) the unaudited condensed consolidated financial statements of the Company for the three-month period ended March 31, 1998, (ii) the audited Consolidated (Combined) Financial Statements of the Company and the Predecessor Company as of December 31, 1997 and for the nine months ended December 31, 1997 and the three months ended March 31, 1997, (iii) the audited financial statements of STS for the year ended June 30, 1997, (iv) the unaudited condensed financial statements of STS as of December 31, 1997 and for the six months ended December 31, 1997 and 1996, (v) the audited consolidated financial statements of ILEX as of December 31, 1997 and for the year ended December 31, 1997 and (vi) the audited combined financial statements of Ocean Systems as of December 31, 1997 and for the year ended December 31, 1997, all of which are included elsewhere herein. The unaudited pro forma condensed financial information may not be indicative of the financial position and results of operations of the Company that actually would have occurred had the Transactions been in effect on the dates indicated or the financial position and results of operations that may be obtained in the future. 20 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998
COMPANY THREE MONTHS PRO FORMA ENDED ADJUSTMENTS MARCH 31, 1998 1998 1998 ACQUISITIONS(3) ACQUISITIONS(2) -------------- --------------- --------------- (IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS: Sales................................... $186.6 $20.7 $ -- Costs and expenses...................... 172.5 23.2 0.5 (4) -------------- --------------- --------------- Operating income (loss)............... 14.1 (2.5) (0.5) Interest and investment income (expense).............................. 0.8 -- Interest expense........................ 10.6 0.1 -------------- --------------- --------------- Income (loss) before income taxes .... 4.3 (2.6) (0.5) Income tax expense (benefit)............ 1.7 (0.6) (0.2) (6) -------------- --------------- --------------- Net income (loss)..................... $ 2.6 $(2.0) $ (0.3) ============== =============== ===============
(RESTUBBED TABLE CONTINUED FROM ABOVE)
THE OFFERINGS PRO FORMA ----------- ----------- STATEMENT OF OPERATIONS: Sales................................... $ -- $207.3 Costs and expenses...................... -- 196.2 ----------- ----------- Operating income (loss)............... -- 11.1 Interest and investment income (expense).............................. (0.8) (5) -- Interest expense........................ (0.1) (5) 10.6 ----------- ----------- Income (loss) before income taxes .... (0.7) 0.5 Income tax expense (benefit)............ (0.3) (6) 0.6 ----------- ----------- Net income (loss)..................... $ (0.4) $ (0.1) =========== ===========
THREE MONTHS ENDED MARCH 31, 1997
PREDECESSOR COMPANY THREE MONTHS PRO FORMA ENDED ADJUSTMENTS PRO FORMA MARCH 31, L-3 L-3 1997(1)(2) ACQUISITION(1) ACQUISITION -------------- ---------------- ------------- (IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS: Sales.......................... $158.9 $(1.8) $157.1 Costs and expenses............. 151.0 (3.2) 147.8 -------------- ---------------- ------------- Operating income (loss) ..... 7.9 1.4 9.3 Interest and investment income (expense)..................... -- -- -- Interest expense............... 8.4 1.5 9.9 -------------- ---------------- ------------- Income (loss) before income taxes....................... (0.5) (0.1) (0.6) Income tax expense (benefit) .. (0.2) -- (0.2) -------------- ---------------- ------------- Net income (loss)............ $ (0.3) $(0.1) $ (0.4) ============== ================ =============
(RESTUBBED TABLE CONTINUED FROM ABOVE)
PRO FORMA ADJUSTMENTS 1998 1998 THE ACQUISITIONS(3) ACQUISITIONS(2) OFFERINGS PRO FORMA --------------- --------------- ----------- ----------- STATEMENT OF OPERATIONS: Sales.......................... $32.1 $ -- $ -- $189.2 Costs and expenses............. 40.2 0.7 (4) -- 188.7 --------------- --------------- ----------- ----------- Operating income (loss) ..... (8.1) (0.7) -- 0.5 Interest and investment income (expense)..................... -- -- -- -- Interest expense............... 0.1 -- 0.6 (5) 10.6 --------------- --------------- ----------- ----------- Income (loss) before income taxes....................... (8.2) (0.7) (0.6) (10.1) Income tax expense (benefit) .. (2.1) (0.3)(6) (0.2)(6) (2.8) --------------- --------------- ----------- ----------- Net income (loss)............ $(6.1) $(0.4) $(0.4) $ (7.3) =============== =============== =========== ===========
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 21 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA YEAR ENDED DECEMBER 31, 1997
PREDECESSOR COMPANY COMPANY NINE MONTHS THREE MONTHS PRO FORMA ENDED ENDED ADJUSTMENTS DECEMBER 31, MARCH 31, L-3 1997 1997(1) ACQUISITION(1) -------------- -------------- ---------------- (IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS: Sales................... $546.5 $158.9 $(1.8) Costs and expenses...... 490.6 151.0 (3.2) -------------- -------------- ---------------- Operating income (loss)............... 55.9 7.9 1.4 Interest and investment income (expense)....... 1.4 -- -- Interest expense........ 29.9 8.4 1.5 -------------- -------------- ---------------- Income (loss) before income taxes......... 27.4 (0.5) (0.1) Income tax expense (benefit).............. 10.7 (0.2) -- -------------- -------------- ---------------- Net income (loss) .... $ 16.7 $ (0.3) $(0.1) ============== ============== ================
(RESTUBBED TABLE CONTINUED FROM ABOVE)
PRO FORMA PRO FORMA ADJUSTMENTS L-3 1998 1998 THE ACQUISITION ACQUISITIONS(3) ACQUISITIONS(2) OFFERING PRO FORMA ------------- --------------- --------------- -------- --------- STATEMENT OF OPERATIONS: Sales................... $703.6 $190.4 $ -- $ -- $894.0 Costs and expenses...... 638.4 196.3 0.9 (4) -- 835.6 ------------- --------------- --------------- -------- --------- Operating income (loss)............... 65.2 (5.9) (0.9) -- 58.4 Interest and investment income (expense)....... 1.4 (0.1) (1.4)(5) (0.1) Interest expense........ 39.8 0.5 2.1 (5) 42.4 ------------- --------------- --------------- -------- --------- Income (loss) before income taxes......... 26.8 (6.5) (0.9) (3.5) 15.9 Income tax expense (benefit).............. 10.5 (4.0) (0.4)(6) 1.4 (6) 4.7 ------------- --------------- --------------- -------- --------- Net income (loss) .... $ 16.3 $ (2.5) $(0.5) $(2.1) $ 11.2 ============= =============== =============== ======== =========
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 22 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following facts and assumptions were used in determining the pro forma effect of the Transactions. 1. The Company's historical financial statements reflect the results of operations of the Company since the effective date of the L-3 Acquisition, April 1, 1997, and the Predecessor Company historical financial statements reflect the results of operations of the Predecessor Company for the three months ended March 31, 1997. The adjustments made to the pro forma statement of operations for the three months ended March 31, 1997, relating to the Predecessor Company are: (a) the elimination of $1.8 million of sales and $1.8 million of costs and expenses related to the Hycor business which was acquired as part of the L-3 Acquisition and which has been accounted for as "net assets of acquired business held for sale", (b) a reduction to costs and expenses of $0.8 million to record amortization expenses on the excess of the L-3 Acquisition purchase price over net assets acquired of $303.2 million over 40 years, net of the reversal of amortization expenses of intangibles included in the Predecessor Company historical financial statements, (c) a reduction to costs and expenses of $0.6 million to record estimated pension cost on a separate company basis net of the reversal of the allocated pension cost included in the Predecessor Company historical financial statements and (d) a net increase to interest expense of $1.5 million, comprised of a $0.2 million allocated interest expense reduction related to the Hycor business and a net $1.7 million increase, reflecting pro forma interest expense of $10.2 million based on actual borrowings of $400.0 million and effective cost of borrowing rates incurred by the Company to finance the L-3 Acquisition less interest expense of approximately $8.5 million included in the historical financial statements of the Predecessor Company. A statutory (federal, state and foreign) tax rate of 39.0% was assumed on these pro forma adjustments. 2. On February 5, 1998, L-3 Communications purchased the assets of STS for $27.0 million of cash. On March 4, 1998, L-3 Communications purchased substantially all the assets of ILEX for $49.2 million of cash (net of acquired cash of $2.7 million) plus additional consideration contingent upon post-acquisition performance of ILEX. On March 30, 1998, L-3 Communications purchased the assets of Ocean Systems for $67.5 million of cash. The purchase prices are subject to adjustment based upon the actual closing net assets of STS and ILEX as defined. For purposes of the pro forma financial information, the aggregate purchase prices (including estimated expenses of $2.6 million) for the 1998 Acquisitions of $146.3 million were assumed to be financed using cash on hand of $77.5 million and initially using $68.8 million of borrowings under the Revolving Credit Facility. See Note 5 for the pro forma effects of the Offerings on interest expense and long-term debt including the Revolving Credit Facility. 3. The pro forma statements of operations include the following historical financial data for the 1998 Acquisitions: The pro forma statement of operations for the three months ended March 31, 1998 includes the following historical data for the periods indicated for the 1998 Acquisitions.
OCEAN 1998 STS(A) ILEX(A) SYSTEMS(B) ACQUISITIONS -------- ------- ---------- -------------- ($ IN MILLIONS) Sales................................ $ 2.3 $4.5 $13.9 $20.7 Costs and expenses................... 5.9 4.4 12.9 23.2 -------- ------- ---------- -------------- Operating (loss) income............ (3.6) 0.1 1.0 (2.5) Interest and investment income (expense)............................ -- -- -- -- Interest expense..................... -- -- 0.1 0.1 -------- ------- ---------- -------------- Income (loss) before income taxes.. (3.6) 0.1 0.9 (2.6) Income tax (benefit) provision....... (1.0) -- 0.4 (0.6) -------- ------- ---------- -------------- Net (loss) income.................. $(2.6) $0.1 $ 0.5 $(2.0) ======== ======= ========== ==============
- ------------ (a) Represents results for the one-month period ended January 31, 1998. (b) Represents results for the three-month period ended March 31, 1998. 23 The pro forma statement of operations for the three months ended March 31, 1997 includes the following historical data for the 1998 Acquisitions.
OCEAN 1998 STS ILEX SYSTEMS ACQUISITIONS -------- ------- --------- -------------- ($ IN MILLIONS) Sales................................ $ 8.9 $13.8 $ 9.4 $32.1 Costs and expenses................... 10.6 12.4 17.2 40.2 -------- ------- --------- -------------- Operating (loss) income............ (1.7) 1.4 (7.8) (8.1) Interest and investment income (expense)............................ -- -- -- -- Interest expense..................... -- -- 0.1 0.1 -------- ------- --------- -------------- Income (loss) before income taxes.. (1.7) 1.4 (7.9) (8.2) Income tax (benefit) provision....... (0.5) 0.1 (1.7) (2.1) -------- ------- --------- -------------- Net (loss) income.................. $(1.2) $ 1.3 $(6.2) $(6.1) ======== ======= ========= ==============
The pro forma statement of operations for the year ended December 31, 1997 includes the following historical data for the 1998 Acquisitions. Such data have been derived from each entity's historical financial statements included elsewhere herein.
OCEAN 1998 STS(A) ILEX SYSTEMS ACQUISITIONS -------- ------- --------- -------------- ($ IN MILLIONS) Sales................................ $53.9 $63.5 $73.0 $190.4 Costs and expenses................... 61.7 55.9 78.7 196.3 -------- ------- --------- -------------- Operating (loss) income............ (7.8) 7.6 (5.7) (5.9) Interest and investment income (expense)............................ -- (0.2) 0.1 (0.1) Interest expense..................... -- -- 0.5 0.5 -------- ------- --------- -------------- Income (loss) before income taxes.. (7.8) 7.4 (6.1) (6.5) Income tax (benefit) provision ...... (2.1) 0.5 (2.4) (4.0) -------- ------- --------- -------------- Net (loss) income.................. $(5.7) $ 6.9 $(3.7) $ (2.5) ======== ======= ========= ==============
- ------------ (a) Represents fiscal year ended June 30, 1997 plus the six month period ended December 31, 1997 minus the six month period ended December 31, 1996. 4. The aggregate estimated excess of purchase price over fair value of net assets acquired related to the 1998 Acquisitions is $89.0 million, comprised of $37.2 million and $51.8 million, respectively, for ILEX and Ocean Systems and is being amortized over 40 years resulting in a pro forma charge of $2.2 million per annum. Based upon preliminary estimates of fair value, the acquisition of STS resulted in no goodwill being recorded since the purchase price was equal to the net assets acquired. Adjustments to costs and expenses in the pro forma statements of operations relating to the 1998 Acquisitions were comprised of the following:
THREE MONTHS ENDED MARCH 31, YEAR ENDED ---------------- DECEMBER 31, 1998 1997 1997 ------- --------------------- ($ IN MILLIONS) (a) Amortization expense of estimated purchase cost in excess of net assets ............................................. $ 0.4 $ 0.6 $ 2.2 (b) Elimination of goodwill amortization expense included in the historical financial statements for the 1998 Acquisitions................................................ (0.1) (0.1) (2.1) (c) Estimated annual rent expense on the Sylmar facility of Ocean Systems which will not be acquired by L-3 Communications.............................................. 0.3 0.3 1.1 (d) Elimination of depreciation expense on buildings and improvements on the Sylmar facility of Ocean Systems which will not be acquired by L-3 Communications .......... (0.1) (0.1) (0.3) ------- ------- -------------- Total increase to costs and expenses...................... $ 0.5 $ 0.7 $ 0.9 ======= ======= ==============
24 5. Adjustments to the pro forma statements of operations include the elimination of interest income of $0.8 million and $1.3 million for the three months ended March 31, 1998 and the year ended December 31, 1997, respectively, to reflect the use of cash on hand to fund partially the aggregate purchase prices for the 1998 Acquisitions. Adjustments to pro forma interest expense include increases of $0.1 million, $0.6 million and $1.3 million for the three months ended March 31, 1998 and 1997 and the year ended December 31, 1997, respectively, to reflect interest expense on the pro forma outstanding debt after the use of proceeds of the Offerings. The details of interest expense, after such pro forma adjustments follow:
THREE MONTHS ENDED MARCH 31, YEAR ENDED ---------------- DECEMBER 31, 1998 1997 1997 ------- --------------------- ($ IN MILLIONS) Interest on the 1997 Notes (10.375% on $225.0 million) ... $ 5.8 $ 5.8 $23.3 Interest on the Notes (assumed 8.25% on $150.0 million) .. 3.1 3.1 12.4 Interest on borrowings under Term Loan Facilities (8.0% on $38.9 million)........................................ 0.8 0.8 3.1 Interest on industrial development bond (4.0% on $1.3 million)................................................. -- -- 0.1 Commitment fee of 0.5% on unused portion of Revolving Credit Facility (0.5% on $200.0 million) ................ 0.3 0.3 1.0 Amortization of deferred debt issuance costs.............. 0.6 0.6 2.5 ------- ------- -------------- Total pro forma interest expense ....................... $10.6 $10.6 $42.4 ======= ======= ==============
In accordance with SEC regulations, the pro forma statement of operations does not reflect interest income on the $50.0 million pro forma cash balance. The Offerings include the Notes Offering and the contribution to the Company by Holdings of the proceeds of the Common Stock Offering. The net proceeds from the Offerings of $241.0 million, comprised of $150.0 million from the Notes Offering less estimated debt issuance costs of $5.5 million, and $96.5 million from the contribution of the net proceeds of the Common Stock Offering reflecting $104.5 million less estimated issuance costs of $8.0 million, have been assumed to reduce borrowings under the Revolving Credit Facility and Term Loan Facilities by $191.0 million and increase cash and cash equivalents by $40.9 million. On a pro forma basis the balance sheet reflects the following adjustments and resulting balances:
INCREASE (DECREASE) ----------------- ($ IN MILLIONS) Cash and cash equivalents ................................................. $ 40.9 ================= Senior subordinated notes (proceeds from the Notes) ....................... 150.0 ================= Other assets (deferred debt issuance costs) ............................... $ 5.5 ================= The net proceeds from the Offerings will be used to reduce borrowings and were recorded as follows: Current portion of long-term debt ........................................ $ (3.9) Revolving Credit Facility ................................................ (67.8) Term Loan Facilities ..................................................... (128.4) ----------------- $(200.1) ================= Shareholders' equity: Contribution by Holdings of proceeds of sale of Common Stock, less expenses ................................................................. $ 96.5 =================
25 The following presents summary balance sheet data after giving effect to the Offerings:
($ IN MILLIONS) Current assets ...... $356.9 =============== Other assets ........ 74.7 =============== Total assets ........ 926.8 =============== Current liabilities 219.4 =============== Long term debt ...... 415.2 =============== Shareholders' equity 235.2 ===============
6. The pro forma adjustments were tax-effected, as appropriate, using a statutory (federal, state and foreign) tax rate of 39.0%. 26 SELECTED FINANCIAL INFORMATION The selected unaudited pro forma data as of March 31, 1998 and for the three months ended March 31, 1998 and 1997 and for the year ended December 31, 1997 have been derived from, and should be read in conjunction with, the unaudited pro forma condensed consolidated financial statements included elsewhere herein. The unaudited pro forma statement of operations and other data reflect the L-3 Acquisition, the 1998 Acquisitions and the Offerings as if such transactions had occurred on January 1, 1997 for the statement of operations and other data. The unaudited pro forma balance sheet data reflect the Offerings as if such transactions had occurred on March 31, 1998. The selected consolidated (combined) financial data as of December 31, 1997, 1996, 1995 and 1994, and for the nine months ended December 31, 1997, the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995 have been derived from the audited financial statements for the respective periods. The selected consolidated (combined) financial data as of and for the periods ended March 31, 1998, December 31, 1993 and March 31, 1993, the nine months ended December 31, 1993 and the three months ended March 31, 1993 have been derived from the unaudited financial statements of the Company. In the opinion of management, such unaudited financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three months ended March 31, 1998 may not be indicative of results for the full year. The selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated (Combined) Financial Statements of the Company (Predecessor Company) and the Loral Acquired Businesses included elsewhere herein. Prior to April 1, 1996, the Predecessor Company was only comprised of Communication Systems -- East.
COMPANY PREDECESSOR COMPANY --------------------------------------------------- --------------------------------------------------- NINE THREE NINE THREE THREE MONTHS ENDED YEAR ENDED MONTHS MONTHS MONTHS MONTHS MARCH 31, 1998 DECEMBER 31, ENDED ENDED YEAR ENDED DECEMBER 31, ENDED ENDED ------------------------ 1997 DEC. 31,(1) MARCH 31, ---------------------------- DEC. 31,(3) MARCH 31,(4) PRO FORMA HISTORICAL PRO FORMA 1997 1997 1996(2) 1995(3) 1994(3) 1993 1993 ----------- ------------ -------------- ----------- ----------- --------- -------- -------- ----------- ------------ (IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Sales ...... $207.3 $ 186.6 $894.0 $ 546.5 $158.9 $ 543.1 $166.8 $218.9 $200.0 $67.8 Operating income .... 11.1 14.1 58.4 55.9 7.9 43.7 4.7 8.4 12.4 5.1 Interest expense, net(5) . .. 10.6 9.8 42.4 28.5 8.4 24.2 4.5 5.5 4.1 Provision (benefit) for income taxes(5) .. 0.6 1.7 4.7 10.7 (0.2) 7.8 1.2 2.3 3.8 2.0 Net income (loss)..... (0.1) 2.6 11.2 16.7 (0.3) 11.7 (1.0) 0.6 4.5 3.1 BALANCE SHEET DATA: Working capital ... $137.5 $ 92.6 $ 131.8 $ 98.8 $ 21.1 $ 19.3 $ 24.7 $22.8 Total assets 926.8 880.4 703.4 593.3 228.5 233.3 241.7 93.5 Long-term debt....... 415.2 459.6 392.0 Invested equity .... 473.6 194.7 199.5 202.0 59.9 Shareholders' equity..... 235.2 138.7 132.7 OTHER DATA: EBITDA(6) .. $ 20.0 $ 21.6 $ 95.1 $ 78.1 $ 15.7 $ 71.8 $ 16.3 $ 19.9 $ 23.4 $ 7.0 Net cash from (used in) operating activities. 11.1 73.9 (16.3) 30.7 9.3 21.8 Net cash (used in) investing activities. (148.7) (457.8) (4.3) (298.0) (5.5) (3.7) Net cash from (used in) financing activities. 69.2 461.4 20.6 267.3 (3.8) (18.1) Depreciation expense ... 5.3 4.6 22.0 13.3 4.5 14.9 5.5 5.4 6.1 1.8 Amortization expense ... 3.6 2.9 14.7 8.9 3.3 13.2 6.1 6.1 4.9 0.1 Capital expenditures 2.9 2.3 19.9 11.9 4.3 13.5 5.5 3.7 2.6 0.8 Ratios of: Earnings to fixed charges(7) 1.0x 1.4x 1.3x 1.8x --(8) 1.7x 1.0x 1.4x 2.5x EBITDA to cash interest expense(9)(10) 2.7x 2.5x 2.4x Net debt to EBITDA(10)(11) 3.4x 4.6x 4.0x
(Footnotes on the following page) 27 - ------------ (1) Reflects the L-3 Acquisition effective April 1, 1997. (2) Reflects ownership of Loral's Communication Systems -- West and Specialized Communication Products businesses commencing April 1, 1996. (3) Reflects ownership of Communication Systems --East by Lockheed Martin effective April 1, 1993. (4) Reflects ownership of Communications Systems -- East by GE Aerospace. The amounts shown herein include only those amounts as reflected in the financial records of Communications Systems --East. (5) For periods prior to April 1, 1997, interest expense and income tax (benefit) provision were allocated from Lockheed Martin. (6) EBITDA is defined as operating income plus depreciation expense and amortization expense (excluding the amortization of deferred debt issuance costs). EBITDA is not a substitute for operating income, net income and cash flow from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because management believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements. (7) For purposes of this computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest on indebtedness plus that portion of lease rental expense representative of the interest element. (8) Earnings were insufficient to cover fixed charges by $0.5 million for the three months ended March 31, 1997. (9) For purposes of this computation, cash interest expense consists of pro forma interest expense excluding amortization of deferred debt issuance costs. (10) These ratios as of and for the three months ended March 31, 1998 are based on the results of operations for the twelve month period ended March 31, 1998. The pro forma ratios have been calculated by adding the pro forma EBITDA and cash interest expense for the year ended December 31, 1997 and the three months ended March 31, 1998 and deducting the pro forma EBITDA and cash interest expense for the three months ended March 31, 1997. For purposes of computing pro forma EBITDA for the three months ended March 31, 1997, depreciation expense and amortization expense were $6.0 million and $2.7 million, respectively. The historical ratios have been calculated by adding historical EBITDA and cash interest expense for the nine months ended December 31, 1997 and the three months ended March 31, 1998. (11) Net debt is defined as long-term debt plus current portion of long-term debt less cash and cash equivalents. 28 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The matters discussed herein may include "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which could result in operating performance that is materially different from management's projections. The section of this Prospectus entitled "Risk Factors" should be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations section. GENERAL The Company is a leading merchant supplier of sophisticated secure communication systems and specialized communication products including secure, high data rate communication systems, microwave components, avionics and ocean systems, telemetry, instrumentation and space products. These systems and products are critical elements of virtually all major communication, command and control, intelligence gathering and space systems. The Company's systems and specialized products are used to connect a variety of airborne, space, ground-and sea-based communication systems and are incorporated into the transmission, processing, recording, monitoring and dissemination functions of these communication systems. The Company's customers include the DoD, selected Government intelligence agencies, major aerospace/defense prime contractors, foreign governments and commercial customers. The Company operates primarily in one industry segment, electronic components and systems. All domestic government contracts and subcontracts of the Company are subject to audit and various cost controls, and include standard provisions for termination for the convenience of the Government. Multi-year Government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent year become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the relevant foreign government. The defense industry has recently undergone significant changes precipitated by ongoing federal budget pressures and new roles and missions to reflect changing strategic and tactical threats. Since the mid-1980's, the overall U. S. defense budget has declined in real dollars. In response, the DoD has focused its resources on enhancing its military readiness, joint operations and digital command and control communications by incorporating advanced electronics to improve the performance, reduce operating cost and extend the life expectancy of its existing and future platforms. The emphasis on system interoperability, force multipliers and providing battlefield commanders with real-time data is increasing the electronics content of nearly all of the major military procurement and research programs. As a result, the DoD's budget for communications and defense electronics is expected to grow. According to Federal Sources, an independent private consulting group, the defense budget for C(3)I is expected to increase from $31.0 billion in the fiscal year ended September 30, 1997 to $42.0 billion in the fiscal year ended September 30, 2002, a compound annual growth rate of 6.3%. ACQUISITION HISTORY The Company was formed to acquire substantially all of the assets of (i) nine business units previously purchased by Lockheed Martin as part of its acquisition of Loral in April 1996 (the "Loral Acquired Businesses") which include eight business units of Loral ("Specialized Communications products") and one business unit purchased by Loral as part of its acquisition of the Defense Systems business of Unisys Corporation in May 1995 ("Communications System --West"), and (ii) one business unit purchased by Lockheed Martin as part of its acquisition of the aerospace business of General Electric Company in April 1993 ("Communication Systems -- East"). Collectively, the Loral Acquired Businesses and Communications Systems -- East comprise the "Predecessor Company" or "Businesses". The Company acquired the assets and liabilities of Ocean Systems, ILEX and STS on March 30, 1998, March 4, 1998 and February 5, 1998, respectively. 29 RESULTS OF OPERATIONS The following information should be read in conjunction with the Company's Condensed Consolidated Financial Statements and Consolidated (Combined) Financial Statements and the notes thereto included herein. The financial statements reflect the Company's results of operations from the effective date of the L-3 Acquisition, April 1, 1997, and also include the results of operations of Ocean Systems, ILEX and STS (collectively, the "1998 Acquisitions") from the effective dates of such acquisitions, which were March 31, 1998 for Ocean Systems, and February 1, 1998 for ILEX and STS. The results of operations presented below exclude the results of operations of the 1998 Acquisitions for the years ended December 31, 1997, 1996 and 1995. The financial statements also reflect the results of operations of the Predecessor Company for the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995 which include the results of operations of the Loral Acquired Businesses beginning on April 1, 1996, the effective date of that acquisition by Lockheed Martin. Therefore, the results of operations for the year ended December 31, 1996 reflect the results of operations of the Loral Acquired Businesses for the nine months from April 1, 1996 to December 31, 1996. Accordingly, changes between periods for the year ended December 31, 1997 and the year ended December 31, 1996 of the Predecessor Company are significantly affected by the timing of the L-3 Acquisition and Loral Acquired Businesses acquisition. The results of operations for the year ended December 31, 1995 and the period from January 1 to March 31, 1996 only comprise the results of operations of Communications Systems -- East. Operating income of the Company and the Predecessor Company are not directly comparable between periods indicated as a result of the effects of valuation of assets and liabilities recorded in accordance with Accounting Principles Board Opinion No. 16 ("APB 16") by the Company and the Predecessor Company, in the purchase accounting for the L-3 Acquisition and Loral Acquired Businesses acquisition. Interest expense and income taxes expense for the periods are also not comparable and the impact of interest expense and income tax expense on the Company is discussed below. As indicated in Note 6 to the Consolidated (Combined) Financial Statements as of December 31, 1997, effective April 1, 1997 the Company has accounted for the sale of its Hycor business in accordance with FASB Emerging Issues Task Force Issue No. 87-11 "Allocation of Purchase Price to Assets to Be Sold". Accordingly, the results of operations of the Hycor business are not included in the results of operations of the Company for the three months ended March 31, 1998 and the nine months ended December 31, 1997. Hycor is a business unit of the Loral Acquired Businesses, and, accordingly, Hycor is only included in the results of operations of the Predecessor Company beginning on April 1, 1996, the effective date of the Loral Acquired Businesses acquisition by Lockheed Martin. On January 29, 1998, the Company sold the Hycor business, excluding land and buildings, for $3.5 million in cash subject to adjustment based on final closing net assets. The results of operations of the Predecessor Company for the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995, include certain costs and expenses allocated by Lockheed Martin for corporate office expenses based primarily on the allocation methodology prescribed by government regulations pertaining to government contractors. Interest expense was allocated based on Lockheed Martin's actual weighted average consolidated interest rate applied to the portion of the beginning of the year invested equity deemed to be financed by consolidated debt based on Lockheed Martin's debt to equity ratio on such date. The provision (benefit) for income taxes was allocated to the Predecessor Company as if it were a separate taxpayer, calculated by applying statutory rates to reported pre-tax income after considering items that do not enter into the determination of taxable income and tax credits related to the Predecessor Company. Also, pension and post-employment benefit costs were allocated based on employee headcount. Accordingly, the results of operations and financial position hereinafter of the Predecessor Company may not be the same as would have occurred had the Predecessor Company been an independent entity. 30 THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997 The following table sets forth selected statement of operations data for the Company and the Predecessor Company for the periods indicated.
COMPANY PREDECESSOR COMPANY -------------- ------------------- THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 1998 MARCH 31, 1997 -------------- ------------------- ($ IN MILLIONS) Sales............................................................. $186.6 $158.9 Costs and expenses................................................ 172.5 151.0 Operating income.................................................. 14.1 7.9 Net interest expense.............................................. 9.8 8.4 Income (loss) before income taxes................................. 4.3 (0.5) Income tax expense (benefit)...................................... 1.7 (0.2) Net income (loss)................................................. 2.6 (0.3) Depreciation and amortization expenses included in operating income........................................................... 7.5 7.8 EBITDA(1)......................................................... 21.6 15.7
- ------------ (1) EBITDA is defined as operating income plus depreciation expense and amortization expense (excluding the amortization of debt issuance costs). EBITDA is not a substitute for operating income, net income or cash flows from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because the Company believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements. Sales increased to $186.6 million for the three months ended March 31, 1998 (the "1998 First Quarter") from $158.9 million for the three months ended March 31, 1997 (the "1997 First Quarter"). Operating income increased to $14.1 million in the 1998 First Quarter from $7.9 million in the 1997 First Quarter. Net income increased to $2.6 million in the 1998 First Quarter from a net loss of $0.3 million in the 1997 First Quarter. ILEX and STS contributed sales of $16.9 million to the 1998 First Quarter. The remaining increase of $10.8 million was primarily attributable to an increase in production and shipments on the CHBDL and UAV programs and increased sales volumes on the E2-C and F-14 display systems and RF safety products, partially offset by lower sales volume on the U-2 Program. Operating income increased by $6.2 million to $14.1 million in the 1998 First Quarter from $7.9 million in the 1997 First Quarter. Operating income as a percentage of sales increased to 7.6% for the 1998 First Quarter compared to 5.0% for the 1997 First Quarter. The increase in operating margins for the 1998 First Quarter is attributable to improved operating performance on sales of aviation recorders and display systems and increased sales volume on the CHBDL program and RF safety products, partially offset by lower sales volume on the U-2 Program. Also, the 1997 First Quarter operating income was negatively impacted by losses incurred on three programs by Communication Systems --East. ILEX and STS contributed $0.3 million of operating income to the 1998 First Quarter. EBITDA for the 1998 First Quarter increased by $5.9 million to $21.6 million from $15.7 million in the 1997 First Quarter. EBITDA as a percentage of sales ("EBITDA margin") increased to 11.6% for the 1998 First Quarter compared to 9.9% for the 1997 First Quarter. The increases in EBITDA and EBITDA margin were attributable to the items affecting the trends in operating income between the 1998 First Quarter and the 1997 First Quarter discussed above. Sales and operating income of the Hycor business included in the Predecessor Company's results of operations for the 1997 First Quarter were $1.8 million and $0.0 million, respectively. Net interest expense for the 1998 First Quarter was $9.8 million representing interest expense on the Company's borrowings under the Senior Credit Facilities and the 10 3/8% senior subordinated notes, and related amortization of debt issuance cost, less interest income of $0.8 million. Interest expense for the 1997 First Quarter of $8.4 million was allocated to the Predecessor Company by applying Lockheed 31 Martin's weighted average consolidated interest rate to the portion of the Predecessor Company's invested equity account deemed to be financed by Lockheed Martin's consolidated debt. The income tax provision for the 1998 First Quarter reflects the Company's estimated effective income tax rate of 39%. In the 1997 First Quarter, income taxes were allocated to the Predecessor Company by Lockheed Martin and the effective income tax rate was significantly impacted by amortization of costs in excess of net assets acquired, which were not deductible for income tax purposes. YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996 The following table sets forth selected statement of operations data for the Company and the Predecessor Company for the periods indicated.
COMPANY PREDECESSOR COMPANY -------------- -------------------------------------------------------------- NINE MONTHS NINE MONTHS THREE MONTHS THREE MONTHS YEAR ENDED ENDED ENDED ENDED ENDED DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31, 1997 1996 1997 1996 1996 -------------- -------------- --------------- -------------- -------------- ($ IN MILLIONS) Sales.............................. $546.5 $501.9 $158.9 $41.2 $543.1 Costs and expenses ................ 490.6 459.9 151.0 39.5 499.4 Operating income .................. 55.9 42.0 7.9 1.7 43.7 Net interest expense .............. 28.5 22.2 8.4 2.0 24.2 Income (loss) before income taxes 27.4 19.8 (0.5) (0.3) 19.5 Income tax provision (benefit) ... 10.7 7.6 (0.2) 0.2 7.8 Net income (loss).................. 16.7 12.2 (0.3) (0.5) 11.7
Sales for the nine months ended December 31, 1997 as compared to the corresponding period in 1996 increased by $44.6 million, of which $30.5 million is attributable to the Loral Acquired Businesses and $14.1 million to Communication Systems -- East. The increase in sales is attributable to increased volume in sales of microwave components, CHBDL, UAV programs, F-14 display system contract, power supplies and P3-C Repair Depot. Operating income for the nine months ended December 31, 1997 as compared to the corresponding period in 1996 increased by $13.9 million, of which $5.8 million is attributable to the Loral Acquired Businesses and $8.1 million to Communication Systems -- East. The increase in operating income for the nine months ended December 31, 1997 is attributable to increased sales, improved operating performance on sales of aviation recorders, passive microwave components and display systems, the GEMnet product-line and P3-C Repair Depot sales, partially offset by $3.3 million of cost of sales related to ongoing certification efforts for the Company's Explosive Detection System ("EDS") contract and lower sales volume on the U-2 Program. Sales and operating income for the three months ended March 31, 1997 increased by $117.7 million and $6.2 million, respectively, as compared to the corresponding period in 1996. The increases are attributable to the acquisition of the Loral Acquired Businesses, offset by losses incurred on three programs by Communication Systems -- East. Sales and operating income of the Hycor business included in the Predecessor Company's results of operations for the three months ended March 31, 1997 and the year ended December 31, 1996 were $1.8 million and $0.0 million, and $7.5 million and $0.3 million, respectively. Net interest expense for the nine months ended December 31, 1997 was $28.5 million representing interest expense on the Company's outstanding borrowings (see Note 8 to Consolidated (Combined) Financial Statements as of December 31, 1997), and amortization of debt issuance costs, less interest income of $1.4 million and interest expense of $0.6 million allocated to the Hycor business net assets held for sale. Interest expense for the three months ended March 31, 1997 and the prior period was $8.4 million and $24.2 million, respectively, and was allocated to the Predecessor Company by applying Lockheed Martin's weighted average consolidated interest rate to the portion of the Predecessor Company's invested equity account deemed to be financed by Lockheed Martin's consolidated debt. The increase in interest expense reflects higher interest rates on the third party debt, as compared to the interest rate utilized to calculate interest expense by the Predecessor Company. 32 The income tax provision for the nine months ended December 31, 1997 reflects the Company's effective income tax rate of 39%. For the three months ended March 31, 1997 and in the prior period, income taxes were allocated to the Predecessor Company by Lockheed Martin and the effective income tax rate was significantly impacted by amortization of costs in excess of net assets acquired, which were not deductible for income tax purposes. See Note 11 to Consolidated (Combined) Financial Statements as of December 31, 1997. SUPPLEMENTAL ANALYSIS OF ANNUAL RESULTS OF OPERATIONS OF THE COMPANY AND THE PREDECESSOR COMPANY As noted above, the Company's financial statements reflect operations since the effective date of the L-3 Acquisition, April 1, 1997, and the results of operations for the year ended December 31, 1996 represent the results of operations of the Predecessor Company, and include the results of operations of the Loral Acquired Businesses beginning on April 1, 1996, the effective date of that acquisition. Accordingly, changes between periods for the year ended December 31, 1997 to the year ended December 31, 1996 of the Predecessor Company are significantly affected by the timing of these acquisitions. To enable investors to better assess the trends in the results of operations and to facilitate comparisons, the following presentation of results of operations for the year ended December 31, 1997 were obtained by aggregating, without adjustment, the historical results of operations of the Predecessor Company for the period from January 1, 1997 through March 31, 1997 with the historical results of operations of the Company for the nine months period from April 1, 1997 through December 31, 1997 (the "1997 period"), and the results of operations for the year ended December 31, 1996 were obtained by aggregating, without adjustments, the historical results of operations of the Predecessor Company for the year ended December 31, 1996 with the historical results of operations of the Loral Acquired Businesses for the period from January 1, 1996 through March 31, 1996 (the "1996 period"). All the historical results were derived from the audited financial statements for respective periods included herein. The following table sets forth historical selected statement of operations data for the Company, Predecessor Company and the Loral Acquired Businesses for the periods indicated and the related calendar year results of operation data derived therefrom.
PREDECESSOR PREDECESSOR LORAL ACQUIRED COMPANY COMPANY COMPANY BUSINESSES -------------- -------------- -------------- -------------- NINE MONTHS THREE MONTHS YEAR THREE MONTHS ENDED ENDED ENDED ENDED DECEMBER 31, MARCH 31, 1997 DECEMBER 31, MARCH 31, 1996 1997 1997 PERIOD 1996 1996 PERIOD -------------- -------------- -------- -------------- -------------- -------- ($ IN MILLIONS) Sales.............. $546.5 $158.9 $705.4 $543.1 $132.2 $675.3 Costs and expenses.......... 490.6 151.0 641.6 499.4 124.4 623.8 -------------- -------------- -------- -------------- -------------- -------- Operating income .. $ 55.9 $ 7.9 $ 63.8 $ 43.7 $ 7.8 $ 51.5 ============== ============== ======== ============== ============== ======== EBITDA(1) ......... $ 78.1 $ 15.7 $ 93.8 $ 71.8 $ 12.8 $ 84.6 ============== ============== ======== ============== ============== ========
- ------------ (1) EBITDA is defined as operating income plus depreciation expense and amortization expense (excluding the amortization of debt issuance costs). EBITDA is not a substitute for operating income, net income or cash flows from operating activities as determined in accordance with generally accepted accounting principles as a measure of profitability or liquidity. EBITDA is presented as additional information because the Company believes it to be a useful indicator of the Company's ability to meet debt service and capital expenditure requirements. Sales for the 1997 period increased to $705.4 million from $675.3 million for the 1996 period. Operating income increased to $63.8 million in the 1997 period from $51.5 million in the 1996 period. Operating income is not directly comparable between the periods as a result of the effects of valuation of assets and liabilities in accordance with Accounting Principles Opinion No. 16. The sales increase in the 1997 period was primarily attributable to sales of the Loral Acquired Businesses which increased by $18.1 million to $531.4 million in the 1997 period as compared to 33 $513.3 million in the 1996 period. This sales increase was primarily attributable to increased sales volume on E2-C antenna program, the E2-C and F-14 display systems and passive microwave components, additional production and shipments on CHBDL and UAV programs, and partially offset by lower sales volume on the U-2 Program. Additionally, sales of Communication Systems - --East increased by $12.0 million to $174.0 million in the current period from $162.0 million in the 1996 period, and were primarily attributable to increased sales of power supplies, the GEMnet product line and the P3-C Repair Depot. Operating income increased by 23.9% to $63.8 million in the 1997 period from $51.5 million in the 1996 period. Operating income as a percentage of sales increased to 9.0% in the 1997 period as compared to 7.6% in the 1996 period. The increase in operating income was largely attributable to cost reductions, increased sales volume of the Loral Acquired Businesses and operating improvements at Communications Systems -- East. Operating income for the 1997 period also reflected fourth quarter cost of sales of $3.3 million related to on-going certification efforts for the Company's EDS contract. Excluding these EDS costs, operating income would have been $67.1 million for the 1997 period and operating income as a percentage of sales would have been 9.5%. EBITDA for the 1997 period increased by $9.2 million to $93.8 million from $84.6 million from the 1996 period. EBITDA margin increased to 13.3% for the 1997 period from 12.5% for the 1996 period. The increases in EBITDA and EBITDA margin were attributable to the items affecting the trends in operating income between the 1997 period and 1996 period discussed above. YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 The following table sets forth selected statement of operations data for the Predecessor Company for the periods indicated.
PREDECESSOR COMPANY ------------------ YEAR ENDED DECEMBER 31, ------------------ 1996 1995 -------- -------- ($ IN MILLIONS) Sales.................... $543.1 $166.8 Costs and expenses....... 499.4 162.1 Operating income......... 43.7 4.7 Net interest expense .... 24.2 4.5 Income before income taxes................... 19.5 0.2 Income tax provision ... 7.8 1.2 Net income (loss)........ 11.7 (1.0)
The results of operations of the Loral Acquired Businesses are reflected in the results of operations of the Predecessor Company beginning on April 1, 1996, the effective date of that acquisition by Lockheed Martin. During 1996, sales increased to $543.1 million from $166.8 million in 1995. Operating income increased to $43.7 million compared with $4.7 million in 1995. Net income increased to $11.7 million as compared to a net loss of $1.0 million in 1995. The Loral Acquired Businesses contributed $13.6 million to net income for the year ended December 31, 1996. The sales increase in 1996 was attributable to the sales of the Loral Acquired Businesses which contributed $381.1 million of the increase. Sales of Communication Systems -East decreased in 1996 by $4.8 million as compared to 1995 primarily due to lower volume on Aegis power supplies and SIGINT system production, partially offset by Local Management Device/Key Processor ("LMD/KP") production startup. The increase in 1996 operating income was largely attributable to the Loral Acquired Businesses, which contributed $36.9 million of the increase. Communication Systems -East operating income in 1996 increased $2.2 million primarily due to improved operating performance on the Shipboard Telephone Communications ("STC-2") program partially offset by increased costs on the Space Station contract. As a percentage of sales, operating income increased to 8.0% from 2.8%. This increase is attributable to the improvement in Communication Systems -- East noted above, higher contract margins and operating improvements in the Loral Acquired Businesses. 34 Allocated interest expense increased to $24.2 million in 1996 from $4.5 million in 1995 due primarily to the acquisition of the Loral Acquired Businesses, which was assumed to be fully financed by debt, coupled with a higher debt-to-equity ratio used in the allocation for Communication Systems - -- East. See Note 9 to Consolidated (Combined) Financial Statements. The effective income tax rate declined to 40% in 1996 as compared to 681% in 1995. The 1995 effective rate was significantly impacted by non-deductible amortization of costs in excess of net assets acquired. As a percentage of income subject to tax, such amortization declined significantly in 1996. LIQUIDITY AND CAPITAL RESOURCES THE L-3 ACQUISITION Effective April 1, 1997, the Company purchased the Businesses from Lockheed Martin for $503.8 million, after a purchase price adjustment of $21.2 million and acquisition costs of $8.0 million. On November 5, 1997 the L-3 Acquisition Agreement was amended to finalize the purchase price adjustment which amounted to $21.2 million of which $15.9 million was received on April 30, 1997 and $5.3 million was received on November 7, 1997, plus interest thereon. The amendment also included the assumption by the Company of Lockheed Martin's rights and obligations under a contract for the U.S. Army's Command and Control Vehicle ("C(2)V") Mission Module Systems ("MMS"), for which the Company received a cash payment of $12.2 million from Lockheed Martin. FINANCING The L-3 Acquisition was funded by a combination of debt and equity aggregating $525.0 million. The equity of $125.0 million was comprised of $80.0 million in cash contributed to Holdings by the Lehman Partnership and Senior Management and a $45.0 million retained interest in Holdings by Lockheed Martin representing partial consideration to Lockheed Martin for its sale of the Businesses to the Company. In connection with the L-3 Acquisition, the Company entered into a $275.0 million credit facility consisting of $175.0 million of term loans (the "Term Loan Facilities") and a $100.0 million revolving credit facility (the "Revolving Credit Facility") (collectively, the "Senior Credit Facilities"). The initial debt balance of $400.0 million consisted of $175.0 million of borrowings under the Term Loan Facilities and $225.0 million of 10 3/8% Senior Subordinated Notes (the "1997 Notes") due May 1, 2007. The required principal payments under the Term Loans Facilities are: $5.0 million in 1998, $11.0 million in 1999, $19.0 million in 2000, $25.0 million in 2001, $33.2 million in 2002, $20.0 million in 2003, and $25.2 million in 2004, $24.9 million 2005, and $8.7 million in 2006. Interest payments on the Term Loan Facilities vary in accordance with the type of borrowings and are made at a minimum every three months. At December 31, 1997, the Senior Credit Facilities also included a $100.0 million Revolving Credit Facility. In February 1998, the Senior Credit Facilities were amended to, among other things, increase the amount available under the revolving credit facility to $200.0 million, waive certain excess cash flow prepayments, as defined, otherwise required, and permit the incurrence of up to an additional $150.0 million of subordinated debt. Other than upon a change of control or the occurrence of certain asset sales, L-3 Communications will not be required to repurchase the 1997 Notes until maturity on May 1, 2007. L-3 Communications is required to make semi-annual interest payments with respect to the 1997 Notes. The Company has a substantial amount of indebtedness. Based upon the current level of operations, management believes that the Company's cash flow from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet its anticipated requirements for working capital, capital expenditures, research and development expenditures, program and other discretionary investments, interest payments and scheduled principal payments for the foreseeable future including at least the next three years. There can be no assurance, however, that the Company's business will continue to generate cash flow at or above current levels or that currently anticipated improvements will be achieved. If the Company is unable to generate sufficient cash flow from operations in the future to service its debt, it may be required to sell assets, reduce capital expenditures, refinance all or a portion of its existing debt or obtain additional financing. The Company's ability to make scheduled principal payments, 35 to pay interest on or to refinance its indebtedness depends on its future performance and financial results, which, to a certain extent, are subject to general conditions in or affecting the defense industry and to general economic, political, financial, competitive, legislative and regulatory factors beyond its control. There can be no assurance that sufficient funds will be available to enable the Company to service its indebtedness, including the 1997 Notes, or make necessary capital expenditures and program and discretionary investments. On November 5, 1997, L-3 Communications completed its exchange offer relating to the 1997 Notes and the holders of the 1997 Notes received registered securities. The 1997 Notes are redeemable at the option of L-3 Communications, in whole or in part, at any time on or after May 1, 2002, at various redemption prices plus accrued and unpaid interest to the applicable redemption date. In addition, prior to May 1, 2000, L-3 Communications may redeem up to 35% of the aggregate principal amount of the 1997 Notes at a redemption price of 109.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date with the net cash proceeds of one or more equity offerings by Holdings that are contributed to L-3 Communications as common equity capital. See "Risk Factors -- Substantial Leverage". The Senior Credit Facilities and the 1997 Notes contain financial covenants, which remain in effect so long as any amount is owed thereunder by L-3 Communications. The financial covenants under the Senior Credit Facilities require that (i) L-3 Communications' debt ratio, as defined, be less than or equal to 5.50 for the quarter ended December 31, 1997, and that the maximum allowable debt ratio, as defined, thereafter be further reduced to less than or equal to 3.1 for the quarters ending after June 30, 2002, and (ii) L-3 Communications' interest coverage ratio, as defined, be at least 1.85 for the quarter ended December 31, 1997, and thereafter increasing the interest coverage ratio, as defined, to at least 3.10 for any fiscal quarters ending after June 30, 2002. At December 31, 1997, L-3 Communications was and has been in compliance with these covenants at all times. To mitigate risks associated with changing interest rates on certain of its debt, the Company entered into the interest rate cap and floor contracts (the "interest rate agreements"). The Company manages exposure to counterparty credit risk by entering into the interest rate agreements only with major financial institutions that are expected to perform fully under the terms of such agreements. Cash payments to (from) the Company and the counterparties are made at the end of the quarter to the extent due under the terms of the interest rate agreements. Such payments are recorded as adjustments to interest expense. The initial costs of the interest rate agreements are capitalized as deferred debt issuance costs and amortized into interest expense. The impact of the interest rate agreements on interest expense was not material for the nine months ended December 31, 1997. See Note 10 to the Consolidated (Combined) Financial Statements. 1998 ACQUISITIONS On March 30, 1998, the Company purchased the assets of Ocean Systems for $67.5 million of cash. On March 4, 1998, the Company purchased the assets of ILEX for $51.9 million of cash, subject to adjustment based on closing net assets, and additional consideration based on post-acquisition performance of ILEX. On February 5, 1998, the Company purchased the assets of STS for $27.0 million in cash, subject to adjustment based upon closing net assets. The Company financed the 1998 Acquisitions using cash on hand and borrowings under the Revolving Credit Facility. The Company considers and executes strategic acquisitions on an ongoing basis and may be evaluating acquisitions or engaged in acquisition negotiations at any given time. As of the date hereof, the Company has completed, has reached agreement on or is in discussions regarding certain acquisitions, in addition to the 1998 Acquisitions, that are either individually or in the aggregate not material to the financial condition of results of operations of the Company. 36 CASH FLOWS THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31, 1997 The following table sets forth selected cash flow statement data for the Company and the Predecessor Company for the periods indicated:
PREDECESSOR COMPANY COMPANY -------------- -------------- THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 1998 MARCH 31, 1997 -------------- -------------- ($ IN MILLIONS) Net cash from (used in) operating activities.................................. $ 11.1 $(16.3) Net cash (used in) investing activities ..... (148.7) (4.3) Net cash from financing activities........... 69.2 20.6
NET CASH FROM (USED IN) OPERATING ACTIVITIES: Cash provided by operating activities of the Company for the three months ended March 31, 1998 was $11.1 million. Earnings after adjustment for non-cash items provided $12.3 million, offset by uses of cash caused by changes in operating assets and liabilities of $1.3 million, net of amounts acquired. Increases in contracts in process of $21.3 million during the three months ended March 31, 1998 were partially offset by increases of $19.8 million primarily in operating liabilities. Net cash used in operating activities of the Predecessor Company was $16.3 million for the three months ended March 31, 1997, resulting primarily from the increase in contracts in process and decrease in current liabilities. Cash flows used by the Loral Acquired Businesses was $10.2 million. Cash used for operating activities by Communication Systems -- East amounted to $6.1 million. The Company's current ratio at March 31, 1998 decreased to 1.4:1 compared with 2.0:1 at December 31, 1997. NET CASH (USED IN) INVESTING ACTIVITIES: Cash used in investing activities for the three months ended March 31, 1998 consisted primarily of $151.4 million, net of cash acquired of $2.7 million, paid by the Company for acquisitions, of which $146.3 million pertained to the 1998 Acquisitions. Cash proceeds from assets held for sale was $4.8 million. Cash used for capital expenditures was $2.3 million and $4.3 million, respectively, for the three months ended March 31, 1998 and the three months ended March 31, 1997. The Company typically makes capital expenditures related primarily to improvement of manufacturing facilities and equipment. The Company expects that its capital expenditures for 1998 will be approximately $27.0 million. NET CASH FROM FINANCING ACTIVITIES: For the three months ended March 31, 1998, the Company's cash from financing activities was $69.2 million, and was comprised of borrowings under the Revolving Credit Facility of $67.8 million; the contribution from Holdings of the proceeds of $3.0 million from the exercise of stock options of Holdings on March 2, 1998 by Mr. Lanza and Mr. LaPenta; scheduled debt payments under the Term Loan Facilities of $1.0 million; and, debt issuance costs of $0.6 million which were incurred in connection with the February 1998 amendment to the Senior Credit Facilities. Prior to the L-3 Acquisition, the Predecessor Company participated in the Lockheed Martin cash management system, under which all cash was received and all payments were made by Lockheed Martin. For purposes of the statements of cash flows, all transactions with Lockheed Martin were deemed to have been settled in cash at the time they were recorded by the Predecessor Company. Net cash from financing activities of the Predecessor Company for the three months ended March 31, 1997 was $20.6 million, and represent advances from Lockheed Martin, the Predecessor Company's parent company. 37 YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEARS ENDED DECEMBER 31, 1996 AND 1995 The following table sets forth selected cash flow statement data for the Company and the Predecessor Company for the periods indicated:
PREDECESSOR PREDECESSOR COMPANY COMPANY COMPANY -------------- -------------- ------------------ NINE MONTHS THREE MONTHS YEAR ENDED ENDED ENDED DECEMBER 31, MARCH 31, DECEMBER 31, ------------------ 1997 1997 1996 1995 -------------- -------------- --------- ------- ($ IN MILLIONS) Net cash from (used in) operating activities.................................. $ 73.9 $(16.3) $ 30.7 $ 9.3 Net cash (used in) investing activities ..... (457.8) (4.3) (298.0) (5.5) Net cash from (used in) financing activities.................................. 461.4 20.6 267.3 (3.8)
NET CASH FROM (USED IN) OPERATING ACTIVITIES: Cash provided by operating activities of the Company for the nine months ended December 31, 1997 was $73.9 million. Cash provided by operations benefited from improved operating results, effective management of contracts in process and increases in accrued employment costs. Contracts in process declined by $18.2 million to $167.2 million from April 1, 1997 to December 31, 1997, and was primarily attributable to collections of and reductions in the levels of commercial and affiliate receivables. Net cash used in operating activities of the Predecessor Company was $16.3 million for the quarter ended March 31, 1997, resulting primarily from the increase in contracts in process and decrease in current liabilities. Cash flows used by the Loral Acquired Businesses was 10.2 million. Cash used for operating activities by Communication Systems -- East amounted to $6.1 million. Cash provided by operating activities of the Predecessor Company was $30.7 million in 1996 and $9.3 million in 1995. The increase of $21.4 million in 1996 was due primarily to the impact of the Loral Acquired Businesses which were acquired by Lockheed Martin effective April 1, 1996. Earnings after adjustment for non-cash items provided $36.7 million, offset by changes in other operating assets and liabilities. Without the Loral Acquired Businesses, cash provided by operating activities for Communication Systems--East increased to $13.7 million in 1996, 46% over 1995. The Company's current ratio at December 31, 1997 remained constant at 2.0: 1 as compared to the Predecessor Company's current ratio at December 31, 1996. NET CASH (USED IN) INVESTING ACTIVITIES: Cash used in investing activities for the nine months ended December 31, 1997 consisted primarily of $466.3 million paid by the Company for the L-3 Acquisition (See Note 1 to Consolidated (Combined) Financial Statements); offset by proceeds from the sale of the Company's Sarasota, Florida property of approximately $9.5 million and cash received in connection with the assumption of obligations under the C(2)V MMS contract from Lockheed Martin of $12.2 million. During the year ended December 31, 1996, $287.8 million was paid by the Predecessor Company for the acquisition of the Loral Acquired Businesses. See Note 4 to the Consolidated (Combined) Financial Statements. In addition, for the nine months ended December 31, 1997 and the three months ended March 31, 1997, $11.9 million and $4.3 million, respectively, was used for capital expenditures, and $5.1 million and nil, respectively, for purchase of investments. The Company typically makes capital expenditures related primarily to improvement of manufacturing facilities and equipment. The Company expects that its capital expenditures for 1998 will be approximately $27.0 million. All transactions between the Businesses and Lockheed Martin have been accounted as settled in cash at the time such transactions were recorded by the Businesses. Accordingly, in 1996, cash flows reflect the purchase of the Loral Acquired Businesses. NET CASH FROM (USED IN) FINANCING ACTIVITIES: Cash from financing activities of the Company was $461.4 million for the nine months ended December 31, 1997, and was due to the debt incurred and proceeds from the issuance of common stock which were issued to finance the L-3 Acquisition. See "--Financing" above. Net cash from financing activities also reflects the payment of debt issue costs of $15.6 million and $3.0 million of scheduled debt payments of the Term Loan Facilities. 38 Prior to the L-3 Acquisition, the Businesses participated in the Lockheed Martin cash management system, under which all cash was received and all payments were made by Lockheed Martin. For purposes of the statements of cash flows, all transactions with Lockheed Martin were deemed to have been settled in cash at the time they were recorded by the Predecessor Company. Net cash from (used in) financing activities of the Predecessor Company for the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995, were approximately $20.6 million, $267.3 million and ($3.8) million, respectively, and represent advances from (repayments to) Lockheed Martin, the Predecessor Company's parent company. BACKLOG The Company's funded backlog at December 31, 1997 totaled $516.9 million, as compared with the Predecessor Company's funded backlog at December 31, 1996 of $542.5 million. Funded orders, on a pro forma basis, for the Company for 1997 were $711.5 million. The Predecessor Company's funded orders for 1996 were $619.5 million. It is expected that 86.0% of the backlog at December 31, 1997 will be recorded as sales during 1998. However, there can be no assurance that the Company's backlog will become revenues in any particular period, if at all. See "Risk Factors -- Backlog". Approximately 81% of the total backlog at December 31, 1997 was directly or indirectly for defense contracts for end use by the Government. Approximately $434.0 million of total backlog was directly or indirectly for U.S. and foreign government defense contracts, and approximately $19.5 million of total backlog was directly or indirectly for U.S. and foreign government non-defense contracts. Foreign customers account for approximately $34.6 million of the total backlog. RESEARCH AND DEVELOPMENT Research and development, including bid and proposal, costs ("R&D costs") sponsored by the Company was $28.9 million for the nine months ended December 31, 1997. R&D costs sponsored by the Predecessor Company were $12.0 million, $36.5 million and $9.8 million for the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995, respectively. The Loral Acquired Businesses sponsored R&D costs of $5.6 million for the three months ended March 31, 1996 and $21.4 million for the year ended December 31, 1995. Accordingly, the Company, Predecessor Company and the Loral Acquired Businesses, in the aggregate, sponsored R&D costs of $40.9 million, $42.1 million and $31.2 million, respectively, for the years ended December 31, 1997, 1996 and 1995. Customer-funded research and development was $117.1 million in 1997, as compared with $153.5 million for 1996. The decrease in customer-funded research and development in 1997 is due primarily to research and development programs existing in 1996 which moved into the production phase during 1997. CONTINGENCIES See Note 9 to the Unaudited Condensed Consolidated (Combined) Financial Statements as of March 31, 1998 and Note 13 to the Consolidated (Combined) Financial Statements as of December 31, 1997. RECENT ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about Segments of an Enterprise and Related Information". SFAS No. 131 establishes accounting standards for the way that public business enterprises report information about operating segments and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits". SFAS No. 132 revises employers' disclosures about pension and other postretirement benefits plans. It does not change the measurement or recognition of those plans. It standardizes the disclosure requirements for pensions and other postretirement benefits to the extent practicable, requires additional information on changes in the benefit obligations and fair values of plan assets that will facilitate financial analysis, and eliminates certain disclosures that are no longer as useful as they were when SFAS No. 87 "Employers' Accounting for Pensions", SFAS No. 88 "Employers' Accounting for Settlements and 39 Curtailments of Defined Benefit Pension Plans and for Termination Benefits" and SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" were issued. SFAS 132 suggests combined formats for presentation of pension and other postretirement benefits disclosures. The Company is currently evaluating the impact, if any, of SFAS No. 131 and SFAS No. 132. INFLATION The effect of inflation on the Company's sales and earnings has not been significant. Although a majority of the Company's sales are made under long-term contracts, the selling prices of such contracts, established for deliveries in the future, generally reflect estimated costs to be incurred in these future periods. In addition, some contracts provide for price adjustments through escalation clauses. YEAR 2000 CONVERSION Under the Company's decentralized structure, each division maintains and/or outsources its computer-based data processing functions. While each division is responsible for its own computer-based functions, in late 1997 a corporate-wide Year 2000 program (the "Program") was instituted for purposes of overseeing Year 2000 compliance efforts. The Program's major phases include (i) identification of areas requiring update, which began in late 1997; (ii) assessment of required actions and related impacts, which commenced in the first quarter of 1998; (iii) development of update schedule and cost estimates, which is scheduled to be concluded in the second quarter of 1998 and (iv) implementation of such plan, including follow-up testing, which is scheduled to commence during the second quarter of 1998 and be completed by mid-1999. Through December 31, 1997, the costs incurred in connection with the Program were not material. While these cost estimates have not been finalized, based upon the type of systems employed by the Company, costs of the Program are not expected to be material to the results of operations, liquidity or capital resources of the Company. 40 BUSINESS COMPANY OVERVIEW L-3 is a leading merchant supplier of sophisticated secure communication systems and specialized communication products including secure, high data rate communication systems, microwave components, avionics and ocean systems, and telemetry, instrumentation and space products. These systems and products are critical elements of virtually all major communication, command and control, intelligence gathering and space systems. The Company's systems and specialized products are used to connect a variety of airborne, space, ground-and sea-based communication systems and are incorporated into the transmission, processing, recording, monitoring and dissemination functions of these communication systems. The Company's customers include the DoD, selected Government intelligence agencies, major aerospace/defense prime contractors, foreign governments and commercial customers. In 1997, L-3 had pro forma sales of $894.0 million and pro forma EBITDA of $95.1 million. The Company's pro forma funded backlog as of December 31, 1997 was $638.1 million. These results reflect internal growth as well as the execution of the Company's strategy of acquiring businesses that complement or extend L-3's product lines. The Company's business areas enjoy proprietary technologies and capabilities and have leading positions in their respective primary markets. Management has organized the Company's operations into two primary business areas: Secure Communication Systems and Specialized Communication Products. In 1997, the Secure Communication Systems and Specialized Communication Products business areas generated approximately $456.0 million and $438.0 million of pro forma sales, respectively, and $52.3 million and $42.8 million of pro forma EBITDA, respectively. In addition, the Company is seeking to expand its products and technologies in commercial markets. See " -- Emerging Commercial Products" below. SECURE COMMUNICATION SYSTEMS. L-3 is the established leader in secure, high data rate communications in support of military and other national agency reconnaissance and surveillance applications. The Company's Secure Communication Systems operations are located in Salt Lake City, Utah, Camden, New Jersey and Shrewsbury, New Jersey. These operations are predominantly cost plus, sole source contractors supporting long-term programs for the U.S. Armed Forces and classified customers. The Company's major secure communication programs and systems include: secure data links for airborne, satellite, ground-and sea-based information collection and transmission; strategic and tactical signal intelligence systems that detect, collect, identify, analyze and disseminate information and related support contracts for military and national agency intelligence efforts; as well as secure telephone and network equipment. The Company believes that it has developed virtually every high bandwidth data link used by the military for surveillance and reconnaissance in operation today. L-3 is also a leading supplier of communication software support services to military and related government intelligence markets. In addition to these core Government programs, L-3 is leveraging its technology base by expanding into related commercial communication equipment markets, including applying its high data rate communications and archiving technology to the medical image archiving market and its wireless communication expertise to develop local wireless loop telecommunications equipment. SPECIALIZED COMMUNICATION PRODUCTS. This business area includes (i) Microwave Components, (ii) Avionics and Ocean Systems and (iii) Telemetry, Instrumentation and Space Products operations of the Company. Microwave Components. L-3 is the preeminent worldwide supplier of commercial off-the-shelf, high performance microwave components and frequency monitoring equipment. L-3's microwave products are sold under the industry-recognized Narda brand name through a standard catalog to wireless, industrial and military communication markets. L-3 also provides state-of-the-art communication components including channel amplifiers and frequency filters for the commercial communication satellite market. Approximately 76% of Microwave Components sales is made to commercial customers, including Loral Space & Communications, Ltd., Motorola, Lucent, AT&T and Lockheed Martin. 41 Avionics and Ocean Systems. Avionics and Ocean Systems include the Company's Aviation Recorders, Display Systems, Antenna Systems and Acoustic Undersea Warfare Systems operations. L-3 is the world's leading manufacturer of commercial cockpit voice and flight data recorders ("black boxes"). These recorders are sold under the Fairchild brand name both on an original equipment manufacturer ("OEM") basis to aircraft manufacturers as well as directly to the world's major airlines for their existing fleets of aircraft. L-3's aviation recorders are also installed on military transport aircraft throughout the world. L-3 provides military and high-end commercial displays for use on a number of DoD programs including the F-14, V-22, F-117 and E-2C. Further, L-3 manufactures high performance surveillance antennas and related equipment for U.S. Air Force, U.S. Army and U.S. Navy aircraft including the F-15, F-16, AWACS, E-2C and B-2, as well as the U.K.'s maritime patrol aircraft. L-3 is also one of the world's leading product suppliers of acoustic undersea warfare systems and airborne dipping sonar systems to the U.S. and over 20 foreign navies. Telemetry, Instrumentation and Space Products. The Company's Telemetry, Instrumentation and Space Products operations develop and manufacture commercial off-the-shelf, real-time data collection and transmission products and components for missile, aircraft and space-based electronic systems. These products are used to gather flight parameter data and other critical information and transmit it from air or space to the ground. Telemetry products are also used for range safety and training applications to simulate battlefield situations. L-3 is also a leading global satellite communications systems and services provider offering systems and services used in satellite transmission of voice, video and data. EMERGING COMMERCIAL PRODUCTS. Building upon its core technical expertise and capabilities, the Company is seeking to expand into several closely aligned commercial business areas and applications. Emerging Commercial Products currently include the following three niche markets: (i) medical archiving and simulation systems; (ii) local wireless loop telecommunications equipment; and (iii) airport security equipment. These commercial products were developed based on technology used in the Company's military businesses with relatively small incremental financial investments. The Company is applying its technical capabilities in high data rate communications and archiving technology developed in its Secure Communication Systems business area to the medical image archiving market jointly with GE Medical Systems. Based on secure, high data rate communications technology also developed in its Secure Communication Systems business area, the Company has developed local wireless loop telecommunications equipment that is primarily designed for emerging market countries and rural areas where voice and data communication infrastructure is inadequate or non-existent. L-3 has completed the development phase for the local wireless loop telecommunications equipment and made its initial shipment in January 1998. In addition, the FAA has awarded the Company a development contract for next generation airport security equipment for explosive detection. L-3 has shipped two prototype test units and FAA certification testing commenced in the first quarter of 1998. To date, revenues generated from L-3's Emerging Commercial Products have not been, in the aggregate, material to the Company. 42 The Company's systems and products are summarized in the following tables: SECURE COMMUNICATION SYSTEMS (1997 PRO FORMA SALES: $456.0 MILLION)
SYSTEMS SELECTED APPLICATIONS SELECTED PLATFORMS/END USES - ------------------------------------- --------------------------------------- ---------------------------------------- SECURE HIGH DATA RATE COMMUNICATIONS o Wideband data links o High performance, secure o Used on aircraft and naval ships and communication links for interoperable unmanned aerial vehicles with military tactical communication and and commercial satellites reconnaissance SATELLITE COMMUNICATION TERMINALS o Ground-based satellite o Interoperable, transportable ground o Provide remote personnel with communication terminals terminals for remote data links to communication links to distant forces distant segments via commercial or military satellites SPACE COMMUNICATION AND SATELLITE CONTROL o Satellite communication and o On-board satellite external o International Space Station; Earth tracking systems communications, video systems, solid Observing Satellite; Landsat-7; Space state recorders and ground support Shuttle; and National Oceanic and equipment Atmospheric Administration weather satellites o Satellite command and control o Software integration, test and o Air Force satellite control network sustainment and support maintenance support for Air Force and Titan IV launch system satellite control network; engineering support for satellite launch systems MILITARY COMMUNICATIONS o Shipboard communication systems o Shipboard and ship-to-ship o Shipboard voice communications systems communications for Aegis cruisers and destroyers and fully automated Integrated Radio Room (IRR) for ship-to-ship communications on Trident submarines o Digital battlefield communications o Communications on the move for o Communication systems for U.S. Army tactical battlefield C(2)V o Communication software support o Value added, critical software o ASAS, JSTARS and GUARDRAIL services support for C(3)I systems INFORMATION SECURITY SYSTEMS o Secure Telephone Unit (STU o Secure and non-secure voice, data and o Office and battlefield secure and III)/Secure Terminal Equipment video communication utilizing ISDN non-secure communication for armed (STE) and ATM commercial network services, intelligence and security technologies agencies o Local management device/key o Provides electronic key material o User authorization and recognition and processor (LMD/KP) accounting, system management and message encryption for secure audit support functions for secure communication data communication o Information processing systems o Custom designed strategic and o Classified military and national tactical signal intelligence systems agency intelligence efforts that detect, collect, identify, analyze and disseminate information and related support contracts - ------------------------------------- --------------------------------------- ----------------------------------------
43 SPECIALIZED COMMUNICATION PRODUCTS (1997 PRO FORMA SALES: $438.0 MILLION)
PRODUCTS SELECTED APPLICATIONS SELECTED PLATFORMS/END USES - --------------------------------------- --------------------------------------- ---------------------------------------- MICROWAVE COMPONENTS o Passive components, mechanical o Radio transmission, switching and o Broad-band and narrow-band commercial switches and wireless assemblies conditioning; antenna and base applications (PCS, cellular, SMR, and station testing and monitoring paging infrastructure) sold under the Narda brand name; and broad- band military applications o Safety products o Radio frequency (RF) monitoring and o Monitor cellular base station and measurement industrial RF emissions frequency monitoring o Semiconductors (diodes, capacitors) o Radio frequency switches, limiters, o Various industrial and military end voltage control, oscillators, uses, including commercial satellites, harmonic generators avionics and specialty communication products o Satellite and wireless components o Satellite transponder control, o China Sat, Pan Am Sat, Telstar, (channel amplifiers, transceivers, channel and frequency separation Sirius, Tempo, Tiros, Milstar, GPS and converters, filters and multiplexers) LandSat AVIONICS AND OCEAN SYSTEMS Aviation Recorders o Solid state cockpit voice and flight o Voice recorders continuously record o Installed on business and commercial data recorders most recent 30-120 minutes of voice aircraft and certain military and sounds from cockpit and aircraft transport aircraft; sold to both inter-communications. Flight data aircraft OEMs and airlines under the recorders record the last 25 hours of Fairchild brand name flight parameters Antenna Systems o Ultra-wide frequency and advanced o Surveillance; radar detection o F-15, F-16, F-18, E-2C, P-3, C-130, radar antenna systems and rotary B-2, AWACS, Apache, Cobra, Mirage joints (France), Maritime Patrol (U.K.) and Tornado (U.K.) Display Systems o Cockpit and mission display systems o High performance, ruggedized flat o E-2C, V-22, F-14, F-117, E-6B, C-130, panel and cathode ray tube displays AWACS and JSTARS Ocean Systems o Airborne dipping sonar systems o Submarine detection and localization o SH-60, SH-2/3, AB-212, EH-101 and Lynx Helicopters o Submarine and surface ship towed o Submarine and surface ship detection o SSN, SSBN, DDG-963 and FFG-7 arrays and localization o Torpedo defense systems o Torpedo detection and jamming o SSN, SSBN and DDG-963 o Mine countermeasure systems o Coastal and route survey o MCDV (Canada) TELEMETRY, INSTRUMENTATION AND SPACE PRODUCTS Airborne, Ground and Space Telemetry o Aircraft, missile and satellite o Real time data acquisition, o JSF, F-15, F-18, F-22, Comanche, telemetry systems measurement, processing, simulation, Nimrod (U.K.), Tactical Hellfire, distribution, display and storage for Titan, EELV, A2100 and ATHENA flight testing o Training range telemetry systems o Battlefield simulation o Combat simulation Space Products o Global satellite communications o Satellite transmission of voice, o Rural telephony or private networks, systems supplier video and data direct to home uplinks, satellite news gathering and wideband applications - --------------------------------------- --------------------------------------- ----------------------------------------
44 INDUSTRY OVERVIEW The defense industry has recently undergone significant changes precipitated by ongoing federal budget pressures and new roles and missions to reflect changing strategic and tactical threats. Since the mid-1980's, the overall U.S. defense budget has declined in real dollars. In response, the DoD has focused its resources on enhancing its military readiness, joint operations and digital command and control communications by incorporating advanced electronics to improve the performance, reduce operating cost and extend the life expectancy of its existing and future platforms. The emphasis on system interoperability, force multipliers and providing battlefield commanders with real-time data is increasing the electronics content of nearly all of the major military procurement and research programs. As a result, the DoD's budget for communications and defense electronics is expected to grow. According to Federal Sources, an independent private consulting group, the defense budget for C(3)I is expected to increase from $31.0 billion in the fiscal year ended September 30, 1997 to $42.0 billion in the fiscal year ended September 30, 2002, a compound annual growth rate of 6.3%. The industry has also undergone dramatic consolidation resulting in the emergence of three dominant prime system contractors (Boeing, Lockheed Martin and Raytheon). One outgrowth of this consolidation among the remaining major prime contractors is their desire to limit purchases of products and sub-systems from one another. However, there are numerous essential products, components and systems that are not economical for the major prime contractors to design, develop or manufacture for their own internal use which creates opportunities for merchant suppliers such as L-3. As the prime contractors continue to evaluate their core competencies and competitive position, focusing their resources on larger programs and platforms, the Company expects the prime contractors to continue to exit non-strategic business areas and procure these needed elements on more favorable terms from independent, commercially oriented merchant suppliers. Recent examples of this trend include divestitures of certain non-core businesses by AlliedSignal, Ceridian, Lockheed Martin and Raytheon. The prime contractors' focus on cost control is also driving increased use of commercial off-the-shelf products for upgrades of existing systems and in new systems. The Company believes the prime contractors will continue to be under pressure to reduce their costs and will increasingly seek to focus their resources and capabilities on major systems, turning to commercially oriented merchant suppliers to produce sub-systems, components and products. Going forward, successful merchant suppliers will use their resources to complement and support, rather than compete with the prime contractors. L-3 anticipates the relationship between the major prime contractors and their primary suppliers will, as in the automotive and commercial aircraft industry, develop into critical partnerships encompassing increasingly greater outsourcing of non-core products and systems by the prime contractors to their key merchant suppliers and increasing supplier participation in the development of future programs. Early involvement in the upgrading of existing systems and the design and engineering of new systems incorporating these outsourced products will provide merchant suppliers, including the Company, with a competitive advantage in securing new business and provide the prime contractors with significant cost reduction opportunities through coordination of the design, development and manufacturing processes. BUSINESS STRATEGY In 1997, management successfully integrated the business units of Lockheed Martin it acquired in the L-3 Acquisition and enhanced the Company's operating efficiency through reduced overhead expenses and facility rationalization. These efforts resulted in improvements in sales, profitability and competitive contract award win rates. Going forward, L-3 intends to leverage its market position, diverse program base and favorable mix of cost plus to fixed price contracts to enhance its profitability and to establish itself as the premier merchant supplier of communication systems and products to the major prime contractors in the aerospace/defense industry as well as the Government. The Company's strategy to continue to achieve its objectives includes: O EXPAND MERCHANT SUPPLIER RELATIONSHIPS. Management has developed strong relationships with virtually all of the prime contractors, the DoD and other major government agencies, enabling L-3 to identify business opportunities and anticipate customer needs. As an independent merchant supplier, the Company anticipates its growth will be driven by expanding its share of existing 45 programs and by participating in new programs. Management identifies opportunities where it believes it will be able to use its strong relationships to increase its business presence and allow its customers to reduce their costs. The Company also expects to benefit from increased outsourcing by prime contractors who in the past may have limited their purchases to captive suppliers and who are now expected to view L-3's capabilities on a more favorable basis given its status as an independent company. L-3's independent status positions it to be the desired merchant supplier to multiple bidders on prime contract bids. As an example of the Company's merchant supplier strategy, L-3 equipment is included in all three prime contractor bids for the ASTOR program in the United Kingdom and both prime contractor bids for the DoD's JASSM program. o SUPPORT CUSTOMER REQUIREMENTS. A significant portion of L-3's sales are derived from high-priority, long-term programs and from programs for which the Company has been the incumbent supplier, and in many cases acted as the sole provider, over many years. Approximately 65% of the Company's total pro forma 1997 sales were generated from sole source contracts. L-3's customer satisfaction and excellent performance record are evidenced by its performance-based award fees exceeding 90% on average over the past two years. Management believes prime contractors will increasingly award long-term, sole source, outsourcing contracts to the merchant supplier they believe is most capable on the basis of quality, responsiveness, design, engineering and program management support as well as cost. Reflecting L-3's strong competitive position, the Company (excluding the 1998 Acquisitions) has experienced a contract award win rate in 1997 in excess of 60% on new competitive contracts for which it competes and in excess of 90% on contracts for which it is the incumbent. The Company intends to continue to align its research and development, manufacturing and new business efforts to complement its customers' requirements and provide state-of-the-art products. o ENHANCE OPERATING MARGINS. Since the L-3 Acquisition in April 1997, management has reduced corporate administrative and facilities expenses, increased sales and improved competitive contract award win rates. Enhancement of operating margins was primarily due to efficient management and elimination of significant corporate expense allocations which existed prior to the L-3 Acquisition. Pro forma EBITDA (excluding the 1998 Acquisitions) as a percentage of sales improved from 12.5% in 1996 to 13.4% in 1997. Management intends to continue to enhance its operating performance by reducing overhead expenses, continuing consolidation and increasing productivity. o LEVERAGE TECHNICAL AND MARKET LEADERSHIP POSITIONS. L-3 has developed strong, proprietary technical capabilities that have enabled it to capture a number one or two market position in most of its key business areas, including secure, high data rate communications systems, solid state aviation recorders, telemetry, instrumentation and space products, advanced antenna systems and high performance microwave components. Over the past three years, the Company, on a pro forma basis, has invested over $150.0 million in Company-sponsored independent research and development, including bid and proposal costs, in addition to making substantial investments in its technical and manufacturing resources. Further, the Company has a highly skilled workforce including approximately 2,000 engineers. Management is applying the Company's technical expertise and capabilities into several closely aligned commercial business areas and applications, such as medical imaging archive management, wireless telephony and airport security equipment and will continue to explore other similar commercial opportunities. o MAINTAIN DIVERSIFIED BUSINESS MIX. The Company enjoys a diverse business mix with a limited program exposure, a favorable balance of cost plus and fixed price contracts, a significant sole source follow-on business and an attractive customer profile. The Company's largest program, representing 13% of 1997 pro forma sales, is a long-term, sole source, cost plus contract for the U-2 Program. No other program represented more than 7% of 1997 sales on a pro forma basis, assuming the L-3 Acquisition had occurred on January 1, 1997. Further, the Company's pro forma sales mix of contracts in 1997 was 36% cost plus and 64% fixed price, providing the Company with a favorable mix of predictable profitability (cost plus) and higher margin (fixed price) business. L-3 also enjoys an 46 attractive customer mix of defense and commercial business, with DoD related sales accounting for 62% and commercial and federal (non-DoD) sales accounting for 38% of 1997 pro forma sales. The Company intends to leverage this favorable business profile to expand its merchant supplier business base. o CAPITALIZE ON STRATEGIC ACQUISITION OPPORTUNITIES. Recent industry consolidation has essentially eliminated traditional middle-tier aerospace/defense companies. This level of consolidation is now beginning to draw the concern of the DoD and federal anti-trust regulators. In 1997, a number of merchant companies were sold: Computing Devices International division of Ceridian to General Dynamics, Kaman Sciences to ITT, BDM to TRW and TASC Inc., a subsidiary of Primark Corporation, to Litton. As a result, the Company anticipates that the consolidation of the smaller participants in the defense industry will create attractive complementary acquisition candidates for L-3 in the future as these companies continue to evaluate their core competencies and competitive position. L-3 intends to enhance its existing product base through internal research and development efforts as well as selective acquisitions and add new products to its product base through acquisitions in areas synergistic with L-3's present technology. The Company seeks to acquire potential targets with the following criteria: (i) significant market position in its business area, (ii) product offerings which complement and/or extend those of L-3 and (iii) positive future growth and earnings prospects. RECENT DEVELOPMENTS Since the formation of the Company in April 1997, the Company has actively pursued its acquisition strategy. The Company recently purchased the assets and liabilities of STS, ILEX and Ocean Systems. The combined purchase price for the 1998 Acquisitions was $146.4 million of cash, subject to certain post-closing adjustments, and in one case certain additional consideration based on post-closing performance. The Company has financed these acquisitions through the use of its existing cash balances as well as through borrowings under the $375.0 million Senior Credit Facilities. These three businesses complement and extend L-3's product offerings. Ocean Systems On March 30, 1998, L-3 Communications purchased the assets of Ocean Systems for $67.5 million in cash. In 1997, Ocean Systems had sales of $73.0 million. Ocean Systems is one of the world's leading products suppliers of acoustic undersea warfare systems, having designed, manufactured and supported a broad range of compact, lightweight, high performance acoustic systems for navies around the world for over 40 years. Ocean Systems is the leading products supplier of airborne dipping sonar systems in the world with substantial market share of the sector and systems in service with the U.S. and 20 foreign navies. Ocean Systems also produces several sea systems products including towed array sonar, integrated side-looking sonar, acoustic jammers, mine detection and torpedo defense systems and supplies commercial navigation and hydrographic survey systems worldwide. Ocean Systems is further supported by ELAC located in Kiel, Germany. ELAC manufactures a broad range of naval defense products including submarine, torpedo and navigation sonars as well as survey and navigation systems for the commercial nautical products industry. Ocean Systems expands L-3's leading products and capabilities into the undersea and anti-submarine warfare market place. ILEX Systems On March 4, 1998, L-3 Communications purchased the assets of ILEX for $51.9 million in cash, subject to adjustment based on closing net assets, plus additional consideration based on post-closing performance of ILEX which could include the issuance of up to 540,000 shares of Common Stock over the next three years. In 1997, ILEX had sales of $63.5 million. ILEX is a leading supplier of communication software support services to military and related government intelligence markets. ILEX also provides environmental consulting, software and systems engineering services and complementary products to several commercial markets. ILEX complements L-3's Secure Communication Systems business area by adding software expertise in critical C(3)I programs and increasing the number of the Company's skilled workforce by adding approximately 500 software system engineers and scientists. 47 Satellite Transmission Systems On February 5, 1998, L-3 Communications purchased the assets of STS of California Microwave, Inc. for $27.0 million, subject to adjustment based on closing net assets. For the fiscal year ended June 30, 1997, STS had sales of $68.0 million. STS is a leading global satellite communications systems and services provider. Its customers include foreign post, telephone and telegraph administrations, domestic and international prime communications infrastructure contractors, telecommunication and satellite service providers, broadcasters and media-related companies, government agencies and large corporations. STS expands L-3's ability to apply its products and provides networking capability to L-3's wireless communications products business. STS also opens new opportunities in broader, international markets. The Company considers and executes strategic acquisitions on an ongoing basis and may be evaluating acquisitions or engaged in acquisition negotiations at any given time. As of the date hereof, the Company has completed, has reached agreement on or is in discussions regarding certain acquisitions, in addition to the 1998 Acquisitions, that are either individually or in the aggregate not material to the financial condition or results of operations of the Company. HISTORY Holdings and L-3 Communications were formed in April 1997 by Mr. Frank C. Lanza, the former President and Chief Operating Officer of Loral, Mr. Robert V. LaPenta, the former Senior Vice President and Controller of Loral (collectively, "Senior Management"), Lehman Brothers Capital Partners III, L.P. and its affiliates (the "Lehman Partnership") and Lockheed Martin to acquire (the "L-3 Acquisition") substantially all of the assets and certain liabilities of (i) nine business units previously purchased by Lockheed Martin as part of its acquisition of Loral in April 1996 (the "Loral Acquired Businesses") and (ii) one business unit, Communication Systems -- East, purchased by Lockheed Martin as part of its acquisition of GE Aerospace in April 1993 (collectively, the "Businesses"). L-3 Communications is a wholly-owned subsidiary of Holdings. At March 31, 1998, Messrs. Lanza and LaPenta and certain other members of management collectively owned 17.8%; the Lehman Partnership owned 49.0%; and Lockheed Martin owned 33.2% of the outstanding capital stock of Holdings. The Company's executive offices are located at 600 Third Avenue, New York, New York, 10016, and the telephone number at that address is 212-697-1111. PRODUCTS AND SERVICES SECURE COMMUNICATION SYSTEMS L-3 is a leader in communication systems for high performance intelligence collection, imagery processing and ground, air, sea and satellite communications for the DoD and other government agencies. The Salt Lake City operation provides secure, high data rate, real-time communication systems for surveillance, reconnaissance and other intelligence collection systems. The Camden operation designs, develops, produces and integrates communication systems and support equipment for space, ground and naval applications. The Shrewsbury operation provides communication software support services to military and related government intelligence markets. Product lines of the Secure Communication Systems business include high data rate communications links, satellite communications ("SATCOM") terminals, Navy vessel communication systems, space communications and satellite control systems, signal intelligence information processing systems, information security systems, tactical battlefield sensor systems and commercial communication systems. O HIGH DATA RATE COMMUNICATIONS The Company is a technology leader in high data rate, covert, jam-resistant microwave communications in support of military and other national agency reconnaissance and surveillance applications. L-3's product line covers a full range of tactical and strategic secure point-to-point and relay data transmission systems, products and support services that conform to military and intelligence specifications. The Company's systems and products are capable of providing battlefield commanders with real time, secure surveillance and targeting information and were used extensively by U.S. armed forces in the Persian Gulf war. 48 During the 1980s, largely based on its prior experience with command and control guidance systems for remotely-piloted vehicles, L-3 developed its current family of strategic and tactical data links, including its Modular Interoperable Data Link ("MIDL") systems and Modular Interoperable Surface Terminals ("MIST"). MIDL and MIST technologies are considered virtual DoD standards in terms of data link hardware. The Company's primary focus is spread spectrum communication (based on CDMA technology), which involves transmitting a data signal with a high rate noise signal so as to make it difficult to detect by others, and then re-capturing the signal and removing the noise. The Company's data links are capable of providing information at over 200 Mb/s. L-3 provides these secure high band width products to the U.S. Air Force, Navy, Army and various Government agencies, many through long-term sole source programs. The scope of these programs include air-to-ground, air-to-air, ground-to-air and satellite communications. Government programs include: U-2 Support Program, Common High-Band Width Data Link ("CHBDL"), Battle Group Passive Horizon Extension System ("BGPHES"), Light Airborne Multi-Purpose System ("LAMPS"), TriBand SATCOM Subsystem ("TSS"), major unmanned aerial vehicle ("UAV") programs and Direct Air-Satellite Relay ("DASR"). O SATELLITE COMMUNICATION TERMINALS L-3 provides ground-to-satellite, high availability, real-time global communications capability through a family of transportable field terminals to communicate with commercial, military and international satellites. These terminals provide remote personnel with anywhere, anytime effective communication capability and provide communications links to distant forces. The Company's TriBand SATCOM Subsystem ("TSS") employs a 6.25 meter tactical dish with a single point feed that provides C, Ku and X band communication to support the U.S. Army. The Company also offers an 11.3 meter dish which is transportable on two C-130 aircraft. The SHF Portable Terminal System ("PTS") is a lightweight (28 lbs.), manportable terminal, which communicates through DSCS, NATO or SKYNET satellites and brings unprecedented connectivity to small military tactical units and mobile command posts. L-3 delivered 14 of these terminals for use by NATO forces in Bosnia. O SPACE COMMUNICATIONS AND SATELLITE CONTROL Continuing L-3's tradition of providing communications for every manned U.S. space flight since Mercury, the Company is currently designing and testing three communication subsystems for the International Space Station ("ISS"). These systems will control all ISS radio frequency ("RF") communications and external video activities. The Company also provides solid-state recorders and memory units for data capture, storage, transfer and retrieval for space applications. The standard NASA tape recorder, which was developed and produced by the Company, has completed over four million hours of service without a mission failure. Current programs include recorders for the National Oceanic & Atmospheric Administration ("NOAA") weather satellites, the Earth Observing Satellite ("EOS"), AM spacecraft and Landsat-7 Earth-monitoring spacecraft. The Company also provides space and satellite system simulation, satellite operations and computer system training, depot support, network engineering, resource scheduling, launch system engineering, support, software integration and test through cost-plus contracts with the U.S. Air Force. O MILITARY COMMUNICATIONS The Company provides integrated, computer controlled switching systems for the interior and exterior voice and data needs of today's Navy military vessels. The Company's products include Integrated Voice Communication Systems ("IVCS") for Aegis cruisers and destroyers and the Integrated Radio Room ("IRR") for Trident class submarines, the first computer controlled communications center in a submarine. These products integrate the intercom, tactical and administrative communications network into one system accessing various types of communication terminals throughout the ship. The Company's MarCom 2000 secure digital switching system is in development for the Los Angeles class attack submarine and provides an integrated approach to the specialized voice and data communications needs of a shipboard environment for internal and external communications, command and control and air 49 traffic control. The Company also offers on-board, high data rate communications systems which provide a data link for carrier battle groups which are interoperable with the U.S. Air Force's surveillance/ reconnaissance terminal platforms. The Company provides the US Army's Command and Control Vehicle ("C2V") Mission Module Systems ("MMS"). MMS provides the "communications on the move" capability needed for the digital battlefield by packaging advanced communications into a modified Bradley Fighting Vehicle. The Company is a proven supplier of superior technological expertise to the DoD, including its contractors and related government intelligence agencies. O INFORMATION SECURITY SYSTEMS The Company has produced more than 100,000 secure telephone units ("STU III") which are in use today by the U.S. Armed Forces to provide secure telephone capabilities for classified confidential communication over public commercial telephone networks. The Company has begun producing the next-generation digital, ISDN-compatible STE. STE provides clearer voice and thirteen-times faster data/fax transmission capability than the STU III. STE also supports secure conference calls and secure video teleconferencing. STE uses a CryptoCard security system which consists of a small, portable, cryptographic module mounted on a PCMCIA card holding the algorithms, keys and personalized credentials to identify its user for secure communications access. The Company also provides LMD/KP which is the workstation component of the Government's Electronic Key Management System ("EKMS"), the next generation of information security systems. EKMS is the Government system to replace current "paper" secret keys used to secure government communications with "electronic" secret keys. LMD/KP is the component of the EKMS which produces and distributes the electronic keys. L-3 also develops specialized strategic and tactical SIGINT systems to detect, acquire, collect, and process information derived from electronic sources. These systems are used by classified customers for intelligence gathering and require high speed digital signal processing and high density custom hardware designs. O TACTICAL SECURITY SYSTEMS The Company manufactures the IREMBASS, an unattended ground sensor system which uses sensors placed along likely avenues of enemy approach or intrusion in a battlefield environment. The sensors respond to seismic and acoustic disturbances, infrared energy and magnetic field changes and thus detect enemy activities. IREMBASS is currently in use by U.S. Special Operations Forces, the U.S. Army's Light Divisions and several foreign governments. The Company also provides the Intrusion Detection Early Warning System ("IDEWS"), a sensor system designed for platoon-level physical security applications. Weighing less than two pounds, this sensor system is ideal for covert perimeter intrusion detection, border protection and airfield or military installation security. SPECIALIZED COMMUNICATION PRODUCTS MICROWAVE COMPONENTS L-3 is the preeminent worldwide supplier of commercial off-the-shelf, high performance radio frequency ("RF") microwave components, assemblies and instruments supplying the wireless communications, industrial and military markets. The Company is also a leading provider of state-of-the-art space-qualified commercial satellite and strategic military RF products. L-3 sells many of these components under the well-recognized Narda brand name and through the world's most comprehensive catalog of standard, stocked hardware. L-3 also sells its products through a direct sales force and an extensive network of premier market representatives. Specific catalog offerings include wireless products, electro-mechanical switches, power dividers and hybrids, couplers/detectors, attenuators, terminations and phase shifters, isolators and circulators, adapters, control products, sources, mixers, waveguide components, RF safety products, power meters/monitors and custom passive products. The Company operates from two sites, Hauppauge, New York ("Narda East"), and Sacramento, California ("Narda West"). Narda East represents approximately 65% of L-3's microwave sales volume, offering high performance microwave components, networks and instruments to the wireless, industrial and military communications markets. Narda East's products can be divided into three major categories: passive components, higher level wireless assemblies/monitoring systems and safety instruments. 50 Passive components are generally purchased in narrow frequency configurations by wireless OEM equipment manufacturers and service providers. Similar components are purchased in wide frequency configurations by first tier military equipment suppliers. Commercial applications for Narda components are primarily in cellular or PCS base stations. Narda also manufactures higher level assemblies for wireless base stations and the paging industry. These products include communication antenna test sets, devices that monitor reflected power to determine if a cellular base station antenna is working and whether the base station radios are operating at peak power levels. Military applications include general procurement for test equipment or electronic surveillance and countermeasure systems. RF safety products are instruments which are used to measure the level of non-ionizing radiation in a given area, i.e., from an antenna, test set or other emitting source, and determine whether human exposure limits are within federal standards. Narda West designs and manufactures state-of-the-art space-qualified and wireless components. Space qualified components include channel amplifiers for satellite transponder control and diplexers/ multiplexers, which are used to separate various signals and direct them to the appropriate other sections of the payload. Narda West's primary areas of focus are communications satellite payload products. Channel amplifiers constitute Narda West's main satellite product. These components amplify the weak signals received from earth stations by a factor of 1 million, and then drive the power amplifier tubes that broadcast the signal back to earth. These products are sold to satellite manufacturers and offer lower cost, lower weight and improved performance versus in-house alternatives. On a typical satellite, for which there are 20 to 50 channel amps, Narda West's channel amps offer cost savings of up to 60% (up to $1 million per satellite) and decrease launch weight by up to 25 kilograms. Narda West products include wireless microwave components for cellular and PCS base station applications. These products include filters used to transmit and receive channel separation as well as ferrite components, which isolate certain microwave functions, thereby preventing undesired signal interaction. Other products include a wide variety of high-reliability power splitters, combiners and filters for spacecraft and launch vehicles, such as LLV, Tiros, THAAD, Mars Surveyor, Peacekeeper, Galileo, Skynet, Cassini, Milstar, Space Shuttle, LandSat, FltSatCom, GPS, GPS Block IIR, IUS, ACE, SMEX and certain classified programs. The balance of the operation's business is of an historical nature and involves wideband filters used for electronic warfare applications. AVIONICS AND OCEAN SYSTEMS O AVIATION RECORDERS L-3 manufactures commercial solid-state crash-protected aviation recorders ("black boxes") under the Fairchild brand name, and has delivered over 40,000 flight recorders to airplane manufacturers and airlines around the world. Recorders are mandated and regulated by various worldwide agencies for commercial airlines and a large portion of business aviation aircraft. Management anticipates growth opportunities in Aviation Recorders as a result of the current high level of orders for new commercial aircraft. Expansion into the military market shows continued growth opportunities. L-3 Recorders were recently selected for installation on the fleet of the Royal Australian Air Force and Royal Australian Army transport aircraft and are currently being installed on the U.S. Navy C-9 aircraft. There are two types of recorders: (i) the Cockpit Voice Recorder ("CVR") which records the last 30 to 120 minutes of crew conversation and ambient sounds from the cockpit and (ii) the Flight Data Recorder ("FDR") which records the last 25 hours of aircraft flight parameters such as speed, altitude, acceleration, thrust from each engine and direction of the flight in its final moments. Recorders are highly ruggedized instruments, designed to absorb the shock equivalent to that of an object traveling at 268 knots stopping in 18 inches, fire resistant to 1,100 degrees centigrade and pressure resistant to 20,000 feet undersea for 30 days. Management believes that the Company has the leading worldwide market position for CVR's and FDR's. O ANTENNA SYSTEMS Under the Randtron brand name, L-3 produces high performance antennas designed for surveillance, high-resolution, ultra-wide frequency bands, detection of low radar cross section ("LRCS") targets, LRCS 51 installations, severe environmental applications and polarization diversity. L-3's main antenna product is a sophisticated 24-foot diameter antenna operational on all E-2C aircraft. This airborne antenna consists of a 24-foot rotating aerodynamic radome containing a UHF surveillance radar antenna, IFF antenna and forward and aft auxiliary antennas. Production of this antenna began in the early 1980s, and production is planned beyond 2000 for the E-2C, P-3 and C-130 AEW aircraft. The replacement for this antenna is a very adaptive radar currently under development for introduction early in the next decade. L-3 also produces broad-band antennas for a variety of tactical aircraft and rotary joints for the AWAC's and E-2C's antenna. Randtron has delivered over 2,000 aircraft sets of antennas and has a current backlog through 1999. O DISPLAY SYSTEMS L-3 specializes in the design, development and manufacture of ruggedized display system solutions for military and high-end commercial applications. L-3's current product lines include cathode ray tubes ("CRTs"), the Actiview family of active matrix liquid crystal displays ("AMLCD"), and a family of high performance Display Processing systems. L-3 manufactures flat-panel displays that are used on platforms such as E-2C, F-117, and the LCAC (Landing Craft Air Cushion) vehicle. Recent new contracts for flat-panel displays include the SH-60J helicopter and the C-130 Senior Scout. L-3 also manufactures CRT displays for the E-2C Hawkeye, V-22 Osprey, and F-14 Tomcat and electronics used in aircraft anti-lock braking systems. O OCEAN SYSTEMS The Company is one of the world's leading suppliers of acoustic undersea warfare systems, having designed, manufactured and supported a broad range of compact, lightweight, high performance acoustic systems for navies around the world for over forty years. This experience spans a wide range of platforms, including helicopters, submarines and surface ships, that employ the Company's sonar systems and countermeasures. TELEMETRY, INSTRUMENTATION AND SPACE The Company is a leader in component products and systems used in telemetry and instrumentation for airborne applications such as satellites, aircraft, UAVs, launch vehicles, guided missiles, projectiles and targets. Telemetry involves the collection of data from these platforms, its transmission to ground stations for analysis, and its further dissemination or transportation to another platform. A principal use of this telemetry data is to measure as many as 1,000 different parameters of the platform's operation (in much the same way as a flight data recorder on an airplane measures various flight parameters) and transmit this data to the ground. Additionally, for satellite platforms, the equipment also acquires the command uplink that controls the satellite and transmits the necessary data for ground processing. In these applications, high reliability of components is crucial because of the high cost of satellite repair and the length of uninterrupted service required. Telemetry also provides the data to terminate the flight of missiles and rockets under errant conditions and/or at the end of a mission. Telemetry and command/control products are currently provided on missile programs such as AMRAAM, ASRAAM, AIM-9X, JASSM, JDAM, FOTT, ATACMS and PAC-3, as well as satellite programs such as GPS BLK IIF, GLOBALSTAR, EARTHWATCH, SBIRS, LUNAR PROSPECTOR and MTSAT. O AIRBORNE, GROUND AND SPACE TELEMETRY The Company provides airborne equipment and data link systems to gather critical information and to process, format and transmit it to the ground through communication data links from a communications satellite, spacecraft, aircraft and/or missile. These products are available in both COTS and custom configurations. Major customers are the major defense contractors who manufacture aircraft, missiles, warheads, launch vehicles, munitions and bombs. Ground instrumentation activity occurs at the ground station where the serial stream of combined data is received and decoded in real-time, as it is received 52 from the airborne platform. Data can be encrypted and decrypted during this process, an additional expertise that the Company offers. The Company recently introduced the NeTstar satellite ground station, which collapses racks of satellite RF receivers, demodulators and related units into a PC. O SPACE PRODUCTS L-3 offers value-added solutions that require complex product integration, rich software content and comprehensive support to its customers. The Company focuses on the following niches within the satellite ground segment equipment market: telephony, video broadcasting and multimedia. The Company's customers include foreign PTT's, domestic and international prime communications infrastructure contractors, telecommunications or satellite service providers, broadcasters and media-related companies. EMERGING COMMERCIAL PRODUCTS O MEDICAL ARCHIVING AND SIMULATION SYSTEMS The Company markets jointly with GE Medical Systems GEMnet(Trademark), a cardiac image management and archive system through an exclusive reseller arrangement with GE Medical Systems. GEMnet(Trademark) eliminates the use of cinefilm in a cardiac catheterization laboratory by providing a direct digital connection to the laboratory. The system provides for acquisition, display, analysis and short-and long-term archive of cardiac patient studies, providing significant cost savings and process improvements to the hospital. The Company is an exclusive reseller of EchoNet(Trademark) pursuant to a reseller arrangement with Heartlab, Inc. EchoNet(Trademark) is a digital archive management and review system designed specifically for the echocardiology profession. The system accepts digital echocardiology studies from a variety of currently available ultrasound systems, manages the studies, making them available on a network, and allows the physicians and technicians to become more productive. EchoNet(Trademark) is a trademark of Heartlab, Inc. GEMnet(Trademark) is a trademark of GE. The Company has approximately a one-third equity ownership interest in Medical Education Technologies, Inc. ("METI"). METI is a medical technology company engaged in the development, manufacture and sale of Human Patient Simulators ("HPS"). The HPS is a computerized system with a life-like mannequin that reacts to medical treatments and interventions similar to a human being. Originally oriented to the anesthesiology training and education domain, METI has expanded into cardiology, critical care, trauma care, allied health care, military medicine and continuing medical education. METI's target customers for its HPS include medical schools throughout the world, colleges with registered nursing programs, community colleges and state, local and volunteer emergency medical service organizations. O WIRELESS LOOP TELECOMMUNICATIONS EQUIPMENT The Company is applying its wireless communication expertise to introduce local wireless loop telecommunications equipment using a synchronous Code Division Multiple Access technology ("CDMA") supporting terrestrial and space based, fixed and mobile communication services. The system's principal targeted customer base is emerging market countries and rural areas where existing telecommunications infrastructure is inadequate or non-existent. The Company's system will have the potential to interface with low earth orbit ("LEO") PCS systems such as Globalstar, Iridium and/or any local public telephone network. The Company expects to manufacture for sale certain of the infrastructure equipment. The Company intends to pursue joint ventures with third parties for service and distribution capabilities. The Company has entered into product distribution agreements with Granger Telecom Ltd. for distribution in parts of Africa, the Middle East and the United Kingdom, and with Unisys for distribution in parts of Mexico and South America. This same technology is also being introduced into the Ellipso "big LEO" program to provide the key communications capability in the ground and user segments. In this program, the Company will provide the CDMA processing equipment in the Ground Control Segment and the Ellipso user terminals, both fixed and mobile. O AIRPORT SECURITY EQUIPMENT The FAA has awarded the Company a development contract for next generation airport security equipment for explosive detection. L-3 has teamed with Analogic Corporation and GE to design and 53 produce an explosive detection system ("EDS") utilizing a dual energy computer tomography ("CT") X-ray system. L-3's EDS system, the eXaminer 3DX(Trademark) 6000, will analyze the contents of checked baggage at airports for a wide-range of explosive material as specified by the FAA. The eXaminer 3DX(Trademark) 6000 will inspect baggage at an average of 675 bags per hour, which will allow screening of passenger-checked baggage for a large body aircraft, such as a Boeing 747, in approximately 40 minutes. It can be installed as a stand-alone unit in a conveyor system or in a mobile van. L-3 has shipped two prototype test units and FAA certification testing commenced in the first quarter of 1998. MAJOR CUSTOMERS The Company's sales are predominantly derived from contracts with agencies of, and prime contractors to, the Government. Various Government customers exercise independent purchasing decisions. Sales to the Government generally are not regarded as constituting sales to one customer. Instead, each contracting entity is considered to be a separate customer. In 1997, the Company performed under approximately 150 contracts with value exceeding $1 million for the Government. Pro forma 1997 sales to the Government, including sales through prime contractors, were $651.1 million. Pro forma sales to Lockheed Martin were $81.6 million in 1997. The Company's largest program is a long-term, sole source cost plus support contract for the U-2 Program which contributed sales on a pro forma basis assuming the L-3 Acquisition had occurred on January 1, 1995, of 13%, 14%, and 14%, respectively, for 1997, 1996 and 1995. No other program represented more than 7% of such pro forma sales for 1997, 1996 and 1995. RESEARCH AND DEVELOPMENT The Company employs scientific, engineering and other personnel to improve its existing product lines and to develop new products and technologies in the same or related fields. As of December 31, 1997, the Company employed approximately 2,000 engineers (of whom over 20% hold advanced degrees). The pro forma amounts of research and development performed under customer-funded contracts and Company-sponsored research projects, including bid and proposal costs, for 1997 were $150.2 million and $46.2 million, respectively. COMPETITION The Company's ability to compete for defense contracts depends to a large extent on the effectiveness and innovativeness of its research and development programs, its ability to offer better program performance than its competitors at a lower cost to the Government customer, and its readiness in facilities, equipment and personnel to undertake the programs for which it competes. In some instances, programs are sole source or work directed by the Government to a single supplier. In such cases, there may be other suppliers who have the capability to compete for the programs involved, but they can only enter or reenter the market if the Government should choose to reopen the particular program to competition. Approximately 65% of the Company's 1997 pro forma sales related to sole source contracts. The Company experiences competition from industrial firms and U.S. government agencies, some of which have substantially greater resources than the Company. These competitors include: AlliedSignal, AMP, Inc., Aydin Corporation, Cubic Corporation, GTE Corporation, Harris Corporation, Hughes, Motorola and Titan Corporation. A majority of the sales of the Company is derived from contracts with the Government and its prime contractors, and such contracts are awarded on the basis of negotiations or competitive bids. Management does not believe any one competitor or a small number of competitors is dominant in any of the business areas of the Company. Management believes the Company will continue to be able to compete successfully based upon the quality and cost competitiveness of its products and services. PATENTS AND LICENSES Although the Company owns some patents and has filed applications for additional patents, it does not believe that its operations depend upon its patents. In addition, the Company's Government contracts 54 generally license it to use patents owned by others. Similar provisions in the Government contracts awarded to other companies make it impossible for the Company to prevent the use by other companies of its patents in most domestic work. BACKLOG As of December 31, 1997, the Company's pro forma funded backlog was approximately $638.1 million. This backlog provides management with a useful tool to project sales and plan its business on an on-going basis; however, no assurance can be given that the Company's backlog will become revenues in any particular period or at all. Funded backlog does not include the total contract value of multi-year, cost-plus reimbursable contracts, which are funded as costs are incurred by the Company. Funded backlog also does not include unexercised contract options which represent the amount of revenue which would be recognized from the performance of contract options that may be exercised by customers under existing contracts and from purchase orders to be issued under indefinite quantity contracts or basic ordering agreements. Backlog is a more relevant predictor of future sales in the Secure Communication Systems business area. Current funded backlog in Secure Communication Systems as of December 31, 1997 was $306.0 million, of which approximately 93% is expected to be shipped in 1998. The Company believes backlog is a less relevant factor in the Specialized Communication Products business area given the nature of its catalog and commercial oriented business. Overall, approximately 85% of the Company's December 31, 1997 funded backlog is expected to be shipped in 1998.
PRO FORMA FUNDED BACKLOG AS OF DECEMBER 31, 1997 -------------------- ($ IN MILLIONS) Secure Communication Systems ..... $306.0 Specialized Communication Products.......................... 332.1 -------------------- $638.1 ====================
GOVERNMENT CONTRACTS Approximately 73% of the Company's 1997 pro forma sales were made to agencies of the Government or to prime contractors or subcontractors of the Government. Approximately 64% of the Company's pro forma 1997 sales mix of contracts were firm fixed price contracts under which the Company agrees to perform for a predetermined price. Although the Company's fixed price contracts generally permit the Company to keep profits if costs are less than projected, the Company does bear the risk that increased or unexpected costs may reduce profit or cause the Company to sustain losses on the contract. Generally, firm fixed price contracts offer higher margin than cost plus type contracts. All domestic defense contracts and subcontracts to which the Company is a party are subject to audit, various profit and cost controls and standard provisions for termination at the convenience of the Government. Upon termination, other than for a contractor's default, the contractor will normally be entitled to reimbursement for allowable costs and to an allowance for profit. Foreign defense contracts generally contain comparable provisions relating to termination at the convenience of the government. To date, no significant fixed price contract of the Company has been terminated. Companies supplying defense-related equipment to the Government are subject to certain additional business risks peculiar to that industry. Among these risks are the ability of the Government to unilaterally suspend the Company from new contracts pending resolution of alleged violations of procurement laws or regulations. Other risks include a dependence on appropriations by the Government, changes in the Government's procurement policies (such as greater emphasis on competitive procurements) and the need to bid on programs in advance of design completion. A reduction in expenditures by the Government for products of the type manufactured by the Company, lower margins resulting from increasingly competitive procurement policies, a reduction in the volume of contracts or subcontracts awarded to the Company or substantial cost overruns would have an adverse effect on the Company's cash flow. 55 PROPERTIES The table below sets forth certain information with respect to manufacturing facilities and properties of the Company, excluding non-operating properties held for sale.
LOCATION OWNED LEASED - ----------------------------------------------------- ----------------- ----------------- (THOUSANDS OF SQUARE FEET) L-3 Headquarters, NY ................................ -- 58.7 SECURE COMMUNICATION SYSTEMS: Camden, NJ.......................................... -- 588.7 Salt Lake City, UT.................................. -- 457.6 Sierra Vista, AZ.................................... -- 18.8 Camarillo, CA....................................... -- 2.4 El Segundo, CA ..................................... -- 1.4 Milpitas, CA........................................ -- 21.4 Oakland, CA......................................... -- 5.2 Santa Ana, CA....................................... -- 5.0 Santa Clara, CA .................................... -- 6.2 Santa Maria, CA .................................... -- 9.8 Colorado Springs, CO ............................... -- 5.8 Hartford, CT........................................ -- 1.8 Chicago, IL......................................... -- 7.3 Boston, MA.......................................... -- 25.6 Annapolis Junction, MD ............................. -- 6.6 Wheaton, MD......................................... -- 0.5 Moorestown, NJ...................................... -- 2.8 Shrewsbury, NJ...................................... -- 22.5 New York, NY........................................ -- 5.9 Cleveland, OH....................................... -- 1.4 Fairfax, VA......................................... -- 1.6 Warrentown, VA ..................................... -- 0.8 SPECIALIZED COMMUNICATION PRODUCTS: Folsom, CA ......................................... -- 57.5 Lancaster, CA ...................................... -- 5.4 Menlo Park, CA ..................................... -- 98.3 San Diego, CA ...................................... 196.0 68.9 San Mateo, CA ...................................... -- 14.8 Santa Clara, CA .................................... -- 2.0 Sylmar, CA.......................................... -- 240.0 Sarasota, FL........................................ -- 143.7 Merritt Island, FL ................................. -- 1.2 Atlanta, GA ........................................ -- 52.1 Alpharetta, GA ..................................... 40.0 -- Norcross, GA ....................................... -- 4.8 Lowell, MA.......................................... -- 47.0 Hauppauge, NY ...................................... 240.0 -- Warminster, PA ..................................... 44.7 -- Hampshire (U.K.).................................... -- 1.2 Kiel, Germany....................................... -- 143.0 ----------------- ----------------- Total................................................ 520.7 2,137.7 ================= =================
LEGAL PROCEEDINGS From time to time the Company is involved in legal proceedings arising in the ordinary course of its business. Management believes it is adequately reserved for these liabilities and that there is no litigation pending that could have a material adverse effect on the Company's financial condition and its results of operations. 56 ENVIRONMENTAL MATTERS The Company's operations are subject to various federal, state and local environmental laws and regulations relating to the discharge, storage, treatment, handling, disposal and remediation of certain materials, substances and wastes used in its operations. The Company continually assesses its obligations and compliance with respect to these requirements. Management believes that the Company's current operations are in substantial compliance with all existing applicable environmental laws and permits. The Company does not believe that its environmental compliance expenditures will have a material adverse effect on its financial condition or results of its operations. Pursuant to the L-3 Acquisition Agreement, the Company has agreed to assume certain on-site and off-site environmental liabilities related to events or activities occurring prior to the L-3 Acquisition. Lockheed Martin has agreed to retain all environmental liabilities for all facilities no longer used by the Businesses and to indemnify fully the Company for such prior site environmental liabilities. Lockheed Martin has also agreed, for the first eight years following April 1997, to pay 50% of all costs incurred by the Company above those reserved for on the Company's balance sheet at April 1997 relating to certain Company-assumed environmental liabilities and, for the seven years thereafter, to pay 40% of certain reasonable operation and maintenance costs relating to any environmental remediation projects undertaken in the first eight years. The Company is aware of environmental contamination at two of the facilities acquired from Lockheed Martin that will require ongoing remediation. In November 1997, the Company sold one such facility located in Sarasota, Florida, while retaining a leasehold interest in a portion of that facility, to DMB in a transaction in which DMB contractually agreed to assume responsibility for further remediation of the Sarasota site. Management believes that the Company has established adequate reserves for the potential costs associated with the assumed environmental liabilities. However, there can be no assurance that any costs incurred will be reimbursable from the Government or covered by Lockheed Martin under the terms of the L-3 Acquisition Agreement or that the Company's environmental reserves will be sufficient. In connection with the acquisition of Ocean Systems, the Company has acquired the stock of ELAC. The premises currently leased by ELAC have environmental contamination consisting of chlorinated solvents in the groundwater beneath and adjoining the site. However, Honeywell Inc. ("Honeywell"), the previous owner of ELAC and the current owner of the property, has retained the liability for remediating the ELAC site and has contractually agreed to indemnify AlliedSignal and ELAC. Management believes that any necessary remediation will be covered by the Honeywell indemnification. PENSION PLANS In connection with the L-3 Acquisition, Holdings and L-3 Communications assumed certain liabilities relating to defined benefit pension plans for present and former employees and retirees of certain businesses which were transferred from Lockheed Martin to Holdings and L-3 Communications. Prior to the consummation of the L-3 Acquisition, Lockheed Martin received a letter from the PBGC which requested information regarding the transfer of such pension plans and indicated that the PBGC believed certain of such pension plans were underfunded using the PBGC's actuarial assumptions (which assumptions result in a larger liability for accrued benefits than the assumptions used for financial reporting under FASB 87). The PBGC underfunding is related to the Subject Plans. As of December 31, 1997, the Company calculated the net funding position of the Subject Plans and believes them to be overfunded by approximately $5.9 million under ERISA assumptions, underfunded by approximately $10.2 million under FASB 87 assumptions and, on a termination basis, underfunded by as much as $57.5 million under PBGC assumptions. With respect to the Subject Plans, Lockheed Martin entered into an agreement (the "Lockheed Martin Commitment Agreement") among Lockheed Martin, L-3 and the PBGC dated as of April 30, 1997. The material terms and conditions of the Lockheed Martin Commitment Agreement include a commitment by Lockheed Martin to, under certain circumstances, assume sponsorship of the Subject Plans or provide another form of financial support for the Subject Plans. The Lockheed Martin Commitment Agreement will continue with respect to any Subject Plan until such time as such Subject Plan is no longer underfunded on a PBGC basis for two consecutive years or, at any time after May 31, 57 2002, the Company achieves investment grade credit ratings. Pursuant to the Lockheed Martin Commitment Agreement, the PBGC agreed that it would take no further action in connection with the L-3 Acquisition. In return for the Lockheed Martin Commitment, the Company entered into an agreement with Lockheed Martin, dated as of April 30, 1997, pursuant to which the Company provided certain assurances to Lockheed Martin including, but not necessarily limited to, (i) continuing to fund the Subject Plans consistent with prior practices and to the extent deductible for tax purposes and, where appropriate, recoverable under Government contracts, (ii) agreeing to not increase benefits under the Subject Plans without the consent of Lockheed Martin, (iii) restricting the Company from a sale of any businesses employing individuals covered by the Subject Plans if such sale would not result in reduction or elimination of the Lockheed Martin Commitment with regard to the specific plan and (iv) if the Subject Plans were returned to Lockheed Martin, granting Lockheed Martin the right to seek recovery from the Company of those amounts actually paid, if any, by Lockheed Martin with regard to the Subject Plans after their return. In addition, upon the occurrence of certain events, Lockheed Martin, at its option, will have the right to decide whether to assume sponsorship of any or all of the Subject Plans, even if the PBGC has not sought to terminate the Subject Plans. The Company has performed its obligations under the letter agreement with Lockheed Martin and the Lockheed Martin Commitment and has not received any communications from the PBGC concerning actions which the PBGC contemplates taking in respect of the Subject Plans. EMPLOYEES As of December 31, 1997, the Company employed approximately 6,100 full-time and part-time employees. The Company believes that its relations with its employees are good. Approximately 540 of the Company's employees at its Communication Systems - -- East operation in Camden, New Jersey are represented by four unions, the Association of Scientists and Professional Engineering Personnel, the International Federation of Professional and Technical Engineers, the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers and an affiliate of the International Brotherhood of Teamsters. Three of the four collective bargaining agreements expire in mid-1998. While the Company has not yet initiated discussions with representatives of these unions, management believes it will be able to negotiate, without material disruption to its business, satisfactory new collective bargaining agreements with these employees. However, there can be no assurance that a satisfactory agreement will be reached with the covered employees or that a material disruption to the Company's Camden operations will not occur. Approximately 200 employees of Ocean Systems are represented by the United Auto Workers. The collective bargaining agreement expires in mid-1999. Approximately 140 of the employees at Ocean Systems' ELAC subsidiary in Kiel, Germany are represented by the Metal Trade Industrial Workers of the Hamburg Region and ELAC is represented by the Association of Metal Industry Employers for Schleswig-Holstein. The labor contract expires in mid-1998. While the Company has not yet initiated discussions with representatives of these unions, management believes it will be able to negotiate, without material disruption to its business, a satisfactory new labor contract with these employees. However, there can be no assurance that a satisfactory agreement will be reached with the covered employees or that material disruption to operations of ELAC or Ocean Systems will not occur. 58 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Under the L-3 Acquisition Agreement, Lockheed Martin has agreed to indemnify L-3, subject to certain limitations, for Lockheed Martin's breach of representations and warranties and L-3 has assumed certain obligations relating to environmental matters and benefits plans. These obligations include certain on-site and off-site environmental liabilities related to events or activities of the Businesses occurring prior to the L-3 Acquisition. Lockheed Martin has agreed to indemnify Holdings, subject to certain limitations, for its breach of (i) non-environmental representations and warranties up to $50 million (subject to a $5 million threshold) and (ii) for the first eight years following April 1997, to pay 50% of all costs incurred by the Company above those reserved for on the Company's balance sheet at April 1997 relating to certain Company-assumed environmental liabilities and, for the seven years thereafter, 40% of certain reasonable operation and maintenance costs relating to any environmental remediation projects undertaken in the first eight years (subject to a $6 million threshold). Lockheed Martin provides to certain divisions of the Company certain management information systems services at Lockheed Martin's fully-burdened cost but without profit. Holdings, L-3 Communications and Lockheed Martin have entered into certain subleases of real property and cross-licenses of intellectual property. In addition, Holdings and Lockheed Martin have entered into a Limited Noncompetition Agreement (the "Noncompetition Agreement") which, for up to three years from April 1997, in certain circumstances, precludes Lockheed Martin from engaging in the sale of any products that compete with the products of the Company that are set forth in the Noncompetition Agreement for specifically identified application of the products. Under the Noncompetition Agreement, Lockheed Martin is prohibited, with certain exceptions, from acquiring any business engaged in the sale of the specified products referred to in the preceding sentence, although Lockheed Martin may acquire such a business under circumstances where the exceptions do not apply provided that it offers to sell such business to L-3 within 90 days of its acquisition. The Noncompetition Agreement does not, among other exceptions, (i) apply to businesses operated and managed by Lockheed Martin on behalf of the Government, (ii) prohibit Lockheed Martin from engaging in any existing businesses and planned businesses as of the closing of the L-3 Acquisition or businesses that are reasonably related to existing or planned businesses or (iii) apply to selling competing products where such products are part of a larger system sold by Lockheed Martin. In the ordinary course of business L-3 sells products to Lockheed Martin and its affiliates. Pro forma and aggregated sales to Lockheed Martin were $81.6 million, $70.7 million and $25.9 million for the years ended December 31, 1997, 1996 and 1995, respectively. See Note 19 to the Consolidated (Combined) Financial Statements. Sales of products to Lockheed Martin, excluding those under existing intercompany work transfer agreements, are made on terms no less favorable than those which would be available from non-affiliated third party customers. A significant portion of L-3's sales to Lockheed Martin are either based on competitive bidding or catalog prices. STOCKHOLDERS AGREEMENT Holdings, Lockheed Martin, the Lehman Partnership and Messrs. Lanza and LaPenta entered into a stockholders agreement (the "Stockholders Agreement") which, except the terms relating to (i) the registration rights, (ii) provision of services by Lehman Brothers Inc. and (iii) the standstill agreement by Lockheed Martin, terminates upon the consummation of the Common Stock Offering. Prior to the consummation of the Common Stock Offering, the Lehman Partnership is entitled to designate a majority of the members of the Board of Directors provided that it holds at least 35% of the capital stock of Holdings and remains the single largest shareholder. Pursuant to the Stockholders Agreement, certain of the existing stockholders have the right, from time to time on or after the 180-day period following the completion of the initial public offering and subject to certain conditions, to require the Company to register under the Securities Act shares of Common Stock held by them. Lockheed Martin, the Lehman Partnership and each of the Senior Management has three, four and one demand registration rights, respectively. In addition, the Stockholders 59 Agreement also provides certain existing stockholders with certain piggyback registration rights. The Stockholders Agreement provides, among other things, that the Company will pay expenses in connection with (i) up to two demand registrations requested by Lockheed Martin, up to three demand registrations requested by the Lehman Partnership and the two demand registrations requested by the Senior Management and (ii) any registration in which the existing stockholders participate through piggyback registration rights granted under such agreement. The Stockholders Agreement also provides that Lehman Brothers Inc. has the exclusive right to provide investment banking services to Holdings for the five-year period after the closing of the L-3 Acquisition (except that the exclusivity period is three years as to cash acquisitions undertaken by L-3) so long as the Lehman Partnership owns at least 10% of the outstanding Common Stock. In the event that Lehman Brothers Inc. agrees to provide any investment banking services to L-3, it will be paid fees that are mutually agreed upon based on similar transactions and practices in the investment banking industry. Under the Stockholders Agreement Lockheed Martin is subject to a standstill arrangement which generally prohibits any increase in its share ownership percentage over 34.9%. 60 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table provides information concerning the directors and executive officers of Holdings and L-3 Communications.
NAME AGE POSITION - ------------------------- ----- ----------------------------------------------- Frank C. Lanza ........... 66 Chairman, Chief Executive Officer and Director Robert V. LaPenta ........ 52 President, Chief Financial Officer and Director Michael T. Strianese .... 42 Vice President--Finance and Controller Christopher C. Cambria .. 39 Vice President--General Counsel and Secretary Robert F. Mehmel ......... 35 Vice President--Planning and Assistant Secretary Lawrence H. Schwartz .... 60 Vice President--Business Development Jimmie V. Adams .......... 61 Vice President--Washington D.C. Operations Robert RisCassi .......... 62 Vice President--Washington D.C. Operations David J. Brand(a) ........ 36 Director Alberto M. Finali ........ 43 Director Eliot M. Fried(a) ........ 65 Director Robert B. Millard(b) .... 47 Director Alan H. Washkowitz(b) ... 57 Director Thomas A. Corcoran ....... 53 Director Frank H. Menaker, Jr.(a) 57 Director John E. Montague(b) ..... 44 Director
- ------------ (a) Member of the Audit Committee. (b) Member of the Compensation Committee. Frank C. Lanza, Chairman and CEO. Mr. Lanza joined the Company in April 1997. From April 1996, when Loral was acquired by Lockheed Martin, until April 1997, Mr. Lanza was Executive Vice President of Lockheed Martin, a member of Lockheed Martin's Executive Council and Board of Directors and President and COO of Lockheed Martin's C(3)I and Systems Integration Sector, which comprised many of the businesses acquired by Lockheed Martin from Loral. Prior to the April 1996 acquisition of Loral, Mr. Lanza was President and COO of Loral, a position he held since 1981. He joined Loral in 1972 as President of its largest division, Electronic Systems. His earlier experience was with Dalmo Victor and Philco Western Development Laboratory. Robert V. LaPenta, President and Chief Financial Officer. Mr. LaPenta joined the Company in April 1997. From April 1996, when Loral was acquired by Lockheed Martin, until April 1997, Mr. LaPenta was a Vice President of Lockheed Martin and was Vice President and Chief Financial Officer of Lockheed's C(3)I and Systems Integration Sector. Prior to the April 1996 acquisition of Loral, he was Loral's Senior Vice President and Controller, a position he held since 1981. He joined Loral in 1972 and was named Vice President and Controller of its largest division in 1974. He became Corporate Controller in 1978 and was named Vice President in 1979. Michael T. Strianese, Vice President-Finance and Controller. Mr. Strianese joined the Company in April 1997. From April 1996, when Loral was acquired by Lockheed Martin, until April 1997, Mr. Strianese was Vice President and Controller of Lockheed Martin's C(3)I and Systems Integration Sector. From 1991 to the April 1996 acquisition of Loral, he was Director of Special Projects at Loral. Prior to joining Loral, he spent 11 years with Ernst & Young. Mr. Strianese is a Certified Public Accountant. Christopher C. Cambria, Vice President-General Counsel and Secretary. Mr. Cambria joined the Company in June 1997. From 1994 until joining the Company, Mr. Cambria was an associate with Fried, Frank, Harris, Shriver & Jacobson. From 1986 until 1993, he was an associate with Cravath, Swaine & Moore. 61 Robert F. Mehmel, Vice President-Planning and Assistant Secretary. Mr. Mehmel joined the Company in April 1997. From April 1996, when Loral was acquired by Lockheed Martin, until April 1997, Mr. Mehmel was the Director of Financial Planning and Capital Review for Lockheed Martin's C(3)I and Systems Integration Sector. From 1984 to 1996, Mr. Mehmel held several accounting and financial analysis positions at Loral Electronic Systems and Loral. At the time of Lockheed Martin's acquisition of Loral, he was Corporate Manager of Business Analysis. Lawrence H. Schwartz, Vice President-Business Development. Mr. Schwartz joined the Company in May 1997. From April 1996 until May 1997, Mr. Schwartz was Vice President of Technology for the C(3)I and System Integration Sector of Lockheed Martin. Prior to the April 1996 acquisition of Loral, he was Corporate Vice President of Technology for Loral, a position he held since 1987. Between 1976 and 1987, Mr Schwartz was Vice President of Engineering, Senior Vice President of Business Development, Senior Vice President of the Rapport Program and Senior Vice President of Development Programs at Loral Electronic Systems. Jimmie V. Adams, Vice President-Washington, D.C. Operations. General Jimmie V. Adams (U.S.A.F.-ret.) joined the Company in April 1997. From April 1996 until April 1997, he was Vice President of Lockheed Martin's Washington Operations for the C(3)I and Systems Integration Sector. Prior to the April 1996 acquisition of Loral he held the same position at Loral since 1993. Before joining Loral in 1993, he was Commander in Chief, Pacific Air Forces, Hickam Air Force Base, Hawaii, capping a 35-year career with the U.S. Air Force. He was also Deputy Chief of Staff for plans and operation for U.S. Air Force headquarters and Vice Commander of Headquarters Tactical Air Command and Vice Commander in Chief of the U.S. Air Forces Atlantic at Langley Air Force Base. He is a command pilot with more than 141 combat missions. Robert RisCassi, Vice President-Washington, D.C. Operations. General Robert W. RisCassi (U.S. Army-ret.) joined the Company in April 1997. From April 1996 until April 1997, he was Vice President of Land Systems for Lockheed Martin's C(3)I and Systems Integration Sector. Prior to the April 1996 acquisition of Loral he held the same position for Loral since 1993. He joined Loral in 1993 after retiring as U.S. Army Commander in Chief, United Nations Command/Korea. His 35-year military career included posts as Army Vice Chief of Staff; Director, Joint Staff, Joint Chiefs of Staff; Deputy Chief of Staff for Operations and Plans; and Commander of the Combined Arms Center. David J. Brand, Director. Mr. Brand has served as a director since April 1997 and is a Managing Director of Lehman Brothers and a principal in the Global Mergers & Acquisitions Group, leading Lehman Brothers' Technology Mergers and Acquisitions business. Mr. Brand joined Lehman Brothers in 1987 and has been responsible for merger and corporate finance advisory services for many of Lehman Brothers' technology and defense industry clients. Mr. Brand is currently a director of K&F Industries, Inc. Mr. Brand holds an M.B.A. from Stanford University's Graduate School of Business and a B.S. in Mechanical Engineering from Boston University. Alberto M. Finali, Director. Mr. Finali has served as a director since April 1997 and is a Managing Director of Lehman Brothers and principal of the Merchant Banking Group, based in New York. Prior to joining the Merchant Banking Group, Mr. Finali spent four years in Lehman Brothers' London office as a senior member of the M&A Group. Mr. Finali joined Lehman Brothers in 1987 as a member of the M&A Group in New York and became a Managing Director in 1997. Prior to joining Lehman Brothers, Mr. Finali worked in the Pipelines and Production Technology Group of Bechtel, Inc. in San Francisco. Mr. Finali holds an M.E. and an M.B.A. from the University of California at Berkeley, and a Laurea Degree in Civil Engineering from the Polytechnic School in Milan, Italy. Eliot M. Fried, Director. Mr. Fried has served as a director since April 1997 and is a Managing Director of Lehman Brothers. Mr. Fried joined Shearson, Hayden Stone, a predecessor firm, in 1976 and became a Managing Director in 1982. Mr. Fried has extensive experience in portfolio management and equity research. Mr. Fried is currently a director of Bridgeport Machines, Inc., Energy Ventures, Inc., SunSource L.P., Vernitron Corporation and Walter Industries, Inc. Mr. Fried holds an M.B.A. from Columbia University and a B.A. from Hobart College. 62 Robert B. Millard, Director. Mr. Millard has served as a director since April 1997 and is a Managing Director of Lehman Brothers, Head of Lehman Brothers' Principal Trading & Investments Group and principal of the Merchant Banking Group. Mr. Millard joined Kuhn Loeb & Co. in 1976 and became a Managing Director of Lehman Brothers in 1983. Mr. Millard is currently a director of GulfMark International, Inc. and Energy Ventures, Inc. Mr. Millard holds an M.B.A. from Harvard University and a B.S. from the Massachusetts Institute of Technology. Alan H. Washkowitz, Director. Mr. Washkowitz has served as a director since April 1997 and is a Managing Director of Lehman Brothers and head of the Merchant Banking Group, and is responsible for the oversight of Lehman Brothers Merchant Banking Portfolio Partnership L.P. Mr. Washkowitz joined Lehman Brothers in 1978 when Kuhn Loeb & Co. was acquired by Lehman Brothers. Mr. Washkowitz is currently a director of Illinois Central Corporation, K&F Industries, Inc. and McBride plc. Mr. Washkowitz holds an M.B.A. from Harvard University, a J.D. from Columbia University and an A.B. from Brooklyn College. Thomas A. Corcoran, Director. Mr. Corcoran has served as a director since July 1997 and has been the President and Chief Operating Officer of the Electronic Systems Sector of Lockheed Martin Corporation since March 1995. From 1993 to 1995, Mr. Corcoran was President of the Electronics Group of Martin Marietta Corporation. Prior to that he worked for General Electric for 26 years and from 1983 to 1993 he held various management positions with GE Aerospace; he was a company officer from 1990 to 1993. Mr. Corcoran is a member of the Board of Trustees of Worcester Polytechnic Institute, the Board of Trustees of Stevens Institute of Technology, the Board of Governors of the Electronic Industries Association, a Director of the U.S. Navy Submarine League and a Director of REMEC Corporation. Frank H. Menaker, Jr., Director. Mr. Menaker has served as a director since April 1997 and has served as Senior Vice President and General Counsel of Lockheed Martin since July 1996. He served as Vice President and General Counsel of Lockheed Martin from March 1995 to July 1996, as Vice President of Martin Marietta Corporation from 1982 until 1995 and as General Counsel of Martin Marietta Corporation from 1981 until 1995. He is a director of Martin Marietta Materials, Inc., a member of the American Bar Association and has been admitted to practice before the United States Supreme Court. Mr. Menaker is a graduate of Wilkes University and the Washington College of Law at American University. John E. Montague, Director. Mr. Montague has served as a director since April 1997 and has been Vice President, Financial Strategies at Lockheed Martin responsible for mergers, acquisitions and divestiture activities and shareholder value strategies since March 1995. Previously, he was Vice President, Corporate Development and Investor Relations at Martin Marietta Corporation from 1991 to 1995. From 1988 to 1991, he was Director of Corporate Development at Martin Marietta Corporation, which he joined in 1977 as a member of the engineering staff. Mr. Montague is a director of Rational Software Corporation. Mr. Montague received his B.S. from the Georgia Institute of Technology and an M.S. in engineering from the University of Colorado. The Board of Directors intends to appoint two additional directors who are not affiliated with the Company promptly following the Common Stock Offering. The additional directors have not yet been identified. Upon closing of the Common Stock Offering, the Company's certificate of incorporation will provide for a classified Board of Directors divided into three classes. Class I will expire at the annual meeting of the stockholders to be held in 1999; Class II will expire at the annual meeting of the stockholders to be held in 2000; and Class III will expire at the annual meeting of the stockholders to be held in 2001. At each annual meeting of the stockholders, beginning with the 1999 annual meeting, the successors to directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following election and until their successors have been duly elected and qualified, or until their earlier resignation or removal, if any. To the extent there is an increase or reduction in the number of directors, increase or decrease in directorships resulting therefrom will be distributed among the three classes so that, as nearly as possible, each class will consist of an equal number of directors. 63 Each executive officer and key employee serves at the discretion of the Board of Directors. COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors has two standing committees: an Audit Committee and a Compensation Committee. Currently, the Audit Committee consists of Messrs. Brand, Fried and Menaker. The Company intends to appoint to the Audit Committee only persons who qualify as an "independent" director for purposes of the rules and regulations of the NYSE. The Audit Committee will select and engage, on behalf of the Company, the independent public accountants to audit the Company's annual financial statements, and will review and approve the planned scope of the annual audit. Currently, Messrs. Millard, Montague and Washkowitz serve as members of the Compensation Committee. The Compensation Committee establishes remuneration levels for certain officers of the Company, performs such functions as provided under the Company's employee benefit programs and executive compensation programs and administers the 1997 Option Plan of Key Employees of Holdings. COMPENSATION OF DIRECTORS The current directors of the Company do not receive compensation for their services as directors. Any non-affiliated directors will receive directors' fees and reimbursements for their reasonable out-of-pocket expenses in connection with their travel to and attendance at meetings of the board of directors or committees thereof. LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS The Company's Certificate of Incorporation provides that to the fullest extent permitted by the Delaware General Corporation Law (the "DGCL"), a director of the Company shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. Under the DGCL, liability of a director may not be limited (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) in respect of certain unlawful dividend payments or stock redemptions or repurchases and (iv) for any transaction from which the director derives an improper personal benefit. The effect of the provisions of the Company's Certificate of Incorporation is to eliminate the rights of the Company and its stockholders (through stockholders' derivative suits on behalf of the Company) to recover monetary damages against a director for breach of the fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior), except in the situations described in clauses (i) through (iv) above. This provision does not limit or eliminate the rights of the Company or any stockholder to seek nonmonetary relief such as an injunction or rescission in the event of a breach of a director's duty of care. In addition, the Company's Bylaws provide that the Company shall indemnify its directors, officers, employees and agents against losses incurred by any such person by reason of the fact that such person was acting in such capacity. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 64 EXECUTIVE COMPENSATION Summary Compensation Table. The following table provides certain summary information concerning compensation paid or accrued by the Company to or on behalf of the Company's Chief Executive Officer and each of the four other most highly compensated executive officers of the Company (the "Named Executive Officers") during the nine months ended December 31, 1997: SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS ------------------------------- ANNUAL COMPENSATION SECURITIES --------------------- RESTRICTED UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION SALARY BONUS STOCK AWARDS STOCK OPTIONS COMPENSATION(1) - -------------------------------------------- ---------- --------- -------------- --------------- --------------- Frank C. Lanza (Chairman and Chief Executive Officer)(2)................................ $542,654 -- 1,142,857 -- Robert V. LaPenta (President and Chief Financial Officer)(2)...................... 356,538 -- 1,142,857 -- Lawrence H. Schwartz (Vice President)....... 145,327 $80,000 17,000 -- Jimmie V. Adams (Vice President)............ 157,854 70,000 15,000 $ 61 Robert RisCassi (Vice President)............ 125,704 60,000 15,000 611
- ------------ (1) Represents Company match under savings plan. (2) On March 2, 1998, each of Mr. Lanza and Mr. LaPenta exercised 228,571 options. Stock Options Granted in 1997. The following table sets forth information concerning individual grants of stock options to purchase Holdings' Common Stock made in 1997 to each of the Named Executive Officers. OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS ------------------------------------------------------------------------ NUMBER OF PERCENT OF SECURITIES TOTAL OPTIONS UNDERLYING GRANTED TO EXERCISE OPTIONS EMPLOYEES IN PRICE EXPIRATION GRANT-DATE NAME AND PRINCIPAL POSITION GRANTED (#) FISCAL YEAR ($/SH) DATE VALUE(1) - -------------------------------------- -------------- --------------- ---------- -------------- ------------ Frank C. Lanza (Chairman and Chief Executive Officer).................... 1,142,857(2) 38.2% $6.47 April 30, 2007 $2,326,731 Robert V. LaPenta (President and Chief Financial Officer) ................... 1,142,857(2) 38.2% $6.47 April 30, 2007 $2,326,731 Lawrence H. Schwartz (Vice President) 17,000 0.6% $6.47 July 1, 2007 $ 17,571 Jimmie V. Adams (Vice President) ...... 15,000 0.5% $6.47 July 1, 2007 $ 15,504 Robert RisCassi (Vice President) ...... 15,000 0.5% $6.47 July 1, 2007 $ 15,504
- ------------ (1) The grant-date valuation of the options was calculated using the minimum value method described in SFAS No. 123. The minimum value is computed as the current price of stock at the grant date reduced to exclude the present value of any expected dividends during the option's expected life minus the present value of the exercise price, and does not consider the expected volatility of the price of the stock underlying the option. The material assumptions underlying the computations are: an average discount rate 6.3%; a dividend yield of 0% and a weighted average expected option life of 5.49 years, with the option lives ranging from 2 years to 10 years. (2) Half of the options granted consists of Time Options and half consists of Performance Options. See "--Employment Agreements" for descriptions of the terms of these options. 65 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
VALUE OF NUMBER OF UNEXERCISED SECURITIES UNDERLYING IN-THE-MONEY UNEXERCISED OPTIONS OPTIONS AT SHARES VALUE AT FY-END(1) FY-END(2) ACQUIRED ON REALIZED ------------------------------ ------------------------------ NAME AND PRINCIPAL POSITION EXERCISES (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - -------------------------------- ------------- ---------- ------------- --------------- ------------- --------------- Frank C. Lanza (Chairman and Chief Executive Officer)(3) .... -- -- -- 1,142,857 -- $1,748,571 Robert V. LaPenta (President and Chief Financial Officer)(3) .... -- -- -- 1,142,857 -- 1,748,571 Lawrence H. Schwartz (Vice President)...................... -- -- -- 17,000 -- 26,010 Jimmie V. Adams (Vice President)...................... -- -- -- 15,000 -- 22,950 Robert RisCassi (Vice President)...................... -- -- -- 15,000 -- 22,950
[FN] - ------------ (1) At December 31, 1997, none of the outstanding options were exercised. (2) The fair value of Holdings' Common Stock was estimated by the Company using an independent appraisal of such Common Stock performed as of January 31, 1998. (3) On March 2, 1998, each of Mr. Lanza and Mr. LaPenta exercised 228,571 options. PENSION PLAN The following table shows the estimated annual pension benefits payable under the L-3 Communications Corporation Pension Plan and Supplemental Employee Retirement Plan to a covered participant upon retirement at normal retirement age, based on the career average compensation (salary and bonus) and years of credited service with the Company.
CAREER AVERAGE COMPENSATION YEARS OF CREDITED SERVICE - --------------------------- ---------------------------------------------------- 15 20 25 30 35 --------- --------- --------- --------- --------- $125,000.................... $ 18,981 $ 24,937 $ 29,833 $ 33,856 $ 37,164 150,000.................... 23,172 30,408 36,355 41,243 45,260 175,000.................... 27,364 35,879 42,877 48,629 53,357 200,000.................... 31,556 41,349 49,399 56,015 61,454 225,000.................... 35,747 46,820 55,921 63,402 69,550 250,000.................... 39,939 52,291 62,444 70,788 77,647 300,000.................... 48,322 63,233 75,488 85,561 93,840 400,000.................... 65,089 85,116 101,577 115,106 126,226 450,000.................... 73,472 96,057 114,621 129,879 142,420 500,000.................... 81,855 106,999 127,665 144,651 158,613 750,000.................... 123,772 161,707 192,887 218,515 239,579
As of December 31, 1997, the current annual compensation and current years of credited service (including for Messrs. LaPenta, Adams and RisCassi, years of credited service as an employee of Loral and Lockheed Martin) for each of the following persons were: Mr. Lanza, $750,000 and one year; Mr. LaPenta, $500,000 and 26 years; Mr. Adams, $216,011 and 5 years; Mr. RisCassi, $172,016 and 4 years; and Mr. Schwartz, $229,000 and one year. Compensation covered under the pension plans includes amounts reported as salary and bonus in the Summary Compensation Table. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Board of Directors of Holdings established a Compensation Committee in June 1997. During the last fiscal year, Messrs. Robert Millard, Steven Berger and John Montague served as members of the Compensation Committee. None of these individuals has served at any time as an officer or employee of 66 Holdings or L-3 Communications. Mr. Berger resigned from Holdings' Board of Directors and the Compensation Committee in January 1998 and Mr. Washkowitz was appointed to the Compensation Committee in March 1998. Prior to the establishment of the Compensation Committee, all decisions relating to executive compensation were made by Holdings' Board of Directors. Messrs. Millard and Montague are affiliated with the Lehman Partnership which, assuming the consummation of the Common Stock Offering and full exercise of the over-allotment option, holds 37.4% of the Common Stock and is a party to the Stockholders Agreement. Pursuant to the Stockholders Agreement, the Lehman Partnership has the right, from time to time on or after the 180-day period following that completion of the initial public offering and subject to certain conditions, to require the Company to register under the Securities Act shares of Common Stock held by them. The Lehman Partnership has the right to request up to four demand registrations and also has piggyback registration rights. The Company has agreed in the Stockholders Agreement to pay expenses in connection with, among other things, (i) up to three demand registrations requested by the Lehman Partnership and (ii) any registration in which the existing stockholders participate through piggyback registration rights granted under such agreement. The Stockholders Agreement also provides that Lehman Brothers Inc. has the exclusive right to provide investment banking services to Holdings for the five-year period after the closing of the L-3 Acquisition (except that the exclusivity period is three years as to cash acquisitions undertaken by L-3) so long as the Lehman Partnership owns at least 10% of the outstanding Common Stock. In the event that Lehman Brothers Inc. agrees to provide any investment banking services to L-3, it will be paid fees that are mutually agreed upon based on similar transactions and practices in the investment banking industry. No executive officer of Holdings or L-3 Communications serves as a member of the board of directors or compensation committee of any entity which has one or more executive officers serving as a member of Holdings' Board of Directors or Compensation Committee. 1997 STOCK OPTION PLAN In April 1997, Holdings adopted the 1997 Option Plan for Key Employees of Holdings (the "1997 Stock Option Plan") which authorizes the Compensation Committee to grant options to key employees of Holdings and its subsidiaries. On March 10, 1998, the 1997 Stock Option Plan was amended to increase the shares available for option grants to 4,255,815 shares of Common Stock, of which 3,246,084 had been granted as of March 31, 1998. The Compensation Committee of the Board of Directors of Holdings, in its sole discretion, determines the terms of option agreements, including without limitation the treatment of option grants in the event of a change of control. The 1997 Stock Option Plan remains in effect for 10 years following the date of approval. On April 30, 1997, Holdings granted each of Messrs. Lanza and LaPenta options to purchase 1,142,857 shares of Common Stock. See "--Employment Agreements" for a description of the terms of these grants. On July 1, 1997 and November 11, 1997, the Compensation Committee authorized grants of options to employees of Holdings and its subsidiaries, other than Messrs. Lanza and LaPenta, to acquire an aggregate of 689,500 shares of Common Stock at an exercise price of $6.47 per share (the "Employee Options"). Each Employee Option was granted pursuant to an individual agreement that provides (i) 20% of shares underlying the option will become exercisable on the first anniversary of the grant date, 50% will become exercisable on the second anniversary of the grant date and 30% will become exercisable on the third anniversary of the grant date; provided that, in the event of an initial public offering of Common Stock, 15% of the shares underlying the option (which would otherwise become exercisable on the second anniversary of the grant date) will become exercisable on the earlier to occur of (A) the completion of the initial public offering of the Common Stock and (B) the first anniversary of the grant date; (ii) all shares underlying the option will become exercisable upon certain events constituting a change of control; and (iii) the option will expire upon the earliest to occur of (A) the tenth anniversary of the grant date, (B) one year after termination of employment due to the optionee's death or permanent disability, (C) immediately upon termination of the optionee's employment for cause and (D) three months after termination of optionee's employment for any other reason. On March 2, 1998, each of Mr. Lanza and Mr. LaPenta exercised options to acquire 228,571 shares of Common Stock. 67 EMPLOYMENT AGREEMENTS Holdings entered into an employment agreement (the "Employment Agreements") effective on April 30, 1997 with each of Mr. Lanza, Chairman and Chief Executive Officer of Holdings and L-3 Communications, who will receive a base salary of $750,000 per annum and appropriate executive level benefits, and Mr. LaPenta, President and Chief Financial Officer of Holdings and L-3 Communications, who will receive a base salary of $500,000 per annum and appropriate executive level benefits. The Employment Agreements provide for an initial term of five years, which will automatically renew for one-year periods thereafter, unless a party thereto gives notice of its intent to terminate at least 90 days prior to the expiration of the term. Upon a termination without cause or resignation for good reason, Holdings will be obligated, through the end of the term, to (i) continue to pay the base salary and (ii) continue to provide life insurance and medical and hospitalization benefits comparable to those provided to other senior executives; provided, however, that any such coverage shall terminate to the extent that Mr. Lanza or Mr. LaPenta, as the case may be, is offered or obtains comparable benefits coverage from any other employer. The Employment Agreements provide for confidentiality during employment and at all times thereafter. There is also a noncompetition and non-solicitation covenant which is effective during the employment term and for one year thereafter; provided, however, that if the employment terminates following the expiration of the initial term, the noncompetition covenant will only be effective during the period, if any, that Holdings pays the severance described above. Holdings has granted each of Messrs. Lanza and LaPenta (collectively, the "Equity Executives") nonqualified options to purchase, at $6.47 per share of Common Stock, 1,142,857 shares of Holdings' initial fully-diluted common stock. In each case, half of the options will be "Time Options" and half will be "Performance Options" (collectively, the "Options"). The Time Options will become exercisable with respect to 20% of the shares subject to the Time Options on March 2, 1998 and each of the second through fifth anniversaries of the closing of the L-3 Acquisition (the "Closing") if employment continues through and including such date. The Performance Options will become exercisable nine years after the Closing, but will become exercisable earlier with respect to up to 20% of the shares subject to the Performance Options on March 2, 1998 and each of the second through fifth anniversaries of the Closing, to the extent certain EBITDA targets are achieved. The Options will become fully exercisable under certain circumstances, including a change in control. The Option term is ten years from the Closing; except that (i) if the Equity Executive is fired for cause or resigns without good reason, the Options expire upon termination of employment; (ii) if the Equity Executive is fired without cause, resigns for good reason, dies, becomes disabled or retires, the Options expire one year after termination of employment. Unexercisable Options will terminate upon termination of employment, unless acceleration is expressly provided for. Upon a change of control, Holdings may terminate the Options, so long as the Equity Executives are cashed out or permitted to exercise their Options prior to such change of control. 68 OWNERSHIP OF CAPITAL STOCK All outstanding capital stock of L-3 Communications is owned by Holdings. Following the consummation of the Common Stock Offering, the existing 2,944,000 shares of Class B Common Stock of Holdings will convert to Common Stock. Assuming such conversion, as of March 31, 1998, there were 20,457,142 shares of Common Stock outstanding. The following table sets forth certain information regarding the beneficial ownership of the shares of the Common Stock of Holdings, as of March 31, 1998, by each person who beneficially owns more than five percent of the outstanding shares of Common Stock of Holdings and by the directors and certain executive officers of Holdings, individually and as a group.
PERCENTAGE OWNERSHIP ------------------------------ BEFORE AFTER COMMON STOCK COMMON STOCK NAME OF BENEFICIAL OWNER COMMON STOCK OFFERING OFFERING(1) - ----------------------------------------------------------- -------------- -------------- -------------- Lehman Brothers Capital Partners III, L.P. and affiliates(2) c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 .................................. 10,020,000 49.0% 38.6% Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817-1877.............................. 6,800,000 33.2 26.2 Frank C. Lanza c/o L-3 Communications Holdings, Inc. 600 Third Avenue, 34th Floor New York, New York 10016 .................................. 1,700,571 8.3 6.6 Robert V. LaPenta c/o L-3 Communications Holdings, Inc. 600 Third Avenue, 34th Floor New York, New York 10016 .................................. 1,700,571 8.3 6.6 All directors and executive officers as group (23 persons) . 3,637,142 17.8 14.0
- ------------ (1) Assumes no exercise of the over-allotment option by the Underwriters. (2) David J. Brand, Alberto M. Finali, Eliot M. Fried, Robert B. Millard and Alan H. Washkowitz, each of whom is director of the Company, are each Managing Directors of Lehman Brothers Inc. As limited partners of Lehman Brothers Capital Partners III, L.P. or other affiliated partnerships sponsored by Lehman Brothers, all such individuals may be deemed to have shared beneficial ownership of shares of Common Stock held by Lehman Brothers Capital Partners III, L.P. and such affiliated partnerships. Such individuals disclaim any such beneficial ownership. 69 DESCRIPTION OF CERTAIN INDEBTEDNESS SENIOR CREDIT FACILITIES The Senior Credit Facilities have been provided by a syndicate of banks and other financial institutions led by Lehman Commercial Paper Inc., as Arranger and Syndication Agent. The Senior Credit Facilities provide for $175.0 million in term loans (the "Term Loan Facilities") and for $200.0 million in revolving credit loans (the "Revolving Credit Facility" and, together with the Term Loan Facilities, the "Senior Credit Facilities"). The Revolving Credit Facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice (the "Swingline Loans"). The Term Loans, originally funded on April 30, 1997, comprised of a Tranche A Term Loan ($100.0 million), which had an initial maturity of six years, a Tranche B Term Loan ($45.0 million), which had an initial maturity of eight years, and a Tranche C Term Loan ($30.0 million), which had an initial maturity of nine years. The Revolving Loan Termination Date (as defined therein) is March 31, 2003. All borrowings under the Senior Credit Facilities bear interest, at L-3 Communications' option, at either: (A) a "base rate" equal to, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America NT&SA, as Administrative Agent, in San Francisco, California, as its "reference rate" plus (i) in the case of the Tranche A Term Loan, the Revolving Credit Facility and the Swingline Loans, a debt to EBITDA-dependent rate ranging from 0.50% to 1.25% per annum, (ii) in the case of the Tranche B Term Loan, a rate of 1.50% per annum or (iii) in the case of the Tranche C Term Loan, a rate of 1.75% per annum or (B) a "LIBOR rate" equal to, for any Interest Period (as defined in the Senior Credit Facilities), with respect to LIBOR Loans comprising part of the same borrowing, the London interbank offered rate of interest per annum for such Interest Period as determined by the Administrative Agent, plus (i) in the case of the Tranche A Term Loan and the Revolving Credit Facility, a debt to EBITDA-dependent rate ranging from 1.50% to 2.25% per annum, (ii) in the case of the Tranche B Term Loan, a rate of 2.50% per annum or (iii) in the case of the Tranche C Term Loan, a rate of 2.75% per annum. L-3 Communications will pay a commitment fee calculated at a debt to EBITDA-dependent rate ranging from 0.375% to 0.50% per annum of the available unused commitment under the Revolving Credit Facility, in each case in effect on each day. Such fee will be payable quarterly in arrears and upon termination of the Revolving Credit Facility. L-3 Communications will pay a letter of credit fee calculated at a debt to EBITDA-dependent rate ranging from 1.50% to 2.25% per annum of the face amount of each letter of credit and a fronting fee calculated at a rate equal to 0.125% per annum of the face amount of each letter of credit. Such fees will be payable quarterly in arrears and upon the termination of the Revolving Credit Facility. In addition, L-3 Communications will pay customary transaction charges in connection with any letters of credit. The foregoing debt to EBITDA-dependent rates range from the low rate specified if the ratio of debt to EBITDA is less than 3.75 to 1.0 to the high rate specified if such ratio is at least equal to 4.75 to 1.0. The Term Loans are subject to the following amortization schedule:
TRANCHE A TERM LOAN TRANCHE B TERM LOAN TRANCHE C TERM LOAN ------------------- ------------------- ------------------- Year 1 ............... $ 4,000,000 $ 500,000 $ 500,000 Year 2 ............... 5,000,000 500,000 500,000 Year 3 ............... 15,000,000 500,000 500,000 Year 4 ............... 21,000,000 500,000 500,000 Year 5 ............... 27,000,000 500,000 500,000 Year 6 ............... 28,000,000 500,000 500,000 Year 7 ............... -- 20,000,000 500,000 Year 8 ............... -- 22,000,000 500,000 Year 9 ............... -- -- 26,000,000
70 Borrowings under the Senior Credit Facilities are subject to mandatory prepayment (i) with the net proceeds of any incurrence of indebtedness with certain exceptions to be agreed, (ii) with the proceeds of certain asset sales and (iii) on an annual basis with (A) 75% of the Company's excess cash flow (as defined in the Senior Credit Facilities) if the ratio of the Company's debt to EBITDA is greater than 3.5 to 1.0 or (B) 50% of such excess cash flow if the ratio is less than 3.5 to 1.0. L-3 Communications' obligations under the Senior Credit Facilities are secured by a lien on substantially all of the tangible and intangible assets of the Company, including: (i) a pledge by Holdings of the stock of L-3 Communications and (ii) a pledge by L-3 Communications and its direct and indirect subsidiaries of all of the stock of their respective domestic subsidiaries and 65% of the stock of L-3 Communications' first-tier foreign subsidiaries. In addition, indebtedness under the Senior Credit Facilities is guaranteed by Holdings and by all of L-3 Communications' direct and indirect domestic subsidiaries. The Senior Credit Facilities contain customary covenants and restrictions on L-3 Communications' ability to engage in certain activities. In addition, the Senior Credit Facilities provide that L-3 Communications must meet or exceed certain interest coverage ratios and must not exceed a leverage ratio. The Senior Credit Facilities also include customary events of default. 10 3/8% SENIOR SUBORDINATED NOTES DUE 2007 L-3 Communications has outstanding $225.0 million in aggregate principal amount of its 10 3/8% Senior Subordinated Notes due 2007 (the "1997 Notes"). The 1997 Notes are subject to the terms and conditions of an Indenture (the "1997 Indenture") dated as of April 30, 1997 between L-3 Communications and The Bank of New York, as trustee, a copy of which was filed as an exhibit to L-3 Communications' Registration Statement on Form S-4 relating to the 1997 Notes. The 1997 Notes are subject to all of the terms and conditions of the 1997 Indenture. The following summary of the material provisions of the 1997 Indenture does not purport to be complete, and is subject to, and qualified in its entirety by reference to, all of the provisions of the 1997 Indenture and those terms made a part of the 1997 Indenture by the Trust Indenture Act of 1939, as amended. All terms defined in the 1997 Indenture and not otherwise defined herein are used below with the meanings set forth in the 1997 Indenture. General. The 1997 Notes will mature on May 1, 2007 and bear interest at 10 3/8% per annum, payable semi-annually on May 1 and November 1 of each year. The 1997 Notes are general unsecured obligations of L-3 Communications and are subordinated in right of payment to all existing and future Senior Debt of L-3 Communications and rank pari passu with the Notes. The 1997 Notes will be unconditionally guaranteed, on an unsecured senior subordinated basis, jointly and severally, by all of L-3 Communications' future Restricted Subsidiaries other than Foreign Subsidiaries. Optional Redemption. The 1997 Notes are subject to redemption at any time, at the option of L-3 Communications, in whole or in part, on or after May 1, 2002 at redemption prices (plus accrued and unpaid interest) starting at 105.188% of principal (plus accrued and unpaid interest) during the 12-month period beginning May 1, 2002 and declining annually to 100% of principal (plus accrued and unpaid interest) on May 1, 2005 and thereafter. In addition, prior to May 1, 2000, L-3 Communications may redeem up to 35% of the aggregate principal amount of the 1997 Notes with the net proceeds of one or more Equity Offerings (as defined in the Indentures), to the extent such proceeds are contributed (within 120 days of any such offering) to L-3 Communications as common equity, at a price equal to 109.375% of the principal (plus accrued and unpaid interest) provided that at least 65% of the original aggregate principal amount of the 1997 Notes remains outstanding thereafter. Change of Control. Upon the occurrence of a Change of Control, each holder of the 1997 Notes may require L-3 Communications to repurchase all or a portion of such holder's 1997 Notes at a purchase price equal to 101% of the principal amount thereof (plus accrued and unpaid interest). Generally, a Change of Control means the occurrence of any of the following: (i) the disposition of all or substantially all of L-3 Communications' assets to any person, (ii) the adoption of a plan relating to the liquidation or dissolution of L-3 Communications, (iii) the consummation of any transaction in which a person other 71 than the Principals and their Related Parties becomes the beneficial owner of more than 50% of the voting stock of L-3 Communications, or (iv) the first day on which a majority of the members of the Board of Directors of L-3 Communications are not Continuing Directors. Subordination. The 1997 Notes are general unsecured obligations of L-3 Communications and are subordinate to all existing and future Senior Debt of L-3 Communications. The 1997 Notes will rank senior in right of payment to all subordinated Indebtedness of L-3 Communications. Any Subsidiary Guarantees would be general unsecured obligations of the Guarantors and are subordinated to the Senior Debt and to the guarantees of Senior Debt of such Guarantors. The Subsidiary Guarantees rank senior in right of payment to all subordinated Indebtedness of the Guarantors. Certain Covenants. The 1997 Indenture contains a number of covenants restricting the operations of L-3 Communications, which, among other things, limit the ability of L-3 Communications to incur additional Indebtedness, pay dividends or make distributions, sell assets, issue subsidiary stock, restrict distributions from Subsidiaries, create certain liens, enter into certain consolidations or mergers and enter into certain transactions with affiliates. Events of Default. Events of Default under the 1997 Indenture include the following: (i) a default for 30 days in the payment when due of interest on the 1997 Notes; (ii) default in payment when due of the principal of or premium, if any, on the 1997 Notes; (iii) failure by L-3 Communications to comply with certain provisions of the 1997 Indenture (subject, in some but not all cases, to notice and cure periods); (iv) default under Indebtedness for money borrowed by L-3 Communications or any of its Restricted Subsidiaries in excess of $10.0 million; (v) failure by L-3 Communications or any Restricted Subsidiary that would be a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vi) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee; or (vii) certain events of bankruptcy or insolvency with respect to L-3 Communications or any of its Restricted Subsidiaries. Upon the occurrence of an Event of Default, with certain exceptions, the Trustee or the holders of at least 25% in principal amount of the then outstanding 1997 Notes may accelerate the maturity of all the 1997 Notes as provided in the 1997 Indenture. 72 DESCRIPTION OF THE NOTES GENERAL The Notes will be issued under an indenture dated as of , 1998 (the "Indenture") between the Company, as issuer, and The Bank of New York, as trustee (the "Trustee"). The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes are subject to all such terms, and holders of the Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Indenture describes the material terms of the Indenture but does not purport to be complete and is subject to, and qualified in its entirety by reference to, the provisions of the Indenture, including the definitions of certain terms contained therein and those terms made part of the Indenture by reference to the Trust Indenture Act. For definitions of certain capitalized terms used in the following summary, see "--Certain Definitions". For purposes of this summary, the term "Company" refers only to L-3 Communications Corporation and not to any of its Subsidiaries. The Notes will be general unsecured obligations of the Company and will rank pari passu in right of payment with the 1997 Notes and will be subordinated in right of payment to all current and future Senior Debt. At March 31, 1998, on a pro forma basis giving effect to the 1998 Acquisitions and the Offerings, the Company would have had Senior Debt of approximately $36.9 million outstanding (excluding letters of credit). The Indenture will permit the incurrence of additional Senior Debt in the future. See "--Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock". The Indenture will provide that the Company's payment obligations under the Notes will be jointly and severally guaranteed (the "Subsidiary Guarantees") by all of the Company's present and future Restricted Subsidiaries, other than Foreign Subsidiaries (collectively, the "Guarantors"). The Subsidiary Guarantee of each Guarantor will be subordinated to the prior payment in full of all Senior Debt of such Guarantor, which would include the guarantees of amounts borrowed under the Senior Credit Facilities. PRINCIPAL, MATURITY AND INTEREST The Notes will be limited in aggregate principal amount to $250.0 million, of which $150.0 million will be issued in the Notes Offering. The Notes will mature on , 2008. Interest on the Notes will accrue at the rate of % per annum and will be payable semi-annually in arrears on and , commencing on , 1998, to Holders of record on the immediately preceding and . Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium, if any, and interest on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments of principal, premium and interest with respect to Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof if such Holders shall be registered Holders of at least $250,000 in principal amount of Notes. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The Notes will be issued in denominations of $1,000 and integral multiples thereof. OPTIONAL REDEMPTION The Notes will not be redeemable at the Company's option prior to , 2003. Thereafter, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages 73 of principal amount) set forth below plus accrued and unpaid interest to the applicable redemption date, if redeemed during the twelve-month period beginning on of the years indicated below:
YEAR PERCENTAGE - ------------------------ -------------- 2003 .................... % 2004 .................... % 2005 .................... % 2006 and thereafter .... 100.000%
Notwithstanding the foregoing, during the first 36 months after the Issue Date, the Company may on any one or more occasions redeem up to an aggregate of 35% of the Notes originally issued at a redemption price of % of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Company or the net cash proceeds of one or more Equity Offerings by Holdings that are contributed to the Company as common equity capital; provided that at least 65% of the Notes originally issued remain outstanding immediately after the occurrence of each such redemption; and provided, further, that any such redemption must occur within 120 days of the date of the closing of such Equity Offering. SUBORDINATION The payment of principal of, premium, if any, and interest on the Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full of all Senior Debt, whether outstanding on the Issue Date or thereafter incurred. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt, whether or not an allowable claim in any such proceeding) before the Holders of Notes will be entitled to receive any payment with respect to the Notes, and until all Obligations with respect to Senior Debt are paid in full, any distribution to which the Holders of Notes would be entitled shall be made to the holders of Senior Debt (except, in each case, that Holders of Notes may receive Permitted Junior Securities and payments made from the trust described under "--Legal Defeasance and Covenant Defeasance"). The Company also may not make any payment upon or in respect of the Notes (except from the trust described under "--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Debt occurs and is continuing or (ii) any other default occurs and is continuing with respect to Designated Senior Debt that permits holders of the Designated Senior Debt as to which such default relates to accelerate its maturity (or that would permit such holders to accelerate with the giving of notice or the passage of time or both) and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Company or the holders of any Designated Senior Debt. Payments on the Notes may and shall be resumed (A) in the case of a payment default, upon the date on which such default is cured or waived and (B) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated. No new period of payment blockage may be commenced unless and until (i) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest on the Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Indenture further requires that the Company promptly notify holders of Senior Debt if payment of the Notes is accelerated because of an Event of Default. 74 As a result of the subordination provisions described above, in the event of a liquidation or insolvency, Holders of Notes may recover less ratably than creditors of the Company who are holders of Senior Debt. On a pro forma basis, after giving effect to the Offerings and the 1998 Acquisitions, the principal amount of Senior Debt outstanding (excluding letters of credit) at March 31, 1998 would have been approximately $36.9 million. SELECTION AND NOTICE If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. MANDATORY REDEMPTION Except as set forth below under "--Repurchase at the Option of Holders", the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Indenture will provide that, prior to mailing a Change of Control Offer, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Debt or offer to repay all Senior Debt and terminate all commitments thereunder of each lender who has accepted such 75 offer or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. The Senior Credit Facilities will prohibit the Company from purchasing any Notes, and also provides that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company's failure to purchase tendered Notes would constitute an Event of Default under the Indenture and 1997 Indenture which would, in turn, constitute a default under the Senior Credit Facilities. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes. See "Risk Factors -- Change of Control". Finally, the Company's ability to pay cash to the holders of Notes upon a purchase may be limited by the Company's then-existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. Even if sufficient funds were otherwise available, the terms of the Senior Credit Facilities will prohibit, subject to certain exceptions, the Company's prepayment of Notes prior to their scheduled maturity. Consequently, if the Company is not able to prepay indebtedness outstanding under the Senior Credit Facilities and any other Senior Indebtedness containing similar restrictions or obtain requisite consents, the Company will be unable to fulfill its repurchase obligations if holders of Notes exercise their purchase rights following a Change of Control, thereby resulting in a default under the Indenture and 1997 Indenture. Furthermore, the Change of Control provisions of the Indenture and 1997 Indenture may in certain circumstances make more difficult or discourage a takeover of the Company. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Principals or their Related Parties (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the Issue Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. 76 "Principals" means any Lehman Investor, Lockheed Martin Corporation, Frank C. Lanza and Robert V. LaPenta. "Related Party" with respect to any Principal means (i) any controlling stockholder, 50% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (ii) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a more than 50% controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (i). "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. With respect to the disposition of assets, the phrase "all or substantially all" as used in the Indenture varies according to the facts and circumstances of the subject transaction and is subject to judicial interpretation. Accordingly, in certain circumstances there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of "all or substantially all" of the assets of the Company, and therefore it may be unclear as to whether a Change of Control has occurred and whether the holders have the right to require the Company to purchase the Notes. In the event that the Company were to determine that a Change of Control did not occur because not "all or substantially all" of the assets of the Company and its Restricted Subsidiaries had been sold and the holders of the Notes disagreed with such determination, the holders and/or the Trustee would need to seek a judicial determination of the issue. ASSET SALES The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by an Officers' Certificate delivered to the Trustee which will include a resolution of the Board of Directors with respect to such fair market value in the event such Asset Sale involves aggregate consideration in excess of $5.0 million) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 80% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, consists of cash, Cash Equivalents and/or Marketable Securities; provided, however, that (A) the amount of any Senior Debt of the Company or such Restricted Subsidiary that is assumed by the transferee in any such transaction and (B) any consideration received by the Company or such Restricted Subsidiary, as the case may be, that consists of (1) all or substantially all of the assets of one or more Similar Businesses, (2) other long-term assets that are used or useful in one or more Similar Businesses and (3) Permitted Securities shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds, at its option, (i) to repay Indebtedness under a Credit Facility, or (ii) to the acquisition of Permitted Securities, all or substantially all of the assets of one or more Similar Businesses, or the making of a capital expenditure or the acquisition of other long-term assets in a Similar Business. Pending the final application of any such Net Proceeds, the Company may temporarily reduce Indebtedness under a Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0 million, the 1997 Indenture provides that the Company will be required to make an offer to all holders of 1997 Notes (an "Asset Sale Offer") to purchase the maximum principal amount of 1997 Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the 1997 Indenture. To the extent that the aggregate amount of 1997 Notes tendered pursuant to an Asset Sale Offer is less than the remaining Excess Proceeds ("Remaining Excess Proceeds") and the sum of (A) such amount of Remaining Excess Proceeds and (B) the Remaining Excess Proceeds from any subsequent Asset Sale Offers exceeds $3.0 million, the Company will be required to make an offer to all Holders of Notes and any other Indebtedness that ranks pari passu with the Notes that, by its terms, requires the Company to offer to 77 repurchase such Indebtedness with such Remaining Excess Proceeds (a "Secondary Asset Sale Offer") to purchase the maximum principal amount of Notes and pari passu Indebtedness that may be purchased out of such Remaining Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes or pari passu Indebtedness tendered pursuant to a Secondary Asset Sale Offer is less than the Remaining Excess Proceeds, the Company may use any Remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes or pari passu Indebtedness surrendered by Holders thereof exceeds the amount of Remaining Excess Proceeds in a Secondary Asset Sale Offer, the Company shall repurchase such Indebtedness on a pro rata basis and the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. The Senior Credit Facilities will substantially limit the Company's ability to purchase subordinated Indebtedness, including the Notes. Any future credit agreements relating to Senior Debt may contain similar restrictions. See "Description of Certain Indebtedness -- Senior Credit Facilities". CERTAIN COVENANTS RESTRICTED PAYMENTS The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than (A) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities); (ii) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under caption "Incurrence of Indebtedness and Issuance of Preferred Stock"; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries since April 30, 1997 (excluding Restricted Payments permitted by clauses (ii) through (vii) of the next succeeding paragraph or of the kind contemplated by such clauses that were made prior to the date of the Indenture), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from July 1, 1997 to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% 78 of the aggregate net cash proceeds received by the Company since April 30, 1997 from a contribution to its common equity capital or the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or convertible debt securities that have been converted into Disqualified Stock), plus (iii) to the extent that any Restricted Investment that was made after April 30, 1997 is sold for cash or otherwise liquidated or repaid for cash, the amount of cash received in connection therewith (or from the sale of Marketable Securities received in connection therewith), plus (iv) to the extent not already included in such Consolidated Net Income of the Company for such period and without duplication, (A) 100% of the aggregate amount of cash received as a dividend from an Unrestricted Subsidiary, (B) 100% of the cash received upon the sale of Marketable Securities received as a dividend from an Unrestricted Subsidiary, and (C) 100% of the net assets of any Unrestricted Subsidiary on the date that it becomes a Restricted Subsidiary. As of December 31, 1997 (without giving effect to the Common Stock Offering), the amount that would have been available to the Company for Restricted Payments pursuant to this paragraph (c) would have been $6.8 million. The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness (other than intercompany Indebtedness) in exchange for, or with the net cash proceeds from an incurrence of, Permitted Refinancing Indebtedness; (iv) the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company or Holdings held by any future, present or former employee, director or consultant of the Company or any Subsidiary or Holdings issued pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided, however, that the aggregate amount of Restricted Payments made under this clause (iv) does not exceed $1.5 million in any calendar year and provided further that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Indenture; (v) repurchases of Equity Interests deemed to occur upon exercise of stock options upon surrender of Equity Interests to pay the exercise price of such options; (vi) payments to Holdings (A) in amounts equal to the amounts required for Holdings to pay franchise taxes and other fees required to maintain its legal existence and provide for other operating costs of up to $500,000 per fiscal year and (B) in amounts equal to amounts required for Holdings to pay federal, state and local income taxes to the extent such income taxes are actually due and owing; provided that the aggregate amount paid under this clause (B) does not exceed the amount that the Company would be required to pay in respect of the income of the Company and its Subsidiaries if the Company were a stand alone entity that was not owned by Holdings; and (vii) other Restricted Payments in an aggregate amount since the Issue Date not to exceed $20.0 million. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such 79 determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "Restricted Payments" were computed. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK The Indenture will provide that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The foregoing limitation will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of additional Indebtedness under Credit Facilities (and the guarantee thereof by the Guarantors) in an aggregate principal amount outstanding pursuant to this clause (i) at any one time (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder), including all Permitted Refinancing Indebtedness then outstanding incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (i), not to exceed $375.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied to repay any such Indebtedness pursuant to the covenant described above under the caption "--Asset Sales"; (ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iii) the incurrence by the Company and the Guarantors of $150.0 million in aggregate principal amount of the Notes and the Subsidiary Guarantees thereof; (iv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness then outstanding incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (iv), not to exceed $30.0 million at any time outstanding; 80 (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in connection with the acquisition of assets or a new Restricted Subsidiary; provided that such Indebtedness was incurred by the prior owner of such assets or such Restricted Subsidiary prior to such acquisition by the Company or one of its Restricted Subsidiaries and was not incurred in connection with, or in contemplation of, such acquisition by the Company or one of its Restricted Subsidiaries; and provided further that the principal amount (or accreted value, as applicable) of such Indebtedness, together with any other outstanding Indebtedness incurred pursuant to this clause (v), does not exceed $10.0 million; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness that was permitted by the Indenture to be incurred (other than intercompany Indebtedness or Indebtedness incurred pursuant to clause (i) above); (vii) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of workers' compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; (viii) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (ix) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (A) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (B)(1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or one of its Restricted Subsidiaries and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or one of its Restricted Subsidiaries shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (x) the incurrence by the Company or any of the Guarantors of Hedging Obligations that are incurred for the purpose of (A) fixing, hedging or capping interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the Indenture to be outstanding or (B) protecting the Company and its Restricted Subsidiaries against changes in currency exchange rates; (xi) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant; (xii) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xii), and the issuance of preferred stock by Unrestricted Subsidiaries; 81 (xiii) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiaries in the ordinary course of business; and (xiv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness then outstanding incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (xiv), not to exceed $50.0 million. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xiv) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify, or later reclassify, such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. LIENS The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens. ANTILAYERING PROVISION The Indenture will provide that (i) the Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Notes, and (ii) no Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of a Guarantor and senior in any respect in right of payment to any of the Subsidiary Guarantees. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(A) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (B) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (A) the provisions of security agreements that restrict the transfer of assets that are subject to a Lien created by such security agreements, (B) the provisions of agreements governing Indebtedness incurred pursuant to clause (v) of the second paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock", (C) the Indenture, the Notes, and the 1997 Indenture and the 1997 Notes, (D) applicable law, (E) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred, (F) by reason of customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (G) purchase money obligations for property acquired in the ordinary course of business that impose 82 restrictions of the nature described in clause (iii) above on the property so acquired, (H) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced, (I) contracts for the sale of assets, including, without limitation, customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, (J) agreements relating to secured Indebtedness otherwise permitted to be incurred pursuant to the covenants described under "Limitations on Incurrence of Indebtedness and Issuance of Preferred Stock" and "Liens" that limit the right of the debtor to dispose of the assets securing such Indebtedness, (K) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, or (L) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business. MERGER, CONSOLIDATION OR SALE OF ASSETS The Indenture will provide that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made, after giving pro forma effect to such transaction as if such transaction had occurred at the beginning of the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such transaction either (A) would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" or (B) would have a pro forma Fixed Charge Coverage Ratio that is greater than the actual Fixed Charge Coverage Ratio for the same four-quarter period without giving pro forma effect to such transaction. Notwithstanding the foregoing clause (iv), (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate that has no significant assets or liabilities and was incorporated solely for the purpose of reincorporating the Company in another State of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. TRANSACTIONS WITH AFFILIATES The Indenture will provide that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (A) with respect to any Affiliate 83 Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The foregoing provisions will not prohibit: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; (ii) any transaction with a Lehman Investor; (iii) any transaction between or among the Company and/or its Restricted Subsidiaries; (iv) transactions between the Company or any of its Restricted Subsidiaries, on the one hand, and Lockheed Martin or any of its Subsidiaries or a Permitted Joint Venture, on the other hand, on terms that are not materially less favorable to the Company or the applicable Restricted Subsidiary of the Company than those that could have been obtained from an unaffiliated third party; provided that (A) in the case of any such transaction or series of related transactions pursuant to this clause (iv) involving aggregate consideration in excess of $5.0 million but less than $25.0 million, such transaction or series of transactions (or the agreement pursuant to which the transactions were executed) was approved by the Company's Chief Executive Officer or Chief Financial Officer and (B) in the case of any such transaction or series of related transactions pursuant to this clause (iv) involving aggregate consideration equal to or in excess of $25.0 million, such transaction or series of related transactions (or the agreement pursuant to which the transactions were executed) was approved by a majority of the disinterested members of the Board of Directors; (v) any transaction pursuant to and in accordance with the provisions of the Transaction Documents as the same are in effect on the Issue Date; and (vi) any Restricted Payment that is permitted by the provisions of the Indenture described above under the caption "--Restricted Payments". PAYMENTS FOR CONSENT The Indenture will provide that neither the Company nor any of its Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. REPORTS Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the Commission, the Indenture will require the Company to file with the Commission (and provide the Trustee and Holders with copies thereof, without cost to each Holder, within 15 days after it files them with the Commission), (a) within 90 days after the end of each fiscal year, annual reports on Form 10-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or comparable form); (c) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K (or any successor or comparable form); and (d) any other information, documents and other reports which the Company would be required to file with the Commission if it were subject to Section 13 or 15(d) of the Exchange Act; provided, however, the Company shall not be so obligated to file such reports with the Commission if the Commission does not permit such filing, in which event the Company will make available such information to prospective purchasers of Notes, in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the Commission, if it were subject to Sections 13 or 15(d) of the Exchange Act. 84 FUTURE SUBSIDIARY GUARANTEES The Company's payment obligations under the Notes will be jointly and severally guaranteed by all of the Company's existing and future Restricted Subsidiaries, other than Foreign Subsidiaries. The Indenture will provide that if the Company or any of its Subsidiaries shall acquire or create a Subsidiary (other than a Foreign Subsidiary or an Unrestricted Subsidiary) after the Issue Date, then such Subsidiary shall execute a Subsidiary Guarantee and deliver an opinion of counsel, in accordance with the terms of the Indenture. The Subsidiary Guarantee of each Guarantor will rank pari passu with the guarantees of the Original Notes subordinated to the prior payment in full of all Senior Debt of such Guarantor, which would include the guarantees of amounts borrowed under the Senior Credit Facilities. The obligations of each Guarantor under its Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. The Indenture will provide that no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person (except the Company or another Guarantor) unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes and the Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) the Company (A) would be permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" or (B) would have a pro forma Fixed Charge Coverage Ratio that is greater than the actual Fixed Charge Coverage Ratio for the same four-quarter period without giving pro forma effect to such transaction. Notwithstanding the foregoing paragraph, (i) any Guarantor may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) any Guarantor may merge with an Affiliate that has no significant assets or liabilities and was incorporated solely for the purpose of reincorporating such Guarantor in another State of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. The Indenture will provide that in the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. See "--Repurchase at Option of Holders -- Asset Sales". EVENTS OF DEFAULT AND REMEDIES The Indenture will provide that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the provisions described under the captions "--Change of Control", "--Asset Sales" or "--Merger, Consolidation or Sale of Assets"; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of 85 any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates $10.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, however, that so long as any Designated Senior Debt is outstanding, such declaration shall not become effective until the earlier of (i) the day which is five Business Days after receipt by the Representatives of Designated Senior Debt of such notice of acceleration or (ii) the date of acceleration of any Designated Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Restricted Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to , 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to , 2003, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes and the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen 86 Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company must deliver to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of it for all purposes. 87 AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration), (v) make any Note payable in money other than that stated in the Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes, (vii) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the caption "--Repurchase at the Option of Holders") or (viii) make any change in the foregoing amendment and waiver provisions. In addition, any amendment to the provisions of Article 10 of the Indenture (which relates to subordination) will require the consent of the Holders of at least 75% in aggregate principal amount of the Notes then outstanding if such amendment would adversely affect the rights of Holders of Notes. Notwithstanding the foregoing, without the consent of any Holder of Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of Notes in the case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. 88 "1997 Indenture" means the indenture, dated as of April 30, 1997, among The Bank of New York, as trustee, and the Company, with respect to the 1997 Notes. "1997 Notes" means the $225,000,000 in aggregate principal amount of the Company's 10 3/8% Senior Subordinated Notes due 2007, issued pursuant to the 1997 Indenture on April 30, 1997. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption "--Change of Control" and/or the provisions described above under the caption "--Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue or sale by the Company or any of its Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (A) that have a fair market value in excess of $1.0 million or (B) for net proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that is permitted by the covenant described above under the caption "--Restricted Payments" and (iv) a disposition of Cash Equivalents in the ordinary course of business will not be deemed to be an Asset Sale. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any 89 domestic financial institution to the Senior Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's or S&P and in each case maturing within six months after the date of acquisition, (vi) investment funds investing 95% of their assets in securities of the types described in clauses (i)-(v) above, and (vii) readily marketable direct obligations issued by any State of the United States of America or any political subdivision thereof having maturities of not more than one year from the date of acquisition and having one of the two highest rating categories obtainable from either Moody's or S&P. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill, debt issuance costs and other intangibles but excluding amortization of other prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, minus (v) non-cash items (excluding any items that were accrued in the ordinary course of business) increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, (v) the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries, and (vi) the Net Income of any Restricted Subsidiary shall be calculated after deducting preferred stock dividends payable by such Restricted Subsidiary to Persons other than the Company and its other Restricted Subsidiaries. "Consolidated Tangible Assets" means, with respect to the Company, the total consolidated assets of the Company and its Restricted Subsidiaries, less the total intangible assets of the Company and its Restricted Subsidiaries, as shown on the most recent internal consolidated balance sheet of the Company and such Restricted Subsidiaries calculated on a consolidated basis in accordance with GAAP. 90 "Credit Facilities" means, with respect to the Company, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Designated Senior Debt" means (i) any Indebtedness outstanding under the Senior Credit Facilities and (ii) any other Senior Debt permitted under the Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Debt". "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "--Certain Covenants -- Restricted Payments"; and provided further, that if such Capital Stock is issued to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of equity securities (excluding Disqualified Stock) of the Company or Holdings, other than any private sales to an Affiliate of the Company or Holdings. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Indebtedness" means any Indebtedness of the Company (other than Indebtedness under the Senior Credit Facilities and the Notes) in existence on the date of the Indenture, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (A) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company, times (B) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. 91 "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Foreign Subsidiary" means a Restricted Subsidiary of the Company that was not organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which were in effect April 30, 1997. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantors" means each Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of the Indenture, and their respective successors and assigns. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or interest rates. "Holdings" means L-3 Communications Holdings, Inc. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any 92 Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel, moving and similar loans or advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the last paragraph of the covenant described above under the caption "--Restricted Payments". "Issue Date" means the closing date for the sale and original issuance of the Notes under the Indenture. "Lehman Investor" means Lehman Brothers Holdings Inc. and any of its Affiliates. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Marketable Securities" means, with respect to any Asset Sale, any readily marketable equity securities that are (i) traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii) issued by a corporation having a total equity market capitalization of not less than $250.0 million; provided that the excess of (A) the aggregate amount of securities of any one such corporation held by the Company and any Restricted Subsidiary over (B) ten times the average daily trading volume of such securities during the 20 immediately preceding trading days shall be deemed not to be Marketable Securities; as determined on the date of the contract relating to such Asset Sale. "Moody's" means Moody's Investors Services, Inc. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes thereon, realized in connection with (A) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss and (iii) the cumulative effect of a change in accounting principles. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. 93 "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (A) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (B) is directly or indirectly liable (as a guarantor or otherwise), or (C) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than Indebtedness incurred under Credit Facilities) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Obligations" means any principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto. "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary of the Company that is a Guarantor; (ii) any Investment in cash or Cash Equivalents; (iii) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (A) such Person becomes a Restricted Subsidiary of the Company and a Guarantor or (B) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Guarantor; (iv) any Restricted Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "--Repurchase at the Option of Holders -- Asset Sales" or any disposition of assets not constituting an Asset sale; (v) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (vi) advances to employees not to exceed $2.5 million at any one time outstanding; (vii) any Investment acquired in connection with or as a result of a workout or bankruptcy of a customer or supplier; (viii) Hedging Obligations permitted to be incurred under the covenant described above under the caption "--Incurrence of Indebtedness and Issuance of Preferred Stock"; (ix) any Investment in a Similar Business that is not a Restricted Subsidiary; provided that the aggregate fair market value of all Investments outstanding pursuant to this clause (ix) (valued on the date each such Investment was made and without giving effect to subsequent changes in value) may not at any one time exceed 10% of the Consolidated Tangible Assets of the Company; and (x) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (x) that are at the time outstanding, not to exceed $15.0 million. "Permitted Joint Venture" means any joint venture, partnership or other Person designated by the Board of Directors (until designation by the Board of Directors to the contrary); provided that (i) at least 25% of the Capital Stock thereof with voting power under ordinary circumstances to elect directors (or Persons having similar or corresponding powers and responsibilities) is at the time owned (beneficially or directly) by the Company and/or by one or more Restricted Subsidiaries of the Company and (ii) such joint venture, partnership or other Person is engaged in a Similar Business. Any such designation or designation to the contrary shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "Permitted Junior Securities" means Equity Interests in the Company or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Notes and the Subsidiary Guarantees are subordinated to Senior Debt pursuant to Article 10 of the Indenture. "Permitted Liens" means (i) Liens securing Senior Debt of the Company or any Guarantor that was permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of the Company or any 94 Guarantor; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any other assets of the Company or any of its Restricted Subsidiaries; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (iv) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with such Indebtedness -- ; (vii) Liens existing on the Issue Date; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding; (x) Liens on assets of Guarantors to secure Senior Debt of such Guarantors that was permitted by the Indenture to be incurred; (xi) Liens securing Permitted Refinancing Indebtedness, provided that any such Lien does not extend to or cover any property, shares or debt other than the property, shares or debt securing the Indebtedness so refunded, refinanced or extended; (xii) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return of money bonds and other obligations of a like nature, in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); (xiii) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (xiv) Liens encumbering customary initial deposits and margin deposits, and other Liens incurred in the ordinary course of business that are within the general parameters customary in the industry, in each case securing Indebtedness under Hedging Obligations; and (xv) Liens encumbering deposits made in the ordinary course of business to secure nondelinquent obligations arising from statutory or regulatory, contractual or warranty requirements of the Company or its Subsidiaries for which a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses and prepayment premiums incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Permitted Securities" means, with respect to any Asset Sale, Voting Stock of a Person primarily engaged in one or more Similar Businesses; provided that after giving effect to the Asset Sale such Person shall become a Restricted Subsidiary and a Guarantor. 95 "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Debt. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" means, with respect to any Person, each Subsidiary of such Person that is not an Unrestricted Subsidiary. "Senior Credit Facilities" means the credit agreement, as in effect on the Issue Date among the Company and a syndicate of banks and other financial institutions led by Lehman Commercial Paper Inc., as syndication agent, and any related notes, collateral documents, letters of credit and guarantees, including any appendices, exhibits or schedules to any of the foregoing (as the same may be in effect from time to time), in each case, as such agreements may be amended, modified, supplemented or restated from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid or extended from time to time (whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise). "Senior Debt" means (i) all Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities and all Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted to be incurred by the Company or any of its Restricted Subsidiaries under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (i) any liability for federal, state, local or other taxes owed or owing by the Company, (ii) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any Indebtedness that is incurred in violation of the Indenture. The 1997 Notes will be pari passu with the Notes and will not constitute Senior Debt. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Similar Business" means a business, a majority of whose revenues in the most recently ended calendar year were derived from (i) the sale of defense products, electronics, communications systems, aerospace products, avionics products and/or communications products, (ii) any services related thereto, (iii) any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto, and (iv) any combination of any of the foregoing. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (A) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (B) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "S&P" means Standard and Poor's Corporation. "Transaction Documents" means the Indenture, the Notes and the Underwriting Agreement. "Unrestricted Subsidiary" means any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: 96 (i) has no Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (iii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (A) to subscribe for additional Equity Interests or (B) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (iv) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (v) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenant described above under the caption "Certain Covenants -- Restricted Payments". If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock", the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock", calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (B) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned" means, when used with respect to any Subsidiary or Restricted Subsidiary of a Person, a Subsidiary (or Restricted Subsidiary, as appropriate) of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as appropriate) of such Person and one or more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as appropriate) of such Person. 97 UNITED STATES FEDERAL TAX CONSIDERATIONS In the opinion of Simpson Thacher & Bartlett, the following summary accurately describes the material U.S. federal income tax consequences that may be relevant to the purchase, ownership and disposition of the Notes as of the date hereof by U.S. Holders as described below. Except where noted, it deals only with Notes held as capital assets by initial purchasers that purchase the Notes at their issue price and does not deal with special situations, such as those of dealers in securities or currencies, financial institutions, tax-exempt entities, life insurance companies, persons holding Notes as a part of a hedging constructive sale or conversion transaction or a straddle or holders of Notes whose "functional currency" is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in federal income tax consequences different from those discussed below. In addition, except as otherwise indicated, the following does not consider the effect of any applicable foreign, state, local or other tax laws or estate or gift tax considerations. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS, AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. STATED INTEREST ON NOTES It is expected that the Notes will not be issued with original issue discount, therefore, interest on a Note will generally be taxable to a U.S. Holder as ordinary income from domestic sources at the time it is paid or accrued in accordance with the U.S. Holder's method of accounting for tax purposes. As used herein, a "U.S. Holder" means a holder of a Note that is (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust which is subject to the supervision of a court within the United States and the control of one or more U.S. persons as described in Section 7701(a)(30) of the Code. A "Non-U.S. Holder" is a holder of a Note that is not a U.S. Holder. SALE, EXCHANGE AND RETIREMENT OF NOTES A U.S. Holder's tax basis in a Note will, in general, be the U.S. Holder's cost therefor. Upon the sale, exchange, retirement or other disposition of a Note, a U.S. Holder will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, retirement or other disposition and the tax basis of the Note. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if at the time of sale, exchange, retirement or other disposition the Note has been held for more than one year. Under recently enacted legislation, capital gains of individuals derived in respect of capital assets held for more than one year are eligible for reduced rates of taxation which may vary depending upon the holding period of such capital assets. Prospective investors should consult their own tax advisors with respect to the tax consequences of the new legislation. The deductibility of capital losses is subject to limitations. NON-U.S. HOLDERS Under present U.S. federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) no withholding of U.S. federal income tax will be required with respect to the payment by the Company or any paying agent of principal, premium, if any, or interest on, if any, in respect of a Note owned by a Non-U.S. Holder (the "Portfolio Interest Exception"), provided (i) that the beneficial owner does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote within the meaning of section 871(h)(3) of the Code and the regulations thereunder, (ii) the beneficial owner is not a controlled foreign corporation that is related to the Company through stock ownership, (iii) the beneficial owner is not a bank whose receipt of interest on a Note is described in section 881(c)(3)(A) of the Code and (iv) the beneficial owner satisfies the statement requirement (described generally below) set forth in section 871(h) and section 881(c) of the Code and the regulations thereunder. 98 (b) no withholding of U.S. federal income tax will be required with respect to any gain or income realized by a Non-U.S. Holder upon the sale, exchange, retirement or other disposition of a Note; and (c) a Note beneficially owned by an individual who at the time of death is a Non-U.S. Holder will not be subject to U.S. federal estate tax as a result of such individual's death, provided that such individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote within the meaning of section 871(h)(3) of the Code and provided that the interest payments with respect to such Note would not have been, if received at the time of such individual's death, effectively connected with the conduct of a U.S. trade or business by such individual. To satisfy the requirement referred to in (a)(iv) above, the beneficial owner of such Note, or a financial institution holding the Note on behalf of such owner, must provide, in accordance with specified procedures, a paying agent of the Company with a statement to the effect that the beneficial owner is not a U.S. person. Currently, these requirements will be met if (i) the beneficial owner provides his name and address, and certifies, under penalties of perjury, that he is not a U.S. person (which certification may be made on an IRS Form W-8 (or successor form)) or (ii) a financial institution holding the Note on behalf of the beneficial owner certifies, under penalties of perjury, that such statement has been received by it and furnishes a paying agent with a copy thereof. Under recently finalized Treasury regulations (the "Final Regulations"), the statement requirement referred to in (a)(iv) above may also be satisfied with other documentary evidence for interest paid after December 31, 1999 with respect to an offshore account or through certain foreign intermediaries. If a Non-U.S. Holder cannot satisfy the requirements of the Portfolio Interest Exception described in (a) above, payments on a Note made to such Non-U.S. Holder will be subject to a 30% withholding tax unless the beneficial owner of the Note provides the Company or its paying agent, as the case may be, with a properly executed (i) IRS Form 1001 (or successor form) claiming an exemption from withholding under the benefit of a tax treaty or (ii) IRS Form 4224 (or successor form) stating that interest paid on the Note is not subject to withholding tax because it is effectively connected with the beneficial owner's conduct of a trade or business in the United States. Under the Final Regulations, Non-U.S. Holders will generally be required to provide IRS Form W-8 in lieu of IRS Form 1001 and IRS Form 4224, although alternative documentation may be applicable in certain situations. If a Non-U.S. Holder is engaged in a trade or business in the United States and payment on a Note is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although exempt from the withholding tax discussed above, will be subject to U.S. federal income tax on such payment on a net income basis in the same manner as if it were a U.S. Holder. In addition, if such holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, such payment on a Note will be included in such foreign corporation's earnings and profits. Any gain or income realized upon the sale, exchange, retirement or other disposition of a Note generally will not be subject to U.S. federal income tax unless (i) such gain or income is effectively connected with a trade or business in the United States of the Non-U.S. Holder, or (ii) in the case of a Non-U.S. Holder who is an individual, such individual is present in the United States for 183 days or more in the taxable year of such sale, exchange, retirement or other disposition, and certain other conditions are met. INFORMATION REPORTING AND BACKUP WITHHOLDING In general, information reporting requirements will apply to payments on a Note and to the proceeds of sale of a Note made to U.S. Holders other than certain exempt recipients (such as corporations). A 31% backup withholding tax will apply to such payments if the U.S. Holder fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. 99 No information reporting or backup withholding will be required with respect to payments made by the Company or any paying agent to Non-U.S. Holders if a statement described in (a)(iv) under "--Non-U.S. Holders" has been received and the payor does not have actual knowledge that the beneficial owner is a U.S. person. In addition, backup withholding and information reporting will not apply if payments on a Note are paid or collected by a foreign office of a custodian, nominee or other foreign agent on behalf of the beneficial owner of such Note, or if a foreign office of a broker (as defined in applicable Treasury regulations) pays the proceeds of the sale of a Note to the owner thereof. If, however, such nominee, custodian, agent or broker is, for U.S. federal income tax purposes, a U.S. person, a controlled foreign corporation or a foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, or, for taxable years beginning after December 31, 1999, a foreign partnership, in which one or more U.S. persons, in the aggregate, own more than 50% of the income or capital interests in the partnership or which is engaged in a trade or business in the United States, such payments will be subject to information reporting (but not backup withholding), unless (i) such custodian, nominee, agent or broker has documentary evidence in its records that the beneficial owner is not a U.S. person and certain other conditions are met or (ii) the beneficial owner otherwise establishes an exemption. Payments on a Note paid to the beneficial owner of a Note by a U.S. office of a custodian, nominee or agent, or the payment by the U.S. office of a broker of the proceeds of sale of a Note, will be subject to both backup withholding and information reporting unless the beneficial owner provides the statement referred to in (a)(iv) above and the payor does not have actual knowledge that the beneficial owner is a U.S. person or otherwise establishes an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against such holder's U.S. federal income tax liability provided the required information is furnished to the IRS. 100 UNDERWRITING The underwriters named below (the "Underwriters") have severally agreed, subject to the terms and conditions of the underwriting agreement (the form of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part) (the "Underwriting Agreement"), to purchase from L-3 Communications, and L-3 Communications has agreed to sell to the Underwriters, the aggregate principal amount of Notes set forth opposite their respective names below.
PRINCIPAL AMOUNT UNDERWRITERS OF NOTES - ----------------------------------- -------------------- Lehman Brothers Inc. ............... BancAmerica Robertson Stephens .... -------------------- Total............................. $150,000,000 ====================
The Underwriting Agreement provides that the obligations of the Underwriters to purchase the Notes are subject to the approval of certain legal matters by their counsel and to certain conditions, and that if any Notes are purchased by the Underwriters pursuant to the Underwriting Agreement, all of the Notes agreed to be purchased by the Underwriters pursuant to the Underwriting Agreement must be so purchased. In the Underwriting Agreement, L-3 Communications has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Underwriters may be required to make in respect thereof. In order to facilitate the Notes Offering, the Underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of the Notes. Specifically, the Underwriters may overallot in connection with the Notes Offering, creating a short position in the Notes for their own account. In addition, to cover overallotments or to stabilize the price of the Notes, the Underwriters may bid for and purchase Notes in the open market. Any of these activities may stabilize or maintain the market price of the Notes above independent market levels. Lehman Brothers Inc. has provided investment banking, financial advisor and other services to the Company, for which services Lehman Brothers Inc. has received fees. In addition, Lehman Brothers Inc. is acting as lead underwriter for the concurrent Common Stock Offering, and Lehman Brothers Commercial Paper Inc., an affiliate of Lehman Brothers Inc., is the Arranger and Syndication Agent under the Senior Credit Facilities. After the completion of the Common Stock Offering and assuming that the Underwriters' over-allotment option is exercised, the Lehman Partnership will beneficially own 37.4% of the outstanding capital stock of Holdings. By virtue of such ownership, the Lehman Partnership will be able to significantly influence the business and affairs of the Company with respect to matters requiring stockholder approval. See "Management -- Directors and Executive Officers" and "Ownership of Capital Stock". Under Rule 2720 ("Rule 2720") of the Conduct Rules of the National Association of Securities Dealers, Inc. ("NASD"), the Company is considered an affiliate of Lehman Brothers Inc. This Notes Offering is being conducted in accordance with Rule 2720, which provides that, among other things, when an NASD member participates in the underwriting of an affiliate's debt securities, the yield at which such debt securities is to be distributed to the public can be no lower than that recommended by a "qualified independent underwriter" meeting certain standards ("QUI"). In accordance with this requirement, C.E. Unterberg, Towbin has assumed the responsibilities of acting as QIU and will recommend a yield for the Notes in compliance with the requirements of Rule 2720. In connection with the Notes Offering, C.E. Unterberg, Towbin is performing due diligence investigations and reviewing and participating in the preparation of this Prospectus and the Registration Statement of which this Prospectus forms a part. C.E. Unterberg, Towbin will receive $10,000 as compensation for its services as QIU. Bank of America NT&SA, an affiliate of BancAmerica Robertson Stephens, acts as the Administrative Agent and a lender under the Senior Credit Facilities. See "Description of Certain Indebtedness -- Senior Credit Facilities". Bank of America NT&SA and Lehman Brothers Commercial Paper Inc. will receive a portion of the net proceeds of the Offerings in repayment of indebtedness outstanding under the Senior Credit Facilities. 101 LEGAL MATTERS The validity of the Notes offered hereby will be passed upon for the Company by Simpson Thacher & Bartlett, New York, New York and for the Underwriters by Latham & Watkins, New York, New York. EXPERTS The (i) consolidated balance sheet of the Company as of December 31, 1997 and the related consolidated statements of operations, changes in shareholders' equity and cash flows for the nine months then ended, (ii) combined statements of operations, changes in invested equity and cash flows of the Predecessor Company for the three months ended March 31, 1997, (iii) combined balance sheet of the Predecessor Company as of December 31, 1996 and the related combined statements of operations, changes in invested equity and cash flows for the year then ended, (iv) combined statement of operations and cash flows of the Loral Acquired Businesses for the three months ended March 31, 1996 and for the year ended December 31, 1995 and (v) the combined balance sheet of AlliedSignal Ocean Systems (a wholly-owned operation of AlliedSignal, Inc.) and the related combined statements of operations, cash flows and equity for the year then ended, included in this Prospectus, have been included herein in reliance on the reports of Coopers & Lybrand L.L.P., independent auditors, given on the authority of that firm as experts in accounting and auditing. The report on the combined financial statements of the Predecessor Company for the year ended December 31, 1996 indicates that Coopers & Lybrand L.L.P.'s opinion, insofar as it relates to the financial statements of the Lockheed Martin Communications Systems Division included in such combined financial statements, is based solely on the report of other auditors. The combined financial statements of Lockheed Martin Communications Systems Division as of and for the years ended December 31, 1996 (not presented separately herein) and 1995, and the financial statements of the Satellite Transmission Systems Division of California Microwave, Inc. as of June 30, 1997 and 1996 and for each of the three years in the period ended June 30, 1997, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of ILEX Systems, Inc. as of December 31, 1997, and for the year then ended have been included in this Prospectus and the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. 102 INDEX TO FINANCIAL STATEMENTS
L-3 COMMUNICATIONS CORPORATION (AND THE PREDECESSOR COMPANY) Unaudited Condensed Consolidated (Combined) Financial Statements as of March 31, 1998 and December 31, 1997 and for the three months ended March 31, 1998 and 1997 ................. F-3 Condensed Consolidated Balance Sheets as of March 31, 1998 (Unaudited) and December 31, 1997....................................................................... F-4 Condensed Consolidated (Combined) Statements of Operations for the three months ended March 31, 1998 (Unaudited) and March 31, 1997..................................... F-5 Condensed Consolidated (Combined) Statements of Cash Flows for the three months ended March 31, 1998 (Unaudited) and March 31, 1997..................................... F-6 Notes to Condensed Consolidated (Combined) Financial Statements.......................... F-7 Consolidated (Combined) Financial Statements as of December 31, 1997 and 1996 and for the nine months ended December 31, 1997, the three months ended March 31, 1997, and the years ended December 31, 1996 and 1995 ........................... F-12 Report of Coopers & Lybrand L.L.P. ...................................................... F-13 Report of Ernst & Young LLP on the financial statements of Lockheed Martin Communications Systems Division as of December 31, 1996 and for the two years ended December 31, 1996....................................................................... F-14 Consolidated (Combined) Balance Sheets as of December 31, 1997 and December 31, 1996 ... F-15 Consolidated (Combined) Statements of Operations for the nine months ended December 31, 1997, for the three months ended March 31, 1997 and for the years ended December 31, 1996 and 1995 .......................................................................... F-16 Consolidated (Combined) Statements of Changes in Shareholders' Equity and Invested Equity for the nine months ended December 31, 1997, for three months ended March 31, 1997 and for the years ended December 31, 1996 and 1995 ................................ F-17 Consolidated (Combined) Statements of Cash Flows for the nine months ended December 31, 1997, for the three months ended March 31, 1997 and for the years ended December 31, 1996 and 1995 .......................................................................... F-18 Notes to Consolidated (Combined) Financial Statements.................................... F-19 LORAL ACQUIRED BUSINESSES Combined Financial Statements for the three months ended March 31, 1996 and the year ended December 31, 1995 .................................................................. F-37 Report of Coopers & Lybrand L.L.P. ...................................................... F-38 Combined Statements of Operations for three months ended March 31, 1996 and the year ended December 31, 1995 ........................................................... F-39 Combined Statements of Cash Flows for three months ended March 31, 1996 and the year ended December 31, 1995 ................................................................ F-40 Notes to Combined Financial Statements .................................................. F-41 F-1 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. Unaudited Condensed Financial Statements as of December 31, 1997 and for the six months ended December 31, 1997 and 1996 ......................................................... F-47 Condensed Balance Sheet (Unaudited) as of December 31, 1997 ............................. F-48 Condensed Statements of Operations (Unaudited) for the six months ended December 31, 1997 and 1996 .......................................................................... F-49 Condensed Statements of Cash Flows (Unaudited) for the six months ended December 31, 1997 and 1996 .......................................................................... F-50 Notes to the Condensed Financial Statements ............................................. F-51 Financial Statements as of June 30, 1997 and 1996 and for the years ended June 30, 1997, 1996 and 1995 ............................................................. F-54 Report of Ernst & Young LLP.............................................................. F-55 Balance Sheets as of June 30, 1997 and 1996 ............................................. F-56 Statements of Operations for the years ended June 30, 1997, 1996 and 1995 .............. F-57 Statements of Cash Flows for the years ended June 30, 1997, 1996 and 1995 .............. F-58 Notes to the Financial Statements ....................................................... F-59 ILEX SYSTEMS, INC. AND SUBSIDIARY Consolidated Financial Statements as of December 31, 1997 and for the year ended December 31, 1997 ........................................................................ F-65 Report of KPMG Peat Marwick LLP ......................................................... F-66 Consolidated Balance Sheet as of December 31, 1997 ...................................... F-67 Consolidated Statement of Income for the year ended December 31, 1997 .................. F-68 Consolidated Statement of Shareholders' Equity for the year ended December 31, 1997 .... F-69 Consolidated Statement of Cash Flows for the year ended December 31, 1997 .............. F-70 Notes to the Consolidated Financial Statements .......................................... F-71 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.) Combined Financial Statements as of December 31, 1997 and for the year ended December 31, 1997 ........................................................................ F-75 Report of Coopers & Lybrand L.L.P. ...................................................... F-76 Combined Balance Sheet as of December 31, 1997 .......................................... F-77 Combined Statement of Operations for the year ended December 31, 1997 .................. F-78 Combined Statement of Invested Equity for the year ended December 31, 1997 ............. F-79 Combined Statement of Cash Flows for the year ended December 31, 1997 .................. F-80 Notes to the Combined Financial Statements .............................................. F-81
F-2 L-3 COMMUNICATIONS CORPORATION (AND THE PREDECESSOR COMPANY) UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND DECEMBER 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 F-3 L-3 COMMUNICATIONS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
MARCH 31, 1998 DECEMBER 31, 1997 -------------- ----------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents ...................................... $ 9,058 $ 77,474 Contracts in process ........................................... 287,584 167,202 Net assets held for sale ....................................... 1,868 6,653 Deferred income taxes .......................................... 12,079 13,298 Other current assets ........................................... 5,369 2,750 -------------- ----------------- Total current assets ......................................... 315,958 267,377 -------------- ----------------- Property, plant and equipment ................................... 124,059 95,034 Less, accumulated depreciation and amortization ................ 16,418 12,025 -------------- ----------------- 107,641 83,009 -------------- ----------------- Intangibles, primarily cost in excess of net assets acquired, net of amortization ............................................ 387,616 297,503 Deferred income taxes ........................................... 36,216 24,217 Other assets .................................................... 32,980 31,298 -------------- ----------------- Total assets ................................................. $880,411 $703,404 ============== ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt .............................. $ 5,700 $ 5,000 Accounts payable, trade ........................................ 48,604 33,052 Accrued employment costs ....................................... 41,003 31,162 Customer advances .............................................. 56,707 15,989 Amounts in excess of costs incurred ............................ 29,098 18,469 Accrued interest ............................................... 10,526 4,419 Other current liabilities ...................................... 31,691 27,476 -------------- ----------------- Total current liabilities .................................... 223,329 135,567 -------------- ----------------- Pension and postretirement benefits ............................. 52,528 38,113 Other liabilities ............................................... 6,187 5,009 Revolving Credit Facility ....................................... 67,800 -- Long-term debt .................................................. 391,830 392,000 Commitments and contingencies Shareholders' equity Common Stock, $.01 par value; 100 shares authorized, issued and outstanding ................................................... -- -- Additional paid-in capital ..................................... 128,409 125,000 Retained earnings .............................................. 19,328 16,715 Deemed distribution ............................................ (9,000) (9,000) -------------- ----------------- Total shareholders' equity ...................................... 138,737 132,715 -------------- ----------------- Total liabilities and shareholders' equity ................... $880,411 $703,404 ============== =================
See notes to unaudited condensed consolidated financial statements. F-4 L-3 COMMUNICATIONS CORPORATION CONDENSED CONSOLIDATED (COMBINED) STATEMENTS OF OPERATIONS (IN THOUSANDS)
PREDECESSOR COMPANY COMPANY CONSOLIDATED COMBINED -------------- -------------- THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 1998 MARCH 31, 1997 -------------- -------------- (UNAUDITED) Sales ............................. $186,564 $158,873 Costs and expenses ................ 172,472 150,937 -------------- -------------- Operating income .................. 14,093 7,936 Interest income ................... 796 -- Interest expense .................. 10,605 8,441 -------------- -------------- Income (loss) before income taxes 4,284 (505) Income tax expense (benefit) ..... 1,671 (247) -------------- -------------- Net income (loss) ................. $ 2,613 $ (258) ============== ==============
See notes to unaudited condensed consolidated (combined) financial statements. F-5 L-3 COMMUNICATIONS CORPORATION CONDENSED CONSOLIDATED (COMBINED) STATEMENTS OF CASH FLOWS (IN THOUSANDS)
PREDECESSOR COMPANY COMPANY CONSOLIDATED COMBINED -------------- -------------- THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 1998 MARCH 31, 1997 -------------- -------------- (UNAUDITED) OPERATING ACTIVITIES: Net income (loss) ......................................... $ 2,613 $ (258) Depreciation and amortization ............................. 7,490 7,790 Amortization of deferred debt issue costs ................. 502 -- Deferred income taxes ..................................... 1,671 -- Changes in operating assets and liabilities, net of amounts acquired: Contracts in process ..................................... (21,349) (17,475) Other current assets ..................................... (752) (481) Other assets ............................................. (72) (765) Accounts payable ......................................... 5,207 (207) Accrued employment costs ................................. 2,285 (625) Customer advances ........................................ (229) 1,146 Amounts in excess of costs incurred ...................... 3,363 (3,037) Accrued interest ......................................... 6,104 -- Other current liabilities ................................ 134 (1,867) Pension and postretirement benefits ...................... 2,956 -- Other liabilities ........................................ 1,159 (500) -------------- -------------- Net cash from (used in) operating activities .............. 11,082 (16,279) -------------- -------------- INVESTING ACTIVITIES: Acquisition of businesses, net of cash acquired .......... (151,428) -- Proceeds from sale of property ............................ 4,785 -- Capital expenditures ...................................... (2,273) (4,300) Disposition of property, plant and equipment .............. 220 -- -------------- -------------- Net cash (used in) investing activities ................... (148,696) (4,300) -------------- -------------- FINANCING ACTIVITIES: Borrowings under revolving credit facility................. 67,800 -- Contribution from Holdings of proceeds from issuance of Holdings common stock .................................... 2,958 -- Debt issuance costs ....................................... (560) -- Payment of debt ........................................... (1,000) -- Advances from Lockheed Martin ............................. -- 20,579 -------------- -------------- Net cash from financing activities ........................ 69,198 20,579 -------------- -------------- Net change in cash ........................................ (68,416) -- Cash and cash equivalents, beginning of the period ....... 77,474 -- -------------- -------------- Cash and cash equivalents, end of the period............... $ 9,058 -- ============== ==============
See notes to unaudited condensed consolidated (combined) financial statements. F-6 L-3 COMMUNICATIONS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS (IN THOUSANDS) 1. BASIS OF PRESENTATION The accompanying condensed consolidated (combined) financial statements include the assets, liabilities and results of operations of L-3 Communications Corporation, the successor company ("L-3" or the "Company") following the change in ownership (see Note 2) effective as of April 1, 1997. Prior to April 1, 1997, the statements comprise substantially all of the assets and certain liabilities of (i) nine business units previously purchased by Lockheed Martin Corporation ("Lockheed Martin") as part of its acquisition of Loral Corporation ("Loral") in April 1996, and (ii) one business unit, Communications Systems--East purchased by Lockheed Martin as part of its acquisition of the aerospace business of GE in April 1993, (collectively, the "Businesses" or the "Predecessor Company"). The combined financial statements of the Predecessor Company reflect the Businesses' results of operations and cash flows included in Lockheed Martin's historical financial statements. Significant inter-company and inter-business transactions and balances have been eliminated. The accompanying unaudited condensed consolidated (combined) financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X of the Securities and Exchange Commission ("SEC"); accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All significant intercompany balances and transactions have been eliminated. The combined statement of operations for the three months ended March 31, 1997 has been derived from the audited financial statements of the Predecessor Company for such period. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods presented have been included. The results of operations for the interim periods are not necessarily indicative of results for the full year. For further information, the interim financial statements should be read in conjunction with the notes to these Unaudited Condensed Consolidated Financial Statements as of March 31, 1998 and Company's Consolidated (Combined) Financial Statements as of December 31, 1997 and notes thereto. 2. CHANGE IN OWNERSHIP TRANSACTION L-3 was formed on April 8, 1997, and is a wholly-owned subsidiary of L-3 Communications Holdings, Inc. ("Holdings"). Holdings and L-3 were formed by Mr. Frank C. Lanza, the former President and Chief Operating Officer of Loral, Mr. Robert V. LaPenta, the former Senior Vice President and Controller of Loral (collectively, the "Equity Executives"), Lehman Brothers Capital Partners III, L.P. and its affiliates (the "Lehman Partnership") and Lockheed Martin to acquire the Businesses. The Company was capitalized with an equity contribution from Holdings of $125,000. On March 28, 1997, Lanza, LaPenta, the Lehman Partnership, Holdings, and Lockheed Martin entered into a Transaction Agreement (the "L-3 Acquisition Agreement") whereby Holdings would acquire the Businesses from Lockheed Martin (the "L-3 Acquisition"). Pursuant to the L-3 Acquisition Agreement on April 30, 1997 (closing date), Holdings acquired the Businesses from Lockheed Martin for $525,000, comprised of $458,779 of cash after a $21,221 reduction related to a purchase price adjustment, and $45,000 of common equity, representing a 34.9% interest in Holdings retained by Lockheed Martin, plus acquisition costs of $8,000. Also pursuant to the Transaction Agreement, Lockheed Martin, on behalf and at the direction of Holdings, transferred the Businesses to the Company. The Acquisition was financed with the debt proceeds of $400,000 (see Note 5) and capital contributions of $125,000 from Holdings, including the $45,000 retained by Lockheed Martin. F-7 L-3 COMMUNICATIONS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS (IN THOUSANDS) The Company and Lockheed Martin finalized the purchase price adjustment pursuant to an amendment to the L-3 Acquisition Agreement dated November 5, 1997, which also included the assumption by the Company of Lockheed Martin's rights and obligations under a contract for the production of mission communication systems for track vehicles, for which the Company received a cash payment of $12,176. The assets and liabilities recorded in connection with the L-3 Acquisition purchase price allocation were $664,800 and $164,400, respectively. The excess of the purchase price over the fair value of net assets acquired of $303,200 was recorded as goodwill, and is being amortized on a straight-line basis over a period of 40 years. As a result of the 34.9% ownership interest retained by Lockheed Martin, the provisions of EITF 88-16 were applied in connection with the purchase price allocation, which resulted in recording net assets acquired at 34.9% of Lockheed Martin's carrying values in the Businesses and 65.1% at fair value, and the recognition of a deemed distribution of $9,000. 3. ACQUISITIONS On March 30, 1998 the Company purchased the assets of the Ocean Systems business ("Ocean Systems") of Allied Signal, Inc. for $67,500 of cash. On March 4, 1998, the Company purchased the assets of ILEX Systems ("ILEX") for $51,900 of cash, subject to adjustment based on closing net assets, and additional consideration based on post-acquisition performance of ILEX. On February 5, 1998, the Company purchased the assets of Satellite Transmission Systems ("STS") of California Microwave, Inc. for $27,000 in cash, subject to adjustment based upon closing net assets. On January 13, 1998, the Company purchased all of the stock of Southern California Microwave, Inc. ("SCM") for $4,600 subject to adjustment based on closing net assets, and additional consideration based on post-acquisition performance of SCM. The Company has financed the acquisitions using its cash on hand and available borrowings under its Revolving Credit Facility. The Ocean Systems, ILEX, STS and SCM acquisitions have been accounted for as purchase business combinations and are included in the Company's results of operation from their effective dates of March 31, 1998, February 1, 1998, February 1, 1998 and January 1, 1998, respectively. The assets and liabilities recorded in connection with the purchase price allocations for the acquisitions of Ocean Systems, ILEX, STS and SCM are based upon preliminary estimates. Actual adjustments will be based on final appraisals and other analyses of fair values which are in process and the final purchase prices. Management does not expect that differences between the preliminary and final allocations will have a material impact on the Company's financial position or results of operations. The assets and liabilities recorded in connection with the preliminary purchase price allocations for the acquisitions of Ocean Systems, ILEX, STS and SCM were $139,901 and $72,093, $58,349 and $4,238, $33,956 and $6,624, and $5,088 and $251, respectively. Had the L-3 Acquisition and the Ocean Systems, ILEX and STS acquisitions occurred on January 1, 1997, the unaudited pro forma sales, net loss and loss per share for the three months ended March 31, 1998 and 1997 would have been $207,300, $(100) and $(0.00) and $189,200, $(7,300) and $(0.29), respectively. The pro forma results are based on various assumptions and are not necessarily indicative of what would have occurred had the acquisitions been consummated on January 1, 1997. F-8 L-3 COMMUNICATIONS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS (IN THOUSANDS) 4. CONTRACTS IN PROGRESS Billings and accumulated costs and profits on long-term contracts, principally with the U.S. Government, comprise the following:
MARCH 31, 1998 DECEMBER 31, 1997 -------------- ----------------- Billed contract receivables...................... $ 43,583 $ 39,029 Unbilled contract receivables.................... 42,914 33,136 Other billed receivables, principally commercial and affiliates.................................. 83,022 31,253 Inventoried costs................................ 138,190 82,954 -------------- ----------------- 307,709 186,372 Less, unliquidated progress payments............. (20,125) (19,170) -------------- ----------------- Net contracts in process......................... $287,584 $167,202 ============== =================
5. DEBT The Company's long-term debt consists of the following:
MARCH 31, 1998 DECEMBER 31, 1997 -------------- ----------------- Borrowings under Revolving Credit Facility.................................. $ 67,800 -- Term Loan Facilities....................... 171,000 $172,000 10 3/8% Senior Subordinated Notes due 2007...................................... 225,000 225,000 Industrial Development Bonds............... 1,530 -- -------------- ----------------- Total debt................................ 465,330 397,000 Less current portion....................... 5,700 5,000 -------------- ----------------- Total long-term debt...................... $459,630 $392,000 ============== =================
In connection with the L-3 Acquisition, the Company entered into a credit facility (the "Senior Credit Facilities") with a syndicate of banks and financial institutions for $275,000 consisting of $175,000 of term loans (the "Term Loan Facilities") and a $100,000 revolving credit facility (the "Revolving Credit Facility"). The Revolving Credit Facility expires in 2003 and is available for ongoing working capital and letter of credit needs. Approximately $114,400 of the Revolving Credit is available at March 31, 1998 reflecting $67,800 of borrowings and letters of credit of $17,800 drawn against the Revolving Credit Facility of $200,000. In February 1998, the Senior Credit Facilities were amended to, among other things, increase the Revolving Credit Facility to $200,000, waive certain excess cash flow prepayments, as defined in the Senior Credit Facilities, otherwise required, and permit the incurrence of up to an additional $150,000 of subordinated debt. The Senior Credit Facilities and the 1997 Notes agreement contain financial and restrictive covenants that limit, among other things, the ability of the Company to borrow additional funds, dispose of assets, or pay cash dividends. At March 31, 1998, none of the Company's retained earnings were available to pay dividends. The Senior Credit Facilities contain financial covenants, which remain in effect so long as any amount is owed by the Company thereunder. These financial covenants require that (i) the Company's debt ratio, as defined, be less than or equal to 5.50 for the quarter ended March 31, 1998, and that the maximum allowable debt ratio, as defined therein, thereafter be further reduced to less than or equal to 3.1 for the quarters ending after June 30, 2002, and (ii) the Company's interest coverage ratio, as defined therein, be at least 1.85 for the quarter ended March 31, 1998, and thereafter increasing the interest coverage ratio, as defined therein, to at least 3.10 for any fiscal quarters ended after June 30, 2002. At March 31, 1998, the Company was in compliance with these covenants. The aggregate principal payments for debt, excluding borrowings under the Revolving Credit Facility, for the five years ending December 31, 1998 through 2002 are: $5,000, $11,000, $19,000, $25,000 and $33,200, respectively. F-9 L-3 COMMUNICATIONS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS (IN THOUSANDS) In February 1998, the Company filed a registration statement with the Securities and Exchange Commission ("SEC") for the sale of $150,000 aggregate principal amount of Senior Subordinated Notes due 2008 (the "Notes Offering"), and concurrently with the Notes Offering, Holdings filed a registration statement with the SEC for the sale of 5.5 million shares of common stock. 6. STOCK OPTIONS On March 2, 1998, Messrs. Lanza and LaPenta each exercised options to purchase 228,571 shares of Holdings' Class A Common Stock. The options were granted on April 30, 1997 at an exercise price of $6.47. Holdings contributed aggregate proceeds of $2,958 for such exercise of stock options to the Company, which the Company has recorded to additional paid-in capital in the accompanying balance sheet. 7. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental disclosures to the Condensed Consolidated (Combined) Statement of Cash Flows are as follows:
COMPANY PREDECESSOR COMPANY -------------- ------------------- THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 1998 MARCH 31, 1997 -------------- ------------------- Cash paid for interest expense $3,495 -- Cash paid for income taxes .... $ 18 --
During the quarter ended March 31, 1998, the Company credited a current income tax benefit of $451 directly to shareholders' equity related to the tax benefit from the exercise of stock options. 8. ACCOUNTING POLICIES On January 1, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general purpose financial statements. For the three months ended March 31, 1998 and 1997, there were no differences between net income and comprehensive income. 9. CONTINGENCIES Management is continually assessing the Company's obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments with respect to those environmental loss contingencies of which management of the Company is aware, the Company believes that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Company's results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company is engaged in providing products and services under contracts with the U.S. Government and to a lesser degree, under foreign government contracts, some of which are funded by the U.S. Government. All such contracts are subject to extensive legal and regulatory requirements, and, periodically, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. Under government procurement regulations, an indictment of the Company by a federal grand jury could result in the Company being suspended for a period of time from eligibility for awards of new government contracts. A conviction could result in debarment from contracting with the federal government for a specified term. F-10 L-3 COMMUNICATIONS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS (IN THOUSANDS) The Company is periodically subject to litigation, claims or assessments and various contingent liabilities (including environmental matters) incidental to its business. With respect to those investigative actions, items of litigation, claims or assessments of which they are aware, management of the Company believes that, after taking into account certain provisions that have been made with respect to these matters, the ultimate resolution of any such investigate actions, items of litigation, claims or assessments would not have a material adverse effect on the financial position or result of operations of the Company. F-11 L-3 COMMUNICATIONS CORPORATION (AND THE PREDECESSOR COMPANY) Consolidated (Combined) Financial Statements as of December 31, 1997 and 1996 and for the nine months ended December 31, 1997, the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995. F-12 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of L-3 Communications Corporation: We have audited the accompanying (i) consolidated balance sheet of L-3 Communications Corporation and subsidiaries (the "Company") as of December 31, 1997, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the nine months then ended, (ii) the combined statements of operations and cash flows of the Predecessor Company, as defined in Note 1 to the financial statements, for the three months ended March 31, 1997 and (iii) combined balance sheet of the Predecessor Company, as of December 31, 1996 and the related combined statements of operations, changes in invested equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 1996 financial statements of the Lockheed Martin Communications Systems Division, which statements reflect total assets and sales constituting 35 percent and 30 percent of the related combined totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Lockheed Martin Communications Systems Division for 1996, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above (i) present fairly, in all material respects, the consolidated financial position of the Company and subsidiaries as of December 31, 1997 and their consolidated results of operations and cash flows for the nine months then ended, and (ii) based on our audit and the report of other auditors for 1996, present fairly in all material respects the combined financial position of the Predecessor Company as of December 31, 1996 and their combined results of operations, and cash flows for the year then ended and the three months ended March 31, 1997, in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. 1301 Avenue of the Americas New York, New York 10019 February 2, 1998 F-13 REPORT OF INDEPENDENT AUDITORS Board of Directors Lockheed Martin Corporation We have audited the combined balance sheet of Lockheed Martin Communications Systems Division, as defined in Note 1 to the financial statements, as of December 31, 1996, and the related combined statements of operations, changes in shareholders' equity and invested equity, and cash flows for the two years in the period ended December 31, 1996. These financial statements are the responsibility of the Division's and Lockheed Martin Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Lockheed Martin Communications Systems Division at December 31, 1996 (not presented separately herein), and the combined results of its operations and its cash flows for the year ended December 31, 1996 (not presented separately herein), and the results of its operations and its cash flows for the period ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Washington, D.C. March 7, 1997 F-14 L-3 COMMUNICATIONS CORPORATION CONSOLIDATED (COMBINED) BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)
COMPANY PREDECESSOR COMPANY CONSOLIDATED COMBINED ----------------- ------------------- DECEMBER 31, 1997 DECEMBER 31, 1996 ----------------- ------------------- ASSETS Current assets: Cash and cash equivalents ...................................... $ 77,474 -- Contracts in process ........................................... 167,202 $198,073 Net assets held for sale ....................................... 6,653 -- Deferred income taxes .......................................... 13,298 -- Other current assets ........................................... 2,750 3,661 ----------------- ------------------- Total current assets ......................................... 267,377 201,734 ----------------- ------------------- Property, plant and equipment ................................... 95,034 116,566 Less, accumulated depreciation and amortization ................ 12,025 24,983 ----------------- ------------------- 83,009 91,583 ----------------- ------------------- Intangibles, primarily cost in excess of net assets acquired, net of amortization ............................................ 297,503 282,674 Deferred income taxes ........................................... 24,217 -- Other assets .................................................... 31,298 17,307 ----------------- ------------------- Total assets ................................................. $703,404 $593,298 ================= =================== LIABILITIES AND SHAREHOLDERS' (INVESTED) EQUITY Current liabilities: Current portion of long-term debt .............................. $ 5,000 -- Accounts payable, trade ........................................ 33,052 $ 35,069 Accrued employment costs ....................................... 31,162 27,313 Customer advances .............................................. 15,989 3,381 Amounts in excess of costs incurred ............................ 18,469 10,918 Accrued interest ............................................... 4,419 -- Other current liabilities ...................................... 27,476 26,207 ----------------- ------------------- Total current liabilities .................................... 135,567 102,888 ----------------- ------------------- Pension and postretirement benefits ............................. 38,113 -- Other liabilities ............................................... 5,009 16,801 Long-term debt .................................................. 392,000 -- Commitments and contingencies ................................... Shareholders' equity Common Stock, $.01 par value; 100 shares authorized and outstanding.................................................... -- -- Additional paid-in capital ..................................... 125,000 -- Retained earnings .............................................. 16,715 -- Deemed distribution ............................................ (9,000) -- ----------------- ------------------- Total shareholders' and invested equity ......................... 132,715 473,609 ----------------- ------------------- Total liabilities and shareholders' and invested equity ..... $703,404 $593,298 ================= ===================
See notes to consolidated (combined) financial statements. F-15 L-3 COMMUNICATIONS CORPORATION CONSOLIDATED (COMBINED) STATEMENTS OF OPERATIONS (IN THOUSANDS)
COMPANY PREDECESSOR COMPANY CONSOLIDATED COMBINED ----------------- -------------------------------------- YEAR ENDED DECEMBER NINE MONTHS THREE MONTHS 31, ENDED ENDED ---------------------- DECEMBER 31, 1997 MARCH 31, 1997 1996 1995 - ---------------------------------- ----------------- -------------- ---------- ---------- Sales ............................. $546,525 $158,873 $543,081 $166,781 Costs and expenses ................ 490,669 150,937 499,390 162,132 ----------------- -------------- ---------- ---------- Operating income .................. 55,856 7,936 43,691 4,649 Interest income ................... 1,430 -- -- -- Interest expense .................. 29,884 8,441 24,197 4,475 ----------------- -------------- ---------- ---------- Income (loss) before income taxes 27,402 (505) 19,494 174 Income tax expense (benefit) ..... 10,687 (247) 7,798 1,186 ----------------- -------------- ---------- ---------- Net income (loss) ................. $ 16,715 $ (258) $ 11,696 $ (1,012) ================= ============== ========== ==========
See notes to consolidated (combined) financial statements. F-16 L-3 COMMUNICATIONS CORPORATION CONSOLIDATED (COMBINED) STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND INVESTED EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 1997, THREE MONTHS ENDED MARCH 31, 1997 AND YEARS ENDED DECEMBER 31, 1996 AND 1995 (IN THOUSANDS EXCEPT SHARE DATA)
PREDECESSOR COMPANY COMPANY COMBINED CONSOLIDATED ------------- ----------------------------------------------------------------------- COMMON STOCK --------------------- ADDITIONAL INVESTED SHARES PAID-IN RETAINED EQUITY EQUITY ISSUED PAR VALUE CAPITAL EARNINGS ADJUSTMENT TOTAL ------------- -------- ----------- ------------ ---------- ------------ ---------- Balance January 1, 1995 .. $199,506 Repayments to Lockheed Martin.................. (3,831) Net loss................. (1,012) ------------- Balance December 31, 1995..................... 194,663 Advances from Lockheed Martin.................. 267,250 Net income............... 11,696 ------------- Balance December 31, 1996..................... 473,609 Advances from Lockheed Martin.................. 20,579 Net loss................. (258) ------------- Balance March 31, 1997 ... $493,930 -- -- -- -- -- -- ============= ======== =========== ============ ========== ============ ========== Shares Issued............ 100 $-- $125,000 $125,000 Deemed distribution ..... $(9,000) (9,000) Net Income............... $16,715 16,715 -------- ----------- ------------ ---------- ------------ ---------- Balance December 31, 1997..................... 100 $-- $125,000 $16,715 $(9,000) $132,715 ======== =========== ============ ========== ============ ==========
See notes to consolidated (combined) financial statements. F-17 L-3 COMMUNICATIONS CORPORATION CONSOLIDATED (COMBINED) STATEMENTS OF CASH FLOWS (IN THOUSANDS)
COMPANY PREDECESSOR COMPANY ----------------- --------------------------------------- NINE MONTHS THREE MONTHS YEAR ENDED DECEMBER 31, ENDED ENDED ----------------------- DECEMBER 31, 1997 MARCH 31, 1997 1996 1995 ----------------- -------------- ----------- ---------- OPERATING ACTIVITIES: Net income (loss) ........................... $ 16,715 $ (258) $ 11,696 $(1,012) Depreciation and amortization ............... 22,190 7,786 28,139 11,578 Amortization of deferred debt issue costs .. 1,517 -- -- -- Deferred income taxes ....................... 9,991 -- -- -- Changes in operating assets and liabilities, net of amounts acquired Contracts in process ....................... 18,161 (17,475) 23,543 (3,267) Other current assets ....................... (275) (481) 3,049 788 Other assets ............................... 2,141 (761) (8,346) 1,245 Accounts payable ........................... (6,146) (207) 4,104 (648) Accrued employment costs ................... 6,363 (625) 2,282 (611) Customer advances .......................... (611) 1,146 (5,541) -- Amounts in excess of costs incurred ....... 1,156 (3,037) (6,045) (2,041) Accrued interest ........................... 4,419 -- -- -- Other current liabilities .................. (7,132) (1,867) 3,180 4,004 Pension and postretirement benefits ....... 4,284 -- -- -- Other liabilities .......................... 1,087 (500) (25,327) (699) ----------------- -------------- ----------- ---------- Net cash from (used in) operating activities 73,860 (16,279) 30,734 9,337 ----------------- -------------- ----------- ---------- INVESTING ACTIVITIES: Acquisition of business ..................... (466,317) -- (287,803) -- Proceeds from assumption of contract obligation ................................. 12,176 -- -- -- Net cash from assets held for sale .......... 3,179 -- -- -- Proceeds from sale of property .............. 9,458 -- -- -- Purchases of investments .................... (5,113) -- -- -- Capital expenditures ........................ (11,934) (4,300) (13,528) (5,532) Disposition of property, plant and equipment 771 -- 3,347 26 ----------------- -------------- ----------- ---------- Net cash (used in) investing activities .... (457,780) (4,300) (297,984) (5,506) ----------------- -------------- ----------- ---------- FINANCING ACTIVITIES: Borrowings under senior credit facility .... 175,000 -- -- -- Proceeds from sale of 10 3/8% senior subordinated notes ......................... 225,000 -- -- -- Proceeds from issuance of common stock ..... 80,000 -- -- -- Debt issuance costs ......................... (15,606) -- -- -- Payment of debt ............................. (3,000) -- -- -- Advances from (repayments to) Lockheed Martin ..................................... -- 20,579 267,250 (3,831) ----------------- -------------- ----------- ---------- Net cash from (used in) financing activities.................................. 461,394 20,579 267,250 (3,831) ----------------- -------------- ----------- ---------- Net change in cash .......................... 77,474 -- -- -- Cash and cash equivalents, beginning of the period...................................... -- -- -- -- ----------------- -------------- ----------- ---------- Cash and cash equivalents, end of the period $ 77,474 -- -- -- ================= ============== =========== ==========
See notes to consolidated (combined) financial statements. F-18 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS (Dollars in thousands) 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS The accompanying consolidated financial statements include the assets, liabilities and results of operations of L-3 Communications Corporation, Inc., successor company, ("L-3" or the "Company"), a wholly owned subsidiary of L-3 Communications Holdings, Inc. ("Holdings") following the change in ownership (see Note 2) effective as of April 1, 1997 and for the period from April 1, 1997 to December 31, 1997. Prior to April 1, 1997, the statements comprise substantially all of the assets and liabilities and results of operations of (i) nine business units previously purchased by Lockheed Martin Corporation ("Lockheed Martin") as part of its acquisition of Loral Corporation ("Loral") in April 1996 (the "Loral Acquired Businesses"), and (ii) one business unit, Communications Systems -- East purchased by Lockheed Martin as part of its acquisition of the aerospace business of GE in April 1993 (collectively, the "Businesses" or the "Predecessor Company"). The combined financial statements of the Predecessor Company reflect the Businesses' assets, liabilities and results of operations included in Lockheed Martin's historical financial statements. Intercompany accounts between Lockheed Martin and the Businesses have been included in Invested Equity. The assets and operations of the semiconductor product line and certain other facilities which are not material have been excluded from the combined financial statements. Significant intercompany and inter-business transactions and balances have been eliminated. The Company is a supplier of sophisticated secure communication systems and specialized communication products including secure, high data rate communication systems, microwave components, avionics, recorders, telemetry and space products. The Company's customers include the Department of Defense (the "DoD"), selected U.S. government intelligence agencies, major aerospace/defense prime contractors and commercial customers. The Company operates primarily in one industry segment, electronic components and systems. Substantially all the Company's products are sold to agencies of the U.S. Government, primarily the Department of Defense, to foreign government agencies or to prime contractors or subcontractors thereof. All domestic government contracts and subcontracts of the Businesses are subject to audit and various cost controls, and include standard provisions for termination for the convenience of the U.S. Government. Multi-year U.S. Government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent year become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the government. 2. CHANGE IN OWNERSHIP TRANSACTION Holdings and L-3 were formed by Mr. Frank C. Lanza, the former President and Chief Operating Officer of Loral, Mr. Robert V. LaPenta, the former Senior Vice President and Controller of Loral (collectively, the "Equity Executives"), Lehman Brothers Capital Partners III, L.P. and its affiliates (the "Lehman Partnership") and Lockheed Martin to acquire the Businesses. The Company was capitalized with an equity contribution from Holdings of $125,000. On March 28, 1997, Lanza, LaPenta, the Lehman Partnership, L-3, and Lockheed Martin entered into a Transaction Agreement (the "L-3 Acquisition Agreement") whereby Holdings would acquire the Businesses from Lockheed Martin (the "L-3 Acquisition"). Also included in the acquisition is a semiconductor product line of another business and certain leasehold improvements in New York City which were not material. Pursuant to the L-3 Acquisition Agreement, L-3 acquired the Businesses from Lockheed Martin for $525,000, comprising $458,779 of cash, after a $21,221 reduction related to a purchase price adjustment, and $45,000 of common equity, representing a 34.9% interest in Holdings retained by Lockheed Martin, plus acquisition costs of $8,000. The Company and Lockheed Martin finalized the purchase price adjustment pursuant to an amendment to the L-3 Acquisition Agreement dated November 5, 1997, which also included the F-19 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) assumption by the Company of Lockheed Martin's rights and obligations under a contract for the production of mission communication systems for track vehicles, for which the Company received cash of $12,176. In connection with the L-3 Acquisition Agreement, Holdings and the Company anticipated entering into a transition services agreement with Lockheed Martin pursuant to which Lockheed Martin would provide to L-3 and its subsidiaries (and L-3 would provide to Lockheed Martin) certain corporate services of a type previously provided at costs consistent with past practices until December 31, 1997 (or, in the case of Communication Systems - -- East (formerly known as Communication Systems -- Camden), for a period of up to 18 months after the Closing). Lockheed Martin is providing L-3 the services contemplated by the proposed transaction services agreement in the absence of any executed agreement. The parties also entered into supply agreements which reflect previously existing inter-company work transfer agreements or similar support arrangements upon prices and other terms consistent with previously existing arrangements. Holdings, the Company and Lockheed Martin have entered into certain subleases of real property and cross-licenses of intellectual property. Pursuant to the L-3 Acquisition Agreement the Company also assumed certain obligations relating to environmental liabilities and benefit plans. In accordance with Accounting Principles Board Opinion No. 16, the acquisition of the Businesses by Holdings and L-3 has been accounted for as a purchase business combination effective as of April 1, 1997. The purchase cost (including the fees and expenses related thereto) was allocated to the tangible and intangible assets and liabilities of the Company based upon their respective fair values. The assets and liabilities recorded in connection with the purchase price allocation were $664,800 and $164,400, respectively. The excess of the purchase price over the fair value of net assets acquired of $303,200 was recorded as goodwill, and is being amortized on a straight-line basis over a period of 40 years. As a result of the 34.9% ownership interest retained by Lockheed Martin, the provisions of Emerging Issues Task Force Issue Number 88-16 were applied in connection with the purchase price allocation, which resulted in the recognition of a deemed distribution of $9,000. In connection with the determination of the fair value of assets acquired and pursuant to the provisions of Accounting Principles Board Opinion No. 16, the Company has valued acquired contracts in process at contract price, less the estimated cost to complete and an allowance for the Company's normal profit on its effort to complete such contracts. Had the L-3 Acquisition occurred on January 1, 1996, the unaudited pro forma sales and net income for the years ended December 31, 1997 and 1996 would have been $703,600 and $16,300, and $663,200 and $9,700, respectively. The pro forma results, which are based on various assumptions, are not necessarily indicative of what would have occurred had the acquisition been consummated on January 1, 1996. The 1997 and 1996 pro forma sales and net income have been adjusted to (a) include the operations of the Loral Acquired Businesses from January 1, 1996 (Note 3) and (b) exclude the operations of the Hycor business net assets held for sale from January 1, 1996 (Note 6). 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS: Cash equivalents consist of highly liquid investments with a maturity of three months or less at time of purchase. STATEMENTS OF CASH FLOWS: Changes in operating assets and liabilities are net of the impact of acquisitions and final purchase price allocations. The Predecessor Company participated in Lockheed Martin's cash management system, under which all cash was received and payments were made by Lockheed Martin. All transactions between the Predecessor Company and Lockheed Martin have been accounted for as settled in cash at the time the transactions were recorded by the Predecessor Company. F-20 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) REVENUE RECOGNITION: Sales on production-type contracts are recorded as units are shipped; profits applicable to such shipments are recorded pro rata, based upon estimated total profit at completion of the contract. Sales and profits on cost reimbursable contracts are recognized as costs are incurred. Sales and estimated profits under other long-term contracts are recognized under the percentage of completion method of accounting using the cost-to-cost method. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and their realization is probable. Losses on contracts are recognized when determined. Revisions in profit estimates are reflected in the period, on a cumulative catch-up basis, in which the facts, requiring the revision, become known. CONTRACTS IN PROCESS: Costs accumulated on contracts in process include direct costs, as well as manufacturing overhead, and for government contracts, general and administrative costs, independent research and development costs and bid and proposal costs. In accordance with industry practice, contracts in process contain amounts relating to contracts and programs with long performance cycles, a portion of which may not be realized within one year. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost. Depreciation is provided primarily on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. COST IN EXCESS OF NET ASSETS ACQUIRED: The excess of the cost of the L-3 Acquisition over the fair value of the net assets acquired is being amortized using a straight-line method over a 40 year period. Accumulated amortization of the Company amounted to $5,741 at December 31, 1997. The carrying amount of cost in excess of net assets acquired is evaluated on a recurring basis. Current and future profitability as well as current and future undiscounted cash flows, excluding financing costs, of the acquired businesses are primary indicators of recoverability. For the nine months ended December 31, 1997, there was no reduction to the carrying amount of the cost in excess of net assets acquired resulting from these evaluations. PREDECESSOR COMPANY INTANGIBLES: Intangibles, primarily the excess of the cost of Businesses over the fair value of the net assets acquired, was amortized using a straight-line method primarily over a 40-year period. Other intangibles were amortized over their estimated useful lives which range from 11 to 15 years. Amortization expense of the Businesses was $2,655 for the three months ended March 31, 1997; $10,115 and $6,086 for the years ended December 31, 1996 and 1995, respectively. Accumulated amortization was $26,524 at December 31, 1996. Intangibles of the Predecessor Company include costs allocated to the Businesses relating to the Request for Funding Authorization ("RFA"), consisting of over 20 restructuring projects to reduce operating costs, initiated by General Electric ("GE") Aerospace in 1990 and to the REC Advance Agreement ("RAA"), a restructuring plan initiated after Lockheed Martin's acquisition of GE Aerospace. The RAA was initiated to close two regional electronic manufacturing centers. Restructure costs are reimbursable from the U.S. Government if savings can be demonstrated to exceed costs. The total cost of restructuring under the RFA and the RAA represented approximately 15% of the estimated savings to the U.S. Government and, therefore, a deferred asset has been recorded by Lockheed Martin. The deferred asset is being allocated to all the former GE Aerospace sites, including the Communications Systems Division, on a basis that includes manufacturing labor, overhead, and direct material less non-hardware subcontracts. At December 31, 1997 and 1996, approximately $2,313 and $4,400, respectively, of unamortized RFA and RAA costs are deferred on the Company's and the Predecessor Company's consolidated (combined) balance sheets in other current assets and other assets. The carrying values of the Predecessor Company intangibles were reviewed if the facts and circumstances indicated potential impairment of their carrying value. If this review indicated that F-21 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) intangible assets were not recoverable, as determined based on the undiscounted cash flows of the entity acquired over the remaining amortization period, the Businesses carrying values related to the intangible asset were reduced by the estimated shortfall of cash flows. INCOME TAXES: The Company provides for income taxes using the liability method prescribed by the Financial Accounting Standards Board ("FASB") Statement No. 109, "Accounting for Income Taxes." Under the liability method, deferred income tax assets and liabilities reflect tax carryforwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes, as determined under enacted tax laws and rates. The financial effect of changes in tax laws or rates is accounted for in the period of enactment. PREDECESSOR COMPANY INCOME TAXES: The Predecessor Company was included in the consolidated Federal income tax return and certain combined and separate state and local income tax returns of Lockheed Martin. However, for purposes of these financial statements, the provision for income taxes has been allocated to the Predecessor Company based upon reported combined income before income taxes. Income taxes, current and deferred, are considered to have been paid or charged to Lockheed Martin and are recorded through the invested equity account with Lockheed Martin. The principal components of the deferred taxes are contract accounting methods, property, plant and equipment, goodwill amortization and timing of accruals. RESEARCH AND DEVELOPMENT: Research and development costs sponsored by the Company and the Predecessor Company include research and development, bid and proposal costs related to government products and services. These costs generally are allocated among all contracts and programs in progress under U.S. Government contractual arrangements. Customer-sponsored research and development costs incurred pursuant to contracts are accounted for as direct contract costs. STOCK OPTIONS: In accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related interpretations, compensation expense for stock options is recognized in income based on the excess, if any, of the Company's fair value of the stock at the grant date of the award or other measurement date over the amount an employee must pay to acquire the stock. The exercise price for stock options granted to employees equals or exceeds the fair value of Holdings common stock at the date of grant, thereby resulting in no recognition of compensation expense by the Company. The Company has adopted the disclosure - -only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). DERIVATIVE FINANCIAL INSTRUMENTS: In the normal course of financing operations, the Company enters into interest rate cap and floor transactions for interest rate protection purposes, and not for speculative or trading purposes. Cash payments to and from the Company and the counterparties are recorded as a component of interest expense. The initial cost of these arrangements are deferred and amortized as interest expense. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates and assumptions relate to contract estimates of sales and costs, allocations from Lockheed Martin, recoverability of recorded amounts of fixed assets and cost in excess of net assets acquired, litigation and environmental obligations. Actual results could differ from these estimates. EARNINGS PER SHARE: Earnings per share data is not presented since the Company and the Predecessor Company are wholly owned subsidiaries. F-22 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) ACCOUNTING PRONOUNCEMENTS: In June 1997, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in full set general purpose financial statements. SFAS No. 131 establishes accounting standards for the way that public business enterprises report selected information about operating segments and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132 revises employers' disclosures about pension and other postretirement benefits plans. It does not change the measurement or recognition of those plans. It standardizes the disclosure requirements for pensions and other postretirement benefits to the extent practicable, requires additional information on changes in the benefit obligations and fair values of plan assets that will facilitate financial analysis, and eliminates certain disclosures that are no longer as useful as they were when SFAS No. 87 "Employers' Accounting for Pensions", SFAS No. 88 "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits" and SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" were issued. SFAS No. 132 suggests combined formats for presentation of pension and other postretirement benefits disclosures. SFAS No. 130 and SFAS No. 131 and SFAS No. 132 are required to be adopted by 1998. The Company is currently evaluating the impact, if any, of SFAS No. 130, SFAS No. 131 and SFAS 132. Effective January 1, 1996, the Businesses adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets To Be Disposed Of" ("SFAS 121"). SFAS 121 establishes the accounting standards for the impairment of long-lived assets, certain intangible assets and cost in excess of net assets acquired to be held and used for long-lived assets and certain intangible assets to be disposed of. The impact of adopting SFAS 121 was not material. Effective in December 1997 the Company adopted the provisions of SFAS No. 129, "Disclosure of Information about Capital Structure" ("SFAS 129"). RECLASSIFICATIONS: Certain reclassifications have been made to conform prior-year amounts to the current-year presentation. 4. PREDECESSOR COMPANY ACQUISITION Effective April 1, 1996, Lockheed Martin acquired substantially all the assets and liabilities of the defense businesses of Loral, including the Wideband Systems Division and the Products Group which are included in the Businesses. The acquisition of the Wideband Systems Division and Products Group businesses (the "Loral Acquired Businesses") has been accounted for as a purchase by Lockheed Martin Communications Systems -- Camden Division ("Division"). The acquisition has been reflected in the financial statements based on the purchase price allocated to those acquired businesses by Lockheed Martin. The assets and liabilities recorded in connection with the purchase price allocation were $401,000 and $113,200, respectively. As such, the accompanying condensed combined financial statements for periods prior to April 1, 1997 reflect the results of operations of the Division and the Loral Acquired Businesses from the effective date of acquisition including the effects of an allocated portion of cost in excess of net assets acquired resulting from the acquisition. F-23 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) 5. CONTRACTS IN PROCESS Billings and accumulated costs and profits on long-term contracts, principally with the U.S. Government, comprise the following:
PREDECESSOR COMPANY COMPANY ---------- ------------- DECEMBER 31, ------------------------- 1997 1996 ---------- ------------- Billed contract receivables..................................... $ 39,029 $ 45,212 Unbilled contract receivables .................................. 33,136 84,814 Other billed receivables, principally commercial and affiliates 31,253 41,154 Inventoried costs .............................................. 82,954 72,880 ---------- ------------- 186,372 244,060 Less, unliquidated progress payments (19,170) (45,987) ---------- ------------- Net contracts in process........................................ $167,202 $198,073 ========== =============
The U.S. Government has title to or a secured interest in, inventory to which progress payments are applied. Unbilled contract receivables represent accumulated costs and profits earned but not yet billed to customers. The Company believes that substantially all such amounts will be billed and collected within one year. The following data has been used in the determination of costs and expenses:
COMPANY PREDECESSOR COMPANY -------------- -------------------------------- NINE THREE MONTHS MONTHS FOR THE YEAR ENDED ENDED ENDED DECEMBER 31, DECEMBER 31, MARCH 31, ------------------- 1997 1997 1996 1995 -------------- ----------- --------- -------- Selling, general and administrative ("SG&A") costs included in inventoried costs...................... $15,379 $14,536 $14,700 $1,156 Selling, general and administrative costs incurred . 88,527 28,449 82,226 6,525 Independent research and development, including bid and proposal costs, included in SG&A incurred ..... $28,893 $12,024 $36,500 $9,800
6. NET ASSETS HELD FOR SALE The Company has accounted for the allocation of purchase price and the net assets of its Hycor business in accordance with the FASB's Emerging Issues Task Force Issue 87-11 "Allocation of Purchase Price to Assets to be Sold" ("EITF 87-11"). Accordingly, the net assets related to the Hycor business as of April 1, 1997 are included in the accompanying consolidated balance sheet as "Net assets held for sale". The fair value assigned to such net assets is based upon management's estimate of the proceeds from the sale of the Hycor business less the estimated income from operations for such business during the holding period of April 1, 1997 through January 29, 1998 (the "holding period"), plus interest expense on debt allocated to such net assets during the holding period. On January 29, 1998, the Company sold the Hycor business, excluding land and buildings for $3,500 in cash subject to adjustment based on final closing net assets. In accordance with EITF 87-11, loss from the operations of the Hycor business of $108 and interest expense of $552 on the debt allocated to the Hycor net assets have been excluded from the Company's consolidated statements of operations for the nine months ended December 31, 1997. Management of the Company expects that any gain or loss realized on the ultimate disposition of the Hycor business will not have a material impact on the original purchase price allocation. F-24 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) Also included in net assets held for sale at December 31, 1997 is a Company property located in Atlanta, Georgia. 7. PROPERTY, PLANT AND EQUIPMENT
PREDECESSOR COMPANY COMPANY ---------- ------------- DECEMBER 31, ------------------------- 1997 1996 ---------- ------------- Land.......................................... $ 6,670 $ 9,200 Buildings and improvements ................... 19,487 27,000 Machinery, equipment, furniture and fixtures 58,978 73,137 Leasehold improvements ....................... 9,899 7,229 ---------- ------------- $95,034 $116,566 ========== =============
Depreciation and amortization expense attributable to property, plant and equipment was $13,320 for the nine months ended December 31, 1997; $4,529 for the three months ended March 31, 1997, and $14,924 and $5,492 for the years ended December 31, 1996 and 1995, respectively. 8. DEBT Long-term debt consists of:
DECEMBER 31, 1997 ----------------- Term loans............................. $172,000 10 3/8 Senior Subordinated Notes due 2007 ................................. 225,000 ----------------- $397,000 Less current portion of term loans ... 5,000 ----------------- Total long-term debt.................. $392,000 =================
In connection with the L-3 Acquisition, the Company entered into a credit facility (the "Senior Credit Facilities") with a syndicate of banks and financial institutions for $275,000 consisting of $175,000 of term loans (the "Term Loan Facilities") and a $100,000 revolving credit facility (the "Revolving Credit Facility"). The Senior Credit Facilities bear interest, at the option of the Company, at a rate related to (i) the higher of federal funds rate plus 0.50% per annum or the reference rate published by Bank of America NT&SA or (ii) LIBOR. At December 31, 1997, such interest rates, based on various maturities, ranged from 7.625% to 8.625%. Interest payments vary in accordance with the type of borrowing and are made at a minimum every three months. The Revolving Credit Facility expires in 2003 and is available for ongoing working capital and letter of credit needs. The Term Loans mature in installments until the final maturity date in 2006. Approximately $93,428 of the Revolving Credit Facility is available at December 31, 1997 reflecting letters of credit of $6,572 drawn against the Revolving Credit Facility of $100,000. In February 1998, the Senior Credit Facilities were amended to, among other things, increase the Revolving Credit Facility to $200,000, waive certain excess cash flow prepayments, as defined, otherwise required and permit the incurrence of up to an additional $150,000 of subordinated debt. The Company pays a commitment fee of 0.375% per annum on the unused portion of the Revolving Credit Facility. In April 1997, the Company issued $225,000 of 10 3/8% senior subordinated notes (the "1997 Notes") due May 1, 2007 with interest payable semi-annually on May 1 and November 1 of each year, commencing November 1, 1997. On November 5, 1997, the Company completed its exchange offer relating to the 1997 F-25 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) Notes and the holders of the 1997 Notes received registered securities. The 1997 Notes are redeemable at the option of the Company, in whole or in part, at any time on or after May 1, 2002, at various redemption prices plus accrued and unpaid interest to the applicable redemption date. In addition, prior to May 1, 2000, the Company may redeem up to 35% of the aggregate principal amount of 1997 Notes at a redemption price of 109.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date with the net cash proceeds of one or more equity offerings by Holdings that are contributed to the Company as common equity capital. The Senior Credit Facilities and the 1997 Notes agreement contain financial and restrictive covenants that limit, among other things, the ability of the Company to borrow additional funds, dispose of assets, or pay cash dividends. At December 31, 1997, none of the Company's retained earnings were available to pay dividends. The Senior Credit Facilities contain financial covenants, which remain in effect so long as any amount is owed by the Company thereunder. These financial covenants require that (i) the Company's debt ratio, as defined, be less than or equal to 5.50 for the quarter ended December 31, 1997, and that the maximum allowable debt ratio, as defined, thereafter be further reduced to less than or equal to 3.1 for the quarters ending after June 30, 2002, and (ii) the Company's interest coverage ratio, as defined, be at least 1.85 for the quarter ended December 31, 1997, and thereafter increasing the interest coverage ratio, as defined, to at least 3.10 for any fiscal quarters ended after June 30, 2002. At December 31, 1997, the Company was in compliance with these covenants. In connection with the Senior Credit Facilities, the Company has granted the lenders a first priority lien on substantially all of the Company's assets including the stock of L-3 Communications Corporation. The aggregate principal payments for debt, excluding borrowings under the Revolving Credit Facility, for the five years ending December 31, 1998 through 2002 are: $5,000, $11,000, $19,000, $25,000 and $33,200, respectively. The costs related to the issuance of debt have been deferred and are being amortized as interest expense over the term of the related debt using a method that approximates the effective interest method. 9. PREDECESSOR COMPANY'S INTEREST EXPENSE Interest expense has been allocated to the Predecessor Company by applying Lockheed Martin's weighted average consolidated interest rate to the portion of the beginning of the period invested equity account deemed to be financed by consolidated debt, which has been determined based on Lockheed Martin's debt to equity ratio on such date, except that the acquisition of the Loral Acquired Businesses has been assumed to be fully financed by debt. Management of the Businesses believes that this allocation methodology is reasonable. Interest expense of the Predecessor Company was calculated using the following balances and interest rates:
YEARS ENDED DECEMBER THREE MONTHS 31, ENDED ---------------------- MARCH 31, 1997 1996 1995 -------------- ---------- ---------- Invested Equity $473,609 $482,466 $199,506 Interest Rate .. 7.10% 7.20% 7.40%
10. FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash and cash equivalents, billed contract receivables, other billed receivables (principally commercial and affiliates), trade accounts payable, customer advances, debt instruments, and interest rate cap and interest rate floor contracts. The book values of cash and cash equivalents, billed contract receivables, other billed receivables (principally F-26 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) commercial and affiliates), trade accounts payable and customer advances are considered to be representative of their respective fair values at December 31, 1997 due to the short-term maturities or expected settlement dates of these instruments. The Company's debt instruments consist of term loans and 1997 Notes (Note 8). The carrying values of the term loans approximate fair value because they are variable-rate loans which bear interest at current market rates. The 1997 Notes are registered, unlisted public debt which is traded in the over-the-counter market. The fair value of such debt at December 31, 1997 was estimated to be approximately $243,000, based on trading activity on December 31, 1997. To mitigate risks associated with changing interest rates on certain of its debt, the Company entered into the interest rate agreements. The fair values of the interest rate caps and interest rate floors (collectively, the "interest rate agreements") were estimated by discounting expected cash flows using quoted market interest rates. The Company manages exposure to counterparty credit risk by entering into the interest rate agreements only with major financial institutions that are expected to fully perform under the terms of such agreements. The notional amounts are used to measure the volume of these agreements and do not represent exposure to credit loss. The impact of the interest rate agreements was not material to interest expense for the nine months ended December 31, 1997. Information with respect to the interest rate agreements is as follows:
DECEMBER 31, 1997 -------------------------- NOTIONAL UNREALIZED AMOUNT GAINS (LOSSES) ---------- -------------- Interest rate caps . $100,000 $(1,008) ---------- -------------- Interest rate floors.............. $ 50,000 $ (263) ---------- --------------
At December 31, 1996, the Predecessor Company's financial instruments consisted primarily of billed contract receivables, other billed receivables (principally commercial and affiliates), trade accounts payable and customer advances. The book value of billed contract receivables, other billed receivables (principally commercial and affiliates), trade accounts payable and customer advances approximated their respective fair values at December 31, 1996, due to the short-term maturities or expected settlement dates of those instruments. 11. INCOME TAXES THE COMPANY Pretax income of the Company for the nine months ended December 31, 1997 was $27,402 and was primarily domestic. The components of the Company's provision for income taxes for the nine months ended December 31, 1997 are:
Income taxes currently payable, primarily federal $ 696 Deferred income taxes: Federal .......................................... 8,635 State and local .................................. 1,356 -------- Subtotal ......................................... $ 9,991 -------- Total provision for income taxes .................. $10,687 ========
F-27 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) The effective income tax rate of the Company for the nine months ended December 31, 1997 differs from the statutory federal income tax rate for the following reasons:
Statutory federal income tax rate .............................. 35.0% State and local income taxes, net of federal income tax benefit 3.2 Non-deductible goodwill amortization and other expenses ....... 3.7 Research and development and other tax credits ................. (2.9) ------- Effective income tax rate ...................................... 39.0 % =======
The significant components of the Company's net deferred tax assets at December 31, 1997 are:
Deferred tax assets: Other postretirement benefits ....................... $ 8,649 Inventoried costs ................................... 8,711 Compensation and benefits ........................... 528 Pension costs ....................................... 4,177 Property, plant and equipment ....................... 8,098 Income recognition on long-term contracts .......... 3,691 Other ............................................... 1,861 Net operating loss and other credit carryforwards .. 2,969 --------- Total deferred tax assets........................... 38,684 Deferred tax liabilities: Cost in excess of net assets acquired ............... (1,099) Other, net .......................................... (70) --------- Total deferred tax liabilities...................... (1,169) --------- Net deferred tax assets............................... $37,515 ========= The net deferred tax assets are classified as follows: Current deferred tax assets ......................... $13,298 Long-term deferred tax assets........................ 24,217 --------- $37,515 =========
At December 31, 1997, the Company had $2,969 of tax credit carryforwards, primarily related to U.S. federal net operating losses and research and experimentation tax credits which expire, if unused, in 2012. The Company believes that these carryforwards will be available to reduce future income tax liabilities and has recorded these carryforwards as non-current deferred tax assets. PREDECESSOR COMPANY The (benefit) provision for income taxes for the Predecessor Company was calculated by applying statutory tax rates to the reported income (loss) before income taxes after considering items that do not enter into the determination of taxable income and tax credits reflected in the consolidated provision of Lockheed Martin, which are related to the Businesses. Substantially all the income of the Businesses are from domestic operations. For the three months ended March 31, 1997, it is estimated that the benefit for deferred taxes represents $1,315. For the years ended December 31, 1996 and 1995, it is estimated that the (benefit) provision for deferred taxes represents ($2,143) and $3,994, respectively. F-28 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) The effective income tax rate of the Predecessor Company differs from the statutory Federal income tax rate for the following reasons:
FOR THE THREE MONTHS YEARS ENDED ENDED DECEMBER 31, MARCH 31, ---------------- 1997 1996 1995 --------------------- ------- Statutory federal income tax rate ..................... (35.0)% 35.0% 34.0% Amortization of cost in excess of net assets acquired (8.1) 2 529 Research and development and other tax credits ....... (11.3) (2) -- State and local income taxes, net of federal income tax benefit and state and local income tax credits .. 4.8 6 101 Foreign sales corporation tax benefits ................ (8.4) (1) -- Other, net ............................................ 9.1 -- 17.0 -------------- ------- ------- Effective income tax rate ............................. (48.9)% 40.0% 681% ============== ======= =======
12. STOCK OPTIONS THE COMPANY Holdings sponsors an option plan for key employees, pursuant to which options to purchase up to 3,255,815 shares of common stock have been authorized for grant. On April 30, 1997, Holdings adopted the 1997 Option Plan for key employees and granted to the Equity Executives nonqualified options to purchase, at $6.47 per share, 2,285,714 shares of Class A common stock of Holdings. In each case, half of the options are "Time Options" and half are "Performance Options" (collectively, the "Options"). The Time Options become exercisable with respect to 20% of the shares subject to the Time Options on each of the first five anniversaries if employment continues through and including such date. The Performance Options become exercisable nine years after the grant date, but may become exercisable earlier with respect to up to 20% of the shares subject to the Performance Options on each of the first five anniversaries, to the extent certain defined targets are achieved. The Options, which have a ten year term, become fully exercisable under certain circumstances, including a change in control. On July 1, 1997 and November 11, 1997, Holdings granted nonqualified options to certain officers and other employees of the Company to purchase at $6.47 per share 689,500 shares of Class A common stock of Holdings (collectively, the "1997 Options"). Generally, the 1997 Options vest over a three-year vesting period and expire ten years from the date of grant. The exercise price for Holdings' stock options granted to employees in 1997 equaled the estimated fair value of Holdings' common stock at the date of grant. Accordingly, in accordance with APB 25, no compensation expense was recognized by the Company. Pro forma information regarding net earnings as required by SFAS 123 has been determined as if the Company had accounted for its employee stock options under the fair value method. Because Holdings is a nonpublic entity the fair value for the options was estimated at the date of grant using the minimum value method prescribed in SFAS 123, which does not consider the expected volatility of Holdings' stock price, with the following weighted-average assumptions for 1997: risk-free interest rate of 6.3%; dividend yield of 0%; and weighted-average expected option life of 5.49 years. F-29 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) For purposes of pro forma disclosures, the compensation cost of the options based on their estimated fair values is amortized to expense over vesting periods of the options. The Company's net income for the nine months ended December 31, 1997 would have decreased to the pro forma amounts indicated below:
Net income: As reported . $16,715 ========= Pro forma..... $16,161 =========
A summary of the stock option activity for the nine months ended December 31, 1997 is as follows:
SHARES WEIGHTED AVERAGE (000'S) EXERCISE PRICE -------- ---------------- Options granted ........................ 2,975 $6.47 Options exercised ...................... -- -- Options cancelled ...................... 4 $6.47 Options outstanding, December 31, 1997 2,971 $6.47 Options exercisable, December 31, 1997 -- --
The weighted-average grant-date fair value of options granted during the nine months ended December 31, 1997 was $1.82 per option. The weighted average remaining contract life of the Company's outstanding stock options was 9.37 years at December 31, 1997. PREDECESSOR COMPANY During the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995, certain employees of the Predecessor Company participated in Lockheed Martin's stock option plans. All stock options granted had 10 year terms and vested over a two year service period. Exercise prices of options awarded in both years were equal to the market price of the stock on the date of grant. Pro forma information regarding net earnings (loss) as required by SFAS No. 123 has been determined as if the Predecessor Company had accounted for its employee stock options under the fair value method. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995, respectively: risk-free interest rates of 5.58%, 5.58% and 6.64%; dividend yield of 1.70%; volatility factors related to the expected market price of the Lockheed Martin's common stock of .186, .186 and .216; weighted-average expected option life of five years. The weighted-average fair values of options granted during 1997, 1996 and 1995 were $17.24, $17.24 and $16.09, respectively. For the purposes of pro forma disclosures, the options' estimated fair values are amortized to expense over the options' vesting periods. The Predecessor Company's pro forma net loss for the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995 were ($386), $11,531, and $(1,040), respectively. F-30 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) 13. COMMITMENTS AND CONTINGENCIES THE COMPANY The Company and Predecessor Company leases certain facilities and equipment under agreements expiring at various dates through 2011. At December 31, 1997, the Company's future minimum payments for noncancellable operating leases with initial or remaining terms in excess of one year are as follows:
OPERATING LEASES ------------------------------------ REAL ESTATE EQUIPMENT TOTAL ------------- ----------- -------- 1998.......... $ 8,599 $295 $ 8,894 1999 ......... 7,734 244 7,978 2000 ......... 10,030 232 10,262 2001 ......... 8,926 29 8,955 2002 ......... 2,795 22 2,817 Thereafter .. 14,393 -- 14,393 ------------- ----------- -------- $52,477 $822 $53,299 ============= =========== ========
Real estate lease commitments have been reduced by minimum sublease rentals of $22,106 due in the future under noncancellable subleases. Leases covering major items of real estate and equipment contain renewal and or purchase options which may be exercised by the Company and Predecessor Company. Rent expense, net of sublease income from other Lockheed Martin entities, was $7,330 for the Company for the nine months ended December 31, 1997; $2,553 for the Predecessor Company for the three months ended March 31, 1997 and $8,495 and $4,772 for the Predecessor Company for the years ended December 31, 1996 and 1995, respectively. The Company is and the Predecessor Company has been engaged in providing products and services under contracts with the U.S. Government and to a lesser degree, under foreign government contracts, some of which are funded by the U.S. Government. All such contracts are subject to extensive legal and regulatory requirements, and, from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. Under government procurement regulations, an indictment of the Company and the Predecessor Company by a federal grand jury could result in the Company and the Predecessor Company being suspended for a period of time from eligibility for awards of new government contracts. A conviction could result in debarment from contracting with the federal government for a specified term. The decline in the U.S. defense budget since the mid-1980s has resulted in program delays, cancellations and scope reduction for defense contracts in general. These events may or may not have an effect on the Company's programs; however, in the event that U.S. Government expenditures for products of the type manufactured by the Company are reduced, and not offset by greater commercial sales or other new programs or products, or acquisitions, there may be a reduction in the volume of contracts or subcontracts awarded to the Company. Pursuant to the L-3 Acquisition Agreement, Holdings and the Company have agreed to assume certain on-site and off-site environmental liabilities related to events or activities occurring prior to the consummation of the L-3 Acquisition. Lockheed Martin has agreed to retain all environmental liabilities for all facilities not used by the Businesses as of April, 1997 and to indemnify fully Holdings for such prior site environmental liabilities. Lockheed Martin has also agreed, for the first eight years following April 1997 to pay 50% of all costs incurred by Holdings above those reserved for on the Company's balance sheet at March 31, 1997 relating to certain Company-assumed environmental liabilities and, for the seven F-31 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) years thereafter, to pay 40% of certain reasonable operation and maintenance costs relating to any environmental remediation projects undertaken in the first eight years. The Company believes that its total liability for known or reasonably probable environmental claims, even without consideration of the Lockheed Martin indemnification, would not either individually or collectively have a material adverse effect upon the Company's financial condition or upon the results of its operations. Management continually assesses the Company's obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management is aware, the Company believes that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Company's results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company and the Predecessor Company have been periodically subject to litigation, claims or assessments and various contingent liabilities (including environmental matters) incidental to its business. With respect to those investigative actions, items of litigation, claims or assessments of which they are aware, management of the Company is of the opinion that the probability is remote that, after taking into account certain provisions that have been made with respect to these matters, the ultimate resolution of any such investigative actions, items of litigation, claims or assessments will have a material adverse effect on the financial position or results of operations of the Company and the Predecessor Company. 14. PENSIONS AND OTHER EMPLOYEE BENEFITS THE COMPANY PENSIONS: Holdings and the Company maintain a number of pension plans, both contributory and noncontributory, covering certain employees. Eligibility for participation in these plans varies and benefits are generally based on members' compensation and years of service. The Company's funding policy is generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue Code and regulations thereon. Plan assets are invested primarily in U.S. government and agency obligations and listed stocks and bonds. Pension expense for the nine months ended December 31, 1997 includes the following components:
Service cost ................. $ 5,109 Interest cost ................ 8,883 Actual return on plan assets (11,285) Net deferral ................. 1,581 ---------- Total pension cost ........... $ 4,288 ==========
F-32 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) The following presents the funded status and amounts recognized in the balance sheet for the Company's pension plans:
DECEMBER 31, 1997 -------------------------------- ASSETS EXCEED ACCUMULATED ACCUMULATED BENEFITS BENEFITS EXCEED ASSETS --------------- --------------- Actuarial present value of benefit obligations: Vested benefits ................................................ $13,742 $152,133 --------------- --------------- Accumulated benefits ........................................... $13,825 $155,474 Effect of projected future salary increases .................... 3,337 25,795 --------------- --------------- Projected benefits.............................................. $17,162 $181,269 =============== =============== Plan assets at fair value........................................ $18,172 $155,278 --------------- --------------- Plan assets in excess of (less than) projected benefit obligation...................................................... 1,010 (25,991) Unrecognized net (gain) loss .................................... (559) 5,683 --------------- --------------- Prepaid (accrued) pension cost................................... $ 451 $(20,308) =============== ===============
The following assumptions were used in accounting for pension plans for the Company:
APRIL 1, 1997 DECEMBER 31, 1997 --------------- ----------------- Discount rate .................... 7.50% 7.25% Rate of increase in compensation 5.00% 5.00% Rate of return on plan assets ... 9.00% 9.00%
In connection with the Company's assumption of certain plan obligations pursuant to the L-3 Acquisition, Lockheed Martin has provided the PBGC with commitments to assume sponsorship or other forms of financial support under certain circumstances. In this connection, the Company has provided certain assurances to Lockheed Martin including, but not limited to, (i) continuing to fund the pension plans consistent with prior practices and to the extent deductible for tax purposes and, where appropriate, recoverable under Government contracts, (ii) agreeing to not increase benefits under the pension plans without the consent of Lockheed Martin, (iii) restricting the Company from a sale of any businesses employing individuals covered by the pension plans if such sale would not result in reduction or elimination of the Lockheed Martin Commitment with regard to the specific plan and (iv) if the pension plans were returned to Lockheed Martin, granting Lockheed Martin the right to seek recovery from the Company of those amounts actually paid, if any, by Lockheed Martin with regard to the pension plans after their return. POST-RETIREMENT HEALTH CARE AND LIFE INSURANCE: In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's pension plans. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying a portion of the cost through contributions, deductibles and coinsurance provisions. F-33 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) Post-retirement health care and life insurance costs for the nine months ended December 31, 1997 include the following components:
Service cost .............................................. $ 466 Interest cost ............................................. 840 ------- Total post-retirement health care and life insurance costs $1,306 =======
The following table presents the amounts recognized in the balance sheet for the Company at December 31, 1997:
Accumulated post-retirement benefit obligation: Retirees.................................................... $ 4,702 Fully eligible plan participants ........................... 3,188 Other active plan participants ............................. 10,990 --------- Total accumulated post-retirement benefit obligation ........ $18,880 Unrecognized net loss ....................................... 624 --------- Accrued post-retirement health care and life insurance costs $18,256 =========
Actuarial assumptions used in determining the December 31, 1997 accumulated post-retirement benefit obligation include a discount rate of 7.25%, an average rate of compensation increase of 5.0% and an assumed health care cost trend rate of 6.5% in 1997 decreasing gradually to a rate of 4.5% by the year 2001. The discount rate used at April 1, 1997 was 7.50%. The other assumptions did not change from April 1, 1997. Increasing the assumed health care cost trend rate by 1% would change the accumulated post-retirement benefits obligation at December 31, 1997 by approximately $2,218 and the aggregate service and interest cost components for the nine months ended December 31, 1997 by approximately $81 and $113, respectively. EMPLOYEE SAVINGS PLAN: Under its various employee savings plans, the Company matches the contributions of participating employees up to a designated level. The extent of the match, vesting terms and the form of the matching contribution vary among the plans. Under these plans, the Company's matching contributions, in cash, for the nine months ended December 31, 1997 was $3,742. THE PREDECESSOR COMPANY Certain of the Businesses for the Predecessor Company participated in various Lockheed Martin-sponsored pension plans covering certain employees. Eligibility for participation in these plans varies, and benefits are generally based on members' compensation and years of service. Lockheed Martin's funding policy was generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue Code and regulations. Since the aforementioned pension arrangements are part of certain Lockheed Martin defined benefit plans, no separate actuarial data is available for the portion allocable to the Businesses. Therefore, no liabilities or assets are reflected in the accompanying combined financial statements of the Predecessor Company as of December 31, 1996. The Businesses have been allocated pension costs based upon participant employee headcount. Net pension expense included in the accompanying combined financial statements of the Predecessor Company was $1,848 for the three months ended March 31, 1997, and $7,027 and $4,134, for the years ended December 31, 1996 and 1995, respectively. In addition to participating in Lockheed Martin-sponsored pension plans, certain of the Businesses of the Predecessor Company provided varying levels of health care and life insurance benefits for retired F-34 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) employees and dependents. Participants were eligible for these benefits when they retired from active service and met the pension plan eligibility requirements. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying a portion of the cost through contributions, deductibles and coinsurance provisions. Since the aforementioned postretirement benefits are part of certain Lockheed Martin postretirement arrangements, no separate actuarial data is available for the portion allocable to the Businesses. Accordingly, no liability is reflected in the accompanying combined financial statements as of combined December 31, 1996 and 1995. The Businesses have been allocated postretirement benefits cost based on participant employee headcount. Postretirement benefit costs included in the accompanying combined financial statements was $616 for the three months ended March 31, 1997 and $2,787 and $2,124 for the years ended December 31, 1996 and 1995, respectively. Under various employee savings plans sponsored by Lockheed Martin, the Predecessor Company matched contributions of participating employees up to a designated level. Under these plans the matching contributions for the three months ended March 31, 1997 and for the years ended December 31, 1996 and 1995 were $1,241, $3,940 and $1,478, respectively. 15. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental disclosures to the consolidated statement of cash flows are as follows:
COMPANY PREDECESSOR COMPANY ----------------- ------------------------------ YEAR ENDED NINE MONTHS THREE MONTHS DECEMBER 31, ENDED ENDED -------------- DECEMBER 31, 1997 MARCH 31, 1997 1996 1995 ----------------- -------------- ------ ------ Interest paid ..... $21,245 -- -- -- ================= ============== ====== ====== Income taxes paid $ 109 -- -- -- ================= ============== ====== ======
The Company issued $45,000 of Holdings Class A Common Stock to Lockheed Martin in a non-cash transaction as partial consideration paid to Lockheed Martin for the L-3 Acquisition. 16. SALES TO PRINCIPAL CUSTOMERS The Company and the Predecessor Company operate primarily in one industry segment, government electronic systems. Sales to principal customers are as follows:
COMPANY PREDECESSOR COMPANY -------------- ------------------------------------------- THREE NINE MONTHS YEAR YEAR MONTHS ENDED ENDED ENDED ENDED DECEMBER 31, MARCH 31, DECEMBER 31, DECEMBER 31, 1997 1997 1996 1995 -------------- ----------- -------------- -------------- U.S. Government Agencies ... $434,020 $128,505 $425,033 $161,617 Foreign (principally foreign governments) ............... 12,090 13,612 33,475 4,945 Other (principally U.S. commercial) ................ 100,415 16,756 84,573 219 -------------- ----------- -------------- -------------- $546,525 $158,873 $543,081 $166,781 ============== =========== ============== ==============
17. OTHER TRANSACTIONS WITH LOCKHEED MARTIN The Company and the Predecessor Company sell products to Lockheed Martin and its affiliates, net sales for which were $60,402 for the nine months ended December 31, 1997; $21,171 for the three months F-35 L-3 COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued) (Dollars in thousands) ended March 31, 1997 and $70,658 and $25,874 for the years ended December 31, 1996 and 1995, respectively. Included in Contracts in Process are receivables from Lockheed Martin and its affiliates of $8,846 and $10,924 at December 31, 1997 and 1996, respectively. Lockheed Martin provides the Company information systems and other services and previously provided similar services to the Predecessor Company for which the Company and the Predecessor Company was charged $13,690, $4,210, $20,901 and $20,508 for the nine months ended December 31, 1997, the three months ended March 31, 1997 and the years ended December 31, 1996 and 1995, respectively. The Predecessor Company relied on Lockheed Martin for certain services, including treasury, cash management, employee benefits, taxes, risk management, internal audit, financial reporting, contract administration and general corporate services. Although certain assets, liabilities and expenses related to these services have been allocated to the Businesses, the combined financial position, results of operations and cash flows presented in the accompanying combined financial statements would not be the same had the Businesses been independent entities. The amount of allocated corporate expenses to the Predecessor Company and reflected in these combined financial statements was estimated based primarily on an allocation methodology prescribed by government regulations pertaining to government contractors. Allocated costs to the Businesses were $5,208 for the three months ended March 31, 1997, and $10,057 and $2,964 for the years ended December 31, 1996 and 1995, respectively. 18. SUBSEQUENT EVENTS In February 1998, the Company purchased substantially all the assets and liabilities of the Satellite Transmission Systems division of California Microwave, Inc. The purchase price of $27,000 is subject to adjustment based on closing net assets. The Company used cash on hand to fund the purchase price. On December 22, 1997, the Company signed a definitive agreement to purchase substantially all the assets and liabilities of the Ocean Systems division of AlliedSignal Inc. The purchase price of $67,500, subject to adjustment based on closing net working capital, will be financed through cash on hand and/or borrowings available under the Senior Credit Facilities. In February 1998, the Company entered into a definitive agreement to purchase the assets of ILEX Systems ("ILEX") for $51,900 in cash and additional consideration based on post-acquisition performance of ILEX. The acquisition of ILEX and Ocean Systems are expected to close during the first quarter of 1998. The Company plans to finance the purchase prices using its cash on hand and available borrowings under its revolving credit facility. In February 1998, the Company filed a registration statement with the Securities and Exchange Commission ("SEC") for the sale of $150,000 aggregate principal amount of Senior Subordinated Notes due 2008 (the "Notes Offering"), and concurrently with the Notes Offering, Holdings filed a registration statement with the SEC for the sale of 5.5 million shares of common stock of Holdings. F-36 LORAL ACQUIRED BUSINESSES COMBINED FINANCIAL STATEMENTS For the three months ended March 31, 1996 and the year ended December 31, 1995 F-37 REPORT OF INDEPENDENT AUDITORS Board of Directors of L-3 Communications Corporation: We have audited the accompanying combined statements of operations and cash flows for the Loral Acquired Businesses as defined in Note 1 (the "Businesses") for the three months ended March 31, 1996 and the year ended December 31, 1995. These financial statements are the responsibility of the Businesses' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined results of the operations and cash flows of the Businesses for the three months ended March 31, 1996 and the year ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. 1301 Avenue of the Americas New York, New York 10019 March 20, 1997 F-38 LORAL ACQUIRED BUSINESSES COMBINED STATEMENTS OF OPERATIONS (IN THOUSANDS)
THREE MONTHS ENDED YEAR ENDED MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- Sales ...................... $132,200 $448,165 Cost and expenses .......... 124,426 424,899 -------------- ----------------- Operating income ........... 7,774 23,266 Allocated interest expense 4,365 20,799 -------------- ----------------- Income before income taxes 3,409 2,467 Income taxes ............... 1,292 854 -------------- ----------------- Net income.................. $ 2,117 $ 1,613 ============== =================
See notes to combined financial statements. F-39 LORAL ACQUIRED BUSINESSES COMBINED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
THREE MONTHS ENDED YEAR ENDED MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- OPERATING ACTIVITIES: Net Income ................................... $ 2,117 $ 1,613 Depreciation and amortization ................ 5,011 20,625 Changes in operating assets and liabilities Contracts in process ........................ (11,382) 7,327 Other current assets ........................ (3,436) 890 Other assets ................................ 2,437 6,736 Accounts payable and accrued liabilities ... 4,525 (4,533) Other current liabilities ................... 3,348 4,428 Other liabilities ........................... (452) 117 -------------- ----------------- Net cash from operating activities ........... 2,168 37,203 -------------- ----------------- INVESTING ACTIVITIES: Acquisition of business ...................... -- (214,927) Capital expenditures ......................... (3,962) (12,683) Disposition of property, plant and equipment 187 4,342 -------------- ----------------- (3,775) (223,268) -------------- ----------------- FINANCING ACTIVITIES: Advances from (repayments to) Loral ......... $ 1,607 $ 186,065 -------------- ----------------- Net change in cash............................ -- -- ============== =================
See notes to combined financial statements. F-40 LORAL ACQUIRED BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS (Dollars in thousands) 1. BACKGROUND AND DESCRIPTION OF BUSINESS On January 31, 1997, Lockheed Martin Corporation ("Lockheed Martin"), Lehman Brothers Holdings Inc. ("Lehman"), Frank C. Lanza ("Lanza") and Robert V. LaPenta ("LaPenta") entered into a Memorandum of Understanding ("MOU") regarding the transfer of certain businesses of Lockheed Martin to a newly formed corporation ("Newco") to be owned by Lockheed Martin, Lehman, Lanza and LaPenta. The businesses proposed to be transferred (the "Loral Acquired Businesses" or "Businesses") include Lockheed Martin's Wideband Systems Division and the Products Group, comprised of ten autonomous operations, all of which were acquired by Lockheed Martin effective April 1, 1996 as part of the acquisition by Lockheed Martin of the defense electronics business of Loral Corporation ("Loral"). Also included in the transaction is the acquisition of a semiconductor product line of another business and certain leasehold improvements in New York City. The Businesses are leading suppliers of sophisticated secure communication systems, microwave communication components, avionic and instrumentation products and other products and services to major aerospace and defense contractors as well as the U.S. Government. The Businesses operate primarily in one industry segment, communication systems and products. Substantially all the Businesses' products are sold to agencies of the United States Government, primarily the Department of Defense, to foreign government agencies or to prime contractors or subcontractors thereof. All domestic government contracts and subcontracts of the Businesses are subject to audit, various cost controls and include standard provisions for termination for the convenience of the government. Multi-year government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent year become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the government. The decline in the U.S. defense budget since the mid 1980s has resulted in program delays, cancellations and scope reductions for defense contractors in general. These events may or may not have an effect on the Businesses' programs; however, in the event that expenditures for products of the type manufactured by the Businesses are reduced, and not offset by greater foreign sales or other new programs or products, or acquisitions, there may be a reduction in the volume of contracts or subcontracts awarded to the Businesses. The Businesses' operations, as presented herein, include allocations and estimates of certain expenses of Loral based upon estimates of services performed by Loral that management of the Businesses believe are reasonable. Such services include treasury, cash management, employee benefits, taxes, risk management, internal audit and general corporate services. Accordingly, the results of operations and cash flows as presented herein may not be the same as would have occurred had the Businesses been independent entities. 2. BASIS OF PRESENTATION BASIS OF COMBINATION The accompanying combined financial statements reflect the Businesses' assets, liabilities and operations included in Loral Corporation's historical financial statements that will be transferred to Newco. All significant intercompany transactions and amounts have been eliminated. The combined financial statements do not include the operations of telecommunications switch product line which will not be transferred and was exited in 1995. Also, the assets and operations of the semiconductor product line and certain other facilities which are not material to the Businesses have been excluded from the financial statements. F-41 LORAL ACQUIRED BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued) (Dollars in thousands) ALLOCATION OF CORPORATE EXPENSES The amount of corporate office expenses reflected in these financial statements has been estimated based primarily on the allocation methodology prescribed by government regulations pertaining to government contractors, which management of the Businesses believes to be a reasonable allocation method. INCOME TAXES The Businesses were included in the consolidated Federal income tax return and certain combined and separate state and local income tax returns of Loral. However, for the purposes of these financial statements, the provision for income taxes was allocated based upon reported income before income taxes. Such provision was recorded through the advances from (repayments to) Loral account. INTEREST EXPENSE Interest expense has been allocated to the Businesses by applying Loral's weighted average consolidated interest rate to the portion of the beginning of the period invested equity account deemed to be financed by consolidated debt, which amount has been determined based on Loral's debt to equity ratio on such date, except that the acquisition of Wideband Systems has been assumed to be fully financed by debt. STATEMENTS OF CASH FLOWS The Businesses participated in Loral's cash management system, under which all cash was received and payments made by Loral. All transactions between the Businesses and Loral have been accounted for as settled in cash on the date such transactions were recorded by the Businesses. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTRACTS IN PROCESS Sales on long-term production-type contracts are recorded as units are shipped; profits applicable to such shipments are recorded pro rata, based upon estimated total profit at completion of the contract. Sales and profits on cost reimbursable contracts are recognized as costs are incurred. Sales and estimated profits under other long-term contracts are recognized under the percentage of completion method of accounting using the cost-to-cost method. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and realization is probable. Incentive fees and award fees enter into the determination of contract profits when they can be reliably estimated. Costs accumulated under long-term contracts include direct costs as well as manufacturing, overhead, and for government contracts, general and administrative, independent research and development and bid and proposal costs. Losses on contracts are recognized when determined. Revisions in profit estimates are reflected in the period in which the facts which require the revision become known. DEPRECIATION AND AMORTIZATION Depreciation is provided primarily on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. The excess of the cost of purchased businesses over the fair value of the net assets acquired is being amortized using a straight-line method generally over a 40-year period. F-42 LORAL ACQUIRED BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued) (Dollars in thousands) The carrying amount of cost in excess of net assets acquired is evaluated on a recurring basis. Current and future profitability as well as current and future undiscounted cash flows, excluding financing costs, of the underlying businesses are primary indicators of recoverability. There were no adjustments to the carrying amount of cost in excess of net assets acquired resulting from these evaluations during the periods presented. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires the Businesses' management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates and assumptions relate to contract estimates of sales and costs, cost allocations from Loral, including interest and income taxes, recoverability of recorded amounts of fixed assets and cost in excess of net assets acquired, litigation and environmental obligations. Actual results could differ from these estimates. NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 1996, the Businesses adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 establishes the accounting standards for the impairment of long-lived assets, certain intangible assets and cost in excess of net assets and certain intangible assets to be disposed of. The impact of adopting SFAS 121 was not material. Effective January 1, 1994, the Businesses adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS 112"). SFAS 112 requires that the costs of benefits provided to employees after employment but before retirement be recognized on an accrual basis. The adoption of SFAS 112 did not have a material impact on the results of operations of the Businesses. 4. ACQUISITIONS Effective May 1, 1995, Loral acquired substantially all the assets and liabilities of the Defense Systems operations of Unisys Corporation, which included the Wideband Systems Division. The acquisition has been accounted for as a purchase. As such, the accompanying combined financial statements reflect the results of operations of the Wideband Systems Division from the effective date of acquisition, including the amortization of an allocated portion of cost in excess of net assets acquired resulting from the acquisition. Such allocation was based on the sales and profitability of the Wideband Systems Divisions relative to the aggregate sales and profitability of the defense systems operations acquired by Loral. The assets and liabilities recorded in connection with the purchase price allocation were $240,525 and $25,598, respectively. Had the acquisition of the Wideband Systems Division occurred on January 1, 1995, the unaudited pro forma sales and net income for the year ended December 31, 1995 would have been $524,355 and $504,780, respectively. The results, which are based on various assumptions, are not necessarily indicative of what would have occurred had the acquisition been consummated as of January 1, 1995. F-43 LORAL ACQUIRED BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued) (Dollars in thousands) 5. OPERATING EXPENSES The following expenses have been included in the statements of operations:
THREE YEAR MONTHS ENDED ENDED MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- General and administrative expenses ...................... $23,558 $90,757 Independent research and development, and bid and proposal costs .......................................... $ 5,587 $21,370
6. INCOME TAXES The provision for income taxes was calculated by applying Loral's statutory tax rates to the reported pre-tax book income after considering items that do not enter into the determination of taxable income and tax credits reflected in the consolidated provision which are related to the Businesses. It is estimated that deferred income taxes represent approximately $714,000 and $2,857,000 of the provisions for income taxes reflected in these financial statements for the three months ended March 31, 1996 and the year ended December 31, 1995. The principal components of deferred income taxes are contract accounting methods, property plant and equipment, goodwill amortization, and timing of accruals. Substantially all of the Businesses' income is from domestic operations. The following is a reconciliation of the statutory rate to the effective tax rates reflected in the financial statements:
YEARS ENDED DECEMBER 31, ----------------- 1996 1995 ------- -------- Statutory Federal income tax rate ............................. 35.0% 35.0% Research and development and other tax credits................. -- (18.6) State and local income taxes, net of Federal income tax benefit and state and local income tax credits ............... 3.9 (.3) Foreign sales corporation tax benefit ......................... (2.2) (3.0) Amortization of goodwill ...................................... 6.3 35.1 Other, net .................................................... (5.1) (13.6) ------- -------- Effective income tax rate ..................................... 37.9% 34.6% ======= ========
7. INTEREST EXPENSE Interest expense was calculated using the following balances and interest rates:
THREE YEAR MONTHS ENDED ENDED MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- Invested Equity ........................... $453,062 $265,384 Interest Rate ............................. 7.40% 7.87% Wideband Systems Allocated Purchase Price -- $214,927 Interest Rate.............................. -- 7.40%
F-44 LORAL ACQUIRED BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued) (Dollars in thousands) 8. COMMITMENTS AND CONTINGENCIES The Businesses lease certain facilities and equipment under agreements expiring at various dates through 2011. Leases covering major items of real estate and equipment contain renewal and/or purchase options which may be exercised by the Businesses. Rent expense for the three months ended March 31, 1996 was $1,063. Rent expense for the year ended December 31, 1995 was $4,276. Management is continually assessing its obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost to be incurred by the Businesses in order to comply with these laws, based upon available internal and external assessments, the Businesses believe that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Businesses' operations. The Businesses accrue for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Businesses believe that it has adequately accrued for future expenditures in connection with environmental matters and that such expenditures will not have a material adverse effect on its financial position or results of operations. There are a number of lawsuits or claims pending against the Businesses and incidental to its business. However, in the opinion of management, the ultimate liability on these matters, if any, will not have a material adverse effect on the financial position or results of operations of the Businesses. 9. PENSIONS AND OTHER EMPLOYEE BENEFITS PENSIONS The Businesses participate in various Loral-sponsored pension plans both contributory and non-contributory covering certain employees. Eligibility for participation in these plans varies, and benefits are generally based on members' compensation and years of service. Loral's funding policy was generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue code and regulations thereon. Since the aforementioned pension arrangements were part of certain Loral defined benefit or defined contribution plans, no separate actuarial data was available for the Businesses. The Businesses have been allocated their share of pension costs based upon participation employee headcount. Net pension expense, which approximates the amount funded, included in the accompanying financial statements was $1,234 and $4,391 for the three months ended March 31, 1996 and the year ended December 31, 1995, respectively. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS In addition to participating in Loral-sponsored pension plans, the Businesses provide certain health care and life insurance benefits for retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the pension plan eligibility requirements. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying a portion of the cost through contributions, deductibles and coinsurance provisions. Since the aforementioned postretirement benefits were part of certain Loral postretirement arrangements, no separate actuarial data is available for the Businesses. The Businesses have been allocated postretirement benefit costs based upon participant employee headcount. Post-retirement benefits costs included in the accompanying financial statements were $402 and $1,646 for the three months ended March 31, 1996 and the year ended December 31, 1995, respectively. EMPLOYEE SAVINGS PLANS Under various employee savings plans sponsored by Loral, the Businesses matched the contributions of participating employees up to a designated level. The extent of the match, vesting terms and the form F-45 LORAL ACQUIRED BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued) (Dollars in thousands) of the matching contribution vary among the plans. Under these plans, the matching contributions, in cash, common stock or both, for the three months ended March 31, 1996 and the year ended December 31, 1995 were $634 and $1,879, respectively. 10. SALES TO PRINCIPAL CUSTOMERS The Businesses operate primarily in one industry segment, electronic components and systems. Sales to principal customers are as follows:
THREE YEAR MONTHS ENDED ENDED MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- U.S. Government Agencies .................. $ 94,993 $328,476 Foreign (principally foreign governments) 16,838 62,549 Other (principally commercial) ............ 20,369 57,140 -------------- ----------------- $132,200 $448,165 ============== =================
Foreign sales comprise the following:
THREE YEAR MONTHS ENDED ENDED MARCH 31, 1996 DECEMBER 31, 1995 -------------- ----------------- Export sales Asia .............. $ 4,056 $19,248 Middle East ....... 3,648 4,147 Europe ............ 6,275 26,283 Other ............. 2,859 12,871 -------------- ----------------- Total foreign sales............. $16,838 $62,549 ============== =================
11. RELATED PARTY TRANSACTIONS The Businesses had a number of transactions with Loral and its affiliates. Management believes that the arrangements are as favorable to the Businesses as could be obtained from unaffiliated parties. The following describe the related party transactions. Loral allocated certain operational, administrative, legal and other services to the Businesses. Costs allocated to the Businesses were $1,827 and $6,535 for the three months ended March 31, 1996 and the year ended December 31, 1995, respectively. The Businesses sold products to Loral and its affiliates. Net sales to Loral were $14,840 for the three months ended March 31, 1996 and were $54,600 in 1995. Net sales to Space Systems/Loral were $2,471 for the three months ended March 31, 1996 and were $4,596 in 1995. Net sales to K&F Industries were $1,173 for the three months ended March 31, 1996 and were $2,415 in 1995. F-46 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. UNAUDITED CONDENSED FINANCIAL STATEMENTS As of December 31, 1997 and for the six months ended December 31, 1996 and 1997 F-47 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. BALANCE SHEET (UNAUDITED) DECEMBER 31, 1997 (In Thousands)
ASSETS Current assets: Accounts receivable, less $554 allowance for doubtful accounts .................................................... $ 22,204 Inventories .................................................. 10,382 ---------- Total current assets .......................................... 32,586 Property, plant and equipment, at cost ........................ 21,663 Less accumulated depreciation and amortization ................ (14,467) ---------- Net property and equipment .................................... 7,196 Other assets .................................................. 15 ---------- Total assets .................................................. $ 39,797 ========== LIABILITIES AND DIVISION EQUITY Current liabilities: Accounts payable ............................................. $ 6,508 Accrued liabilities .......................................... 3,703 Current portion of long-term debt ............................ 200 ---------- Total current liabilities ..................................... 10,411 Long-term debt ................................................ 1,330 ---------- Total liabilities ............................................. 11,741 Commitments Division equity ............................................... 28,056 ---------- Total liabilities and Division equity ......................... $ 39,797 ==========
See accompanying notes. F-48 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands)
SIX MONTHS ENDED DECEMBER 31 ---------------------- 1997 1996 ---------- ---------- Net sales ........................... $24,551 $ 38,770 Cost of products sold ............... 23,226 42,530 ---------- ---------- Gross margin ........................ 1,325 (3,760) ---------- ---------- Expenses: Research and development ........... 712 721 Marketing and administration ...... 5,123 8,064 Amortization of intangible assets . -- 72 ---------- ---------- Total expenses ...................... 5,835 8,857 ---------- ---------- Operating loss ...................... (4,510) (12,617) Interest expense .................... (43) (70) Interest income ..................... -- 5 ---------- ---------- Loss before income tax benefit ..... (4,553) (12,682) Allocated benefit from income taxes 1,639 4,185 ---------- ---------- Net loss ............................ $(2,914) $ (8,497) ========== ==========
See accompanying notes. F-49 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands)
SIX MONTHS ENDED DECEMBER 31 ---------------------- 1997 1996 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss ........................................................ $(2,914) $ (8,497) Adjustments for noncash items: Amortization of intangible assets .............................. -- 72 Depreciation and amortization of property, plant and equipment 780 1,200 Loss on sale of assets ........................................ -- 151 Provision for doubtful accounts ............................... 66 750 Changes in asset and liability accounts: Accounts receivable ............................................ 6,053 16,124 Inventories .................................................... (2,644) 6,789 Prepaid expenses and other assets .............................. 85 213 Accounts payable ............................................... (1,256) (10,238) Accrued liabilities ............................................ 132 (208) ---------- ---------- Net cash provided by operations ................................. 302 6,356 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ............................................ (160) (1,072) Proceeds from sale of building .................................. -- 1,617 ---------- ---------- Net cash provided by (used in) investing activities ............ (160) 545 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on long-term debt ...................................... (100) (200) Net cash provided to CMI ........................................ (42) (6,701) ---------- ---------- Net cash used in financing activities ........................... (142) (6,901) ---------- ---------- Cash and cash equivalents ....................................... $ -- $ -- ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the six month period for interest .............. $ 36 $ 32 ========== ==========
See accompanying notes. F-50 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED DECEMBER 31, 1996 AND 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited financial statements include the operations of the Satellite Transmission Systems Division ("STS" or the "Division") of California Microwave, Inc. ("CMI" or the "Company"). The Division is a global satellite communication systems integrator providing hardware, software and services for turnkey projects to large commercial customers, principally domestic and foreign telephone companies and major common carriers and to the U.S. and foreign governments. These financial statements are presented as if the Division had existed as an entity separate from CMI during the periods presented and include the historical assets, liabilities, sales and expenses that are directly related to the Division's operations. However, these financial statements are not necessarily indicative of the financial position and results of operations which would have occurred had the Division been an independent entity. The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month periods ended December 31, 1996 and 1997 are not necessarily indicative of the results that may be expected for the years ended June 30, 1997 and 1998. For further information, refer to the financial statements and footnotes thereto included in the Division's financial statements for the year ended June 30, 1997. USE OF ESTIMATES; RISKS AND UNCERTAINTIES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates are used in determining the collectibility of accounts receivable, warranty costs, inventory realization, profitability on long-term contracts, restructuring reserves, recoverability of property, plant and equipment, and contingencies. Actual results could differ from estimates. INVENTORIES AND COST OF PRODUCTS SOLD Inventories are recorded at the lower of cost or market. Project inventories are transferred to cost of products sold at the time revenue is recognized based on the estimated total manufacturing costs and total contract prices under each contract. Losses on contracts are recognized in full when the losses become determinable. The cost of other inventories is generally based on standard costs which approximate actual costs determined by the first-in, first-out method. F-51 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 2. INVENTORIES Inventories consisted of the following:
DECEMBER 31, 1997 -------------- (IN THOUSANDS) Projects in process..................................... $ 9,351 Less: progress billings................................. 1,547 -------------- 7,804 Product inventories, principally materials and supplies............................................... 2,578 -------------- Total................................................... $10,382 ==============
3. CORPORATE ALLOCATIONS CMI allocates corporate expenses on a value-added basis to each division, which CMI believes results in a reasonable allocation of such costs. The accompanying financial statements reflect charges for general corporate administrative expenses incurred by CMI which amounted to approximately $832,000 and $793,000 for the six months ended December 31, 1996 and 1997, respectively. No interest is allocated by CMI to the Division. The Division is charged for its proportional share of CMI's self-insured medical plan. Such charges amounted to $1,015,000 and $732,000 for the six months ended December 31, 1996 and 1997, respectively. In addition, there were direct charges from CMI as follows:
SIX MONTHS ENDED DECEMBER 31, -------------- 1997 1996 ------ ------ (IN THOUSANDS) Marketing.................. $304 $389 General and administrative............ -- 142 ------ ------ Total...................... $304 $531 ====== ======
The Division believes that the direct charges from CMI were reasonable during the periods presented. 4. RESTRUCTURING During fiscal 1997, a comprehensive review of the Division's operations was performed, including a review of inventory levels, product development and migration plans and facility and personnel needs. It was determined to focus the Division on potentially higher margin products. This resulted in the write-down of certain inventories and the restructuring of the Division's operations. During the six month period ended December 31, 1996 inventory and other charges of $10,300,000, arising from this review, were included in cost of products sold. During February 1997, additional charges of $800,000 relating to excess facilities and severance were recorded. There are no remaining cash outlays associated with the restructuring at December 31, 1997. F-52 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. OTHER In November 1997, the Division recorded a $1 million charge to cost of sales relating to a contract with a customer in Sudan. The President of the United States imposed economic sanctions on Sudan which banned U.S. companies from doing business in Sudan and as a result, the Division could not continue to perform under the existing contract. Based upon this, the contract was terminated and the Division has been released from further performance requirements. On December 19, 1997, L-3 Communications Corporation, an unrelated party, reached an agreement to purchase from CMI substantially all of the assets of the Division, and to assume certain of the liabilities of the Division, for approximately $27 million in cash. The final purchase price is subject to adjustment based on the net assets of the Division at the closing date of the transaction. F-53 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. FINANCIAL STATEMENTS As of June 30, 1997 and 1996 and for the years ended June 30, 1997, 1996 and 1995 F-54 REPORT OF INDEPENDENT AUDITORS The Board of Directors California Microwave, Inc. We have audited the accompanying balance sheets of the Satellite Transmission Systems Division of California Microwave, Inc. (the "Company") as of June 30, 1997 and 1996, and the related statements of operations and cash flows for each of the three years in the period ended June 30, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Satellite Transmission Systems Division of California Microwave, Inc., as of June 30, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 1997 in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Melville, New York January 27, 1998 F-55 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. BALANCE SHEETS (In Thousands)
JUNE 30, ---------------------- 1997 1996 ---------- ---------- ASSETS Current assets: Accounts receivable, less $140 and $508 allowance for doubtful accounts in 1996 and 1997......................................... $ 28,323 $ 46,750 Inventories........................................................ 7,738 10,412 Prepaid expenses and other assets.................................. 77 121 ---------- ---------- Total current assets................................................ 36,138 57,283 Property, plant and equipment, at cost.............................. 21,503 21,378 Less accumulated depreciation and amortization...................... (13,687) (12,984) ---------- ---------- Net property and equipment ......................................... 7,816 8,394 Intangible assets, net of accumulated amortization of $2,268 in 1996............................................................... -- 2,032 Other assets........................................................ 23 2,045 ---------- ---------- Total assets ....................................................... $ 43,977 $ 69,754 ========== ========== LIABILITIES AND DIVISION EQUITY Current liabilities: Accounts payable................................................... $ 7,764 $ 19,548 Accrued liabilities................................................ 3,571 3,584 Current portion of long-term debt.................................. 100 200 ---------- ---------- Total current liabilities........................................... 11,435 23,332 Long-term debt...................................................... 1,530 1,630 ---------- ---------- Total liabilities................................................... 12,965 24,962 Commitments Division equity..................................................... 31,012 44,792 ---------- ---------- Total liabilities and Division equity............................... $ 43,977 $ 69,754 ========== ==========
See accompanying notes. F-56 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. STATEMENTS OF OPERATIONS (In Thousands)
YEARS ENDED JUNE 30, ---------------------------------- 1997 1996 1995 ----------- ---------- --------- Net sales......................................... $ 68,037 $124,393 $94,271 Cost of products sold............................. 65,724 102,399 86,335 ----------- ---------- --------- Gross margin...................................... 2,313 21,994 7,936 ----------- ---------- --------- Expenses: Research and development......................... 1,360 2,540 2,288 Marketing and administration..................... 14,154 13,295 12,655 Amortization and write-down of intangible assets........................................... 2,032 171 171 Restructuring.................................... 800 -- 2,446 ----------- ---------- --------- Total expenses.................................... 18,346 16,006 17,560 ----------- ---------- --------- Operating (loss) income........................... (16,033) 5,988 (9,624) Interest expense.................................. (65) (69) (98) Interest income................................... 40 11 3 ----------- ---------- --------- (Loss) income before income tax benefit (expense)........................................ (16,058) 5,930 (9,719) Allocated benefit (expense) from income taxes .... 4,676 (2,135) 3,207 ----------- ---------- --------- Net (loss) income................................. $(11,382) $ 3,795 $(6,512) =========== ========== =========
See accompanying notes. F-57 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. STATEMENTS OF CASH FLOWS (In Thousands)
YEARS ENDED JUNE 30, ----------------------------------- 1997 1996 1995 ----------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income................................... $(11,382) $ 3,795 $(6,512) Adjustments for noncash items: Amortization and write-down of intangible assets .. 2,032 171 171 Depreciation and amortization of property, plant and equipment..................................... 1,639 1,746 1,848 Loss on sale of assets............................. 77 140 64 Provision for doubtful accounts.................... 750 100 150 Changes in asset and liability accounts: Accounts receivable................................ 17,677 (17,019) 14,937 Inventories........................................ 2,674 12,243 (8,211) Prepaid expenses and other assets.................. 449 1,449 5,627 Accounts payable................................... (11,783) 5,736 (3,747) Accrued and other liabilities...................... (14) (1,697) 1,895 ----------- ---------- ---------- Net cash provided by operations..................... 2,119 6,664 6,222 ----------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures................................ (1,138) (1,099) (1,881) Proceeds from sale of building...................... 1,617 -- -- ----------- ---------- ---------- Net cash (used in) provided by investing activities......................................... 479 (1,099) (1,881) ----------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on long-term debt.......................... (200) (100) (200) Net cash provided to CMI............................ (2,398) (5,465) (4,141) ----------- ---------- ---------- Net cash used in financing activities............... (2,598) (5,565) (4,341) ----------- ---------- ---------- Cash and cash equivalents........................... $ -- $ -- $ -- =========== ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest.............. $ 38 $ 66 $ 70 =========== ========== ==========
See accompanying notes. F-58 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1995, 1996 AND 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying financial statements include the operations of the Satellite Transmission Systems Division ("STS" or the "Division") of California Microwave, Inc. ("CMI" or the "Company"). The Division is a global satellite communication systems integrator providing hardware, software and services for turnkey projects to large commercial customers, principally domestic and foreign telephone companies and major common carriers and to the U.S. and foreign governments. These financial statements are presented as if the Division had existed as an entity separate from CMI during the periods presented and include the historical assets, liabilities, sales and expenses that are directly related to the Division's operations. However, these financial statements are not necessarily indicative of the financial position and results of operations which would have occurred had the Division been an independent entity. USE OF ESTIMATES; RISKS AND UNCERTAINTIES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates are used in determining the collectibility of accounts receivable, warranty costs, inventory realization, profitability on long-term contracts, restructuring reserves, recoverability of property, plant and equipment, and contingencies. Actual results could differ from estimates. CASH AND CASH EQUIVALENTS The Division participates in CMI's centralized cash management function; accordingly, the Division does not maintain separate cash accounts, other than payroll and foreign subsidiary accounts, which are deemed insignificant, and its cash disbursements and collections are settled through Division equity. INVENTORIES AND COST OF PRODUCTS SOLD Inventories are recorded at the lower of cost or market. Project inventories are transferred to cost of products sold at the time revenue is recognized based on the estimated total manufacturing costs and total contract prices under each contract. Losses on contracts are recognized in full when the losses become determinable. During the year ended June 30, 1995, the Division recognized losses of approximately $2,800,000 on such contracts. The cost of other inventories is generally based on standard costs which approximate actual costs determined by the first-in, first-out method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization charges are computed using the straight-line method based on the estimated useful lives of the related assets. INTANGIBLE ASSETS OF BUSINESS ACQUIRED During 1997, CMI wrote off $1,888,000 of purchased intangible assets, principally goodwill, relating to the original acquisition of STS by CMI, which was pushed down to the Division's books. The intangible F-59 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) assets consisted of the excess of the purchase price paid for STS over the net tangible assets acquired and was amortized using the straight-line method over 30 years. During 1997, CMI determined that the excess purchase price was not recoverable due to a significant reduction in sales by the Division in 1997 as compared to prior periods and appropriately reduced the carrying value. OTHER LONG-LIVED ASSETS In accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of," the Division records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of such assets. Other than as described above related to purchased intangibles, no such losses have been incurred. REVENUE RECOGNITION, RECEIVABLES AND CREDIT RISK Revenue from product sales is recognized at the time of shipment. Sales on certain long-term, small quantity, high unit value contracts are recognized at the completion of significant project milestones, which are generally contract line items. Scheduled billings and retainages under certain contracts (principally export contracts) have deferred billing provisions resulting in unbilled accounts receivable (included in accounts receivable) of $7,426,000 and $4,425,000 at June 30, 1996 and 1997, respectively. The unbilled receivable at June 30, 1997, is expected to be collected within one year. The Division manufactures and sells satellite communications products, systems and turnkey telecommunications networks to large commercial customers, principally domestic and foreign telephone companies and major common carriers, and to the U.S. government. The Division generally requires no collateral, but generally requires letters of credit, denominated in U.S. dollars, from its foreign customers. During 1996 and 1997, the Division periodically transferred certain international accounts receivable to CMI. CMI insures these receivables under a credit insurance program and then sells the receivables, without recourse, at prevailing discount rates. The Division retains the responsibility to collect and service these amounts. Outstanding customer receivables transferred to CMI through Division equity amounted to approximately $421,000 and $2,100,000 during 1996 and 1997, respectively. The Division charged to operations $150,000, $100,000 and $750,000 for its provision for doubtful accounts in 1995, 1996 and 1997, respectively. WARRANTY The Company generally warrants its products for a period of 12 to 24 months from completion of contract or shipment. Warranty expense was approximately $679,000, $753,000 and $688,000 for 1995, 1996 and 1997, respectively. INCOME TAXES Income taxes reflect an allocation of CMI's income tax expense (benefit) calculated based on CMI's effective tax rate. All deferred tax assets and liabilities relating to the Division are included in intercompany balances with CMI and are accounted for within Division equity (see Note 7). On a stand-alone basis, income tax benefit (expense) for the year ended June 30, 1997 would not be material due to the existence of net operating loss carryforwards at the Division level and the need for a full valuation allowance on any resulting net deferred tax asset. Such net operating losses have been fully utilized by CMI. F-60 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FISCAL YEAR The Division's fiscal year ends on the Saturday closest to June 30, and includes 52 weeks in fiscal 1995, 1996 and 1997. For 1995, 1996 and 1997, the fiscal years ended on July 1, 1995, June 29, 1996 and June 28, 1997, respectively. For clarity of presentation, the financial statements are reported as ending on a calendar month end. 2. PROPERTY AND EQUIPMENT Property and equipment consisted of the following:
JUNE 30, ------------------- LIFE 1997 1996 ---------- --------- -------- (IN YEARS) (IN THOUSANDS) Land........................... $ 950 $ 950 Buildings ..................... 30 3,559 3,559 Machinery and equipment ...... 3-5 8,780 9,256 Office and computer equipment 3-10 6,440 5,653 Building improvements.......... -- 1,721 1,813 Vehicles ...................... 5 53 147 --------- -------- $21,503 $21,378 ========= ========
Building improvements are depreciated over the shorter of the life of the improvement or the remaining life of the building. 3. INVENTORIES Inventories consisted of the following:
JUNE 30, ------------------ 1997 1996 -------- -------- (IN THOUSANDS) Projects in process..................................... $6,484 $ 6,287 Less: progress billings................................. 2,544 1,991 -------- -------- 3,940 4,296 Product inventories, principally materials and supplies............................................... 3,798 6,116 -------- -------- Total................................................... $7,738 $10,412 ======== ========
F-61 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. ACCRUED LIABILITIES Accrued liabilities consisted of the following:
JUNE 30, ------------------ 1997 1996 -------- -------- (IN THOUSANDS) Salaries and bonuses . $ 497 $1,381 Vacation.............. 610 873 Other payroll related.............. 123 115 Warranties............ 899 758 Commissions........... 813 -- Other................. 629 457 -------- -------- $3,571 $3,584 ======== ========
5. LONG-TERM DEBT The Division has industrial development bonds that are payable in annual installments through November 9, 2007, may be prepaid at any time without penalty and bear interest at 65% of the bank's floating rate (5.5% at June 30, 1997), based upon prevailing market conditions, which is redetermined daily. The obligor of the industrial development bonds is a related entity, and the bonds are secured by mortgages on the equipment and properties involved. At June 30, 1997, the annual maturities of long-term debt are as follows:
1998................. $ 100,000 1999................. 200,000 2000................. 100,000 2001................. 200,000 2002................. 100,000 Thereafter........... 930,000 ----------- 1,630,000 Less current portion............. 100,000 ----------- $1,530,000 ===========
6. COMMITMENTS On November 15, 1996, the Division leased a facility under an 18-month noncancelable operating lease. Rent expense was approximately $209,000, $229,000 and $69,000 for 1995, 1996, and 1997, respectively. Future minimum lease payments under the operating lease is $48,000 for 1998. F-62 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. DIVISION EQUITY A summary of the Division equity activity is as follows:
JUNE 30, --------------------- 1997 1996 ---------- --------- (IN THOUSANDS) Beginning balance........ $ 44,792 $46,462 Net income (loss)........ (11,382) 3,795 Net cash provided to CMI..................... (2,398) (5,465) ---------- --------- Ending balance........... $ 31,012 $44,792 ========== =========
8. EMPLOYEE BENEFITS The Division participates in the CMI defined contribution retirement plan which covers substantially all of the employees of the Division. The Division's contribution was $379,000, $700,000 and $180,000 for 1995, 1996 and 1997, respectively. 9. SIGNIFICANT CUSTOMERS AND SEGMENT INFORMATION The Division operates in a single industry segment and is engaged in the manufacture and sale of electronics equipment for satellite communications. International sales were as follows:
JUNE 30, ------------------------------- 1997 1996 1995 --------- --------- --------- (IN THOUSANDS) Asia Pacific....... $22,333 $27,106 $17,164 Africa/Middle East.............. 13,052 41,827 9,572 Latin America...... 5,149 11,137 14,768 Europe............. 7,828 15,984 9,784 Other.............. 1,391 2,973 4,312 --------- --------- --------- $49,753 $99,027 $55,600 ========= ========= =========
The Division had revenues from one customer representing 17.3%, 31.5% and 11% of total revenues in 1995, 1996 and 1997, respectively. 10. CORPORATE ALLOCATIONS CMI allocates corporate expenses on a value-added basis to each division, which CMI believes results in a reasonable allocation of such costs. The accompanying financial statements reflect charges for general corporate administrative expenses incurred by CMI which amounted to approximately $1,477,000, $1,555,000 and $1,663,000 in 1995, 1996 and 1997, respectively. No interest is allocated by CMI to the Division. The Division is charged for its proportional share of CMI's self-insured medical plan. Such charges amounted to $944,000, $1,437,000 and $1,856,000 in 1995, 1996, and 1997, respectively. F-63 SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. CORPORATE ALLOCATIONS (Continued) In addition, there were direct charges from CMI as follows:
JUNE 30, ------------------------ 1997 1996 1995 -------- ------ ------ (IN THOUSANDS) Marketing.................. $ 889 -- $-- General and administrative............ 285 $508 -- -------- ------ ------ Total...................... $1,174 $508 $-- ======== ====== ======
The Division believes that the direct charges from CMI were reasonable during the periods presented. 11. RELATED PARTY TRANSACTIONS Included in net sales are product sales to other divisions of CMI. These sales totaled $3,584,000, $640,000 and $1,800,000 for 1995, 1996 and 1997, respectively. In addition, there is approximately $2,363,000, $2,937,000 and $776,000 of purchases from another division of CMI which is included in ending inventory and $2,139,000, $3,576,000 and $1,129,000 due to this division which is included in accounts payable at June 30, 1995, 1996 and 1997, respectively. 12. RESTRUCTURING In June 1995, a decision was made to close the Division's Melbourne, Florida facility as well as to perform a review of personnel needs at the Division's operations. Pursuant to these decisions, approximately $2.4 million of restructuring charges were recorded, including approximately $600,000 to reflect the facility at its net realizable value. There are no remaining cash outlays associated with the restructuring at June 30, 1997. In December 1996 and January 1997, a comprehensive review of the Division's operations was performed, including a review of inventory levels, product development and migration plans and facility and personnel needs. It was determined to focus the Division on potentially higher margin products. This resulted in the write-down of certain inventories and the restructuring of the Division's operations. Inventory and other charges of $10,300,000, arising from this review, were included in cost of products sold and excess facilities and severance charges of $800,000 were included in restructuring. There are no remaining cash outlays associated with the restructuring at June 30, 1997. 13. SUBSEQUENT EVENTS In November 1997, the Division recorded a $1 million charge to cost of sales relating to a contract with a customer in Sudan. The President of the United States imposed economic sanctions on Sudan which banned U.S. companies from doing business in Sudan, and as a result the Division could not continue to perform under the existing contract. Based upon this, the contract was terminated and the Division has been released from further performance requirements. On December 19, 1997, L-3 Communications Corporation, an unrelated party, reached an agreement to purchase from CMI substantially all of the assets of the Division, and to assume certain of the liabilities of the Division, for approximately $27 million in cash. The final purchase price is subject to adjustment based on the net assets of the Division at the closing date of the transaction. F-64 ILEX SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS December 31, 1997 F-65 INDEPENDENT AUDITORS' REPORT The Board of Directors ILEX Systems, Inc.: We have audited the accompanying consolidated balance sheet of ILEX Systems, Inc. and subsidiary as of December 31, 1997, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ILEX Systems, Inc. and subsidiary as of December 31, 1997, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP San Jose, California February 9, 1998, except as to Note 9 which is as of February 27, 1998 F-66 ILEX SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET DECEMBER 31, 1997
ASSETS Current assets: Cash and cash equivalents ..................................................... $ 4,919,548 Accounts receivable, net of allowance for doubtful accounts of $327,422 ...... 7,354,640 Unbilled accounts receivable .................................................. 4,868,453 Inventories ................................................................... 923,466 Deferred income taxes ......................................................... 13,000 Other current assets .......................................................... 278,771 ------------- Total current assets ......................................................... 18,357,878 Property, plant, and equipment: Equipment ..................................................................... 2,343,643 Furniture, fixtures, and leasehold improvements ............................... 634,425 ------------- 2,978,068 Accumulated depreciation and amortization ..................................... (2,031,763) ------------- 946,305 Goodwill, net of accumulated amortization of $117,940 .......................... 343,564 Deposits and other assets ...................................................... 138,730 ------------- $19,786,477 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ............................................. $ 62,833 Accounts payable .............................................................. 2,226,340 Accrued payroll and related expenses .......................................... 3,176,151 Deferred income ............................................................... 37,843 Distribution payable to shareholders .......................................... 2,216,877 Income taxes payable .......................................................... 80,552 Other current liabilities ..................................................... 175,011 ------------- Total current liabilities .................................................... 7,975,607 Other liabilities .............................................................. 18,678 ------------- Total liabilities ............................................................ 7,994,285 Shareholders' equity: Common stock, no par value; 5,000,000 shares authorized; 1,317,605 shares issued and outstanding ....................................................... 1,386,417 Retained earnings ............................................................. 10,405,775 ------------- Total shareholders' equity ................................................... 11,792,192 Commitments .................................................................... ------------- $19,786,477 =============
See accompanying notes to consolidated financial statements. F-67 ILEX SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1997
Revenues: Consulting fees ...................... $57,309,190 Equipment sales ...................... 6,213,038 ------------- 63,522,228 ------------- Costs and expenses: Cost of revenue, consulting .......... 41,852,031 Cost of sales, equipment ............. 3,314,614 Selling, general, and administrative 9,507,879 Research and development ............. 1,211,497 ------------- 55,886,021 ------------- Operating income .................... 7,636,207 Other income (expense): Interest income ...................... 135,114 Interest expense ..................... (8,579) Loss on write-down of investment .... (250,000) Other expense ........................ (108,000) ------------- Income before income taxes .......... 7,404,742 Income taxes .......................... 550,000 ------------- Net income .......................... $ 6,854,742 =============
See accompanying notes to consolidated financial statements. F-68 ILEX SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY YEAR ENDED DECEMBER 31, 1997
COMMON STOCK TOTAL ------------------------- RETAINED SHAREHOLDERS' SHARES AMOUNT EARNINGS EQUITY ----------- ------------ ------------- --------------- Balances as of December 31, 1996 ........ 1,315,720 $1,352,249 $10,606,517 $11,958,766 Issuance of common stock in exchange for services ............................... 3,400 42,500 -- 42,500 Stock repurchase ........................ (1,515) (8,332) (6,060) (14,392) Distributions to shareholders ........... -- -- (7,049,424) (7,049,424) Net income .............................. -- -- 6,854,742 6,854,742 ----------- ------------ ------------- --------------- Balances as of December 31, 1997 ........ 1,317,605 $1,386,417 $10,405,775 $11,792,192 =========== ============ ============= ===============
See accompanying notes to consolidated financial statements. F-69 ILEX SYSTEMS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1997
Cash flows from operating activities: Net income .......................................................................... $ 6,854,742 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ...................................................... 419,593 Allowance for doubtful accounts .................................................... (203,255) Loss on write-down of investment ................................................... 250,000 Deferred income taxes .............................................................. 485,000 Issuance of common stock for services .............................................. 42,500 Changes in operating assets and liabilities: Receivables ....................................................................... (1,267,205) Inventories ....................................................................... 387,485 Other current assets .............................................................. (112,176) Deposits and other assets ......................................................... 140,884 Accounts payable and accrued liabilities .......................................... 324,963 Deferred income ................................................................... (159,012) Income taxes payable .............................................................. 80,552 Other liabilities ................................................................. (459,166) ------------- Net cash provided by operating activities ........................................ 6,784,905 ------------- Cash flows used in investing activities--purchases of property, plant, and equipment (416,630) ------------- Cash flows from financing activities: Payments on debt .................................................................... (67,265) Distributions paid to shareholders .................................................. (4,832,547) Repurchase of common stock .......................................................... (14,392) ------------- Net cash used in financing activities ............................................ (4,914,204) ------------- Increase in cash and cash equivalents ................................................ 1,454,071 Cash and cash equivalents, beginning of year ......................................... 3,465,477 ------------- Cash and cash equivalents, end of year ............................................... $ 4,919,548 ============= Supplemental disclosures of cash flow information: Cash paid during year: Income taxes ....................................................................... $ 716,190 ============= Interest ........................................................................... $ 8,579 ============= Noncash investing and financing activities--distributions payable to shareholders .. $ 2,216,877 =============
See accompanying notes to consolidated financial statements. F-70 ILEX SYSTEMS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 (1) SUMMARY OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS ILEX Systems, Inc. (the "Company") provides services and products primarily in four areas: environmental consulting services to private and public sector customers; software consulting services to the federal government and its contractors; supervisory control and data acquisition products and services to the electrical utility industry; and secured communications products, principally to the federal government and its agencies. The majority of the Company's revenues are derived from its software consulting services. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. REVENUE RECOGNITION The Company's consulting services are generally performed on time-and materials-based contracts for the federal government and its contractors. Accordingly, revenues are recognized as services are performed. Equipment sales revenues are recognized upon shipment. Unbilled accounts receivable comprise charges for services and materials provided to customers that have not been invoiced. The Company does not require collateral for its receivables. Reserves are maintained for potential credit losses. CASH EQUIVALENTS Cash equivalents of $1,879,285 as of December 31, 1997, consist principally of money market investments. For purposes of the accompanying consolidated statement of cash flows, the Company considers all highly liquid debt instruments with remaining maturities of three months or less when acquired to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of financial instruments in the Company's consolidated financial statements approximates fair value due to the short-term maturities of these instruments. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out basis) or market. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets (generally five years). Leasehold improvements are amortized straight-line over the shorter of the lease term or the estimated useful life of the asset. GOODWILL Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is amortized on a straight-line basis over the expected periods to be benefited of 10 to 15 years. The Company assesses the recoverability of goodwill by determining whether the amortization of the goodwill balance over its remaining life can be recovered through undiscounted future operating cash flows of the acquired operation. F-71 INCOME TAXES The Company elected S corporation status on March 17, 1997, effective January 1, 1997. Federal and the majority of state income taxes on the income of S corporations are generally payable by the individual shareholders rather than the Company. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. USE OF ESTIMATES The Company's management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (2) INVENTORIES Inventories consisted of the following as of December 31, 1997:
Raw materials and subassemblies.................. $833,945 Work in process................. 89,521 ---------- $923,466 ==========
(3) LINE OF CREDIT AND LONG-TERM DEBT The Company has a $5,000,000 line of credit with a bank that is due on demand. Interest is payable at the bank's prime rate (8.5% as of December 31, 1997) and is secured by trade accounts receivable, inventories, and other assets. Borrowings outstanding under the line of credit were $-0-as of December 31, 1997. The line of credit contains certain restrictive financial covenants, including a minimum level of net worth and cash flow to debt ratio. As of December 31, 1997, the Company was in compliance with all such covenants. The Company has an unsecured promissory note payable to a former shareholder that was issued in conjunction with the repurchase of shares of common stock in 1992. The note bears interest at 10% with payments of $6,000 per month, including interest, through December 1998. As of December 31, 1997, the principal balance of this note was $62,833. (4) INCOME TAXES The provision for income taxes for the year ended December 31, 1997, consisted of the following:
Federal: Current .. -- Deferred . $388,000 ---------- 388,000 ---------- State: Current .. 65,000 Deferred . 97,000 ---------- 162,000 ---------- $550,000 ==========
F-72 The provision for income taxes for the year ended December 31, 1997, differs from the federal statutory rate, primarily due to the flow through nature of income tax liability to the shareholders and reduction of the federal and partial state deferred income tax assets and liabilities as of December 31, 1996, resulting from the S corporation election as follows:
Federal income tax statutory rate ........ 34.0% State income tax rate..................... 2.2 Benefit of federal S corporation election................................. (28.8) -------- 7.4% ========
The gross deferred tax assets were $13,000 as of December 31, 1997, consisting of the state deferred income tax assets and liabilities for those states who do not recognize S corporation status. Management considers realization of the net deferred tax assets more likely than not due to continued profitability of the Company and significant carryback opportunities. (5) EMPLOYEE BENEFIT PLANS The Company has two Section 401(k) retirement savings plans (the Plans). Under the terms of the Plans, employees may make contributions based on a percentage of eligible earnings. Company contributions to the Plans are discretionary and totaled $359,718 in 1997. (6) STOCK OPTION PLAN The Company has 100,000 shares of common stock reserved for issuance under its 1992 Incentive Stock Option Plan (the "Plan"). Under the Plan, the Company may grant options to employees, officers, and directors. Options are granted at prices not less than the fair market value of the Company's common stock as determined by the Board of Directors on the grant date. Options vest ratably over 48 months and expire 49 months from the date of grant. The Company applies Accounting Principles Board Opinion No. 25 (APB 25) in accounting for its stock options. The exercise price for stock options granted to employees in 1997 equaled the fair value of the Company's common stock at the date of grant. Accordingly, in accordance with APB 25, no compensation expense was recognized by the Company. For purposes of pro forma disclosures required by Statement of Financial Accounting Standards No. 123 (SFAS 123), the compensation cost of the options, based on their estimated fair values, is amortized to expense over the vesting periods of the options. The Company's net income for the year ended December 31, 1997 would have reduced to the pro forma amounts indicated below:
Net income: As reported . $6,854,742 ============ Pro forma .... $6,838,958 ============
On January 1, 1997, the Company had no options outstanding. In July 1997, the Company granted 25,000 options at an exercise price of $17.50, all of which were outstanding but not exercisable as of December 31, 1997. The weighted-average grant-date fair value of options granted during the year ended December 31, 1997 was $3.05 per option. The weighted-average remaining contract life of the Company's outstanding stock options was 3.5 years at December 31, 1997. Pro forma information regarding net income as required by SFAS 123 has been determined as if the Company had accounted for its employee stock options under the fair value method. The fair value for the options was estimated at the date of grant using the minimum value method prescribed in SFAS 123, which does not consider the expected volatility of the Company stock price, with the following weighted-average assumptions for 1997: risk free interest rate of 6.06%; dividend yield of 0%; and weighted-average expected option life of 3.25 years. F-73 (7) COMMITMENTS The Company leases certain facilities under operating leases that expire at various dates through 2001. The Company in turn subleases some of these facilities. As of December 31, 1997, future minimum lease payments under noncancelable operating leases, exclusive of the sublease rentals, are as follows:
YEAR ENDING DECEMBER 31, - -------------- 1998......... $1,474,448 1999......... 510,551 2000......... 292,096 2001......... 124,212 ------------ $2,401,307 ============
Rent expense, exclusive of sublease rentals, was approximately $1,081,636 in 1997. Sublease rental income was approximately $186,733 in 1997. (8) SIGNIFICANT CUSTOMERS For the year ended December 31, 1997, sales to a single customer represented 26% of revenues. The outstanding accounts receivable and unbilled receivable balances for this customer as of December 31, 1997, were $1,257,875 and $2,228,650, respectively. (9) SUBSEQUENT EVENT In January 1998, shareholders of the Company agreed to sell all of their common stock for approximately $50,000,000, subject to certain adjustments, plus additional consideration based on post-acquisition performance. The sale closed on February 27, 1998. F-74 ALLIEDSIGNAL OCEAN SYSTEMS A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC. COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997 F-75 REPORT OF INDEPENDENT AUDITORS To the Management and Board of Directors L-3 Communications Holdings, Inc. We have audited the accompanying combined balance sheet of AlliedSignal Ocean Systems, a wholly owned operation of AlliedSignal, Inc. ("Ocean Systems"), as of December 31, 1997 and the related combined statements of operations, equity and cash flows for the year then ended. These financial statements are the responsibility of Ocean System's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Ocean Systems as of December 31, 1997, and the combined results of their operations and cash flows for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Los Angeles, California February 23, 1998 F-76 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.) COMBINED BALANCE SHEET AS OF DECEMBER 31, 1997 (IN THOUSANDS)
ASSETS Current assets: Accounts receivable, net of allowances for doubtful accounts of $81 $13,313 Inventories ........................................................ 25,274 Contracts in progress .............................................. 793 Prepaid expenses and other current assets .......................... 1,743 --------- Total current assets .............................................. 41,123 Property, plant and equipment, net .................................. 16,845 Capitalized software, net ........................................... 2,248 Goodwill, net ....................................................... 1,820 Other assets ........................................................ 31 --------- Total assets ........................................................ $62,067 ========= LIABILITIES AND EQUITY Current liabilities: Accounts payable ................................................... $ 2,626 Accrued liabilities ................................................ 16,112 Advance payments ................................................... 16,162 --------- Total current liabilities ......................................... 34,900 Accrued pension and postretirement benefits ......................... 10,959 --------- Total liabilities ................................................... 45,859 --------- Commitment and contingencies Equity: Invested equity..................................................... 9,312 ELAC common stock .................................................. 3,424 ELAC retained earnings ............................................. 4,570 Cumulative translation adjustment .................................. (1,098) --------- Total equity......................................................... 16,208 --------- Total liabilities and equity ........................................ $62,067 =========
See accompanying notes to the combined financial statements F-77 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.) COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
Sales ................................. $73,033 Cost of sales ......................... 56,049 --------- Gross profit ......................... 16,984 Operating expenses: General and administrative ........... 11,981 Selling .............................. 5,933 Bid and proposal ..................... 2,053 Independent research and development 2,765 --------- Total operating expenses ............ 22,732 --------- Loss from operations .................. (5,748) Interest expense, net ................. 490 Other income .......................... (185) --------- Loss before income taxes .............. (6,053) Benefit for income taxes .............. (2,378) --------- Net loss ............................ $(3,675) =========
See accompanying notes to the combined financial statements F-78 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) COMBINED STATEMENT OF EQUITY FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
INVESTED ELAC ELAC CUMULATIVE EQUITY IN OS COMMON RETAINED TRANSLATION TOTAL (DEFICIT) STOCK EARNINGS ADJUSTMENT EQUITY -------------- -------- ---------- ------------- --------- Balance at December 31, 1996 ..... $ 8,298 $3,424 $6,403 $ 87 $18,212 Net loss .......................... (2,680) -- (995) -- (3,675) Cumulative translation adjustment -- -- -- (1,185) (1,185) Advances from (repayments to) AlliedSignal ..................... 3,694 -- (838) -- 2,856 -------------- -------- ---------- ------------- --------- Balance at December 31, 1997 ..... $ 9,312 $3,424 $4,570 $(1,098) $16,208 ============== ======== ========== ============= =========
See accompanying notes to the combined financial statements F-79 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
Cash flows from operating activities: Net loss ..................................................................... ($ 3,675) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of property, plant and equipment ............................... 2,976 Amortization of capitalized software ........................................ 1,078 Amortization of intangible assets ........................................... 70 Loss on the disposal of property, plant and equipment ....................... 8 Changes in operating assets and liabilities: Accounts receivable ........................................................ 13,561 Inventories ................................................................ (359) Contracts in progress ...................................................... 1,666 Prepaid and other current assets ........................................... (220) Accounts payable ........................................................... (1,976) Accrued liabilities ........................................................ (10,472) Advance payments ........................................................... (1,092) Accrued pension and postretirement benefits ................................ (20) ---------- Net cash provided by operating activities ................................. 1,545 ---------- Cash flows from investing activities: Property, plant and equipment purchased ...................................... (3,090) Software purchased ........................................................... (265) ---------- Net cash used in investing activities ..................................... (3,355) ---------- Cash flows from financing activities: Advances from AlliedSignal, net .............................................. 3,198 ---------- Net cash provided by financing activities ................................. 3,198 ---------- Effect of foreign currency exchange rate changes on cash ..................... (1,388) ---------- Net change in cash ............................................................ -- Cash and cash equivalents at the beginning of the year ........................ -- ---------- Cash and cash equivalents at the end of the year .............................. $ -- ========== Supplement disclosures of cash flow information: Cash paid during the year for: Interest--AlliedSignal ...................................................... $ 552 ----------
See accompanying notes to the combined financial statements F-80 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) 1. BACKGROUND AND DESCRIPTION OF BUSINESS The Ocean Systems business ("Ocean Systems" or the "Company") is a wholly owned operation of AlliedSignal Inc. ("AlliedSignal") comprised of the Ocean Systems Division ("OS"), and AlliedSignal ELAC Nautik GmbH ("ELAC"). The OS Division headquarters and principal operations, including one manufacturing site, are located in Sylmar, California, a suburb of Los Angeles. OS also operates marketing offices located in Canada ("ASCI") and England ("BOSL"). OS was acquired through AlliedSignal's merger with the Bendix Corporation in 1982. ELAC is a wholly owned subsidiary of AlliedSignal Deutschland ("AS Deutschland") and is a separate legal entity located in Kiel, Germany. ELAC was acquired from Honeywell Inc. in 1994. On December 22, 1997, L-3 Communications Corporation, a wholly owned subsidiary of L-3 Communications Holdings, Inc. ("L-3") entered into a definitive Purchase Agreement with AlliedSignal to acquire substantially all the net assets excluding land and buildings, and assumed certain of the liabilities of OS and purchased the outstanding capital stock of ELAC from AS Deutschland. Ocean Systems develops, manufactures and sells sophisticated sonar detection and tracking devices for underwater use. The Company's customers include the U.S. Government, foreign governments, defense industry prime contractors and commercial customers. The Company operates primarily in one industry segment, electronic sonar components and systems. All domestic government contracts and subcontracts of Ocean Systems are subject to audit and various cost controls, and Government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent year become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the foreign government. The decline in the U.S. defense budget since the late 1980s has resulted in program delays, cancellations and scope reduction for defense contracts in general. These events may or may not have an effect on the Company's programs; however, in the event that U.S. Government expenditures for products of the type manufactured by the Company are reduced, and not offset by greater foreign sales or other new programs or products, or acquisitions, there may be a reduction in the volume of contracts or subcontracts awarded to the Company. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES BASIS OF PRESENTATION AND USE OF ESTIMATES The accompanying combined financial statements reflect the assets, liabilities and operations of Ocean Systems including OS and ELAC which are combined herein as they are entities under common control and management. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principals requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates and assumptions relate to contract estimates of sales and costs, excess and obsolete inventory reserves, warranty reserves, pension estimates and recoverability of recorded amounts of fixed assets. Actual results could differ from these estimates. REVENUE RECOGNITION Under fixed-price contracts, sales and related costs are recorded upon delivery and customer acceptance. Sales and related costs under cost-reimbursable contracts are recorded on the percentage of F-81 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) completion method. Anticipated future losses on contracts are charged to income when identified. Revisions in profit estimates are reflected in the period in which the facts, which require the revision, become known. ACCOUNTS RECEIVABLE Management assesses the credit risk and records an allowance for uncollectable accounts as considered necessary based on several factors including, but not limited to, an analysis of specific customers, historical trends, current economic conditions and other information. The U.S. Navy comprises a significant portion of Ocean System's revenues. The Company's other customers include the navies of many foreign countries. The Company's credit risk is affected by conditions or occurrences within the U.S. Government and economic conditions of the countries in which the Company operates or has customers. Sales are made on unsecured, customer-specific credit terms, which may include extended terms. INVENTORIES Inventories are valued at the lower of cost or market using the average cost method. Inventories consist of raw materials and supplies, work in process and finished goods. An excess and obsolete inventory reserve has been established primarily for raw materials and parts that have not been allocated to firm contracts. The excess and obsolete inventory reserve is based on estimates of future usage of inventory on hand. CONTRACTS IN PROCESS Costs accumulated under cost-reimbursable contracts include direct costs, as well as manufacturing overhead. In accordance with industry practice, these amounts are included in current assets. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at historical cost net of accumulated depreciation. For financial purposes, property, plant and equipment is generally depreciated on the straight line method using estimated useful lives ranging from 3 to 20 years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. Interest costs incurred during the construction of plant and equipment are capitalized using an imputed interest rate approximating 8%. Interest costs capitalized during 1997 amounted to $57. CAPITALIZED SOFTWARE Capitalized software primarily represents costs incurred related to the purchase and implementation of the Company's MRP II business system. Capitalized software is reported at historical cost less accumulated amortization. Amortization is based on the estimated useful service life not to exceed five years. Amortization of capitalized software was $1,078 for the year ended December 31, 1997. Accumulated amortization was $2,368 at December 31, 1997. GOODWILL Goodwill represents the excess of the cost of the purchased business over the net assets acquired and is being amortized on a straight-line basis over 40 years. This excess relates primarily to the allocated portion of goodwill arising out of the AlliedSignal merger with Bendix in 1982 and was allocated to OS F-82 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) based on the proportionate percentage of OS pretax earnings to the total Bendix Aerospace Group pretax earnings at the time of the AlliedSignal acquisition from Bendix. Amortization expense was $70 for the year ended December 31, 1997. Accumulated amortization was $980 at December 31, 1997. The carrying amounts of intangible assets are reviewed if the facts and circumstances indicate potential impairment of their carrying value. If this review indicates that intangible assets are not recoverable, as determined based on the undiscounted cash flows of the entity acquired over the remaining amortization period, the Company's carrying values related to the intangible assets are reduced to the fair value of the asset. RESEARCH AND DEVELOPMENT AND SIMILAR COSTS Research and development costs sponsored by the Company include research and development and bid and proposal efforts related to government products and services. Customer-sponsored research and development costs incurred are included in contract costs. FOREIGN OPERATIONS AND FOREIGN CURRENCY TRANSLATION The Company's major foreign operation is ELAC located in Germany with the Deutsche mark as its functional currency. Assets and liabilities are translated at current exchange rates at the end of the period. Income and expenses are translated using the monthly average exchange rates. The effect of the unrealized rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as a separate component of equity in the accompanying combined balance sheet. There are no material foreign currency gains or losses for the year ended December 31, 1997 as the Company's U.S. sales to foreign customers are denominated in U.S. dollars. ASCI Canadian sales are denominated in Canadian dollars and the ELAC foreign sales are denominated in Deutsche Marks. FINANCIAL INSTRUMENTS At December 31, 1997, the carrying value of the Company's financial instruments, such as receivables, accounts payable and accrued liabilities, approximate fair value, based on the short-term maturities of these instruments. INCOME TAXES The benefit for income taxes for OS was computed by applying statutory tax rates to the reported loss before income taxes after considering items that do not enter into the determination of taxable income and tax credits reflected in the consolidated provision of AlliedSignal which are related to OS. Income taxes for OS are assumed to have been settled with AlliedSignal at December 31, 1997 and there are no separate tax attributes related to OS. For ELAC, separate tax attributes that relate specifically to ELAC have been considered in computing taxes. 3. TRANSACTIONS WITH ALLIEDSIGNAL Ocean Systems relies on AlliedSignal for certain services, including treasury, cash management, employee benefits, taxes, risk management, internal audit, financial reporting, legal, contract administration and general corporate services. Although certain assets, liabilities and expenses related to these services have been allocated to the Company, the combined financial position, results of operations and cash flows presented in the accompanying combined financial statements would not be the same as would have occurred had the Company been an independent entity. The following describes the related party transactions. F-83 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) ALLOCATION OF CORPORATE EXPENSES The amount of allocated corporate expenses reflected in these combined financial statements has been estimated based primarily on an allocation methodology prescribed by government regulations pertaining to government contractors. Corporate expenses allocated to Ocean Systems were $2,258 for the year ended December 31, 1997, and are included in general and administrative expense in the accompanying combined statement of operations. PENSIONS Certain of the Company's employees participate in various AlliedSignal sponsored pension plans covering certain employees. Eligibility for participation in these plans varies, and benefits are generally based on employees' compensation and years of service. AlliedSignal funding policy is generally to contribute in accordance with cost accounting standards that affect government contractors subject to the Internal Revenue code and regulations. Although the aforementioned pension arrangements are part of certain AlliedSignal defined benefit plans, separate actuarial estimates were made for the portion allocable to the Company. Pension expense included in the accompanying combined statement of operations was $1,452 for the year ended December 31, 1997. The pension plan liability at December 31, 1997 was fully funded. The Company also has a supplemental pension plan for highly compensated employees as defined by IRS rules. The liability reflected in the accompanying combined balance sheet was $650 at December 31, 1997. Pension expense included in the combined statement of operations for the supplemental pension plan was $24 for the year ended December 31, 1997. The Company's German employees of ELAC are covered by a separate pension plan. Pension costs included the following components for the year ended December 31, 1997:
Service costs earned during the year ......... $163 Interest cost on projected benefit obligation 119 Actual return on plan assets .................. (92) Amortization of unrecognized net obligation .. 24 ------ Net periodic pension cost ..................... $214 ======
F-84 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) The following table sets forth the ELAC pension plan funded status and amounts recognized in the Company's combined balance sheet at December 31, 1997:
Actuarial present value of benefit obligation Vested ................................................ $1,067 Nonvested ............................................. 296 -------- Accumulated benefit obligation ....................... 1,363 ======== Projected benefit obligation .......................... 1,919 Plan assets at fair value ............................. 1,422 -------- Projected benefit obligation in excess of plan assets 497 Unrecognized net loss ................................ 37 Unrecognized prior service costs ..................... Unrecognized net obligation .......................... (361) -------- Accrued pension costs ............................... $ 173 ========
Major assumptions were: Discount Rate ................................... 6.8% Expected long-term rate of return on assets .... 6.8% Rate of increase in compensation levels ........ 4.0%
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS In addition to participating in AlliedSignal pension plans, employees of OS are provided varying levels of health care and life insurance benefits for retired employees and dependents. Participants are eligible for these benefits when they retire from active service and meet the pension plan eligibility requirements. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying of the cost through contributions, deductibles and coinsurance provisions. Although the aforementioned postretirement benefits are part of certain AlliedSignal postretirement arrangements, separate actuarial estimates were made for the portion allocable to the Company. The weighted average discount rate utilized in determining the accumulated postretirement benefit obligation was 7.25% for 1997. Net postretirement benefit costs included in the combined statements of operations was $1,072 for the year ended December 31, 1997. The net postretirement benefit costs for 1997 included the following components:
Service cost-benefits attributed to service during the period $ 545 Interest cost on accumulated postretirement benefit obligation 704 Amortization of gain .......................................... (177) ======= Net postretirement benefit cost .............................. $1,072 =======
F-85 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) The funded status of the plan and related liability amounts recognized in the accompanying combined balance sheet at December 31, 1997 were as follows:
Accumulated postretirement benefit obligation: Fully eligible active plan participants ..... $2,698 Other active plan participants ............... 7,049 -------- 9,747 Unrecognized prior service costs .............. -- Unrecognized net gain (loss) .................. -- -------- Accrued postretirement benefit cost ......... $9,747 ========
EMPLOYEE SAVINGS PLANS Ocean Systems North American operation also has a supplemental savings plan in which the Company matches the contributions of participating employees up to a designated level. Under this plan, the matching contributions, in cash, were $54 for the year ended December 31, 1997 and the liability recorded at December 31, 1997 was $562. INTEREST EXPENSE Interest expense has been allocated to the Company by applying AlliedSignal's weighted average consolidated interest rate to the portion of the beginning of the period equity account deemed to be financed by consolidated debt, which has been determined based on AlliedSignal's debt to equity ratio on such date. Management of the Company believes that this allocation methodology is reasonable. The allocated interest expense was calculated using the following equity balance and interest rate, for the year ended December 31, 1997:
Equity ........ $5,751 Interest Rate 9.6%
Allocated interest expense for the year ended December 31, 1997 amounted to $552 and is included in interest expense, net in the accompanying combined statement of operations. INCOME TAXES The Company will be included in the consolidated Federal income tax return, foreign tax returns and certain combined and separate state and local income tax returns of AlliedSignal for 1997. Income taxes for OS are considered to have been settled with AlliedSignal at December 31, 1997 and are recorded through the invested equity account with AlliedSignal as there are no separate stand alone tax attributes related to OS. ELAC participates in the AlliedSignal Deutschland GmbH profit pooling agreement for corporate income tax and municipal trade tax. Since entering into this agreement ELAC has not paid German taxes, as any profits or losses of ELAC are transferred to AlliedSignal Deutschland. For purposes of these combined financial statements, the tax attributes that relate to ELAC prior to entering into the pooling agreement have been considered in computing the separate ELAC tax computations as these attributes will remain with ELAC after the termination of the pooling agreement after the acquisition by L-3. F-86 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) STATEMENT OF CASH FLOWS The company participates in the AlliedSignal cash management system, under which all cash is received and payments are made by AlliedSignal. All transactions between the Company and AlliedSignal have been accounted for as settled in cash at the time such transactions were recorded by the Company. 4. INVENTORIES AND CONTRACTS IN PROCESS Net inventories are comprised of the following components at December 31, 1997:
Raw materials and supplies ............ $14,894 Work in process ....................... 6,675 Finished goods ........................ 12,080 Excess and obsolete inventory reserve (7,772) --------- Net inventories ...................... 25,877 Less, unliquidated progress payments (603) --------- $25,274 =========
For the year ended December 31, 1997, there were no general and administrative, independent research and development, or bid and proposal costs charged to inventory. Contracts in process, amounting to $793 as of December 31, 1997, include accumulated inventoried costs and profits on cost or cost-reimbursement contracts, principally with the U.S. Government. The U.S. Government has title to, or a security interest in, inventories to which progress payments are applied. The Company believes that substantially all such amounts will be billed and collected within one year. 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31, 1997 are comprised of the following components:
Buildings, building improvements and land improvements ................................ $ 9,108 Machinery, equipment, furniture and fixtures 48,060 Leasehold improvements ....................... 300 ---------- 57,468 Less, accumulated depreciation and amortization ................................ (43,324) ---------- 14,144 Land ......................................... 388 Construction in progress ..................... 2,313 ---------- $ 16,845 ==========
Depreciation and amortization expense was $2,976 for the year ended December 31, 1997. F-87 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) 6. INCOME TAXES The effective tax rate differs from the statutory federal income tax rate for the following reasons:
Statutory federal income tax rate .... (35.0)% State taxes net of federal benefit ... (6.0)% Foreign losses with no tax benefit ... 6.7 % Foreign sales corporation tax benefit.............................. (4.5)% Other, net............................ (0.5)% --------- (39.3)% =========
At December 31, 1997, the German trade tax and corporate income tax net operating loss ("NOL") carryovers amounted to $953 and $1,180, respectively, and may be carried forward indefinitely. At December 31, 1997, deferred tax assets related to ELAC's German trade tax and corporate income tax NOL carryovers amounted to $468. A full valuation is recorded against the deferred tax asset. The valuation allowance for deferred taxes was based on ELAC's historical losses from operations and its current year loss. In addition, certain aspects of the acquisition could limit the utilization of a portion or all of these NOL carryovers. Accordingly, management believes currently there is not enough historical information to support that it is more likely than not that ELAC will realize the future tax benefit of these NOL carryovers. 7. EQUITY Invested equity represents the equity contributed to OS by AlliedSignal and related accumulated results of operations of OS. ELAC common stock represents the one share of common stock held by AS Deutschland. ELAC's retained earnings includes the impact of ELAC's accumulated operating losses, and repayments to AlliedSignal offset by the effects of the amortization of negative goodwill associated with the ELAC acquisition from Honeywell. 8. SALES TO PRINCIPAL CUSTOMERS The Company operates primarily in one industry segment, electronic sonar components and systems. Sales to principal customers are as follows for the year ended December 31, 1997:
U.S. Government agencies and prime contractors $36,133 German government............................... 5,895 Other foreign governments....................... 24,883 Commercial customers............................ 6,122 --------- $73,033 =========
F-88 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) Summarized data of the Company's operations by geographic area for the year ended December 31, 1997 are as follows:
NORTH REST OF AMERICA GERMANY EUROPE ASIA OTHER ELIM TOTAL --------- --------- --------- --------- -------- ----------- --------- Sales to unaffiliated customer ............. $39,002 $ 8,146 $6,220 $18,611 $1,054 -- $73,033 Inter-area sales ...... 19,536 4,334 -- -- -- $(23,870) -- Loss from operations . (4,658) (1,090) -- -- -- -- (5,748) Identifiable assets at December 31, 1997 ... 51,613 10,454 -- -- -- -- 62,067
9. COMMITMENTS AND CONTINGENCIES The Company leases certain facilities and equipment under agreements expiring at various dates through 2011. At December 31, 1997, future minimum payments for noncancellable operating leases with initial or remaining terms in excess of one year are $933 for 1998, $340 for 1999, $161 for 2000, $35 for 2001 and $7 for 2002. Leases covering major items of real estate and equipment contain renewal and or purchase options which may be exercised by the company. Rent expense, net of sublease income from other AlliedSignal entities, was $1,342 for the year ended December 31, 1997. Management is continually assessing the Company's obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management of the Company is aware, the Company believes that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that individually or in the aggregate, would be material to the Company's combined financial position, cash flows and results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company is engaged in providing products and services under contracts with the U.S. Government and foreign government agencies. All such contracts are subject to extensive legal and regulatory requirements, and, from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. Under government procurement regulations, an indictment of the Company by a federal grand jury could result in the Company being suspended for a period of time from eligibility for awards of new government contracts. A conviction could result in debarment from contracting with federal government for a specified term. The Company is also periodically subject to periodic review or audit by agencies of the U.S. Government. At December 31, 1997, there are several pending issues with these agencies that are incidental to the Company's business. One of these reviews was critical of the Company's procedures for maintaining control of Government owned property in the Company's custody. The Company is responsible and liable for $93 million of Government-owned property in its possession. With respect to this and other U.S. Government matters, the Company's management believes the ultimate resolution of any such matters will not have a material adverse effect on the combined financial position, cash flows or results of operations of the Company. F-89 ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) The Company is periodically subject to litigation, claims or assessments and various contingent liabilities (including environmental matters) incidental to their business. With respect to those investigative actions, items of litigation, claims or assessments of which they are aware, management of the Company is of the opinion that the probability is remote that, after taking into account certain provisions that have been made with respect to these matters, the ultimate resolution of any such investigative actions, items of litigation, claims or assessments will have a material adverse effect on the combined financial position, cash flows or results of operations of the Company. F-90 Pictures of the platforms, such as Global Star, International Space Station, U-2, E-2C, F14, aircraft carrier, into which L-3's products are integrated. SECURE COMMUNICATION SYSTEMS SECURE HIGH DATA RATE COMMUNICATIONS Wideband Data Links SATELLITE COMMUNICATION TERMINALS Ground-Based Satellite Communication Terminals SPACE COMMUNICATION AND GROUND CONTROL Satellite Communication and Tracking Systems Satellite Command and Control Sustainment and Support MILITARY COMMUNICATIONS Shipboard Communication Systems Digital Battlefield Communications Communication Software Support Services INFORMATION SECURITIES SYSTEMS Secure Telephone Unit (STU III) Secure Terminal Equipment (STE) Local Management Device/Key Processor (LMD/KP) Information Processing Systems SPECIALIZED COMMUNICATION PRODUCTS MICROWAVE PRODUCTS Passive Components, Mechanical Switches and Wireless Assemblies Safety Products Semiconductors Satellite and Wireless Components AVIONICS AND OCEAN SYSTEMS Aviation Recorders Antenna Systems Display Systems Ocean Systems TELEMETRY, INSTRUMENTATION AND SPACE PRODUCTS Airborne, Ground and Space Telemetry Space Products NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE NOTES OFFERED HEREBY NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. TABLE OF CONTENTS
PAGE -------- Available Information ......................... i Prospectus Summary............................. 1 Risk Factors................................... 11 Use of Proceeds ............................... 19 Capitalization................................. 19 Unaudited Pro Forma Condensed Consolidated Financial Information......................... 20 Selected Financial Information................. 27 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 29 Business....................................... 41 Certain Relationships and Related Transactions ................................. 59 Management..................................... 61 Ownership of Capital Stock..................... 69 Description of Certain Indebtedness............ 70 Description of the Notes....................... 73 United States Federal Tax Considerations ...... 98 Underwriting................................... 101 Legal Matters.................................. 102 Experts........................................ 102 Index to Financial Statements.................. F-1
$150,000,000 [L-3 COMMUNICATIONS CORPORATION LOGO] L-3 COMMUNICATIONS CORPORATION % SENIOR SUBORDINATED NOTES DUE 2008 PROSPECTUS , 1998 LEHMAN BROTHERS BANCAMERICA ROBERTSON STEPHENS [ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS] PROSPECTUS [L-3 COMMUNICATIONS CORPORATION LOGO] L-3 COMMUNICATIONS CORPORATION % SENIOR SUBORDINATED NOTES DUE 2008 The % Senior Subordinated Notes due 2008 (the "Notes") of L-3 Communications Corporation (the "Company" or "L-3") have been issued by the Company. The payment of principal, premium, if any, and interest on the Notes is guaranteed (the "Guarantees") on a senior subordinated basis by all of L-3 Communications' Restricted Subsidiaries, including Hygienetics Environmental Services, Inc., L-3 Communications ILEX Systems, Inc. and Southern California Microwave, Inc. (the "Guarantors"), other than Foreign Subsidiaries. Interest on the Notes will be payable semi-annually on and of each year, commencing , 1998. The Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after , 2003, at the redemption prices set forth herein, plus accrued and unpaid interest to the date of redemption. In addition, prior to , 2001, the Company may redeem up to 35% of the aggregate principal amount of Notes at the redemption price set forth herein plus accrued and unpaid interest through the redemption date with the net cash proceeds of one or more Equity Offerings. The Notes will not be subject to any mandatory sinking fund. In the event of a Change of Control, each holder of Notes will have the right, at the holder's option, to require the Company to purchase such holder's Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. See "Description of the Notes". The Company's ability to pay cash to the holders of Notes upon a purchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. The Notes will be general unsecured obligations of the Company, subordinate in right of payment to all existing and future Senior Debt of the Company. As of March 31, 1998, after giving pro forma effect to the Offerings, application of the net proceeds therefrom and borrowings under the Senior Credit Facilities, the Company would have had approximately $415.2 million of indebtedness outstanding, of which $36.9 million would have been Senior Debt (excluding letters of credit). See "Capitalization". FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES, SEE "RISK FACTORS" BEGINNING ON PAGE 11. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This Prospectus has been prepared for and is to be used by Lehman Brothers Inc. in connection with offers and sales in market-making transactions of the Notes. The Company will not receive any of the proceeds of such sales. Lehman Brothers Inc. may act as a principal or agent in such transactions. The Notes may be offered in negotiated transactions or otherwise. LEHMAN BROTHERS The date of this Prospectus is , 1998 [ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS] THE NOTES OFFERING Capitalized terms used under this heading "The Notes Offering" have been defined under the heading "Description of the Notes -- Certain Definitions." Securities Offered ............ $150,000,000 aggregate principal amount of % Senior Subordinated Notes due 2008 (the "Notes"). Maturity ...................... , 2008. Interest Payment Dates ........ and , commencing , 1998. Guarantees .................... The Notes will be unconditionally guaranteed on a senior subordinated basis by each Restricted Subsidiary (as defined), other than Foreign Subsidiaries (as defined). The Guarantees will be unsecured senior subordinated obligations of the Guarantors, and will be subordinated in right of payment to all existing and future Guarantor Senior Debt (as defined) and will rank on a parity or pari passu with any senior subordinated Indebtedness of the Guarantors and senior in right of payment to all subordinated obligations of the Guarantors. Optional Redemption ........... The Notes may be redeemed at the option of L-3 Communications, in whole or in part, on or after , 2003, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to , 2001, L-3 Communications may redeem up to an aggregate of 35% of the Notes originally issued at a redemption price of % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, with the net cash proceeds of one or more Equity Offerings; provided, however, that at least 65% in aggregate principal amount of the Notes originally issued remain outstanding following such redemption. Change of Control ............. In the event of a Change of Control (as defined), the holders of the Notes will have the right to require L-3 Communications to purchase their Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. Ranking ....................... The Notes will be general unsecured obligations of L-3 Communications, subordinate in right of payment to all current and future Senior Debt including all obligations of L-3 Communications and its subsidiaries under the Senior Credit Facilities (as defined). At March 31, 1998, on a pro forma basis after giving effect to the 1998 Acquisitions and the Offerings, L-3 Communications would have had $415.2 million of indebtedness outstanding, of which $36.9 million would have been Senior Debt (excluding letters of credit). Borrowings under the Senior Credit Facilities will be secured by substantially ALT-2 [ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS] all of the assets of L-3 Communications as well as the capital stock of L-3 Communications and its subsidiaries. See "Risk Factors -- Substantial Leverage" and "--Subordination". Covenants ..................... The Indenture pursuant to which the Notes will be issued (the "Indenture") will contain certain covenants that, among other things, limit the ability of L-3 Communications and its Restricted Subsidiaries to incur additional Indebtedness and issue preferred stock, pay dividends or make other distributions, repurchase Equity Interests (as defined) or subordinated Indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets of L-3 Communications or its Restricted Subsidiaries, issue or sell Equity Interests of L-3 Communications' Restricted Subsidiaries or enter into certain mergers and consolidations. In addition, under certain circumstances, L-3 Communications will be required to offer to purchase Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, with the proceeds of certain Asset Sales (as defined). See "Description of the Notes". Use of Proceeds ............... This Prospectus is delivered in connection with the sale of the Notes by Lehman Brothers Inc. in market-making transactions. The Company will receive no proceeds from such transactions. See "Use of Proceeds." RISK FACTORS For a discussion of certain risk factors that should be considered in connection with an investment in the Notes, see "Risk Factors". ALT-3 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] USE OF PROCEEDS This Prospectus is delivered in connection with the sale of the Notes by Lehman Brothers Inc. in market-making transactions. The Company will not receive any of the proceeds from such transactions. ALT-4 [ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS] AVAILABLE INFORMATION L-3 Communications has filed with the Commission a Registration Statement on Form S-1 (together with all amendments, exhibits, schedules and supplements thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") with respect to the Notes being offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement. For further information with respect to the Company and the Notes, reference is made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the Registration Statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made. L-3 Communications is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission"). The Registration Statement, such reports and other information can be inspected and copied at the Public Reference Section of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at regional public reference facilities maintained by the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material, including copies of all or any portion of the Registration Statement, can be obtained from the Public Reference Section of the Commission at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). So long as L-3 Communications is subject to the periodic reporting requirements of the Exchange Act, it is required to furnish the information required to be filed with the Commission to the Trustee and the holders of the Notes. L-3 Communications has agreed that, even if it is not required under the Exchange Act to furnish such information to the Commission, it will nonetheless continue to furnish information that would be required to be furnished by L-3 Communications by Section 13 of the Exchange Act to the Trustee and the holders of the Notes as if it were subject to such periodic reporting requirements. ALT-5 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] UNDERWRITING This Prospectus is to be used by Lehman Brothers Inc. in connection with offers and sales of the Notes in market-making transactions effected from time to time. Lehman Brothers Inc. may act as a principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties when it acts as agent for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. Affiliates of Lehman Brothers Inc. currently own % of the Common Stock. See "Ownership of Capital Stock". Lehman Brothers Inc. has informed the Company that it does not intend to confirm sales of the Notes to any accounts over which it exercises discretionary authority without the prior specific written approval of such transactions by the customer. The Company has been advised by Lehman Brothers Inc. that, subject to applicable laws and regulations, Lehman Brothers Inc. currently intends to make a market in the Notes following completion of the Notes Offering. However, Lehman Brothers Inc. is not obligated to do so and any such market-making may be interrupted or discontinued at any time without notice. In addition, such market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act. There can be no assurance that an active trading market will develop or be sustained. See "Risk Factors - -- Trading Market for the Notes". Lehman Brothers Inc. has provided investment banking, financial advisor and other services to the Company, for which services Lehman Brothers Inc. has received fees. In addition, Lehman Brothers Inc. acted as the lead underwriter in connection with the initial sale of the Notes and received an underwriting discount of approximately $ million in connection therewith. Lehman Brothers Commercial Paper Inc., an affiliate of Lehman Brothers Inc., is the Arranger and Syndication Agent under the Senior Credit Facilities. See "Certain Relationship and Related Transactions". ALT-6 [ALTERNATE BACK COVER FOR MARKET-MAKING PROSPECTUS] NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. TABLE OF CONTENTS
PAGE -------- Available Information ............................. i Prospectus Summary................................. 1 Risk Factors....................................... 11 Use of Proceeds.................................... 19 Capitalization..................................... 19 Unaudited Pro Forma Condensed Consolidated Financial Information............................. 20 Selected Financial Information..................... 27 Management's Discussion and Analysis of Financial Condition and Results of Operations .... 29 Business........................................... 41 Certain Relationships and Related Transactions .... 59 Management......................................... 61 Ownership of Capital Stock......................... 69 Description of Certain Indebtedness................ 70 Description of The Notes........................... 73 United States Federal Tax Considerations .......... 98 Underwriting....................................... 101 Legal Matters...................................... 102 Experts............................................ 102 Index to Financial Statements...................... F-1
[L-3 COMMUNICATIONS CORPORATION LOGO] L-3 COMMUNICATIONS CORPORATION PROSPECTUS % SENIOR SUBORDINATED NOTES DUE 2008 LEHMAN BROTHERS PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
DESCRIPTION AMOUNT - --------------------------------------------------------------- ----------- Securities and Exchange Commission registration fee ........... $44,250 National Association of Securities Dealers, Inc. filing fee ... 15,500 Legal fees and expenses ........................................ * Accounting fees and expenses ................................... * Printing and engraving fees and expenses ....................... * Blue Sky fees and expenses ..................................... * Trustee fees and expenses....................................... * Miscellaneous expenses.......................................... * ----------- Total......................................................... $ * ===========
- ------------ * To be provided by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the "DGCL") provides for, among other things: (i) permissive indemnification for expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by designated persons, including directors and officers of a corporation, in the event such persons are parties to litigation other than stockholder derivative actions if certain conditions are met; (ii) permissive indemnification for expenses (including attorneys' fees) actually and reasonably incurred by designated persons, including directors and officers of a corporation, in the event such persons are parties to stockholder derivative actions if certain conditions are met; (iii) mandatory indemnification for expenses (including attorneys' fees) actually and reasonably incurred by designated persons, including directors and officers of a corporation, in the event such persons are successful on the merits or otherwise in defense of litigation covered by (i) and (ii) above; and (iv) that the indemnification provided for by Section 145 is not deemed exclusive of any other rights which may be provided under any by-law, agreement, stockholder or disinterested director vote, or otherwise. In addition to the indemnification provisions of the DGCL described above, the Registrant's Certificate of Incorporation (the "Certificate of Incorporation") provides that the Registrant shall, to the fullest extent permitted by the DGCL, (i) indemnify its officers and directors and (ii) advance expenses incurred by such officers or directors in relation to any action, suit or proceeding. The Registrant's Bylaws (the "Bylaws") require the advancement of expenses to an officer or director (without a determination as to his conduct) in advance of the final disposition of a proceeding if such person furnishes a written affirmation of his good faith belief that he has met the applicable standard of conduct and furnishes a written undertaking to repay any advances if it is ultimately determined that he is not entitled to indemnification. In connection with proceedings by or in the right of the Registrant, the Bylaws provide that indemnification shall include not only reasonable expenses, but also judgments, fines, penalties and amounts paid in settlement. The Bylaws provide that the Registrant may, subject to authorization on a case by case basis, indemnify and advance expenses to employees or agents to the same extent as a director or to a lesser extent (or greater, as permitted by law) as determined by the Board of Directors. II-1 The Bylaws purport to confer upon officers and directors contractual rights to indemnification and advancement of expenses as provided therein. The Certificate of Incorporation limits the personal liability of directors to the Registrant or its stockholders for monetary damages for breach of the fiduciary duty as a director, other than liability as a director (i) for breach of duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (certain illegal distributions) or (iv) for any transaction for which the director derived an improper personal benefit. The Registrant maintains officers' and directors' insurance covering certain liabilities that may be incurred by officers and directors in the performance of their duties. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. On April 30, 1997, L-3 Communications issued 100 shares of its common stock to Holdings for aggregate consideration of $125 million. The securities were sold directly by L-3 Communications and did not involve any underwriter. L-3 Communications considers these securities to have been offered and sold in a transaction not involving any public offering and, therefore, to be exempted from registration under Section 4(2) of the Securities Act. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits: The following exhibits are filed pursuant to Item 601 of Regulation S-K.
EXHIBIT NO. DESCRIPTION OF EXHIBIT - --------------- -------------------------------------------------------------------------------------------- *1.1 Form of Underwriting Agreement among L-3 Communications Corporation and the Underwriters named therein *3.1 Certificate of Incorporation. *3.2 By-Laws of L-3 Communications Corporation. *4.1 Form of Indenture between L-3 Communications Corporation and the Trustee, including the form of Note. *5 Opinion of Simpson Thacher & Bartlett. 10.1 Credit Agreement, dated as of April 30, 1997 among L-3 Communications Corporation and lenders named therein, as amended. 10.2 Indenture dated as of April 30, 1997 between L-3 Communications Corporation and The Bank of New York, as Trustee. *10.3 Stockholders Agreement dated as of April 30, 1997 among L-3 Communications Corporation and the stockholders parties thereto. *10.4 Transaction Agreement dated as of March 28, 1997, as amended, among Lockheed Martin Corporation, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza, Robert V. LaPenta and L-3 Communications Holdings, Inc. 10.5 Employment Agreement dated April 30, 1997 between Frank C. Lanza and L-3 Communications Holdings, Inc. 10.51 Employment Agreement dated April 30, 1997 between Robert V. LaPenta and L-3 Communications Holdings, Inc. **10.6 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3 Communications Corporation and KSL, Division of Bonneville International. 10.61 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, L-3 Communications Corporation and Unisys Corporation. **10.62 Sublease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3 Communications Corporation and Unisys Corporation. II-2 EXHIBIT NO. DESCRIPTION OF EXHIBIT - --------------- -------------------------------------------------------------------------------------------- 10.7 Limited Noncompetition Agreement dated April 30, 1997 between Lockheed Martin Corporation and L-3 Communications Corporation. 10.8 Asset Purchase Agreement dated as of December 19, 1997 between L-3 Communications Corporation and California Microwave, Inc. 10.81 Asset Purchase Agreement dated as of February 10, 1998 between FAP Trust and L-3 Communications Corporation. *10.82 Asset Purchase Agreement dated as of March 30, 1998 among AlliedSignal Inc., AlliedSignal Technologies, Inc., AlliedSignal Deutschland GMBH and L-3 Communications Corporation. **10.9 Form of Stock Option Agreement for Employee Options. **10.91 Form of 1997 Stock Option Plan for Key Employees. *10.10 L-3 Communications Corporation Pension Plan. 12 Ratio of earnings to fixed charges. *23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5 hereto). 23.2 Consent of Coopers & Lybrand L.L.P., independent certified public accountants. 23.3 Consent of Ernst & Young LLP, independent certified public accountants. 23.31 Consent of Ernst & Young LLP, independent certified public accountants. 23.4 Consent of KPMG Peat Marwick LLP, independent certified public accountants. **24 Powers of Attorney of L-3 Communications Corporation. **24.1 Power of Attorney of Hygienetics Environmental Services, Inc., L-3 Communications ILEX Systems, Inc. and Southern California Microwave, Inc. *25 Statement of Eligibility of Trustee on Form T-1.
- ------------ * To be provided by amendment. ** Previously filed. (b) Financial Statement Schedules Not applicable II-3 ITEM 17. UNDERTAKINGS. (a) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on April 27, 1998. L-3 COMMUNICATIONS CORPORATION By: /s/ Christopher C. Cambria ------------------------------- Vice President, Secretary and General Counsel Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 27th day of April, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE - ----------------------------------- ---------------------------------------------------------- * Chairman, Chief Executive Officer and Director (Principal ---------------------------------- Executive Officer) Frank C. Lanza * President, Chief Financial Officer (Principal Financial ---------------------------------- Officer) and Director Robert V. LaPenta * Vice President--Finance and Controller (Principal ---------------------------------- Accounting Officer) Michael T. Strianese * Director ---------------------------------- David J. Brand * Director ---------------------------------- Thomas A. Corcoran * Director ---------------------------------- Alberto M. Finali * Director ---------------------------------- Eliot M. Fried * Director ---------------------------------- Frank H. Menaker, Jr. * Director ---------------------------------- Robert B. Millard * Director ---------------------------------- John E. Montague * Director ---------------------------------- Alan H. Washkowitz *By:/s/ Christopher C. Cambria ---------------------------------- Attorney-in-Fact
II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on April 27, 1998. HYGIENETICS ENVIRONMENTAL SERVICES, INC. By: /s/ Christopher C. Cambria ------------------------------------ Vice President, Secretary and Director Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 27th day of April, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE - ----------------------------------- ---------------------------------------------------------- * Chief Executive Officer and Director (Principal Executive ---------------------------------- Officer) Frank C. Lanza * Chief Financial Officer (Principal Financial Officer) and ---------------------------------- Director Robert V. LaPenta * Vice President, Principal Accounting Officer ---------------------------------- and Director Michael T. Strianese /s/Christopher C. Cambria Director ---------------------------------- Christopher C. Cambria *By:/s/ Christopher C. Cambria ---------------------------------- Attorney-in-Fact
II-6 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on April 27, 1998. L-3 COMMUNICATIONS ILEX SYSTEMS, INC. By: /s/ Christopher C. Cambria ------------------------------- Vice President, Secretary and Director Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 27th day of April, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE - ----------------------------------- ---------------------------------------------------------- * Chief Executive Officer and Director (Principal Executive ---------------------------------- Officer) Frank C. Lanza * Chief Financial Officer (Principal Financial Officer) and ---------------------------------- Director Robert V. LaPenta * Vice President, Principal Accounting Officer ---------------------------------- and Director Michael T. Strianese /s/Christopher C. Cambria Director ---------------------------------- Christopher C. Cambria *By:/s/ Christopher C. Cambria ---------------------------------- Attorney-in-Fact
II-7 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused the Registration Statement or amendments thereto to be signed on its behalf by the undersigned, thereunto duly authorized, on April 27, 1998. SOUTHERN CALIFORNIA MICROWAVE, INC. By: /s/ Christopher C. Cambria ------------------------------- Vice President, Secretary and Director Pursuant to the requirements of the Securities Act, the Registration Statement has been signed on the 27th day of April, 1998 by the following persons in the capacities indicated:
SIGNATURE TITLE - ----------------------------------- ---------------------------------------------------------- * Chief Executive Officer and Director (Principal Executive ---------------------------------- Officer) Frank C. Lanza * Chief Financial Officer (Principal Financial Officer) and ---------------------------------- Director Robert V. LaPenta * Vice President, Principal Accounting Officer ---------------------------------- and Director Michael T. Strianese /s/Christopher C. Cambria Director ---------------------------------- Christopher C. Cambria * Director ---------------------------------- William Kirk *By:/s/ Christopher C. Cambria ---------------------------------- Attorney-in-Fact
II-8 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT - --------------- -------------------------------------------------------------------------------------------- *1.1 Form of Underwriting Agreement among L-3 Communications Corporation and the Underwriters named therein *3.1 Certificate of Incorporation. *3.2 By-Laws of L-3 Communications Corporation. *4.1 Form of Indenture between L-3 Communications Corporation and the Trustee, including the form of Note. *5 Opinion of Simpson Thacher & Bartlett. 10.1 Credit Agreement, dated as of April 30, 1997 among L-3 Communications Corporation and lenders named therein, as amended. 10.2 Indenture dated as of April 30, 1997 between L-3 Communications Corporation and The Bank of New York, as Trustee. *10.3 Stockholders Agreement dated as of April 30, 1997 among L-3 Communications Corporation and the stockholders parties thereto. *10.4 Transaction Agreement dated as of March 28, 1997, as amended, among Lockheed Martin Corporation, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza, Robert V. LaPenta and L-3 Communications Holdings, Inc. 10.5 Employment Agreement dated April 30, 1997 between Frank C. Lanza and L-3 Communications Holdings, Inc. 10.51 Employment Agreement dated April 30, 1997 between Robert V. LaPenta and L-3 Communications Holdings, Inc. **10.6 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3 Communications Corporation and KSL, Division of Bonneville International. 10.61 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, L-3 Communications Corporation and Unisys Corporation. **10.62 Sublease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3 Communications Corporation and Unisys Corporation. 10.7 Limited Noncompetition Agreement dated April 30, 1997 between Lockheed Martin Corporation and L-3 Communications Corporation. 10.8 Asset Purchase Agreement dated as of December 19, 1997 between L-3 Communications Corporation and California Microwave, Inc. 10.81 Asset Purchase Agreement dated as of February 10, 1998 between FAP Trust and L-3 Communications Corporation. *10.82 Asset Purchase Agreement dated as of March 30, 1998 among AlliedSignal Inc., AlliedSignal Technologies, Inc., AlliedSignal Deutschland GMBH and L-3 Communications Corporation. **10.9 Form of Stock Option Agreement for Employee Options. **10.91 Form of 1997 Stock Option Plan for Key Employees. *10.10 L-3 Communications Corporation Pension Plan. 12 Ratio of earnings to fixed charges. *23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5 hereto). 23.2 Consent of Coopers & Lybrand L.L.P., independent certified public accountants. 23.3 Consent of Ernst & Young LLP, independent certified public accountants. 23.31 Consent of Ernst & Young LLP, independent certified public accountants. 23.4 Consent of KPMG Peat Marwick LLP, independent certified public accountants. **24 Powers of Attorney of L-3 Communications Corporation. **24.1 Power of Attorney of Southern California Microwave, Inc., L-3 Communications ILEX Systems, Inc. and Hygienetics Environmental Services, Inc. (included in signature page). *25 Statement of Eligibility of Trustee on Form T-1.
- ------------ * To be provided by amendment. ** Previously filed. EX-10.1 2 CREDIT AGREEMENT =============================================================================== EXHIBIT 10.1 L-3 COMMUNICATIONS CORPORATION, a Delaware corporation ------------------------- CREDIT AGREEMENT dated as of April 30, 1997 ------------------------- $275,000,000 Credit Facility ------------------------ LEHMAN COMMERCIAL PAPER INC., as Arranger, Syndication Agent and Documentation Agent, and BANK OF AMERICA NT & SA as Administrative Agent =============================================================================== TABLE OF CONTENTS Page SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . . 2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Procedure for Borrowing . . . . . . . . . . . . . . . . . . 2.3 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . 2.4 Termination or Reduction of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . 2.5 Repayment of Loans; Evidence of Debt . . . . . . . . . . . 2.6 Optional Prepayments; Mandatory Prepayments and Reduction of Commitments . . . . . . . . . . . . . . . 2.7 Conversion and Continuation Options . . . . . . . . . . . . 2.8 Minimum Amounts and Maximum Number of Tranches . . . . . . 2.9 Interest Rates and Payment Dates . . . . . . . . . . . . . 2.10 Computation of Interest and Fees . . . . . . . . . . . . . 2.11 Inability to Determine Interest Rate . . . . . . . . . . . 2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . . 2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . 2.14 Requirements of Law . . . . . . . . . . . . . . . . . . . 2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 2.17 Replacement of Lenders . . . . . . . . . . . . . . . . . . 2.18 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . 2.19 Certain Rules Relating to the Payment of Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . 3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . 3.2 Procedure for Issuance of Letters of Credit . . . . . . . . 3.3 Fees, Commissions and Other Charges . . . . . . . . . . . . 3.4 L/C Participation . . . . . . . . . . . . . . . . . . . . . 3.5 Reimbursement Obligation of the Borrower . . . . . . . . . 3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . 3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . 3.8 Application . . . . . . . . . . . . . . . . . . . . . . . . SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 4.1 Financial Condition . . . . . . . . . . . . . . . . . . . . 4.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Corporate Existence; Compliance with Law . . . . . . . . . 4.4 Corporate Power; Authorization; Enforceable Obligations . . 4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . 4.6 No Material Litigation . . . . . . . . . . . . . . . . . . 4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . 4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . 4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 Federal Regulations . . . . . . . . . . . . . . . . . . . 4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13 Investment Company Act; Other Regulations . . . . . . . . 4.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 4.15 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . 4.16 Environmental Matters . . . . . . . . . . . . . . . . . . 4.17 Collateral Documents . . . . . . . . . . . . . . . . . . . 4.18 Accuracy and Completeness of Information . . . . . . . . . 4.19 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . 4.20 Labor Matters . . . . . . . . . . . . . . . . . . . . . . 4.21 Transaction Documents . . . . . . . . . . . . . . . . . . SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 5.1 Conditions to Initial Loans . . . . . . . . . . . . . . . . 5.2 Conditions to Each Extension of Credit . . . . . . . . . . SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 6.1 Financial Statements . . . . . . . . . . . . . . . . . . . 6.2 Certificates; Other Information . . . . . . . . . . . . . . 6.3 Payment of Obligations . . . . . . . . . . . . . . . . . . 6.4 Conduct of Business and Maintenance of Existence . . . . . 6.5 Maintenance of Property; Insurance . . . . . . . . . . . . 6.6 Inspection of Property; Books and Records; Discussions . . 6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . 6.9 Further Assurances . . . . . . . . . . . . . . . . . . . . 6.10 Additional Collateral . . . . . . . . . . . . . . . . . . 6.11 Interest Rate Protection . . . . . . . . . . . . . . . . . 6.12 Foreign Jurisdictions . . . . . . . . . . . . . . . . . . 6.13 Novation; Federal Assignment of Claims . . . . . . . . . . 6.14 Maintenance of Collateral; Alterations . . . . . . . . . . 6.15 Arrangements with the Seller . . . . . . . . . . . . . . . SECTION 7. NEGATIVE COVENANTS 7.1 Financial Condition Covenants . . . . . . . . . . . . . . . 7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . 7.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . 7.4 Limitation on Guarantee Obligations . . . . . . . . . . . . 7.5 Limitation on Fundamental Changes . . . . . . . . . . . . . 7.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . 7.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . 7.8 Limitation on Capital Expenditures . . . . . . . . . . . . 7.9 Limitation on Investments, Loans and Advances . . . . . . . 7.10 Limitation on Optional Payments and Modifications of Instruments and Agreements . . . . . . . . . . . . . . 7.11 Limitation on Transactions with Affiliates . . . . . . . . 7.12 Limitation on Sales and Leasebacks . . . . . . . . . . . . 7.13 Limitation on Changes in Fiscal Year . . . . . . . . . . . 7.14 Limitation on Negative Pledge Clauses . . . . . . . . . . 7.15 Limitation on Lines of Business . . . . . . . . . . . . . 7.16 Designated Senior Debt . . . . . . . . . . . . . . . . . . SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . SECTION 9. THE AGENTS; THE ARRANGER . . . . . . . . . . . . . . . . . . 9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . 9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . 9.4 Reliance by Agents . . . . . . . . . . . . . . . . . . . . 9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . 9.6 Non-Reliance on Agents and Other Lenders . . . . . . . . . 9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . 9.8 Agents, in Their Individual Capacities . . . . . . . . . . 9.9 Successor Administrative Agent . . . . . . . . . . . . . . 9.10 The Arranger . . . . . . . . . . . . . . . . . . . . . . . SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . 10.4 Survival of Representations and Warranties . . . . . . . . 10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . 10.6 Successors and Assigns; Participation and Assignments . . 10.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . 10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . 10.10 Integration . . . . . . . . . . . . . . . . . . . . . . . 10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 10.12 SUBMISSION TO JURISDICTION; WAIVERS . . . . . . . . . . . 10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . 10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . 10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . EXHIBITS Exhibit A-1 Form of Tranche A Term Note Exhibit A-2 Form of Tranche B Term Note Exhibit A-3 Form of Tranche C Term Note Exhibit A-4 Form of Revolving Credit Note Exhibit A-5 Form of Swing Line Note Exhibit B-1 Form of Parent Guarantee Exhibit B-2 Form of Subsidiary Guarantees Exhibit B-3 Form of Parent Pledge and Security Agreement Exhibit B-4 Form of Borrower Pledge and Security Agreement Exhibit B-5 Form of Subsidiary Pledge and Security Agreement Exhibit C-1 Form of Mortgage Exhibit C-2 Form of Deed of Trust Exhibit D-1 Form of Legal Opinion of Simpson Thacher and Bartlett Exhibit D-2 Form of Legal Opinion of Fried, Frank, Harris, Shriver & Jacobson Exhibit E Form of Borrowing Certificate Exhibit F Form of Certificate of Non-U.S. Lender Exhibit G Form of Assignment and Acceptance SCHEDULES Schedule I Lenders and Commitments Schedule II Pricing Grid Schedule III Real Property to be Mortgaged Schedule IV Transaction Documents Schedule 4.4 Required Consents Schedule 4.5 No Legal Bar Schedule 4.6 Material Litigation Schedule 4.8 Real Property Schedule 4.9 Intellectual Property Claims Schedule 4.10 Taxes Schedule 4.14 Subsidiaries Schedule 4.17 Filing Jurisdictions Schedule 6.5 Insurance Schedule 6.10 Certain Real Property Schedule 7.2(f) Existing Indebtedness Schedule 7.3(f) Existing Liens Schedule 7.4 Existing Guarantee Obligations Schedule 7.9(c) Officers Schedule 7.9(g) Existing Investments CREDIT AGREEMENT, dated as of April 30, 1997, among L-3 Communications Corporation, a Delaware corporation (the "Borrower") which is wholly owned by L-3 Communications Holdings, Inc., a Delaware corporation ("Holdings"), the several lenders from time to time parties hereto (the "Lenders"), Lehman Commercial Paper Inc. ("LCPI") as arranger (in such capacity, the "Arranger"), LCPI, as syndication agent (in such capacity, the "Syndication Agent"), LCPI, as documentation agent (in such capacity, the "Documentation Agent") and Bank of America NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). W I T N E S S E T H: WHEREAS, the Borrower is a party to the Transaction Agreement, dated as of March 28, 1997 (as amended through the date hereof the "Transaction Agreement"), by and among Lockheed Martin Corporation, a Maryland corporation (the "Seller"), the Borrower, Lehman Brothers Capital Partners III, L.P. ("Capital Partners") and its Affiliates, Frank C. Lanza and Robert V. LaPenta; WHEREAS, pursuant to the Transaction Agreement, on the Closing Date: (i) the Seller, on behalf of itself and its various transferor subsidiaries, will transfer (the "Asset Contribution") to the Borrower, on behalf of and at the direction of Holdings, the Transferred Assets (as defined in the Transaction Agreement); (ii) Holdings will issue to the Seller 6,980,000 shares of its Class A Common Stock par value $.01 per share; (iii) Holdings will pay the Seller $479,835,000 in cash (subject to adjustment as provided in the Transaction Agreement) (the "Cash Consideration"); and (iv) the Borrower, on behalf of and at the direction of Holdings, will assume the Assumed Liabilities (as defined in the Transaction Agreement); WHEREAS, Holdings' obligation to pay the Cash Consideration will be financed with (i) an investment of not less than $79,835,000 in Holdings Class A Common Stock (the "Equity Investment"), of which (x) $64,835,000 will be provided by Capital Partners and (y) $7,500,000 will be provided by each of Frank C. Lanza and Robert J. LaPenta, (ii) the issuance and sale by the Borrower of senior subordinated debt securities for cash proceeds of at least $225.0 million (the "Securities Offering") and (iii) senior debt financing; WHEREAS, the Borrower has requested the Lenders to extend credit to it (i) to finance a portion of the Cash Consideration to be paid by Holdings in connection with the Asset Contribution and (ii) for working capital and general corporate purposes of the Borrower and its Subsidiaries after the Closing Date; and WHEREAS, the Lenders are willing to extend such credit to the Borrower upon and subject to the terms and conditions hereafter set forth; NOW, THEREFORE, parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: 1 "Adjustment Date": the fifth day following the receipt by the Administrative Agent of the financial statements for the most recently completed fiscal period furnished pursuant to subsection 6.1(a) or (b), as the case may be, and the compliance certificate with respect to such financial statements furnished pursuant to subsection 6.2(c). For purposes of determining the Applicable Margin and the Commitment Fee Rate, the first "Adjustment Date" shall mean the date on which the financial statements for the fiscal quarter ended September 30, 1997 furnished pursuant to subsection 6.1(b) and the related compliance certificate furnished pursuant to subsection 6.2(c) are delivered to the Administrative Agent pursuant to subsection 6.1(b) and 6.2(c), respectively. "Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agents": the collective reference to the Syndication Agent, the Documentation Agent and the Administrative Agent. "Aggregate Outstanding Extensions of Credit": as to any Lender with respect to any Type of Loan at any time, an amount equal to the sum of (a) the aggregate principal amount of all Loans of such Type made by such Lender then outstanding and (b) in the case of Revolving Credit Loans, such Lender's Commitment Percentage of the L/C Obligations then outstanding. "Agreement": this Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time. "Applicable Margin": at any time, the percentages set forth on Schedule II under the relevant column heading opposite the level of the Debt Ratio most recently determined; provided that (a) the Applicable Margins commencing on the Closing Date shall be those set forth in Schedule II opposite a Debt Ratio captioned "greater than or equal to 4.75" until the first Adjustment Date, (b) the Applicable Margins determined for any Adjustment Date (including the first Adjustment Date) shall remain in effect until a subsequent Adjustment Date for which the Debt Ratio falls within a different level and (c) if the financial statements and related compliance certificate for any fiscal period are not delivered by the date due pursuant to subsections 6.1 and 6.2, the Applicable Margins shall be (i) for the first 35 days subsequent to such due date, the Applicable Margin in effect prior to such due date and (ii) thereafter, those set forth opposite a Debt Ratio captioned "greater than or equal to 4.75," in either case, until the date of delivery of such financial statements and compliance certificate. "Application": an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to issue a Letter of Credit. 2 "Asset Contribution": as defined in the recitals to this Agreement. "Asset Sale": any sale, sale-leaseback, or other disposition by any Person or any Subsidiary thereof of any of its property or assets, including the stock of any Subsidiary of such Person, except sales and dispositions permitted by subsection 7.6 other than subsection 7.6(b) or (e). "Assignee": as defined in subsection 10.6(c). "Attributable Debt": in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Available Commitment": as to any Lender and any Type of Loan, at any time, an amount equal to the excess, if any, of (a) such Lender's Commitment with respect to such Type of Loan over (b) such Lender's Aggregate Outstanding Extensions of Credit with respect to such Type of Loan. "Base Rate": means, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by BOA in San Francisco, California, as its "reference rate." (The "reference rate" is a rate set by BOA based upon various factors including BOA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.) "Base Rate Loans": Loans the rate of interest applicable to which is based upon the Base Rate. "BOA": as defined in the recitals to this Agreement. "Borrower Pledge and Security Agreement": the Borrower Pledge and Security Agreement substantially in the form of Exhibit B-4, to be executed and delivered by the Borrower, as the same may be amended, supplemented or otherwise modified. "Borrowing Date": any Business Day specified in a notice pursuant to subsection 2.2 as a date on which the Borrower requests the Lenders to make Loans hereunder. "Business": as defined in subsection 4.16. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco, California are authorized or required by law to close and, if the applicable Business Day relates to Eurodollar Loans, any day on which dealings are carried on in the applicable London interbank market. 3 "Capital Expenditures" shall mean, for any fiscal period, the aggregate of all expenditures that, in conformity with GAAP (but excluding capitalized interest), are or are required to be included as additions during such period to property, plant or equipment reflected on the consolidated balance sheet of the Borrower and its Subsidiaries, excluding the expenditures relating to the Transaction. "Capital Lease Obligations": of any Person as of the date of determination, the aggregate liability of such Person under Financing Leases reflected on a balance sheet of such Person under GAAP. "Capital Partners": as defined in the recitals to this Agreement. "Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Cash Consideration": as defined in the recitals to this Agreement. "Cash Equivalents": (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any Lender or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-2 by Standard and Poor's Rating Group ("S&P") or P-2 by Moody's Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a nationally recognized rating agency if both of S&P and Moody's cease publishing ratings of investments, (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Change of Control": the occurrence of any of the following events: (i) the Principals and their Related Parties, as a whole, shall at any time cease to own, directly or indirectly, 60% of the Capital Stock of Holdings, determined on a fully diluted basis; or 4 (ii) the Principals or their Related Parties, as a whole, shall at any time cease to own, determined on a fully diluted basis, sufficient shares of the Capital Stock of Holdings, determined on a fully diluted basis, to elect a majority of the Board of Directors of Holdings and the Borrower or otherwise cease to have the right or ability, by voting power, contract or otherwise, to elect or designate for election a majority of the Board of Directors of Holdings and the Borrower; or (iii) Holdings shall, at any time, cease to own 100% of the Capital Stock of the Borrower; or (iv) a "Change of Control" shall have occurred under the Indenture. "Class": (i) Lenders having Tranche A Term Loan Exposure and/or Revolving Loan Exposure (taken together as a single class), (ii) Lenders having Tranche B Term Loan Exposure and (iii) Lenders having Tranche C Term Loan Exposure. "Closing Date": the date on which the conditions precedent set forth in subsection 5.1 shall be satisfied. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Collateral": all assets of the Credit Parties, now owned or hereinafter acquired, upon which a Lien is purported to be created by any Security Document. "Commitment": as to any Lender, such Lender's Tranche A Term Loan Commitment, Tranche B Term Loan Commitment, Tranche C Term Loan Commitment and Revolving Credit Commitment. "Commitment Letter": the Commitment Letter, dated as of April 2, 1997, among Holdings, the Borrower and LCPI, as the same may be amended, supplemented or otherwise modified from time to time. "Commitment Fee Rate": at any time, the rates per annum set forth on Schedule II under the relevant column heading opposite the level of the Debt Ratio most recently determined; provided that (a) the Commitment Fee Rate commencing on the Closing Date shall be that set forth in Schedule II opposite a Debt Ratio captioned "greater than or equal to 4.75" until the first Adjustment Date, (b) the Commitment Fee Rate determined for any Adjustment Date (including the first Adjustment Date) shall remain in effect until a subsequent Adjustment Date for which the Debt Ratio falls within a different level and (c) if the financial statements and related compliance certificate for any fiscal period are not delivered by the date due pursuant to subsections 6.1 and 6.2, the Commitment Fee Rate shall be (i) for the first 35 days subsequent to such due date, the Commitment Fee Rate in effect prior to such due date and (ii) thereafter, that set forth opposite a Debt Ratio captioned "greater than or equal to 4.75," in either case, until the date of delivery of such financial statements and compliance certificate. 5 "Commitment Percentage": as to the Commitment of any Lender with respect to any Type of Loan at any time, the percentage which the Commitment of such Lender with respect to such Type of Loan then constitutes of the aggregate Commitments with respect to such Type of Loan (or, at any time after such Commitments shall have expired or terminated, the percentage which the aggregate amount of the Aggregate Outstanding Extensions of Credit of such Lender with respect to such Type of Loan constitutes of the aggregate amount of the Aggregate Outstanding Extensions of Credit of all Lenders with respect to such Type of Loan). "Commitment Period": the period from and including the date hereof to but not including the Revolving Loan Termination Date or such earlier date on which the Revolving Credit Commitments shall terminate as provided herein. "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 (b) or (c) of the Code. "Consolidated EBITDA": as of the last day of any fiscal quarter, Consolidated Net Income (excluding without duplication, (x) extraordinary gains and losses in accordance with GAAP, (y) gains and losses in connection with asset dispositions whether or not constituting extraordinary gains and losses and (z) gains or losses on discontinued operations) for such period, plus (i) Consolidated Cash Interest Expense for such period, plus (ii) to the extent deducted in computing such Consolidated Net Income, the sum of income taxes, depreciation and amortization for the four fiscal quarters ended on such date; provided that for any calculation of Consolidated EBITDA for any fiscal period ending during the first three full fiscal quarters following March 31, 1997, Consolidated EBITDA shall be deemed to be Consolidated EBITDA from March 31, 1997 to the last day of such period multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from March 31, 1997 to the last day of such period. "Consolidated Cash Interest Expense": as of the last day of any fiscal quarter, the amount of interest expense, payable in cash, of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP for the four fiscal quarters ended on such date; provided that for any calculation of Consolidated Cash Interest Expense for any fiscal period ending during the first three full fiscal quarters following March 31, 1997, Consolidated Cash Interest Expense shall be deemed to be Consolidated Cash Interest Expense from March 31, 1997 to the last day of such period multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from March 31, 1997 to the last day of such period. "Consolidated Net Income": for any fiscal period, net income of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Consolidated Total Debt": at any date, all Indebtedness of the Borrower and its Subsidiaries outstanding on such date for borrowed money or the deferred purchase price of property, including, without 6 limitation, in respect of Financing Leases but excluding Indebtedness permitted pursuant to subsection 7.2(h). "Consolidated Working Capital": at any date, the excess of (a) the sum of all amounts (other than cash and Cash Equivalents) that would, in accordance with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date over (b) the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries on such date (excluding, to the extent it would otherwise be included under current liabilities, any short-term Consolidated Total Debt and the current portion of any long-term Consolidated Total Debt). "Constitutional Documents": as to any Person, the articles or certificate of incorporation and by-laws, partnership agreement or other organizational documents of such Person. "Contingent Purchase Price Receipts": at any date, the aggregate cash received by Holdings, the Borrower or any of their Subsidiaries in respect of any purchase price adjustment made pursuant to, or in connection with, the Transaction Agreement subsequent to the date hereof. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Credit Documents": this Agreement, the Notes, the Applications, the Guarantees and the Security Documents. "Credit Parties": the Borrower, Holdings, and each Subsidiary of the Borrower which is a party to a Credit Document. "Debt Ratio": as at the last day of any fiscal quarter, the ratio of (a) Consolidated Total Debt on such date to (b) Consolidated EBITDA. "Default": any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Dollars" and "$": dollars in lawful currency of the United States of America. "Environmental Laws": any and all laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or other legally enforceable requirement (including, without limitation, common law) of any foreign government, the United States, or any state, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or of human health as affected by the environment as has been, is now, or may at any time hereafter be, in effect, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.; the Toxic Substance Control Act, 15 U.S.C. Sections 9601 7 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.; the Clean Water Act; 33 U.S.C. Sections 1251 et seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; or other similar federal and/or state environmental laws. "Environmental Permits": any and all permits, licenses, registrations, notifications, exemptions and any other authorization required under any applicable Environmental Law. "Equity Documents": the Stockholder Agreement, the Subscription Agreements and the Option Agreements. "Equity Investment": as defined in the recitals to this Agreement. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "Eurocurrency Reserve Requirements": means for any day for any Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). "Eurodollar Loans": Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate": means, for any Interest Period, with respect to Eurodollar Loans comprising part of the same borrowing, the rate of interest per annum (rounded upward to the next 1/16th of 1%) determined by the Administrative Agent as follows: Eurodollar Rate = LIBOR 1.00 - Eurodollar Reserve Percentage "Eurodollar Reserve Percentage": for any day for any Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). "Event of Default": any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Excess Cash Flow": for any fiscal year of the Borrower, the excess of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the net decrease, if any, in Consolidated Working Capital during such fiscal year, (iii) to the extent deducted in computing such Consolidated Net Income, non-cash 8 interest expense, depreciation and amortization for such fiscal year, (iv) extraordinary non-cash losses during such fiscal year subtracted in the determination of Consolidated Net Income for such fiscal year, (v) change in deferred tax liability of the Borrower for such fiscal year, (vi) non-cash losses in connection with asset dispositions whether or not constituting extraordinary losses, (vii) non-cash ordinary losses and (viii) Contingent Purchase Price Receipts in excess of $10,000,000 over (b) the sum, without duplication, of (i) the aggregate amount of permitted cash Capital Expenditures made by the Borrower and its Subsidiaries during such fiscal year, (ii) the net increase, if any, in Consolidated Working Capital during such fiscal year, (iii) the aggregate amount of payments of principal in respect of any Indebtedness not prohibited hereunder during such fiscal year (other than prepayments of Revolving Credit Loans not accompanied by reductions of the Commitments), (iv) deferred income tax credit of the Borrower for such fiscal year, (v) extraordinary non-cash gains during such fiscal year added in the determination of Consolidated Net Income for such fiscal year, (vi) non-cash gains in connection with asset dispositions whether or not constituting extraordinary gains and (vii) non-cash ordinary gains. "Excess Cash Flow Payment Date": in respect of any fiscal year, the date on which the Borrower is required to deliver audited financial statements for such fiscal year to each Lender pursuant to subsection 6.1(a). "Financing Lease": any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Final Maturity Date": March 31, 2006. "Foreign Subsidiary": any Subsidiary which is organized under the laws of any jurisdiction outside the United States or under the laws of the U.S. Virgin Islands. "FRB": means the Board of Governors of the Federal Reserve System, and any governmental authority succeeding to any of its principal functions. "GAAP": generally accepted accounting principles in the United States of America in effect from on the Closing Date. "GC Notice Recipient": with respect to any Government Contract, the true and correct (x) contracting officer, or the head of the respective U.S. government department or agency, (y) surety or sureties upon the bond or bonds, if any, in connection with such Government Contract, and (z) disbursing officer, if any designated in such Government Contract to make payment. "Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another 9 Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, reimbursement obligations under letters of credit and any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Guarantees": the Parent Guarantee and the Subsidiary Guarantees. "Indebtedness": of any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices and accrued expenses incurred in the ordinary course of business), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of such Person under Financing Leases, (d) all obligations of such Person in respect of acceptances issued or created for the account of such Person, (e) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof and (f) all Attributable Debt of such Person with respect to sale and leaseback transactions of such Person. "Indenture": the Indenture between the Borrower and The Bank of New York, as trustee, pursuant to which the Subordinated Notes are issued. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. 10 "Insolvent": pertaining to a condition of Insolvency. "Interest Payment Date": (a) as to any Base Rate Loan, the last Business Day of each March, June, September and December, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last Business Day of such Interest Period, and (c) as to any Eurodollar Loan having an interest period longer than three months, (i) each Business Day which is three months or a whole multiple thereof after the first day of such Interest Period and (ii) the last Business Day of such Interest Period. "Interest Period": with respect to any Eurodollar Loan: (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period for any Loan that would otherwise extend beyond the Termination Date of such Loan shall end on the Termination Date of such Loan; (iii) any Interest Period pertaining to a Eurodollar Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month in which such Interest Period would otherwise be scheduled to end) shall end on the last Business Day of the appropriate calendar month; and (iv) no Interest Period with respect to any portion of any Type of Term Loan shall extend beyond a date on which the Borrower is required to make a scheduled payment of principal of Term Loans of such Type unless the sum of (a) the aggregate principal amount of Term Loans of such Type that are Base Rate Loans plus (b) the aggregate principal amount of Term Loans of such Type that are Eurodollar Rate Loans with Interest Periods expiring on or before 11 such date equals or exceeds the principal amount required to be paid on Term Loans of such Type on such date. "Interest Rate Agreement": any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement. "Interest Rate Agreement Obligations": the obligations of the Borrower or any of its Subsidiaries to make payments to counterparties under Interest Rate Agreements in the event of the occurrence of a termination event thereunder. "Issuing Lender": BOA, in its capacity as issuer of any Letter of Credit or, at the election of BOA, such other Lender or Lenders that agree to act as Issuing Lender at the request of the Company. "LCPI": as defined in the recitals to this Agreement. "L/C Commitment": $15,000,000. "L/C Fee Payment Date": the last Business Day of each March, June, September and December. "L/C Obligations": at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to subsection 3.5. "L/C Participants": the collective reference to all the Revolving Credit Lenders other than the Issuing Lender. "Lender" and "Lenders": the persons identified as Lenders and listed on the signature pages of this Agreement (including the Issuing Bank and the Swing Line Lender), together with their successors and permitted assigns pursuant to subsection 10.6; provided that the term "Lenders", when used in the context of a particular Commitment, shall mean Lenders having that Commitment. "Letters of Credit": as defined in subsection 3.1. "LIBOR": the rate of interest per annum determined by the Administrative Agent to be the arithmetic mean (rounded upward to the next 1/16th of 1%) of the rates of interest per annum notified to the Administrative Agent by each Reference Bank as the rate of interest at which dollar deposits in the approximate amount of the amount of the Loan to be made or continued as, or converted into, a Eurodollar Rate Loan by such Reference Bank and having a maturity comparable to such Interest Period would be offered to major banks in the London interbank market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period. "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title 12 retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). "Loan": any loan made by any Lender pursuant to this Agreement. "Lockheed Martin Predecessor Businesses": the businesses to be transferred by the Seller and its Subsidiaries to the Borrower pursuant to the Transaction Agreement. "Loral Acquired Businesses": that portion of the Lockheed Martin Predecessor Businesses consisting of the Seller's Wide Band Systems Division and Products Group, comprised of ten autonomous operations, acquired by the Seller effective April 1, 1996, as part of the acquisition by the Seller of the defense electronics business of Loral Corporation. "Material Adverse Effect": a material adverse effect on (a) the business, assets, operations, property or condition (financial or otherwise) of Holdings and its Subsidiaries taken as a whole, (b) the validity or enforceability of this or any of the other Credit Documents or the rights or remedies of the Agents or the Lenders hereunder or thereunder or (c) the Transaction. "Materials of Environmental Concern": any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under, or that could give rise to liability under, any applicable Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls, urea-formaldehyde insulation, gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products. "Mortgages": the collective reference to the mortgages and deeds of trust to be executed and delivered by the Borrower or the appropriate Subsidiary, substantially in the forms of Exhibit C-1 and C-2 (with such changes therein as may be required to reflect different laws and practices in the various jurisdictions in which the Mortgages are to be recorded), covering the parcels of real property identified in Schedule III, as the same may be amended, supplemented or otherwise modified from time to time. "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Proceeds": the aggregate cash proceeds (including Cash Equivalents) received by Holdings or any of its Subsidiaries in respect of: (a) any issuance by the Borrower or any of its Subsidiaries of Indebtedness after the Closing Date; (b) any Asset Sale; and (c) any cash payments received in respect of promissory notes or other evidences of indebtedness delivered to Holdings or such Subsidiary in respect of an Asset Sale; 13 in each case net of (without duplication) (i), (A) in the case of an Asset Sale, the amount required to repay any Indebtedness (other than the Loans) secured by a Lien on any assets of Holdings or a Subsidiary of Holdings that are sold or otherwise disposed of in connection with such Asset Sale and (B) reasonable and appropriate amounts established by Holdings or such Subsidiary, as the case may be, as a reserve against liabilities associated with such Asset Sale and retained by Holdings or such Subsidiary, (ii) the reasonable expenses (including legal fees and brokers' and underwriters' commissions, lenders fees, credit enhancement fees, accountants' fees, investment banking fees, survey costs, title insurance premiums and other customary fees, in any case, paid to third parties or, to the extent permitted hereby, Affiliates) incurred in effecting such issuance or sale and (iii) any taxes reasonably attributable to such sale and reasonably estimated by Holdings or such Subsidiary to be actually payable. "Non-Excluded Taxes": as defined in subsection 2.15. "Non-U.S. Lender": as defined in subsection 2.15(b). "Notes": The Tranche A Term Notes, the Tranche B Term Notes, the Tranche C Term Notes, the Revolving Credit Notes and the Swing Line Note (or any of them). "Novation Agreement": as defined in the Transaction Agreement. "Obligations": as defined in the Guarantees and the Security Documents. "Option Agreements": the Option Agreements between Holdings and each of Frank C. Lanza and Robert V. LaPenta, each dated as of the Closing Date. "Parent Distributions": as defined in the Parent Guarantee. "Parent Guarantee": the Parent Guarantee substantially in the form of Exhibit B-1, to be executed and delivered by Holdings, as the same may be amended, supplemented or otherwise modified. "Parent Pledge and Security Agreement": the Parent Pledge and Security Agreement substantially in the form of Exhibit B-3, to be executed and delivered by Holdings, as the same may be amended, supplemented or otherwise modified. "Participant": as defined in subsection 10.6(b). "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any successor thereto. "Permitted Liens": Liens permitted to exist under subsection 7.3. "Permitted Stock Payments": (A) dividends by the Borrower to Holdings in amounts equal to the amounts required for Holdings to pay franchise taxes and other fees required to maintain its legal existence and provide for other operating costs of up to $1,000,000 per fiscal year, (B) dividends by the Borrower to Holdings in amounts equal to amounts required for Holdings to pay federal, state and local income 14 taxes to the extent such income taxes are actually due and owing; provided that the aggregate amount paid under this clause (B) does not exceed the amount that the Borrower would be required to pay in respect of the income of the Borrower and its Subsidiaries if the Borrower were a stand alone entity that was not owned by Holdings, and (C) from and after May 1, 1999, dividends by the Borrower to Holdings payable solely out of Excess Cash Flow which is not required to be applied to the prepayment of Loans and the permanent reduction of Commitments pursuant to subsection 2.6(a)(iii), provided that (i) as of the last day of the most recently completed fiscal quarter the Debt Ratio is less than or equal to 3.5 to 1, (ii) the aggregate amount of dividends paid by the Borrower to Holdings under this clause (C) since the date of this Agreement does not exceed $5,000,000 and (iii) Holdings promptly uses the proceeds of such dividends to repurchase Capital Stock of Holdings. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan covered by ERISA and in respect of which the Borrower or any Commonly Controlled Entity maintains, administers, contributes to or is required to contribute to, or under which the Borrower or any Commonly Controlled Entity may incur any liability. "Principals": each of Lehman Brothers Holdings, Inc., Capital Partners, the Seller, Frank C. Lanza and Robert V. LaPenta. "Pro Forma Financial Statements": as defined in subsection 4.1(c). "Properties": as defined in subsection 4.17. "Purchase Agreement": the Purchase Agreement, dated as of April 25, 1997, among the Borrower and each of Lehman Brothers, Inc. and BancAmerica Securities, Inc. "Receivables": as defined in the Security Documents. "Reference Bank": the Bank of America NT & SA. "Register": as defined in subsection 10.6(d). "Registration Rights Agreement": the Registration Rights Agreement, dated as of April 30, 1997, among the Borrower and each of Lehman Brothers, Inc. and BancAmerica Securities, Inc. "Regulation U": Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Reimbursement Obligation": the obligation of the Borrower to reimburse the Issuing Lender pursuant to subsection 3.5 for amounts drawn under Letters of Credit. "Refunded Swing Line Loan": as defined in subsection 2.1(b)(iii). "Related Party": with respect to the Principals, (a) any controlling stockholder, 51% (or more) owned Subsidiary, or spouse or 15 immediate family member (in the case of an individual) of such Principal or (b) a trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 51% or more controlling interest of which consist of the Principals and/or such other Persons referred to in the immediately preceding clause (a). "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty-day notice period is waived under the regulations of the PBGC. "Required Lenders": at any time, Lenders the Commitment Percentages for all Types of Loans of which aggregate more than 50%. "Requirement of Law": as to any Person, the Constitutional Documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Requisite Class Lenders": at any time, (a) for the Class Lenders having Tranche A Term Loan Exposure, Lenders having or holding 66 2/3% of the aggregate Tranche A Term Loan Exposure of all Lenders, (b) for the Class Lenders having Revolving Credit Loan Exposure, Lenders having or holding 66 2/3% of the aggregate Revolving Credit Loan Exposure of all Lenders, (c) for the Class Lenders having Tranche B Term Loan Exposure, Lenders having or holding 66 2/3% of the aggregate Tranche B Term Loan Exposure of all Lenders and (d) for the Class Lenders having Tranche C Term Loan Exposure, Lenders having or holding 66 2/3% of the aggregate Tranche C Term Loan Exposure of all Lenders. "Responsible Officer": the chief executive officer, the president or vice president of the Borrower or, with respect to financial matters, the chief financial officer, vice president--finance or treasurer of the Borrower. "Restricted Government Contracts": as defined in the Security Documents. "Revolving Credit Commitment": the commitment of a Lender, as set forth on Schedule I hereto, to make Revolving Credit Loans to the Borrower pursuant to Subsection 2.1(a)(iv) and, to issue and/or purchase participations in Letters of Credit pursuant to Section 3; and "Revolving Credit Commitments" means such commitments of all Lenders in the aggregate, which shall initially be $100,000,000. "Revolving Credit Lender": any Lender or Lenders having a Revolving Credit Commitment or a Revolving Credit Loan outstanding. "Revolving Credit Loans": the Loans made by Revolving Credit Lenders to the Borrower pursuant to Subsection 2.1(a)(iv). 16 "Revolving Credit Loan Exposure": with respect to any Lender as of date of determination, (i) if there are no outstanding Letters of Credit or Revolving Credit Loans, that Lender's Revolving Credit Commitment, and (ii) otherwise, the sum of (a) the aggregate outstanding principal amount of the Revolving Credit Loans of that Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (in each case net of any participations purchased by other Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) in the event that such Lender is the Swing Line Lender, the aggregate principal amount of Swing Line Loans made by such Lender then outstanding (net of any participations purchased by other Lenders in such Swing Line Loans) plus (d) the aggregate amount of all participations purchased by that Lender in any outstanding Swing Line Loans or Letters of Credit or any unreimbursed drawings under any Letters of Credit. "Revolving Credit Notes": (i) the promissory notes of the Borrower issued pursuant to subsection 2.5(i)(iv) on the Closing Date to evidence the Revolving Credit Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to Section 10.6(d) in connection with assignments of the Revolving Credit Commitments and Revolving Credit Loans of any Lenders, in each case substantially in the form of Exhibit A-4 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Revolving Loan Termination Date": March 31, 2003. "Security Documents": the collective reference to the Parent Pledge and Security Agreement, the Borrower Pledge and Security Agreement and the Subsidiary Pledge and Security Agreement, the Mortgages and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any asset or assets of any Person to secure the obligations and liabilities of the Borrower hereunder and under any of the other Credit Documents or to secure any guarantee of any such obligations and liabilities. "Securities Offering": as defined in the recitals to this Agreement. "Seller": as defined in the recitals to this Agreement. "Similar Business": a business, at least a majority of whose revenues in the most recently ended calendar year were derived from (i) the sale of defense products, electronics, communications systems, aerospace products, avionics products and/or communications products, (ii) any services related thereto, (iii) any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto, and (iv) any combination of any of the foregoing. "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Stockholders Agreement": the Stockholders Agreement, dated as of April 30, 1997, by and among the Borrower, Holdings, the Seller, the Principals and any other party that may from time to time become a party 17 thereto as provided therein, as the same may be amended, supplemented or otherwise modified from time to time. "Subordinated Debt": indebtedness outstanding under the Subordinated Notes. "Subordinated Debt Documents": the Indenture, the Registration Rights Agreement, the Purchase Agreement and the Subordinated Notes. "Subordinated Notes": the Borrower's 10 3/8% Senior Subordinated Notes, due 2007 (the "Initial Subordinated Notes"), issued on the Closing Date, and the subordinated notes of the Borrower, having the same terms as the Initial Subordinated Notes, issued in exchange for the Initial Subordinated Notes as contemplated by the Subordinated Debt Documents. "Subscription Agreements": the Common Stock Subscription Agreements between Holdings and each of Frank C. Lanza, Robert V. LaPenta, Capital Partners and the Seller, each dated as of the Closing Date. "Subsidiary": as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, directly or indirectly, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Subsidiary Guarantees": the Subsidiary Guarantees substantially in the form of Exhibit B-2, to be executed and delivered by the Borrower's Subsidiaries, as the same may be amended, supplemented or otherwise modified. "Subsidiary Pledge and Security Agreement": the Subsidiary Pledge and Security Agreement substantially in the form of Exhibit B-5, to be executed and delivered by the Borrower's Subsidiaries, as the same may be amended, supplemented or otherwise modified. "Swing Line Lender": means Bank of America NT & SA. "Swing Line Loans": as defined in Section 2.1(b). "Term Loan Commitment or Term Loan Commitments": the commitments of a Lender to make any Term Loans pursuant to subsection 2.1(a); and Term Loan Commitments means such commitments of all Lenders in the aggregate, which shall initially be $175,000,000. "Term Loan Exposure": with respect to a Lender of a Type of Term Loan as of any date of determination, (i) prior to the termination of all of a Lender's Commitment with respect to the Term Loans of such Type, that Lender's Commitment with respect to Term Loans of such Type (or any portion thereof that has not been terminated) plus the outstanding principal amount of the Term Loan of such Type of that Lender, and (ii) after the termination of all of a Lender's Commitment 18 with respect to the Term Loans of such Type, the outstanding principal amount of the Term Loan of such Type of that Lender. "Term Loans": one or more of the Tranche A Term Loans, the Tranche B Term Loans or the Tranche C Term Loans. "Termination Date": (i) with respect to Tranche A Term Loans, March 31, 2003; (ii) with respect to Tranche B Term Loans, March 31, 2005; (iii) with respect to Tranche C Term Loans, March 31, 2006; and (iv) with respect to Revolving Credit Loans and Swing Line Loans, the Revolving Credit Termination Date. "Tranche": the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day); Tranches may be identified as "Eurodollar Tranches". "Tranche A Term Lender": any Lender having a Tranche A Term Loan Commitment or a Tranche A Term Loan outstanding. "Tranche A Term Loans": the Loans made by Tranche A Term Lenders to the Borrower pursuant to subsection 2.1(a)(i). "Tranche A Term Loan Commitment": the commitment of a Tranche A Term Lender, as set forth on Schedule I hereto, to make a Tranche A Term Loan to the Borrower pursuant to subsection 2.1(a)(i); and "Tranche A Term Loan Commitments" means such commitments of all Tranche A Term Lenders in the aggregate, which shall initially be $100,000,000. "Tranche A Term Notes": (i) the promissory notes of the Borrower issued pursuant to subsection 2.5(i)(i) on the Closing Date to evidence the Tranche A Term Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to subsection 10.6(d) in connection with assignments of the Tranche A Term Loan Commitments and Tranche A Term Loans of any Lender, in each case substantially in the form of Exhibit A-1 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Tranche B Term Lenders": any Lender having a Tranche B Term Loan Commitment or a Tranche B Term Loan outstanding. "Tranche B Term Loans": the Loans made by Tranche B Term Lenders to the Borrower pursuant to subsection 2.1(a)(ii). "Tranche B Term Loan Commitment": the commitment of a Tranche B Term Lender to make a Tranche B Term Loan to the Borrower pursuant to subsection 2.1(a)(ii); and "Tranche B Term Loan Commitments" means such commitments of all Tranche B Term Lenders in the aggregate, which shall initially be $45,000,000. "Tranche B Term Notes": (i) the promissory notes of the Borrower issued pursuant to subsection 2.5(i)(ii) on the Closing Date to evidence the Tranche B Term Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to subsection 10.6(d) in connection with assignments of the Tranche B Term Loan Commitments and Tranche B Term Loans of any Lender, in each case substantially in the form of 19 Exhibit A-2 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Tranche C Term Lender": any Lender having a Tranche C Term Loan Commitment or a Tranche C Term Loan outstanding. "Tranche C Term Loan Commitment": the commitment of a Tranche C Term Lender, as set forth on Schedule I hereto, to make a Tranche C Term Loan to the Borrower pursuant to subsection 2.1(a)(iii); and "Tranche C Term Loan Commitments" means such commitments of all Tranche C Term Lenders in the aggregate, which shall initially be $30,000,000. "Tranche C Term Loans": the Loans made by Tranche C Term Lenders to the Borrower pursuant to subsection 2.1(a)(iii). "Tranche C Term Notes": (i) the promissory notes of the Borrower issued pursuant to subsection 2.5(i)(iii) on the Closing Date to evidence the Tranche C Term Loans of any Lender and (ii) any promissory notes issued by the Borrower pursuant to subsection 10.6(d) in connection with assignments of the Tranche C Term Loan Commitments and Tranche C Term Loans of any Lender, in each case substantially in the form of Exhibit A-3 annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Transaction": the transactions contemplated by the Transaction Documents. "Transaction Agreement": as defined in the recitals to this Agreement. "Transaction Documents": (i) the Transaction Agreement, the Schedules thereto and the documents set forth on Schedule IV hereto, (ii) the Equity Documents and (iii) the Subordinated Debt Documents. "Transferee": as defined in subsection 10.6(f). "Type": a Revolving Loan, a Tranche A Term Loan, a Tranche B Term Loan, a Tranche C Term Loan or a Swing Line Loan. "Uniform Customs": the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time. "U.S. Taxes": any tax, assessment, or other charge or levy and any liabilities with respect thereto, including any penalties, additions to tax, fines or interest thereon, imposed by or on behalf of the United States or any taxing authority thereof. 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any Credit Document or any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any Credit Document, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Borrower and its Subsidiaries not defined in subsection 1.1 20 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS 2.1 Commitments. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make the loans described in this Section 2.1(a) as applicable to the Borrower. (i) Tranche A Term Loans. Each Tranche A Term Lender severally agrees to make a term loan to the Borrower on the Closing Date in an aggregate principal amount which does not exceed the amount of such Lender's Tranche A Term Loan Commitment. Amounts borrowed under this subsection 2.1(a)(i) and subsequently repaid may not be reborrowed. (ii) Tranche B Term Loans. Each Tranche B Term Lender severally agrees to make a term loan to the Borrower on the Closing Date in an aggregate principal amount which does not exceed the amount of such Lender's Tranche B Term Loan Commitment. Amounts borrowed under this subsection 2.1(a)(ii) and subsequently repaid may not be reborrowed. (iii) Tranche C Term Loans. Each Tranche C Term Lender severally agrees to make a term loan to the Borrower on the Closing Date in an aggregate principal amount which does not exceed the amount of such Lender's Tranche C Term Loan Commitment. Amounts borrowed under this subsection 2.1(a)(iii) and subsequently repaid may not be reborrowed. (iv) Revolving Credit Loans. Each Revolving Credit Lender severally agrees to make revolving credit loans to the Borrower, from time to time during the Commitment Period, in an aggregate principal amount at any one time outstanding which, when added to the aggregate principal amount of outstanding Swing Line Loans made by such Lender (or in which such Lender has purchased a participation) and such Lender's Revolving Credit Commitment Percentage of the then outstanding L/C Obligations, does not exceed the amount of such Lender's Revolving Credit Commitment. During the Commitment Period, the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans, in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) (i) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make swing line loans (individually, a "Swing Line Loan"; collectively, the "Swing Line Loans") to the Borrower from time to 21 time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed $10,000,000; provided, that no Swing Line Loan shall be made if, after giving effect thereto and to the simultaneous use of the proceeds thereof, the aggregate principal amount of Revolving Credit Loans then outstanding plus the aggregate principal amount of Swing Line Loans then outstanding, plus the aggregate amount of L/C Obligations then outstanding would exceed the Revolving Credit Commitments of the Revolving Credit Lenders. Amounts borrowed by the Borrower under this subsection 2.1(b) may be repaid and, through but excluding the Termination Date, reborrowed. All Swing Line Loans shall be made as Base Rate Loans and may not be converted into Eurodollar Loans. In order to borrow a Swing Line Loan, the Borrower shall give the Swing Line Lender, with a copy to the Administrative Agent, irrevocable notice (which notice must be received by the Swing Line Lender prior to 12:00 Noon, New York City time) on the requested Borrowing Date specifying the amount of the requested Swing Line Loan which shall be in a minimum amount of $500,000 or whole multiples of $100,000 in excess thereof. The proceeds of the Swing Line Loan will be made available by the Swing Line Lender to the Borrower at the office of the Swing Line Lender by crediting the account of the Borrower at such office with such proceeds. (ii) The Swing Line Loans shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit A-5 (the "Swing Line Note"), with appropriate insertions, payable to the order of the Swing Line Lender and representing the obligation of the Borrower to pay the unpaid principal amount of the Swing Line Loans, with interest thereon as prescribed in subsection 2.9. The Swing Line Note shall (i) be dated the Closing Date, (ii) be stated to mature on the Termination Date and (iii) bear interest, payable on the dates specified in 2.9, for the period from the date thereof to the Termination Date on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum specified in subsection 2.9. (iii) The Swing Line Lender, at any time in its sole and absolute discretion, may on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf) request each Lender, including the Swing Line Lender, to make a Revolving Credit Loan (which shall be a Base Rate Loan) in an amount equal to such Lender's Commitment Percentage with respect to Revolving Credit Loans of such Revolving Credit Loan (the "Refunded Swing Line Loans") outstanding on the date such notice is given. Unless any of the events described in subsection 8(f) shall have occurred (in which event the procedures of subsection 2.1(b)(iv) shall apply) each Lender shall, not later than 12:00 P.M., New York City time, on the Business Day next succeeding the date on which such notice is given, make available to the Swing Line Lender in immediately available funds the amount equal to the Revolving Credit Loan to be made by such Lender. The proceeds of such Revolving Credit Loans shall be immediately applied to repay the Refunded Swing Line Loans. Upon any request by the Swing Line Lender to the Lender pursuant to this subsection 2.1(b)(iii), the Administrative Agent shall promptly give notice to the Borrower of such request. (iv) If prior to the making of a Revolving Credit Loan pursuant to subsection 2.1(b)(iii) one of the events described in subsection 8(f) shall have occurred, each Lender will, on the date such Loan was to have been made, purchase an undivided participating interest in the Swing Line Loans in an amount equal to its Commitment Percentage with respect to 22 Revolving Credit Loans. Each Lender will immediately transfer to the Swing Line Lender, in immediately available funds, the amount of its participation. (v) Whenever, at any time after the Swing Line Lender has received from any Lender such Lender's participating interest in a Swing Line Loan, the Swing Line Lender receives any payment on account thereof, the Swing Line Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Swing Line Lender any portion thereof previously distributed by the Swing Line Lender to it. (vi) Each Lender's obligation to purchase participating interests pursuant to subsection 2.1(b)(iv) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (a) any set-off, counterclaim, recoupment, defense or other right which such Lender or the Borrower may have against the Swing Line Lender, any other Lender or anyone else for any reason whatsoever, (b) the occurrence or continuance of any Default or Event of Default; (c) any adverse change in the condition (financial or otherwise) of the Borrower; (d) any breach of this Agreement by the Borrower or any other Lender; or (e) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (c) Except for Swing Line Loans, which shall be Base Rate Loans, the Loans may from time to time be (i) Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 2.2 and 2.7, provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Termination Date with respect to such Loan. 2.2 Procedure for Borrowing. The Borrower may borrow under the Commitments during the Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to (a) 11:00 A.M., New York City time, three Business Days prior to the requested Borrowing Date, if all or any part of the requested Loans are to be initially Eurodollar Loans, (b) 11:00 A.M., New York City time, on the requested Borrowing Date in the case of a Swing Line Loan or a Base Rate Loan), specifying (i) the amount to be borrowed of each Type of Loan, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the respective lengths of the initial Interest Periods therefor. Each borrowing under the Commitments shall be in an amount equal to (x) in the case of Base Rate Loans (other than Swing Line Loans), $2,000,000 or a whole multiple of $500,000 in excess thereof (or, if the then Available Commitments are less than $2,000,000, such lesser amount), (y) in the case of Swing Line Loans, as provided in subsection 2.1(b)(i) and (z) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Each Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in subsection 23 10.2 prior to 11:00 A.M., New York City time (in the case of Eurodollar Loans) or 2:30 P.M., New York City time (in the case of Base Rate Loans), on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. All notices given by the Borrower under this subsection 2.2 may be made by telephonic notice promptly confirmed in writing. 2.3 Commitment Fee. The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Credit Lender a commitment fee for the period from and including the first day of the Commitment Period to and including the Revolving Loan Termination Date, computed at the Commitment Fee Rate on the average daily amount of the Available Commitment of such Revolving Credit Lender during the period for which payment is made, payable quarterly in arrears on the last Business Day of each March, June, September and December and on the Revolving Loan Termination Date, commencing on the first of such dates to occur after the date hereof. 2.4 Termination or Reduction of Revolving Credit Commitments. The Borrower shall have the right, upon not less than three Business Days' written notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, to reduce the amount of the Revolving Credit Commitments ratably among the Revolving Credit Lenders; provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, the aggregate principal amount of the Revolving Credit Loans then outstanding, when added to the then outstanding L/C Obligations and the outstanding Swing Line Loans, would exceed the Revolving Credit Commitments then in effect. Any such reduction shall be in an amount equal to $2,000,000 or a whole multiple of $500,000 in excess thereof and shall reduce permanently the Revolving Credit Commitments then in effect. 2.5 Repayment of Loans; Evidence of Debt. (a) Scheduled Payments of Tranche A Term Loans. The Borrower shall make principal payments on the Tranche A Term Loans on March 31, June 30, September 30 and December 31 of each year, commencing on June 30, 1997, in the amounts set forth opposite the corresponding Payment Period as follows: Scheduled Repayment Payment Period of Tranche A Term Loans -------------- ----------------------- Closing Date - 6/30/97 $ 800,000 7/1/97 - 9/30/97 800,000 10/1/97 - 12/31/97 800,000 1/1/98 - 3/31/98 800,000 4/1/98 - 6/30/98 800,000 7/1/98 - 9/30/98 1,250,000 10/1/98 - 12/31/98 1,250,000 1/1/99 - 3/31/99 1,250,000 4/1/99 - 6/30/99 1,250,000 24 7/1/99 - 9/30/99 3,750,000 10/1/99 - 12/31/99 3,750,000 1/1/00 - 3/31/00 3,750,000 4/1/00 - 6/30/00 3,750,000 7/1/00 - 9/30/00 5,250,000 10/1/00 - 12/31/00 5,250,000 1/1/01 - 3/31/01 5,250,000 4/1/01 - 6/30/01 5,250,000 7/1/01 - 9/30/01 6,750,000 10/1/01 - 12/31/01 6,750,000 1/1/02 - 3/31/02 6,750,000 4/1/02 - 6/30/02 6,750,000 7/1/02 - 9/30/02 9,333,333.33 10/1/02 - 12/31/02 9,333,333.33 1/1/03 - 3/31/03 9,333,333.34 $ 100,000,000; provided that the scheduled installments of principal of the Tranche A Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as provided in such subsection); and provided further that the Tranche A Term Loans and all other amounts owed hereunder with respect to the Tranche A Term Loans shall be paid in full no later than March 31, 2003, and the final installment payable by the Borrower in respect of the Tranche A Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by the Borrower under this Agreement with respect to the Tranche A Term Loans. (b) Scheduled Payments of Tranche B Term Loans. The Borrower shall make principal payments on the Tranche B Term Loans on March 31, June 30, September 30 and December 31 of each year, commencing on June 30, 1997, in the amounts set forth opposite the corresponding Payment Period as follows: Scheduled Repayment Payment Period of Tranche B Term Loans -------------- ----------------------- Closing Date - 6/30/97 $ 100,000 7/1/97 - 9/30/97 100,000 10/1/97 - 12/31/97 100,000 1/1/98 - 3/31/98 100,000 4/1/98 - 6/30/98 100,000 7/1/98 - 9/30/98 125,000 10/1/98 - 12/31/98 125,000 1/1/99 - 3/31/99 125,000 4/1/99 - 6/30/99 125,000 7/1/99 - 9/30/99 125,000 10/1/99 - 12/31/99 125,000 25 1/1/00 - 3/31/00 125,000 4/1/00 - 6/30/00 125,000 7/1/00 - 9/30/00 125,000 10/1/00 - 12/31/00 125,000 1/1/01 - 3/31/01 125,000 4/1/01 - 6/30/01 125,000 7/1/01 - 9/30/01 125,000 10/1/01 - 12/31/01 125,000 1/1/02 - 3/31/02 125,000 4/1/02 - 6/30/02 125,000 7/1/02 - 9/30/02 125,000 10/1/02 - 12/31/02 125,000 1/1/03 - 3/31/03 125,000 4/1/03 - 6/30/03 125,000 7/1/03 - 9/30/03 5,000,000 10/1/03 - 12/31/03 5,000,000 1/1/04 - 3/31/04 5,000,000 4/1/04 - 6/30/04 5,000,000 7/1/04 - 9/30/04 7,333,333.33 10/1/04 - 12/31/04 7,333,333.33 1/1/05 - 3/31/05 7,333,333.33 $ 45,000,000; provided that the scheduled installments of principal of the Tranche B Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as provided in such subsection); and provided further that the Tranche B Term Loans and all other amounts owed hereunder with respect to the Tranche B Term Loans shall be paid in full no later than March 31, 2005, and the final installment payable by the Borrower in respect of the Tranche B Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by the Borrower under this Agreement with respect to the Tranche B Term Loans. (c) Scheduled Payments of Tranche C Term Loans. The Borrower shall make principal payments on the Tranche C Term Loans on March 31, June 30, September 30 and December 31 of each year, commencing on June 30, 1997, in the amounts set forth opposite the corresponding Payment Period as follows: Scheduled Repayment Payment Period of Tranche C Term Loans -------------- ----------------------- Closing Date - 6/30/97 $ 100,000 7/1/97 - 9/30/97 100,000 10/1/97 - 12/31/97 100,000 1/1/98 - 3/31/98 100,000 4/1/98 - 6/30/98 100,000 26 7/1/98 - 9/30/98 125,000 10/1/98 - 12/31/98 125,000 1/1/99 - 3/31/99 125,000 4/1/99 - 6/30/99 125,000 7/1/99 - 9/30/99 125,000 10/1/99 - 12/31/99 125,000 1/1/00 - 3/31/00 125,000 4/1/00 - 6/30/00 125,000 7/1/00 - 9/30/00 125,000 10/1/00 - 12/31/00 125,000 1/1/01 - 3/31/01 125,000 4/1/01 - 6/30/01 125,000 7/1/01 - 9/30/01 125,000 10/1/01 - 12/31/01 125,000 1/1/02 - 3/31/02 125,000 4/1/02 - 6/30/02 125,000 7/1/02 - 9/30/02 125,000 10/1/02 - 12/31/02 125,000 1/1/03 - 3/31/03 125,000 4/1/03 - 6/30/03 125,000 7/1/03 - 9/30/03 125,000 10/1/03 - 12/31/03 125,000 1/1/04 - 3/31/04 125,000 4/1/04 - 6/30/04 125,000 7/1/04 - 9/30/04 125,000 10/1/04 - 12/31/04 125,000 1/1/05 - 3/31/05 125,000 4/1/05 - 6/30/05 125,000 7/1/05 - 9/30/05 8,666,666.66 10/1/05 - 12/31/05 8,666,666.67 1/1/06 - 3/31/06 8,666,666.67 $ 30,000,000; provided that the scheduled installments of principal of the Tranche C Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as provided in such subsection); and provided further that the Tranche C Term Loans and all other amounts owed hereunder with respect to the Tranche C Term Loans shall be paid in full no later than March 31, 2006, and the final installment payable by the Borrower in respect of the Tranche C Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by the Borrower under this Agreement with respect to the Tranche C Term Loans. (d) Payments on Revolving Credit and Swing Line Loans. The Borrower hereby unconditionally promises to pay to the Administrative Agent on the Revolving Credit Termination Date (or such earlier date on which the Loans become due and payable pursuant to Section 8) (i) for the account of each Revolving Credit Lender the then unpaid principal amount of each Revolving Credit Loan of such Lender and (ii) for the account of the Swing 27 Line Lender (and each other Revolving Credit Lender that has purchased a participation in then outstanding Swing Line Loans) the then unpaid principal amount of Swing Line Loans. (e) Interest. The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding from the date such Loans are made until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.9. (f) Recording. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (g) Register. The Administrative Agent shall maintain the Register pursuant to subsection 10.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan and each Obligation evidenced by a Note made hereunder, the Type thereof, whether each such Loan is a Base Rate Loan or a Eurodollar Loan and each Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof. (h) Prima Facie Evidence. The entries made in the Register and the accounts of each Lender maintained pursuant to subsection 2.5(g) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. (i) Notes. The Borrower agrees that the Borrower will execute and deliver to each Lender a promissory note of the Borrower evidencing (i) the Tranche A Term Loans of such Lender, substantially in the form of Exhibit A-1 with appropriate insertions as to date and principal amount (a "Tranche A Term Note"), (ii) the Tranche B Term Loans of such Lender, substantially in the form of Exhibit A-2 with appropriate insertions as to date and principal amount (a "Tranche B Term Note"), (iii) the Tranche C Term Loans of such Lender substantially in the form of Exhibit A-3 with appropriate insertions as to date and principal amount (a "Tranche C Term Note") and (iv) the Revolving Credit Loans of such Lender, substantially in the form of Exhibit A-4 with appropriate insertions as to date and principal amount ("Revolving Credit Note"). A Note and the Obligation evidenced thereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer of such Note and the Obligation evidenced thereby in the Register (and each Note shall expressly so provide). Any assignment or transfer of all or part of an Obligation evidenced by a Note shall be registered in the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Obligation, duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the holder thereof, and thereupon one or more new Notes shall be issued to the designated Assignee and the old Note shall be returned by the Administrative Agent to the Borrower marked "cancelled." No 28 assignment of a Note and the Obligation evidenced thereby shall be effective unless it shall have been recorded in the Register by the Administrative Agent as provided in this subsection 2.5(i). 2.6 Optional Prepayments; Mandatory Prepayments and Reduction of Commitments. (a) Subject to subsection 2.16, the Borrower may at any time and from time to time prepay any Loans, in whole or in part, without premium or penalty, upon irrevocable notice to the Administrative Agent prior to 11:00 A.M., New York City time, three Business Days prior to the date of prepayment, specifying the date and amount of prepayment, the Type of Loan to be prepaid (which loans shall be prepaid on a pro rata basis among the applicable Lenders) and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each applicable Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to subsection 2.16. Partial prepayments shall be in an aggregate principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof. (b) (i) If, subsequent to the Closing Date, Holdings or any of its Subsidiaries shall incur or permit the incurrence of any Indebtedness (other than Indebtedness permitted pursuant to subsection 7.2) 100% of the Net Proceeds thereof shall be promptly applied toward the prepayment of the Loans and permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b). Nothing in this paragraph (b) shall be deemed to permit any Indebtedness not permitted by subsection 7.2. (ii) If, subsequent to the Closing Date, Holdings or any of its Subsidiaries shall receive Net Proceeds from any Asset Sale, such Net Proceeds shall be promptly applied toward the prepayment of the Loans and permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b); provided that Net Proceeds from any Asset Sales shall not be required to be so applied to the extent that such Net Proceeds are used by the Borrower or such Subsidiary to acquire assets to be employed in the business of the Borrower or its Subsidiaries within 365 days of receipt thereof, but if such Net Proceeds are not so used, 100% of such Net Proceeds shall be applied toward the prepayment of the Loans and the permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the earlier of (x) the 366th day after receipt of such Net Proceeds and (y) the date on which the Borrower has determined that such Net Proceeds shall not be so used. (iii) If there is Excess Cash Flow for any fiscal year and the Debt Ratio as of the last day of such fiscal year is greater than 3.5 to 1.0, 75% of such Excess Cash Flow shall be applied toward the prepayment of the Loans and the permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such fiscal year. If there is Excess Cash Flow for any fiscal year and the Debt Ratio as of the last day of such fiscal year is less than or equal to 3.5 to 1.0, 50% of such Excess Cash Flow shall be applied toward the prepayment of the Loans and the permanent reduction of the Commitments as set forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such fiscal year. 29 (iv) Any mandatory prepayments of the Loans pursuant to subsection 2.6 shall be applied (x) to the Tranche A Term Loans, the Tranche B Term Loans and the Tranche C Term Loans on a pro rata basis to reduce the unpaid scheduled installments of principal of each such Tranche of Term Loans on a pro rata basis, and (y) thereafter to the permanent reduction of the Revolving Credit Commitment; provided that, in the case of Tranche B Term Loans and Tranche C Term Loans, so long as any Tranche A Term Loans are outstanding, each of the Tranche B Term Lenders and the Tranche C Term Lenders shall have the right to waive such Lender's right to receive any portion of such prepayment. The Administrative Agent shall notify the Tranche B Term Lenders and the Tranche C Term Lenders of such receipt and the amount of the prepayment to be applied to each such Lender's Term Loans; provided, that the Borrower shall use its reasonable efforts to notify the Tranche B Term Lenders and the Tranche C Term Lenders of such waivable mandatory prepayment three (3) Business Days prior to the payment to the Administrative Agent of such waivable mandatory prepayment (it being understood that the Borrower shall have no liabilities for failing to so notify such Lenders). In the event any such Tranche B Term Lender or Tranche C Term Lender desires to waive such Lender's right to receive any such waivable mandatory prepayment, such Lender shall so advise the Administrative Agent no later than the close of business on the Business Day immediately following the date of such notice from the Administrative Agent. In the event that any such Lender waives such Lender's right to any such waivable mandatory prepayment, the Administrative Agent shall apply 50% of the amount so waived by such Lender to prepay the Tranche A Term Loans to reduce unpaid scheduled installments of principal of the Tranche A Term Loans on a pro rata basis. The Administrative Agent shall return the remainder of the amount so waived by such Lender to the Borrower. Revolving Credit Commitment reductions made pursuant to subsections 2.6(b)(i), (ii) and (iii) shall be applied to each Lender's Revolving Credit Commitment on a pro rata basis and shall reduce permanently such Commitments. (v) If after giving effect to any reduction of the Revolving Credit Commitments under subsection 2.4, 2.5 or 2.6 the aggregate outstanding principal amount of Swing Line Loans plus the aggregate outstanding principal amount of Revolving Credit Loans plus the aggregate outstanding amount of L/C Obligations shall exceed the aggregate amount of the Revolving Credit Commitments, such reduction shall be accompanied by prepayment in the amount of such excess to be applied (x) first, to the outstanding Swing Line Loans and (y) second, to outstanding Revolving Credit Loans (in each case, together with any amounts payable under subsection 2.16)); provided that if the aggregate principal amount of Swing Line Loans and Revolving Credit Loans then outstanding is less than the amount of such excess (because Letters of Credit constitute a portion of such excess), the Borrower shall immediately, without notice or demand, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount (but in no event greater than such balance) in a cash collateral account satisfactory to the Administrative Agent established for the benefit of the Revolving Credit Lenders. 2.7 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to Base Rate Loans, by giving the Administrative Agent prior irrevocable notice of such election on or before 11:00 A.M. New York City time, on the Business Day immediately preceding the date of the proposed conversion and of the amount and Type of Loan to be converted, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. 30 The Borrower may elect from time to time to convert Base Rate Loans (other than Swing Line Loans) to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such election on or before 11:00 A.M., New York City time, on the third Business Day immediately preceding the date of the proposed conversion and of the amount and Type of Loan to be converted. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each applicable Lender thereof. All or any part of outstanding Eurodollar Loans and Base Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is then continuing and (ii) no Loan may be converted into a Eurodollar Loan after the date that is one month prior to the Termination Date with respect to such Loan. (b) Any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Loans and of the amount and Type of Loan to be converted, provided that no Eurodollar Loan may be continued as such (i) when any Event of Default has occurred and is then continuing or (ii) after the date that is one month prior to the Termination Date with respect to such Loan and provided, further, that if the Borrower shall fail to give such notice or if such continuation is not permitted such Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Interest Period. (c) All notices given by Borrower under this subsection 2.7 may be made by telephonic notice promptly confirmed in writing. 2.8 Minimum Amounts and Maximum Number of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event shall there be more than 10 Eurodollar Tranches outstanding at any time. 2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin. (c) If all or a portion of (i) any principal of any Loan, (ii) any interest payable thereon, (iii) any commitment fee or (iv) any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), the principal of the Loans and any such overdue interest, commitment fee or other amount shall bear interest at a rate per annum which is (x) in the case of principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of any such overdue interest, commitment fee or other amount, the rate described in paragraph (b) of this 31 subsection plus 2%, in each case from the date of such non-payment until such overdue principal, interest, commitment fee or other amount is paid in full (as well after as before judgment). (d) Interest shall be payable with respect to each Loan in arrears on each Interest Payment Date and on the Termination Date with respect to such Loan, provided that interest accruing pursuant to paragraph (c) of this subsection shall be payable from time to time on demand. 2.10 Computation of Interest and Fees. (a) Interest on Base Rate Loans and fees shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed; all other interest shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.9(a) or (c). 2.11 Inability to Determine Interest Rate. If prior to the first day of any Interest Period: (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be converted to or continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the first day of such Interest Period, to Base Rate Loans. Until such notice has been withdrawn in writing by the Administrative Agent (which the Administrative Agent agrees to do when the Administrative Agent has determined, or has been instructed by the Required Lenders that, the circumstances that prompted the 32 delivery of such notice no longer exist), no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Loans to Eurodollar Loans. 2.12 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Revolving Credit Lenders hereunder, each payment by the Borrower on account of any commitment fee hereunder and any reduction of the Revolving Credit Commitments of Revolving Credit Lenders shall be made pro rata according to the respective Commitment Percentages of the Revolving Credit Lenders. Each payment (including each prepayment) by the Borrower on account of principal of and interest on any Term Loans or the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of such Loans then held by the Lenders. All payments (including prepayments) to be made by the Borrower hereunder in respect of any Loan, whether on account of principal, interest, Reimbursement Obligations, fees or otherwise, shall be made without set off or counterclaim and shall be made prior to 11:00 A.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders with respect to such Loans, at the Administrative Agent's office specified in subsection 10.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the applicable Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its Commitment Percentage of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrower. The failure of any Lender to make any Loan to be made by it shall not relieve any other Lender of its obligation hereunder to make its Loan on such Borrowing Date. 2.13 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding as 33 Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to subsection 2.16. If circumstances subsequently change so that any affected Lender shall determine that it is no longer so affected, such Lender will promptly notify the Borrower and the Administrative Agent, and upon receipt of such notice, the obligations of such Lender to make or continue Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans shall be reinstated. 2.14 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by subsection 2.15 and changes in the rate of net income taxes (including branch profits taxes and minimum taxes) or franchise taxes (imposed in lieu of net income taxes) of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender upon written demand such additional amount or amounts as will compensate such Lender for such increased cost or reduced amount receivable; provided that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its reasonable discretion, in any legal, economic or regulatory manner) to designate a different Eurodollar lending office if the making of such designation would allow the Lender or its Eurodollar lending office to continue to perform its obligations to make Eurodollar Loans or to continue to fund or maintain Eurodollar Loans and avoid the need for, or reduce the amount of, such increased cost. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Borrower, through the Administrative Agent, of the event by reason of which it has become so entitled. If the Borrower so 34 notifies the Administrative Agent within five Business Days after any Lender notifies the Borrower of any increased cost pursuant to the foregoing provisions of this Section, the Borrower may convert all Eurodollar Loans of such Lender then outstanding into Base Rate Loans in accordance with the terms hereof. Each Lender shall notify the Borrower within 120 days after it becomes aware of the imposition of such costs; provided that if such Lender fails to so notify the Borrower within such 120-day period, such Lender shall not be entitled to claim any additional amounts pursuant to this subsection for any period ending on a date which is prior to 120 days before such notification. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a prompt written request therefor, the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. Each Lender shall notify the Borrower within 120 days after it becomes aware of the imposition of such additional amount or amounts; provided that if such Lender fails to so notify the Borrower within such 120-day period, such Lender shall not be entitled to claim any additional amount or amounts pursuant to this subsection for any period ending on a date which is prior to 120 days before such notification. (c) If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection, showing the calculation thereof in reasonable detail, submitted by such Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.15 Taxes. (a) Except as provided in this subsection 2.15, all payments made by the Borrower under this Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority ("Taxes"), excluding Taxes on net income (including, without limitation, branch profits taxes and minimum taxes) and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender as a result of a present or former connection between any Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent or such Lender having 35 executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to any Agent or any Lender hereunder or under any Note, the amounts so payable to such Agent or such Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof with respect to any Taxes that are imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement or that are attributable to such Lender's failure to comply with the requirements of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as possible thereafter, the Borrower shall send to the relevant Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt, if any, received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the relevant Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agents and the Lenders for any incremental taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (b) Each Lender, Assignee and Participant that is not a citizen or resident of the United States of America, a corporation, partnership created or organized in or under the laws of the United States of America, any estate that is subject to U.S. federal income taxation regardless of the source of its income or any trust which is subject to the supervision of a court within the United States and the control of a United States fiduciary as described in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the Borrower and the Administrative Agent, and if applicable, the assigning Lender (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) on or before the date on which it becomes a party to this Agreement (or, in the case of a Participant, on or before the date on which such Participant purchases the related participation) either: (A) two duly completed and signed copies of either Internal Revenue Service Form 1001 (relating to such Non-U.S. Lender and entitling it to a complete exemption from withholding of U.S. Taxes on all amounts to be received by such Non-U.S. Lender pursuant to this Agreement and the other Credit Documents) or Form 4224 (relating to all amounts to be received by such Non-U.S. Lender pursuant to this Agreement and the other Credit Documents), or successor and related applicable forms, as the case may be; or (B) in the case of a Non-U.S. Lender that is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and that does not comply with the requirements of clause (A) hereof, (x) a statement in the form of Exhibit F (or such other form of statement as shall be reasonably requested by the Borrower from time to time) to the effect that such Non-U.S. Lender is eligible for a complete 36 exemption from withholding of U.S. Taxes under Code Section 871(h) or 881(c), and (y) two duly completed and signed copies of Internal Revenue Service Form W-8 or successor and related applicable form (it being understood and agreed that no Participant and, without the prior written consent of the Borrower described in clause (B) of the proviso to the first sentence of subsection 10.6(c), no Assignee shall be entitled to deliver any forms or statements pursuant to this clause (B), but rather shall be required to deliver forms pursuant to clause (A) of this subsection 2.15(b)). Further, each Non-U.S. Lender agrees (i) to deliver to the Borrower and the Administrative Agent, and if applicable, the assigning Lender (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two further duly completed and signed copies of such Forms 1001 or 4224, as the case may be, or successor and related applicable forms, on or before the date that any such form expires or becomes obsolete and promptly after the occurrence of any event requiring a change from the most recent form(s) previously delivered by it to the Borrower (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) in accordance with applicable U.S. laws and regulations and (ii) in the case of a Non-U.S. Lender that delivers a statement in the form of Exhibit F (or such other form of statement as shall have been requested by the Borrower), to deliver to the Borrower and the Administrative Agent, and if applicable, the assigning Lender, such statement on an annual basis on the anniversary of the date on which such Non-U.S. Lender became a party to this Agreement and to deliver promptly to the Borrower and the Administrative Agent, and if applicable, the assigning Lender, such additional statements and forms as shall be reasonably requested by the Borrower from time to time unless, in any such case, any change in law or regulation has occurred subsequent to the date such Lender became a party to this Agreement (or in the case of a Participant, the date on which such Participant purchased the related participation) which renders all such forms inapplicable or which would prevent such Lender (or Participant) from properly completing and executing any such form with respect to it and such Lender promptly notifies the Borrower and the Administrative Agent (or, in the case of a Participant, the Lender from which the related participation shall have been purchased) if it is no longer able to deliver, or if it is required to withdraw or cancel, any form or statement previously delivered by it pursuant to this subsection 2.15(b). Each Non-U.S. Lender agrees to indemnify and hold harmless the Borrower from and against any taxes, penalties, interest or other costs or losses (including, without limitation, reasonable attorneys' fees and expenses) incurred or payable by the Borrower as a result of the failure of the Borrower to comply with its obligations to deduct or withhold any U.S. Taxes from any payments made pursuant to this Agreement to such Non-U.S. Lender or the Administrative Agent which failure resulted from the Borrower's reliance on any form, statement, certificate or other information provided to it by such Non-U.S. Lender pursuant to clause (B) or clause (ii) of this subsection 2.15(b). The Borrower hereby agrees that for so long as a Non-U.S. Lender complies with this subsection 2.15(b), the Borrower shall not withhold any amounts from any payments made pursuant to this Agreement to such Non-U.S. Lender, unless the Borrower reasonably determines that it is required by law to withhold or deduct any amounts from any payments made to such Non-U.S. Lender pursuant to this Agreement. A Non-U.S. Lender shall not be required to deliver any form or statement pursuant to the immediately preceding sentences in this subsection 2.15(b) that such Non-U.S. Lender is not legally able to deliver (it being understood and agreed that the Borrower shall withhold or deduct such amounts from any 37 payments made to such Non-U.S. Lender that the Borrower reasonably determines are required by law and that payments resulting from a failure to comply with this paragraph (b) shall not be subject to payment or indemnity by the Borrower pursuant to subsection 2.15(a)). If any Credit Party other than the Borrower makes any payment to any Non-U.S. Lender under any Credit Document, the foregoing provisions of this subsection 2.15 shall apply to such Non-U.S. Lender and such Credit Party as if such Credit Party were the Borrower (but a Non-U.S. Lender shall not be required to provide any form or make any statement to any such Credit Party unless such Non-U.S. Lender has received a request to do so from such Credit Party and has a reasonable time to comply with such request). (c) If a Lender shall become aware that it is entitled to receive a refund (whether by way of a direct payment or by offset) in respect of a Non-Excluded Tax paid by the Borrower, which refund, in the good faith judgment of such Lender, is allocable to such payment made pursuant to this Section, it shall promptly notify the Borrower of the availability of such refund and shall, within 30 days after the receipt of a request from the Borrower, apply for such refund at the Borrower's sole expense. If any Lender receives such refund (as described in the preceding sentence), it shall repay the amount of such refund (together with any interest received thereon) to the Borrower if all the payments due under this Section has been paid in full. 2.16 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto (but excluding loss of margin). Such indemnification under this subsection 2.16 may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (but excluding loss of margin) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. Each Lender claiming any payment pursuant to this subsection 2.16 shall do so by giving notice thereof to the Borrower and the Administrative Agent (showing calculation of the amount claimed in reasonable detail) within 60 Business Days after a failure to borrow, convert or continue Eurodollar Loans, or to prepay, after notice or after a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period therefor. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.17 Replacement of Lenders. If at any time (a) the Borrower becomes obligated to pay additional amounts described in subsections 2.13, 2.14 or 2.15 as a result of any condition described in such 38 subsections, or any Lender ceases to make Eurodollar Loans pursuant to subsection 2.13, (b) any Lender becomes insolvent and its assets become subject to a receiver, liquidator, trustee, custodian or other Person having similar powers or (c) any Lender becomes a "Nonconsenting Lender" (hereinafter defined), then the Borrower may, on ten Business Days' prior written notice to the Administrative Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall) assign pursuant to subsection 10.6 all of its rights and obligations under this Agreement to a Lender or other entity selected by the Borrower and acceptable to the Administrative Agent for a purchase price equal to the outstanding principal amount of such Lender's Loans and all accrued interest and fees and other amounts payable hereunder (including amounts payable under subsection 2.16 as though such Loans were being paid instead of being purchased); provided that (i) the Borrower shall have no right to replace the Administrative Agent, (ii) neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such entity, (iii) in the event of a replacement of a Nonconsenting Lender or a Lender to which the Borrower becomes obligated to pay additional amounts pursuant to this subsection 2.17, in order for the Borrower to be entitled to replace such a Lender, such replacement must take place no later than 180 days after (A) the date the Nonconsenting Lender shall have notified the Borrower and the Administrative Agent of its failure to agree to any requested consent, waiver or amendment or (B) the Lender shall have demanded payment of additional amounts under one of the subsections described in this subsection 2.17, as the case may be, and (iv) in no event shall the Lender hereby replaced be required to pay or surrender to such replacement Lender or other entity any of the fees received by such Lender hereby replaced pursuant to this Agreement. In the case of a replacement of a Lender to which the Borrower becomes obligated to pay additional amounts pursuant to this subsection 2.17, the Borrower shall pay such additional amounts to such Lender prior to such Lender being replaced and the payment of such additional amounts shall be a condition to the replacement of such Lender. In the event that (x) the Borrower or the Administrative Agent has requested the Lenders to consent to a departure or waiver of any provisions of the Credit Documents or to agree to any amendment thereto, (y) the consent, waiver or amendment in question requires the agreement of all Lenders in accordance with the terms of subsection 10.1 and (z) the Required Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a "Nonconsenting Lender." 2.18 Certain Fees. The Company agrees to pay to the Administrative Agent, for its own account, a non-refundable administration fee in an amount previously agreed to with the Administrative Agent, payable in advance on the Closing Date and annually in advance on each anniversary thereof prior to the earlier of (x) the Final Maturity Date and (y) the payment in full of all Loans and all other amounts owing under this Agreement. 2.19 Certain Rules Relating to the Payment of Additional Amounts. (a) Upon the request, and at the expense, of the Borrower, each Lender to which the Borrower is required to pay any additional amount pursuant to Section 2.14 or 2.15 shall reasonably afford the Borrower the opportunity to contest, and reasonably cooperate with the Borrower in contesting, the imposition of any Non-Excluded taxes giving rise to such payment; provided that (i) such Lender shall not be required to afford the Borrower the opportunity to so contest unless the Borrower shall have confirmed in writing to such Lender its obligation to pay such amounts 39 pursuant to this Agreement and (ii) the Borrower shall reimburse such Lender for its reasonable attorneys' and accountants' fees and disbursements incurred in so cooperating with the Borrower in contesting the imposition of such Non-Excluded Taxes. (b) Each Lender agrees that if it makes any demand for payment under subsection 2.14 or 2.15(a), or if any adoption or change of the type described in subsection 2.13 shall occur with respect to it, it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, as determined in its reasonable discretion) to designate a different lending office if the making of such a designation would allow the Lender to continue to make and maintain Eurodollar Loans and would reduce or obviate the need for the Borrower to make payments under subsection 2.14 or 2.15(a), or would eliminate or reduce the effect of any adoption or change described in subsection 2.13. SECTION 3. LETTERS OF CREDIT 3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue letters of credit ("Letters of Credit") for the account of the Borrower on any Business Day during the Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the Available Commitment with respect to Revolving Credit Loans of all Revolving Credit Lenders less the aggregate principal amount of the Swing Line Loans then outstanding would be less than zero. (b) Each Letter of Credit shall (i) be denominated in Dollars, (ii) be a standby letter of credit issued to support obligations of the Borrower or any of its Subsidiaries, contingent or otherwise and (iii) expire no later than the earlier of (x) the date that is 12 months after the date of its issuance and (y) the fifth Business Day prior to the Revolving Loan Termination Date; provided that any Letter of Credit with an expiration date occurring up to twelve months after such Letter of Credit's date of issuance may be automatically renewable for subsequent 12-month periods (but in no event later than the fifth Business Day prior to the Revolving Loan Termination Date). (c) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (d) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law or any policies of the Issuing Lender. 3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit at any time prior to the fifth Business Day prior to the Revolving Loan Termination Date by delivering to the Issuing Lender with a copy to the 40 Administrative Agent at its address for notices specified herein an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower and the Administrative Agent (with copies for each Lender) promptly following the issuance thereof. 3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit fee with respect to each Letter of Credit, computed for the period from and including the date of issuance of such Letter of Credit to the expiration date of such Letter of Credit at a rate per annum equal to the Applicable Margin then in effect for Eurodollar Loans, of the aggregate face amount of Letters of Credit outstanding, payable in arrears on each L/C Fee Payment Date and on the Revolving Loan Termination Date. Such fee shall be payable to the Administrative Agent to be shared ratably among the Revolving Credit Lenders in accordance with their respective Commitment Percentages with respect to Revolving Credit Loans. In addition, the Borrower shall pay to the Administrative Agent, for the sole account of the Issuing Lender, a fee equal to 0.1250% per annum of the aggregate face amount of outstanding Letters of Credit payable quarterly in arrears on each L/C Fee Payment Date and on the Revolving Loan Termination Date. (b) In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. (c) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all fees and commissions received by the Administrative Agent for their respective accounts pursuant to this subsection. 3.4 L/C Participation. (a) The Issuing Lender irrevocably agrees to sell and hereby sells to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage with respect to Revolving Credit Loans from time to time in effect in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not 41 reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's then Commitment Percentage with respect to Revolving Credit Loans of the amount of such draft, or any part thereof, which is not so reimbursed; provided that, if such demand is made prior to 11:00 A.M., New York City time, on a Business Day, such L/C Participant shall make such payment to the Issuing Lender prior to the end of such Business Day and otherwise such L/C Participant shall make such payment on the next succeeding Business Day. (b) If any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal funds rate, as quoted by the Issuing Lender, during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to subsection 3.4(a) is not in fact made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans hereunder. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with subsection 3.4(a), the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will, if such payment is received prior to 11:00 A.M., New York City time, on a Business Day, distribute to such L/C Participant its pro rata share thereof prior to the end of such Business Day and otherwise the Issuing Lender will distribute such payment on the next succeeding Business Day; provided, however, that in the event that any such payment received by the Issuing Lender and distributed to the L/C Participants shall be required to be returned by the Issuing Lender, each such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. 3.5 Reimbursement Obligation of the Borrower. (a) The Borrower agrees to reimburse the Issuing Lender on the same Business Day on which the Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by the Issuing Lender provided such notice is received by 1:00 P.M., New York City time, on such Business Day, and the next Business Day if such notice is received after such time. The Issuing Lender shall provide notice to the Borrower on each Business Day on which a draft is presented and paid by the Issuing Lender indicating the amount of (i) such draft so paid and (ii) any taxes, fees, 42 charges or other costs or expenses incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. (b) Interest shall be payable on any and all amounts remaining unpaid by the Borrower under this subsection from the date a draft presented under any Letter of Credit is paid by the Issuing Lender until payment in full (i) at the rate which would be payable on any Loans that are Base Rate Loans at such time until such payment is required to be made pursuant to subsection 3.5(a), and (ii) thereafter, at the rate which would be payable on any Loans that are Base Rate Loans at such time which were then overdue. 3.6 Obligations Absolute. (a) The Borrower's obligations under subsection 3.5(a) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender, any L/C Participant or any beneficiary of a Letter of Credit. (b) The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under subsection 3.5(a) shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged (unless the Issuing Lender has knowledge of such invalidity, fraud or forgery), or (ii) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or (iii) any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. (c) Neither the Issuing Lender nor any L/C Participant shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. (d) The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender or any L/C Participant to the Borrower. 3.7 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower and the Administrative Agent of the date and amount thereof. If any draft shall be presented for payment under any Letter of Credit, the responsibility of the Issuing Lender to the Borrower in connection with such draft shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment appear on their face to be in conformity with such Letter of Credit. 43 3.8 Application. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall govern and control. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Agents, the Issuing Lender, the Swing Line Lender and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Agents, the Issuing Lender, the Swing Line Lender and each Lender that: 4.1 Financial Condition. (a) The combined balance sheets of the Lockheed Martin Predecessor Businesses as at December 31, 1996 and December 31, 1995 and the related combined statements of operations and changes in invested equity and cash flows for each of the three years in the period ended December 31, 1996, audited by Coopers & Lybrand L.L.P., copies of which have heretofore been furnished to each Lender, present fairly, in all material respects, in accordance with GAAP the combined financial condition of the Lockheed Martin Predecessor Businesses as of such dates, and the combined results of their operations and changes in invested equity and cash flows for each of the years in the period ended December 31, 1996. All such financial statements have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such auditors and as disclosed therein). To the best of the Borrower's knowledge, none of the Lockheed Martin Predecessor Businesses had, at the date of each balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any material interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto or expressly permitted to be incurred hereunder. To the best of the Borrower's knowledge, during the period from December 31, 1996 to and including the date hereof there has been no sale, transfer or other disposition by the Lockheed Martin Predecessor Businesses of any material part of its business or property (except as disclosed in the Transaction Documents) other than pursuant to the Asset Contribution and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of the Lockheed Martin Predecessor Businesses at December 31, 1996. (b) The combined statements of operations and cash flows for the three months ended March 31, 1996 and the years ended December 31, 1995 and 1994 of the Loral Acquired Businesses, audited by Coopers & Lybrand L.L.P., copies of which have heretofore been furnished to each Lender, present fairly, in all material respects, in accordance with GAAP the combined results of operations and cash flows of the Loral Acquired Businesses for the three months ended March 31, 1996, and the years ended December 31, 1995 and 1994. All such financial statements have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants and as disclosed therein). To the best of the Borrower's knowledge, during the period from December 31, 1996 to and including the date hereof, there has been no sale, transfer or other disposition by any of the Loral Acquired Businesses of any material part of its business or property (except as disclosed in the Transaction Documents) other than pursuant to the Asset Contribution and no purchase or other acquisition of any business or property (including any capital stock of any 44 other Person) material in relation to the consolidated financial condition of Loral Acquired Businesses at December 31, 1996. (c) The unaudited pro forma condensed consolidated financial statements of the Borrower, as of December 31, 1996 and for the year then ended, certified by a Responsible Officer (the "Pro Forma Financial Statements"), copies of which have been furnished to each Lender, comprise the unaudited combined financial statements of (x) the Lockheed Martin Predecessor Businesses as of December 31, 1996 and for the year then ended and (y) the Loral Acquired Businesses for the three months ended March 31, 1996, adjusted to give effect (as if such events had occurred on such dates) to the Asset Contribution and each of the other transactions contemplated by the Transaction Documents. The Pro Forma Financial Statements have been prepared based on good faith assumptions in accordance with Regulation S-X under the Securities Exchange Act of 1934, as amended, and based on the best information available to the Borrower, as of the date of delivery thereof, and reflect on a pro forma basis the financial position and results of operations of the Borrower and its Subsidiaries, as of December 31, 1996, and for the year then ended. 4.2 No Change. Since December 31, 1996 there has been no development, event or circumstance which has had or could reasonably be expected to have a Material Adverse Effect. 4.3 Corporate Existence; Compliance with Law. Each of Holdings, the Borrower and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is, or will be on or before the date set forth in subsection 6.12, duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 4.4 Corporate Power; Authorization; Enforceable Obligations. Each of Holdings, the Borrower and its Subsidiaries has the corporate power and authority, and the legal right, to make, deliver and perform the Credit Documents to which it is a party and, in the case of the Borrower, to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of such Credit Documents and Transaction Documents. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Credit Documents and Transaction Documents to which the Borrower and each other Credit Party is a party, except those referred to in subsections 4.17 and 6.13 and those set forth on Schedule 4.4. This Agreement has been, and each other Credit Document and Transaction Document will be, duly executed and delivered on behalf of the Borrower and each other Credit Party. This Agreement constitutes, and each other Credit Document and Transaction Document to which it is a party when executed and delivered will constitute, 45 a legal, valid and binding obligation of each Credit Party thereto enforceable against each such Credit Party, as the case may be, in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 4.5 No Legal Bar. Except as set forth on Schedule 4.5 or as could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, the execution, delivery and performance of each Credit Document, the borrowing and use of the proceeds of the Loans and the consummation of the transactions contemplated by the Credit Documents and the Transaction Documents: (a) will not violate any Requirement of Law or any Contractual Obligation applicable to or binding upon Holdings, the Borrower or any Subsidiary of the Borrower or any of their respective properties or assets and (b) will not result in the creation or imposition of any Lien on any of its properties or assets pursuant to any Requirement of Law applicable to it or any of its Contractual Obligations, except for the Liens arising under the Security Documents. 4.6 No Material Litigation. Except as set forth on Schedule 4.6, no litigation by, investigation by, or proceeding of or before any arbitrator or any Governmental Authority is pending or, to the knowledge of the Borrower, overtly threatened by or against the Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues (including after giving effect to the Asset Contribution and the other transactions contemplated by the Transaction Documents) with respect to any Credit Document or any of the transactions contemplated hereby or thereby or which could reasonably be expected to have a Material Adverse Effect. 4.7 No Default. Neither Holdings, the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 4.8 Ownership of Property; Liens. Each of Holdings, the Borrower and its Subsidiaries (i) has good record and insurable title in fee simple to all the real property listed on Schedule 4.8, (ii) has good record and insurable title in fee simple to, or a valid leasehold interest in, all its other material real property, (iii) has good title to, or a valid leasehold interest in, all its other material property and (iv) none of such property in clauses (i) through (iii) is or shall be subject to any Lien except as permitted by subsection 7.3. 4.9 Intellectual Property. Holdings, the Borrower and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). To the best of the Borrower's knowledge, and except as set forth on Schedule 4.9, no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Borrower know of any valid basis for any such claim which could reasonably be expected to have a Material Adverse 46 Effect. The use of such Intellectual Property by Holdings, the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.10 Taxes. Except as set forth on Schedule 4.10, each of Holdings, the Borrower and its Subsidiaries has filed or caused to be filed all material tax returns which, to the knowledge of the Borrower, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Holdings, the Borrower or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge. 4.11 Federal Regulations. No part of the proceeds of any Loans will be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation G or Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. 4.12 ERISA. The Borrower has provided to the Agents a true and correct copy of all Agreements, arrangements and understandings relating to the transfer of Plans from the Seller to the Borrower (the "Transfer Agreements"). The Transfer Agreements are in full force and effect and have not been waived or modified without the consent of the Agents (which shall not be unreasonably withheld) except to the extent any such waiver or modification, singly or in the aggregate, could not be reasonably expected to have a Material Adverse Effect. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no Reportable Event has occurred with respect to any Single Employer Plan, all contributions required to be made with respect to a Plan have been timely made; none of the Borrower or any of its Subsidiaries nor any Commonly Controlled Entity has incurred any material liability to or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any liability (including any indirect, contingent or secondary liability) under any of the foregoing Sections with respect to any Plan; no termination or, or institution of proceedings to terminate or appoint a trustee to administer, a Single Employer Plan has occurred; and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code (except that with respect to any Multiemployer Plan, such representation is deemed made only to the knowledge of the Borrower). No "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA), extension of any amortization period (within the meaning of Section 412 of the Code) or Lien in favor of the PBGC or a Plan has arisen or has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan. As of the last annual valuation date prior to the date on which this representation is made or deemed made, the fair market value of the assets available for benefits under each Single Employer Plan did not exceed the actuarial present value of all accumulated benefit obligations under such Plan by more than $20,000,000, all 47 as determined in accordance with Statement of Financial Accounting Standards No. 87. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan for which there is any outstanding liability, and neither the Borrower nor any Commonly Controlled Entity would become subject to any liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made in an amount which would be reasonably likely to have a Material Adverse Effect. To the best knowledge of the Borrower, no such Multiemployer Plan is in Reorganization or Insolvent. 4.13 Investment Company Act; Other Regulations. None of the Borrower or any of its Subsidiaries is an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. None of the Borrower or any of its subsidiaries is not subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board of Governors of the Federal Reserve System) which limits its ability to incur Indebtedness. 4.14 Subsidiaries. After giving effect to the consummation of the Transaction, the Subsidiaries of the Borrower and their respective jurisdictions of incorporation shall be as set forth on Schedule 4.14. 4.15 Purpose of Loans. The proceeds of the Loans shall be used by the Borrower (i) to finance a portion of the Transaction and related fees and expenses in an aggregate amount not to exceed $185,000,000 and (ii) for working capital purposes in the ordinary course of business of the Borrower and its Subsidiaries. 4.16 Environmental Matters. Except insofar as any exception to any of the following, or any aggregation of such exceptions, is not reasonably likely to result in a Material Adverse Effect: (a) The facilities and properties owned, leased or operated Holdings, by the Borrower or any of its Subsidiaries (the "Properties") do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could reasonably be expected to give rise to liability under, any applicable Environmental Law. (b) None of Holdings, the Borrower nor any of its Subsidiaries has received any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened. (c) Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could reasonably be expected to give rise to liability under, any applicable Environmental Law, nor have any Materials of Environmental Concern been generated, treated, 48 stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could reasonably be expected to give rise to liability under, any applicable Environmental Law. (d) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which Holdings, the Borrower or any Subsidiary is or, to the knowledge of the Borrower, will be named as a party or with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business. (e) There has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of Holdings, the Borrower or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could reasonably give rise to liability under any applicable Environmental Laws. (f) The Properties and all operations at the Properties are in compliance, and have in the last 3 years been in compliance, in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any applicable Environmental Law with respect to the Properties or the business operated by Holdings, the Borrower or any of its Subsidiaries (the "Business") which could materially interfere with the continued operation of the Properties or materially impair the fair saleable value thereof. (g) Holdings, the Borrower and its Subsidiaries hold and are in compliance with all Environmental Permits necessary for their operations. 4.17 Collateral Documents. (a) Upon execution and delivery thereof by the parties thereto, each of the Borrower Pledge and Security Agreement, the Subsidiary Pledge and Security Agreement and the Parent Pledge and Security Agreement will be effective to create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable security interest in the pledged stock described therein and, when stock certificates representing or constituting the pledged stock described therein are delivered to the Administrative Agent, such security interest shall, subject to the existence of Permitted Liens, constitute a perfected first lien on, and security interest in, all right, title and interest of the pledgor party thereto in the pledged stock described therein. (b) Upon execution and delivery thereof by the parties thereto, each of the Borrower Pledge and Security Agreement, the Subsidiary Pledge and Security Agreement and the Parent Pledge and Security Agreement will be effective to create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable security interest in the collateral described therein. Uniform Commercial Code financing statements have been filed in each of the jurisdictions listed on Schedule 4.17, each such Agreement has been filed in each of the government 49 offices listed on Schedule 4.17 or arrangements have been made for such filing in such jurisdictions, and upon such filings, and upon the taking of possession by the Administrative Agent of any such collateral the security interests in which may be perfected only by possession, such security interests will, subject to the existence of liens as permitted by the definition of Permitted Liens, constitute perfected first priority liens on, and security interests in, all right, title and interest of the debtor party thereto in the collateral described therein, except, in the case of each of the Borrower Pledge and Security Agreement, the Subsidiary Pledge and Security Agreement and the Parent Pledge and Security Agreement, to the extent that a security interest cannot be perfected therein by the filing of a financing statement or the taking of possession under the Uniform Commercial Code of the relevant jurisdiction. (c) Upon (a) execution and delivery of the Mortgages by the parties thereto, (b) the recording of such Mortgages in the jurisdiction listed on Schedule 4.17 and (c) the payment of any required mortgage recording taxes, each of the Mortgages will be effective to create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable lien on the real property described therein and such liens will, as of the Closing Date, subject to the existence of liens as permitted by clauses (a), (e), (f) and (g) of the definition of Permitted Liens, constitute first priority liens on the real property described therein. 4.18 Accuracy and Completeness of Information. No fact is known to Holdings, the Borrower or any of its Subsidiaries which has had or could reasonably be expected to have a Material Adverse Effect, which has not been disclosed to the Lenders by Holdings, the Borrower or its Subsidiaries in writing prior to the date hereof. No document furnished or statement made in writing to the Lenders by Holdings, the Borrower, any Subsidiary or any party to any of the Transaction Documents in connection with the negotiation, preparation or execution of this Agreement or any of the other Credit Documents, taken as a whole, (including the Confidential Offering Memorandum dated April 1997 relating to this facility but excluding all projections (including industry forecasts and statistical data) and pro forma financial statements (whether or not contained therein) which shall have been prepared in good faith and based upon reasonable assumptions) contains any untrue statement of a material fact or omits to state any such material fact necessary in order to make the statements contained therein not misleading in the context in which such statements are made. The Equity Documents constitute all of the agreements relating to the Equity Investment and the Subordinated Debt Documents constitute all of the agreements relating to the Subordinated Debt. 4.19 Solvency. On the Closing Date and after giving effect to the Asset Contribution and the other transactions contemplated by the Transaction Documents including borrowings hereunder on such date and the incurrence of all other Indebtedness and Guarantee Obligations being incurred on such date, the Borrower is "Solvent," in that (a) the property, at a fair valuation, of Holdings and its Subsidiaries, individually and taken together as a single entity, will exceed their debts, (b) the present fair salable value of the assets of Holdings and its Subsidiaries, individually and taken together as a single entity, is not less than the amount that will be required to pay their probable liabilities as such debts become absolute and matured, and (c) the Borrower does not intend to, and does not believe that Holdings and its Subsidiaries, individually and taken together as a single 50 entity, will, incur debts or liabilities beyond the their ability to pay as such debts and liabilities mature. For purposes of this subsection, "debt" means "liability on a claim" and "claim" means any (i) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 4.20 Labor Matters. There are no strikes pending or, to the Borrower's knowledge, overtly threatened against Holdings, the Borrower or any of its Subsidiaries which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The hours worked and payments made to employees of Holdings, the Borrower and each of its Subsidiaries (and their predecessors) have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law, except to the extent such violations could not, or in the aggregate, be reasonably expected to have a Material Adverse Effect. 4.21 Transaction Documents. To the best of the Borrower's knowledge, the representations and warranties contained in the Transaction Documents, taken as a whole, are true and correct in all material respects as of the Closing Date. On the Closing Date, the Asset Contribution will have been consummated in accordance with the Transaction Documents. SECTION 5. CONDITIONS PRECEDENT 5.1 Conditions to Initial Loans. The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction, immediately prior to or concurrently with the making of such extension of credit (including the making of any Loan or the issuance of any Letter of Credit) on the Closing Date, of the following conditions precedent: (a) Credit Documents. The Administrative Agent shall have received (i) this Agreement, (ii) the Guarantees, (iii) the Mortgages and (iv) the Security Documents, in each case executed, duly acknowledged and delivered by duly authorized officers of each party thereto, with a counterpart or a conformed copy for each Lender. Notwithstanding the foregoing, no Foreign Subsidiary of Holdings or the Borrower shall be required to execute a Subsidiary Guarantee or Subsidiary Pledge and Security Agreement, and no more than 65% of the capital stock of or equity interests in any Foreign Subsidiary of the Borrower, Holdings or any of their Subsidiaries, or any other of their Subsidiaries if more than 65% of the assets of such Subsidiary are securities of foreign companies (such determination to be made on the basis of fair market value), shall be required to be pledged hereunder. (b) Related Agreements. The Administrative Agent shall have received, with a copy for each Lender, true and correct copies, certified as to authenticity by the Borrower, of each of the Transaction Documents and such other documents or instruments as may be reasonably requested by the Administrative Agent, including, 51 without limitation, a copy of any debt instrument, security agreement or other material contract to which the Borrower or any of its Subsidiaries may be a party (after giving effect to the Asset Contribution). (c) Asset Contribution. The Asset Contribution shall have been consummated pursuant to the Transaction Agreement, and no material provision of the Transaction Agreement shall have been amended, supplemented, waived or otherwise modified without the prior written consent of the Agents. The Agents shall be reasonably satisfied with the aggregate amount of fees and expenses payable by the Borrower and its Subsidiaries in connection with the transactions contemplated hereby and by the Transaction Documents. (d) Capitalization; Capital Structure (i) After giving effect to the Asset Contribution and the other transactions contemplated by the Transaction Documents, the Borrower shall have the capital structure set forth in the Pro Forma Financial Statements. (ii) The Subordinated Debt Documents shall have been executed and delivered by the parties thereto (and shall be in form and substance reasonably satisfactory to the Agents), shall be in full force and effect and none of the provisions thereof shall have been amended, waived, supplemented or otherwise modified without the prior written consent of the Agents; and the Borrower shall have issued the Subordinated Debt in a principal amount, and received gross proceeds in the amount of $225,000,000. (iii) The Equity Documents shall have been executed and delivered by the parties thereto (and shall be in form and substance reasonably satisfactory to the Agents), shall be in full force and effect and none of the provisions thereof shall have been amended, waived, supplemented or otherwise modified without the prior written consent of the Agents; and the Borrower shall have received at least $79,850,000 in net cash proceeds in accordance with the terms of the Equity Documents. (e) Fees. The Agents, the Arranger and the Lenders shall have received all fees, expenses and other consideration required to be paid on or before the Closing Date. (f) Lien Searches. The Administrative Agent shall have received the results of a search of Uniform Commercial Code, tax and judgment filings made with respect to each of the Borrower and its Subsidiaries (after giving effect to the Asset Contribution) and, without duplication, the Lockheed Martin Predecessor Businesses and the Loral Acquired Businesses in the jurisdictions set forth on Schedule 4.17 together with copies of financing statements disclosed by such searches, and such searches shall disclose no Liens on any assets encumbered by any Security Document, except for Liens permitted hereunder or, if unpermitted Liens are disclosed, the Administrative Agent shall have received satisfactory evidence of the release of such Liens. (g) Consents, Authorizations and Filings, etc. Except for the financing statements contemplated by the Security Documents and 52 the filing of the Security Documents and the Assignment Consent, all consents, authorizations and filings, if any, required in connection with the execution, delivery and performance by the Credit Parties, and the validity and enforceability against the Credit Parties, of the Credit Documents to which any of them is a party, shall have been obtained or made, and such consents, authorizations and filings shall be in full force and effect, except such consents, authorizations and filings, the failure to obtain which would not have a Material Adverse Effect. (h) Insurance. The Lenders shall have received (i) a reasonably satisfactory schedule describing all insurance maintained by the Borrower and its Subsidiaries (after giving effect to the Asset Contribution) pursuant to subsection 6.5, and (ii) binders (or other customary evidence as to the obtaining and maintenance by the Borrower and its Subsidiaries of such insurance) for each policy set forth on such schedule insuring against casualty and other usual and customary risks. (i) Litigation. On the Closing Date, there shall be no actions, suits or proceedings pending or threatened against any Credit Party (a) with respect to this Agreement or any other Credit Document or any Transaction Document or the transactions contemplated hereby or thereby (including the Asset Contribution) or (b) which the Agents or the Required Lenders shall determine could reasonably be expected to have a Material Adverse Effect. (j) Borrowing Certificate. The Administrative Agent shall have received, with a counterpart for each Lender, a certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit E, with appropriate insertions and attachments, reasonably satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of the Borrower. (k) Corporate Proceedings of the Borrower. The Administrative Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the Board of Directors of the Borrower authorizing (i) the execution, delivery and performance of the Credit Documents to which it is a party, (ii) the borrowings contemplated hereunder, (iii) the granting by it of the Liens created pursuant to the Security Documents to which it is a party and (iv) the execution, delivery and performance of the Transaction Documents to which it is a party, certified by the Secretary or an Assistant Secretary of the Borrower as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (l) Borrower Incumbency Certificate. The Administrative Agent shall have received, with a counterpart for each Lender, a Certificate of the Borrower, dated the Closing Date, as to the incumbency and signature of the officers of the Borrower executing any Credit Document reasonably satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice 53 President and the Secretary or any Assistant Secretary of the Borrower. (m) Corporate Proceedings of Other Credit Parties. The Administrative Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of each Credit Party (other than the Borrower) authorizing (i) the execution, delivery and performance of the Credit Documents to which it is a party, (ii) the granting by it of the Liens created pursuant to the Security Documents to which it is a party and (iii) the execution, delivery and performance of the Transaction Documents to which it is a party, certified by the Secretary or an Assistant Secretary of each such Credit Party as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (n) Credit Party Incumbency Certificates. The Administrative Agent shall have received, with a counterpart for each Lender, a certificate of each Credit Party (other than the Borrower), dated the Closing Date, as to the incumbency and signature of the officers of such Credit Party executing any Credit Document, reasonably satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of each such Credit Party. (o) Corporate Documents. The Administrative Agent shall have received, with a counterpart for each Lender, true and complete copies of the certificate of incorporation and by-laws of each Credit Party, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of the such Credit Party. (p) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Lender, the following executed legal opinions: (i) the executed legal opinion of each of Simpson Thacher and Bartlett and Fried, Harris, Shriver & Jacobson, counsel to the Borrower and the other Credit Parties, substantially in the form of Exhibits D-1 and D-2, respectively; and (ii) the executed legal opinions of each of Simpson Thacher and Bartlett and Miles & StockBridge, counsel to the Seller delivered pursuant to the Transaction Agreement, each accompanied by a reliance letter in favor of the Lenders. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Agents may reasonably require. (q) Pledged Stock; Stock Powers. The Administrative Agent shall have received the certificates representing the shares pledged pursuant to each of the Security Documents together with an undated 54 stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof. (r) Actions to Perfect Liens. (i) The Administrative Agent shall have received evidence in form and substance reasonably satisfactory to it that all filings, recordings, registrations and other actions, including, without limitation, the filing of duly executed financing statements on form UCC-1, necessary or, in the opinion of the Administrative Agent, desirable to perfect the Liens created by the Security Documents shall have been completed. The Borrower shall have delivered to the Administrative Agent (A) each Mortgage, each executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender and (B) legal opinions from local counsel in the jurisdictions of such Mortgage relating to such Mortgage and the perfection of Liens created by the Security Documents on personal property located in such jurisdiction, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (ii) The Borrower shall have delivered to the Administrative Agent and the title insurance company issuing the policy referred to below (the "Title Insurance Company") maps or plats of an as-built survey of the sites of the property covered by each Mortgage (other than as set forth on Schedule 6.10) certified to the Administrative Agent and the Title Insurance Company in a manner satisfactory to them, dated a date reasonably satisfactory to the Administrative Agent and the Title Insurance Company by an independent professional licensed land surveyor reasonably satisfactory to the Administrative Agent and the Title Insurance Company, which maps or plats and the surveys on which they are based shall be made in accordance with the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992, and, without limiting the generality of the foregoing, there shall be surveyed and shown on such maps, plats or surveys the following: (A) the locations on such sites of all the buildings, structures and other improvements and the established building setback lines; (B) the lines of streets abutting the sites and width thereof; (C) all access and other easements appurtenant to the sites or necessary or desirable to use the sites; (D) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting the site, whether recorded, apparent from a physical inspection of the sites or otherwise known to the surveyor; (E) any encroachments on any adjoining property by the building structures and improvements on the sites; and (F) if the site is described as being on a filed map, a legend relating the survey to said map. (iii) The Borrower shall deliver to the Administrative Agent in respect of each parcel covered by each Mortgage (other than as set forth on Schedule 6.10) a mortgagee's title policy (or policies) or marked up 55 unconditional binder for such insurance dated a date reasonably satisfactory to the Agents. Each such policy shall (A) be in an amount reasonably satisfactory to the Agents; (B) be issued at ordinary rates; (C) insure that the Mortgage insured thereby creates a valid first Lien on such parcel free and clear of all defects and encumbrances, except for liens permitted by clauses (a), (e), (f) and (g) of the definition of Permitted Liens and such other liens and defects as may be approved by the Agents; (D) name the Administrative Agent for the benefit of the Lenders as the insured thereunder; (E) be in the form of ALTA Loan Policy - 1992; (F) contain such endorsements and affirmative coverage as the Agents may reasonably request and (G) be issued by title companies satisfactory to the Agents (including any such title companies acting as co-insurers or reinsures, at the option of the Agents). The Administrative Agent shall have received evidence reasonably satisfactory to it that all premiums in respect of each such policy, and all charges for mortgage recording tax, if any, have been paid. (iv) If required pursuant to Regulation H of the Board of Governors of the Federal Reserve System ("Regulation H") the Borrower shall deliver to the Administrative Agent (A) a policy of flood insurance which (1) covers any parcel of improved real property which is encumbered by any Mortgage, (2) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage which is reasonably allocable to such real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less, and (3) has a term ending not earlier than the maturity of the indebtedness secured by such Mortgage and (B) confirmation that the Borrower has received the notice required pursuant to Section 208(e)(3) of Regulation H. (v) The Borrower shall deliver to the Administrative Agent a copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in this subsection 3.1(r) and a copy, certified by such parties as the Agents may reasonably deem appropriate, of all other documents affecting the property covered by each Mortgage (other than as set forth on Schedule 6.10). (vi) With respect to any parcel of real property owned in fee by the Borrower or any Subsidiary on which fixtures having an aggregate book value exceeding $250,000 are located, take all actions that the Agents may reasonably require, including (if such property is not covered by a recorded Mortgage) the filing of UCC fixture filing financing statements, to cause the security interest created by the Security Documents in such fixtures to be perfected and with respect to any parcel of real property leased by the Borrower or any Subsidiary on which fixtures having an aggregate book value exceeding $250,000 are 56 located, use commercially reasonable efforts to obtain the consent of the landlord of such property to the filing of UCC fixture filing financing statements and make such filings if such consent is obtained. (s) Solvency Opinion. The Administrative Agent shall have received, with a counterpart for each Lender, a solvency opinion reasonably satisfactory to the Agents from an independent valuation firm reasonably satisfactory to the Agents which shall document the solvency of Holdings and its Subsidiaries (including the Borrower) individually and taken together as a single entity, after giving effect to the Asset Contribution, the making of the Loans, the issuance of the Subordinated Debt and the other transactions contemplated hereby and by the Transaction Documents. (t) Environmental Report. The Administrative Agent shall have received an environmental report prepared by H2M Associates, Inc., dated April 1997, regarding Holdings and its Subsidiaries, and a letter that entitles the Administrative Agent, the other Agents and the Lenders to rely on such report as if prepared for and addressed to each of them. (u) Business Plan. The Lenders shall have received a reasonably satisfactory business plan for Holdings and its Subsidiaries for the period beginning January 1, 1997 and ending December 31, 2006, which plan shall include a written analysis of the business and prospects of Holdings and its Subsidiaries. 5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it on any date (including, without limitation, its initial Loan but excluding Revolving Credit Loans made to repay Refunded Swing Line Loans) is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by the Borrower and each Credit Party in or pursuant to the Credit Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except for any representation and warranty which is expressly made as of an earlier date, which representation and warranty shall have been true and correct in all material respects as of such earlier date. (b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or will occur or exist after giving effect to the extensions of credit requested to be made on such date. (c) Additional Matters. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement and the other Credit Documents shall be satisfactory in form and substance to the Agents, and the Administrative Agent shall have received such other documents and legal opinions in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request. 57 Each borrowing by, and each Letter of Credit issued on behalf of, the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date thereof that the conditions contained in this subsection have been satisfied. SECTION 6. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or any Agent hereunder or under any other Credit Document, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to: 6.1 Financial Statements. Furnish to the Administrative Agent with copies for each Lender: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, (i) a copy of the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing and (ii) an unaudited unconsolidated balance sheet of Holdings prepared on an equity basis (without footnote disclosure) certified by a Responsible Officer of Holdings as being fairly stated in all material respects; (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Borrower and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments). All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 6.2 Certificates; Other Information. Furnish to the Administrative Agent with copies for each Lender: (a) concurrently with the delivery of the financial statements referred to in subsection 6.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that, in performing their audit, nothing came to their attention that caused them to believe that the Borrower failed 58 to comply with the provisions of subsection 7.1, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsections 6.1(a) and (b), a certificate of a Responsible Officer stating that, to the best of such Officer's knowledge, during such period (i) no Subsidiary has been formed or acquired (or, if any such Subsidiary has been formed or acquired, the Borrower has complied with the requirements of subsection 6.10 with respect thereto), (ii) none of Holdings, the Borrower nor any of its Subsidiaries has changed its name, its principal place of business, its chief executive office or the location of any material item of tangible Collateral without complying with the requirements of this Agreement and the Security Documents with respect thereto and (iii) such Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; (c) concurrently with the delivery of financial statements pursuant to subsection 6.1(a) or (b), a certificate of the chief financial officer of the Borrower setting forth, in reasonable detail, the computations, as applicable, of (i) the Debt Ratio, (ii) Excess Cash Flow and (iii) the financial covenants set forth in subsection 7.1, as of such last day or for the fiscal period then ended, as the case may be; (d) not later than 60 days after the end of each fiscal year of the Borrower, a copy of the projections by the Borrower of the operating budget and cash flow budget of the Borrower and its Subsidiaries for the succeeding fiscal year, such projections to be accompanied by a certificate of a Responsible Officer to the effect that such projections have been prepared on the basis of sound financial planning practice and that such Officer has no reason to believe they are incorrect or misleading in any material respect; (e) within five days after the same are sent, copies of all financial statements and reports which the Borrower or Holdings sends to its stockholders, and within five days after the same are filed, copies of all financial statements and other reports which the Borrower or Holdings may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; and (f) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be; provided that, notwithstanding the foregoing, the Borrower and each of its Subsidiaries shall have the right not to pay any such obligation and in good faith contest, by proper legal actions or proceedings, the invalidity or amount of such claims. 59 6.4 Conduct of Business and Maintenance of Existence. Except as permitted by subsection 7.5 and subsection 7.6, continue to engage in business of the same general type as now conducted by it (after giving effect to the Transaction); preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business; and keep all property useful and necessary in its business in good working order and condition except if (i) in the reasonable business judgment of the Borrower or such Subsidiary, as the case may be, it is in its best economic interest not to preserve and maintain such rights, privileges or franchises, and (ii) such failure to preserve and maintain such privileges, rights or franchises would not materially adversely affect the rights of the Lenders hereunder or the value of the Collateral, and except as otherwise permitted pursuant to subsection 7.5; comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect. 6.5 Maintenance of Property; Insurance. (a) Maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, cargo loss and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to the Administrative Agent with copies for each Lender, upon written request, full information as to the insurance carried except to the extent that the failure to do any of the foregoing with respect to any such property could not reasonably be expected to materially adversely affect the value or usefulness of such property; provided that in any event the Borrower will maintain, and will cause each of its Subsidiaries to maintain, to the extent obtainable on commercially reasonable terms, (i) property and casualty insurance on all real and personal property on an all risks basis (including the perils of flood and quake), covering the repair or replacement cost of all such property and consequential loss coverage for business interruption and extra expense (which shall be limited to fixed construction expenses and such other business interruption expenses as are otherwise generally available to similar businesses), covering such risks, for such amounts not less than those, and with deductible and self-insurance amounts not greater than those, set forth in Schedule 6.5, (ii) public liability insurance (including products liability coverage) covering such risks, for such amounts no less than those, and with deductible amounts not greater than those, set forth in Schedule 6.5 and (iii) such other insurance coverage in such amounts and with respect to such risks as the Required Lenders may reasonably request. All such insurance shall be provided by insurers or reinsurers which (x) in the case of the United States insurers and reinsurers have an A.M. Best policyholders rating of not less than A- with respect to primary insurance and B+ with respect to excess insurance and (y) in the case of non-United States insurers or reinsurers, the providers of at least 80% of such insurance have either an ISI policyholders rating of not less than A, an A.M. Best policyholders rating of not less than A- or a surplus of not less than $500,000,000 with respect to primary insurance, and an ISI policyholders rating of not less than BBB with respect to excess insurance, or, if the relevant insurance is not available from such insurers, such other insurers as the Administrative Agent may approve in writing. Such insurers may include a Subsidiary of the Borrower; provided that such Subsidiary need not satisfy the foregoing requirements if all but $15,000,000 of the insurance 60 provided by such Subsidiary is reinsured by one or more reinsurers which satisfy such requirements. (b) The Borrower will deliver to the Administrative Agent on behalf of the Lenders, (i) on the Closing Date, a certificate dated such date showing the amount of coverage as of such date, (ii) upon request of any Lender through the Administrative Agent from time to time full information as to the insurance carried, (iii) promptly following receipt of notice from any insurer, a copy of any notice of cancellation or material change in coverage from that existing on the Closing Date, (iv) forthwith, notice of any cancellation or nonrenewal of coverage by the Borrower or any Subsidiary, and (v) promptly after such information is available to the Borrower, full information as to any claim for an amount in excess of $2,500,000 which respect to any property and casualty insurance policy maintained by the Borrower or any Subsidiary. The Administrative Agent shall be named as additional insured on all property and casualty insurance policies and a loss payee on all property insurance policies. Any proceeds from any such insurance policy in respect of any claim, or any condemnation award or other compensation in respect of a condemnation (or any transfer or disposition of property in lieu of condemnation) for which the Borrower or any of its Subsidiaries receives a condemnation award or other compensation shall be paid to the Borrower or the Subsidiary; provided that: (A) the Borrower or the Subsidiary will use such proceeds, condemnation award or other compensation to repair, restore or replace the assets which were the subject of such claim within 6 months (or in the case of real property, 12 months) after receipt thereof (and a Responsible Officer shall deliver a certificate specifying in reasonable detail such usage not later than the last day of such relevant period), and (B) if, at the time of the receipt of such proceeds, condemnation award or other compensation, an Event of Default has occurred and is continuing, the aggregate amount of all such proceeds, condemnation award or other compensation shall be paid to the Administrative Agent and held as collateral for application in accordance with the Security Documents; and provided further that, to the extent that any amount of such proceeds, condemnation award or other compensation are not used or committed during the time periods specified in proviso (A) above, then, if requested by notice from the Required Lenders to the Borrower, all such remaining uncommitted proceeds, condemnation award or other compensation shall be paid to the Administrative Agent and held as Collateral for application in accordance with the Security Documents. 6.6 Inspection of Property; Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records (except to the extent any such access is restricted by a Requirement of Law) at any reasonable time on a Business Day and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants; provided that the Administrative Agent or such Lender shall notify the Borrower prior to any contact with such accountants and give the Borrower the opportunity to participate in such discussions; provided, further, that the Borrower shall notify the Administrative Agent of any such visits, inspections or discussions prior to each occurrence thereof. 61 6.7 Notices. Promptly give notice to the Administrative Agent and each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries, (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect or (iii) any material asset sale (describing in reasonable detail the assets sold, the consideration received therefor and the proposed use of the proceeds thereof); (c) any other litigation or proceeding affecting the Borrower or any of its Subsidiaries in which the amount involved is $7,500,000 or more and not covered by insurance or in which injunctive or similar relief is sought; and (d) the following events, as soon as possible and in any event within 45 days after the Borrower knows or has reason to know thereof: (i) the incurrence of an accumulated funding deficiency or the filing of an application to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan, the creation of any Lien in favor of the PBGC or a Plan, the occurrence of any "Trigger Event" (as defined in the Transfer Agreements) and the reassumption by the Seller of sponsorship of any Single Employer Plan, (ii) except where such event or liability could not reasonably be expected to have a Material Adverse Effect, the occurrence or expected occurrence of any Reportable Event with respect to any Plan (other than a Multiple Employer Plan), or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan, or a failure to make any required contribution to a Plan, (iii) the institution of proceedings by the PBGC with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer Plan or (iv) except as could not reasonably be expected to have a Material Adverse Effect, the institution of proceedings or the taking of any other action with respect to the withdrawal from or termination of any Single Employer Plan; Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. 6.8 Environmental Laws. (a)(i) Comply in all material respects with all Environmental Laws applicable to it, and obtain, comply in all material respects with and maintain any and all material Environmental Permits necessary for its operations as conducted and as planned; and (ii) take all reasonable efforts to ensure that all of its tenants, subtenants, contractors, subcontractors, and invitees comply in all material respects with all applicable Environmental Laws, and obtain, comply in all material 62 respects with and maintain any and all material Environmental Permits, applicable to any of them. Notwithstanding the foregoing, upon learning of any actual or suspected noncompliance, the Borrower or one or more of its Subsidiaries, as appropriate, shall promptly undertake all reasonable efforts to achieve material compliance. (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions in each case required under applicable Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding applicable Environmental Laws except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not be reasonably expected to have a Material Adverse Effect. 6.9 Further Assurances. Upon the reasonable request of the Administrative Agent, promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents (including, without limitation, financing statements and continuation statements) for filing under the provisions of the Uniform Commercial Code or any other Requirement of Law which are necessary or advisable to maintain in favor of the Administrative Agent, for the benefit of the Lenders, Liens on the Collateral that are duly perfected in accordance with all applicable Requirements of Law. 6.10 Additional Collateral. (a) With respect to any assets acquired after the Closing Date by the Borrower or any of its Subsidiaries (including the Stock of newly created or acquired Subsidiaries) that are intended to be subject to the Lien created by any of the Security Documents but which are not so subject (other than (x) any assets described in paragraph (b) of this Section and (y) immaterial assets a Lien on which cannot be perfected by filing UCC-1 financing statements), promptly (and in any event within 30 days after the acquisition thereof): (i) execute and deliver to the Administrative Agent such amendments to the relevant Security Documents or such other documents as the Administrative Agent shall deem necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on such assets, (ii) take all actions necessary or advisable to cause such Lien to be duly perfected in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be requested by the Administrative Agent, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in clauses (i) and (ii) immediately preceding, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (b) With respect to any Person that, subsequent to the Closing Date, becomes a direct or indirect Subsidiary, promptly: (i) execute and deliver to the Administrative Agent, for the benefit of the Lenders, such amendments to the Subsidiary Pledge and Security Agreement as the Administrative Agent shall deem necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers executed and delivered in blank by a duly authorized officer of the Borrower or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become 63 a party to the Subsidiary Pledge and Security Agreement, the Subsidiary Guarantee and the Mortgages delivered pursuant to clause (B) below, in each case pursuant to documentation which is in form and substance reasonably satisfactory to the Administrative Agent, (B) to deliver to the Documentation Agent Mortgages in form and substance reasonably satisfactory to the Documentation Agent with respect to all real property of such Subsidiary, and (C) to take all actions necessary or advisable to cause each Lien created by the Subsidiary Pledge and Security Agreement and the Mortgages delivered pursuant to clause (B) above to be duly perfected in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be requested by the Administrative Agent and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. Notwithstanding the foregoing, no Foreign Subsidiary of Holdings or the Borrower shall be required to execute a Subsidiary Guarantee or Subsidiary Pledge and Security Agreement, and no more than 65% of the capital stock of or equity interests in any Foreign Subsidiary of the Borrower, Holdings or any of their Subsidiaries, or any other of their Subsidiaries if more than 65% of the assets of such Subsidiary are securities of foreign companies (such determination to be made on the basis of fair market value), shall be required to be pledged hereunder. (c) As promptly as practicable, but in any event within 120 days following the Closing Date, the Borrower shall have delivered to the Administrative Agent (A) a Mortgage with respect the real property described in Part I of Schedule 6.10, executed and delivered by a duly authorized officer of the mortgagor party thereto, with a counterpart or a conformed copy for each Lender and (B) legal opinions from local counsel in the jurisdiction of such Mortgage relating to such Mortgage and the perfection of Liens created by the Security Documents on personal property located in such jurisdiction, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (d) As promptly as practical, but in any event within 120 days following the Closing Date, the Borrower shall have delivered to the Administrative Agent and the Title Insurance Company maps or plats of an as-built survey of the sites of the property covered by each Mortgage set forth on Part II of Schedule 6.10 certified to the Administrative Agent and the Title Insurance Company in a manner satisfactory to them, dated a date reasonably satisfactory to the Administrative Agent and the Title Insurance Company by an independent professional licensed land surveyor reasonably satisfactory to the Administrative Agent and the Title Insurance Company, which maps or plats and the surveys on which they are based shall be made in accordance with the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992, and, without limiting the generality of the foregoing, there shall be surveyed and shown on such maps, plats or surveys the following: (A) the locations on such sites of all the buildings, structures and other improvements and the established building setback lines; (B) the lines of streets abutting the sites and width thereof; (C) all access and other easements appurtenant to the sites or necessary or desirable to use the sites; (D) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting the site, whether recorded, apparent from a physical inspection of the sites or otherwise known to the surveyor; (E) any 64 encroachments on any adjoining property by the building structures and improvements on the sites; and (F) if the site is described as being on a filed map, a legend relating the survey to said map. (e) As promptly as practical, but in any event within 120 days following the Closing Date, the Borrower shall deliver to the Administrative Agent in respect of each parcel covered by each Mortgage set forth on Part II Schedule 6.10 a mortgagee's title policy (or policies) or marked up unconditional binder for such insurance dated a date reasonably satisfactory to the Agents. Each such policy shall (A) be in an amount reasonably satisfactory to the Agents; (B) be issued at ordinary rates; (C) insure that the Mortgage insured thereby creates a valid first Lien on such parcel free and clear of all defects and encumbrances, except for liens permitted by clauses (a), (e), (f) and (g) of the definition of Permitted Liens and such other liens and defects as may be approved by the Agents; (D) name the Administrative Agent for the benefit of the Lenders as the insured thereunder; (E) be in the form of ALTA Loan Policy - 1992; (F) contain such endorsements and affirmative coverage as the Agents may reasonably request and (G) be issued by title companies satisfactory to the Agents (including any such title companies acting as co-insurers or reinsures, at the option of the Agents). The Administrative Agent shall have received evidence reasonably satisfactory to it that all premiums in respect of each such policy, and all charges for mortgage recording tax, if any, have been paid. (f) As promptly as possible, but in any event within 120 days following the Closing Date, the Borrower shall deliver to the Administrative Agent a copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in subsection 6.10(d) and a copy, certified by such parties as the Agents may reasonably deem appropriate, of all other documents affecting the property covered by each Mortgage set forth on Schedule 6.10. (g) As promptly as possible, but in any event within 120 days following the Closing Date, if required pursuant to Regulation H of the Board of Governors of the Federal Reserve System ("Regulation H") the Borrower shall deliver to the Administrative Agent (A) a policy of flood insurance which (1) covers the parcel of improved real property which is encumbered by the Mortgage with respect to the real property set forth on Part I of Schedule 6.10, (2) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage which is reasonably allocable to such real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less, and (3) has a term ending not earlier than the maturity of the Indebtedness secured by such Mortgage and (B) confirmation that the Borrower has received the notice required pursuant to Section 208(e)(3) of Regulation H. (h) As promptly as possible, but in any event within 120 days following the Closing Date, with respect to the parcel of real property described in Part I of Schedule 6.10, the Borrower shall take all actions that the Agents may reasonably require, including (if such property is not covered by a recorded Mortgage) the filing of UCC fixture filing financing statements, to cause the security interest created by the Security Documents in such fixtures to be perfected and with respect to any parcel of real property leased by the Borrower or any Subsidiary on which fixtures having an aggregate book value exceeding $250,000 are located, use commercially reasonable efforts to obtain the consent of the landlord of such property to 65 the filing of Ucc fixture filing financing statements and make such filings if such consent is obtained. (i) Use reasonable efforts to take any action reasonably requested by the Agents with respect to any ground lease still in effect on the real property described in Part III of Schedule 6.10. 6.11 Interest Rate Protection. Within 180 days after the Closing Date, obtain interest rate protection for a period through June 30, 1999 for a notional amount of at least $59,000,000 on terms and conditions reasonably satisfactory to the Agents. 6.12 Foreign Jurisdictions. Within 60 days following the Closing Date, (i) be duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) deliver to the Administrative Agent certificates of good standing issued by the Secretary of State (or other relevant officers) of each jurisdiction referred to in clause (i) of this subsection 6.12. 6.13 Novation; Federal Assignment of Claims. (a) (i) Use commercially reasonable efforts to cause the Seller to perform its obligations under subsection 7.08 of the Transaction Agreement, (ii) use best efforts to perform its obligations under subsection 8.07 of the Transaction Agreement and (iii) use its best efforts to obtain as soon as practicable after the Closing Date the completion and effectiveness of the novation of each Government Contract (as defined in the Transaction Agreement) and the consent under the Assignment of Claims Act to the security interest of the Agents and the Lenders in all of the right, title and interest of the Borrower and its Subsidiaries in the Government Contracts (other than the Restricted Government Contracts) sold, assigned, transferred and conveyed by the Seller under the Transaction Agreement. (b) Within ninety (90) days of the creation of a Government Contract or, upon the occurrence and during the continuance of a Default or an Event of Default, the Borrower and its Subsidiaries shall notify the Administrative Agent thereof, which notice shall set forth (i) each GC Notice Recipient with respect to such Government Contract and (ii) the anticipated annual gross revenue under such Government Contract and shall execute and deliver to the Administrative Agent all documents, in form and substance reasonably satisfactory to the Administrative Agent, and take all such other action (other than the transmittal of the notice of assignment to the U.S. Government) reasonably required by the Administrative Agent to assign the Receivables arising under such Government Contract (other than any Restricted Government Contract), to the Administrative Agent pursuant to the Assignment of Claims Act. The Borrower agrees that promptly upon obtaining knowledge that any of the information provided pursuant to the first sentence of subsection 6.13(b) has changed, it shall give written notice of such change to the Administrative Agent. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and shall at the direction of the Required Lenders, transmit any such notice of assignment received by it from the Borrower and its Subsidiaries to the U.S. Government. (c) The Borrower and its Subsidiaries shall apply for and maintain all material facility security clearances and personnel security 66 clearances required of the Borrower under all Requirements of Law to perform and deliver under any and all Government Contracts and as otherwise may be necessary to continue to perform the business of the Borrower and its Subsidiaries. 6.14 Maintenance of Collateral; Alterations. Refrain from committing any waste on any Collateral, except in the ordinary course of its business, or make any material change in the use of any Collateral, provided that any Credit Party may sell or lease to any other Person all or any portion of any item of Collateral that the Borrower has determined in good faith is not used or useful in such Credit Party's operating business. Each Credit Party granting a security interest in Collateral constituting real property represents and warrants that, to the best of its knowledge: (a) such Collateral is served by all utilities required or necessary for the current use thereof; (b) all streets (or public rights-of-way) necessary to serve such Collateral are completed and serviceable and have been dedicated and accepted as such by the appropriate governmental entities or such Collateral is served by insurable easements (or rights-of-way) for ingress and egress to and from such streets (or rights-of-way); and (c) such Credit Party has access to such Collateral from public roads (or rights-of-way), either directly or by insurable easements (or rights-of-way), sufficient to allow such Credit Parties to conduct its business at such Collateral in accordance with sound commercial and industrial practices. The Credit Parties shall, at all times, maintain all non-possessory collateral and all real estate collateral that is materially useful or necessary in their respective businesses, in good operating order, condition and repair, ordinary wear and tear and damage by fire and/or other casualty or taking by condemnation excepted, and in accordance with all applicable laws, rules and regulations, (including, without limitation, Environmental Laws) the failure to comply with which would have a material adverse effect on the value or usefulness of such Collateral, except where the necessity of compliance therewith is contested in good faith by appropriate proceedings. Each Credit Party shall do what is deemed commercially reasonable to maintain and preserve the value of the Collateral. 6.15 Arrangements with the Seller. (a) As promptly as practicable, but in any event within 90 days following the Closing Date, the Borrower shall have delivered to the Administrative Agent the Supply Agreement, the License Agreement and the Interim Services Agreement (each as defined in the Transaction Agreement) executed and delivered by the Seller and the Borrower which shall be reasonably satisfactory in form and substance to the Agents; and (b) As promptly as practicable, but in any event within 120 days following the Closing Date, the Borrower shall have delivered to the Administrative Agent the executed consents of the lessors of the real property leased by the Seller (which leaseholds constitute Transferred Assets (as defined in the Transaction Agreement)) to the transfer of such leaseholds to the Borrower, which consents shall be reasonably satisfactory in form and substance to the Agents. 67 SECTION 7. NEGATIVE COVENANTS The Borrower hereby agrees that, so long as any portion of the Commitments remain in effect or any amount is owing to any Lender or any of the Agents hereunder or under any other Credit Document, the Borrower shall not, and (except with respect to subsection 7.1), shall not permit any of its Subsidiaries to, directly or indirectly: 7.1 Financial Condition Covenants. (a) Debt Ratio. Permit the Debt Ratio at the last day of any fiscal quarter to be greater than the ratio set forth below opposite the fiscal quarter during which such fiscal quarter occurs: Fiscal Quarter Ending Ratio --------------------- ----- September 30, 1997 5.75 December 31, 1997 5.50 March 31, 1998 5.50 June 30, 1998 5.50 September 30, 1998 5.25 December 31, 1998 5.25 March 31, 1999 5.25 June 30, 1999 5.25 September 30, 1999 4.75 December 31, 1999 4.75 March 31, 2000 4.75 June 30, 2000 4.75 September 30, 2000 4.25 December 31, 2000 4.25 March 31, 2001 4.25 June 30, 2001 4.25 September 30, 2001 3.60 December 31, 2001 3.60 March 31, 2002 3.60 June 30, 2002 3.60 September 30, 2002 3.10 December 31, 2002 3.10 March 31, 2003 3.10 June 30, 2003 3.10 September 30, 2003 3.10 December 31, 2003 3.10 March 31, 2004 3.10 June 30, 2004 3.10 September 30, 2004 3.10 December 31, 2004 3.10 March 31, 2005 3.10 June 30, 2005 3.10 68 September 30, 2005 3.10 December 31, 2005 3.10 and thereafter (b) Interest Coverage. Permit the ratio of (i) Consolidated EBITDA to (ii) Consolidated Cash Interest Expense during any Test Period to be less than the ratio set forth opposite such period below (such ratio, the "Interest Coverage Ratio"): Test Period Interest Coverage Ratio ----------- ----------------------- 7/1/97 - 9/30/97 1.50 10/1/97 - 12/31/97 1.85 1/1/98 - 3/31/98 1.85 4/1/98 - 6/30/98 1.85 7/1/98 - 9/30/98 1.90 10/1/98 - 12/31/98 1.90 1/1/99 - 3/31/99 1.90 4/1/99 - 6/30/99 1.90 7/1/99 - 9/30/99 2.15 10/1/99 - 12/31/99 2.15 1/1/00 - 3/31/00 2.15 4/1/00 - 6/30/00 2.15 7/1/00 - 9/30/00 2.35 10/1/00 - 12/31/00 2.35 1/1/01 - 3/31/01 2.35 4/1/01 - 6/30/01 2.35 7/1/01 - 9/30/01 2.75 10/1/01 - 12/31/01 2.75 1/1/02 - 3/31/02 2.75 4/1/02 - 6/30/02 2.75 7/1/02 - 9/30/02 3.10 10/1/02 - and thereafter 3.10 7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness (including in respect of Interest Rate Agreements, except: (a) Indebtedness of the Borrower under this Agreement; (b) Indebtedness of the Borrower incurred to finance the acquisition of fixed or capital assets (whether pursuant to a loan, a Financing Lease or otherwise) in an aggregate principal amount not exceeding $15,000,000 at any time outstanding; (c) Indebtedness of a corporation which becomes a Subsidiary after the date hereof, provided that (i) such indebtedness existed at the time such corporation became a Subsidiary and was not created in anticipation thereof and (ii) immediately after giving 69 effect to the acquisition of such corporation by the Borrower no Default or Event of Default shall have occurred and be continuing; (d) additional Indebtedness of the Borrower not exceeding $15,000,000 in aggregate principal amount at any one time outstanding; (e) Indebtedness of the Borrower in respect of not more than $225,000,000 principal amount of Subordinated Debt issued on the Closing Date; (f) the Indebtedness of the Borrower and its Subsidiaries outstanding on the Closing Date and reflected on Schedule 7.2(f), and refundings or refinancings thereof, provided that no such refunding or refinancing shall shorten the maturity or increase the principal amount of the original Indebtedness; (g) Indebtedness in respect of the Interest Rate Agreements required by subsection 6.11; (h) Guarantee Obligations permitted by subsection 7.4; (i) the incurrence by any Credit Party of intercompany Indebtedness between or among the Credit Parties; provided, however, that if the Borrower is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations; (j) Indebtedness secured by Permitted Liens; (k) Up to $25,000,000 of purchase money Indebtedness the proceeds of which are utilized to acquire the real property (including improvements thereon) and related assets currently utilized by the Wide Band Systems division in Salt Lake City, Utah, on terms reasonably satisfactory to the Lenders. 7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements; 70 (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) easements, rights-of-way, zoning restrictions, other restrictions and other similar encumbrances previously or hereafter incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or such Subsidiary, or which are set forth in title insurance policies or commitments delivered to Administrative Agent pursuant to the terms of this Agreement; (f) Liens in existence on the date hereof listed on Schedule 7.3(f), securing Indebtedness permitted by subsection 7.2(f), provided that no such Lien is expanded to cover any additional property (other than after-acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien) after the Closing Date and that the amount of Indebtedness secured thereby is not increased and extensions, renewals or replacements thereof provided that no such extension, renewal or replacement shall shorten the fixed maturity or increase the principal amount of the original Indebtedness; and provided, further, that the assets of the Borrower and its Subsidiaries encumbered by such Liens are existing equipment and other existing tangible assets; (g) Liens securing Indebtedness of the Borrower and its Subsidiaries permitted by subsection 7.2(b) and subsection 7.2(k) incurred to finance the acquisition of fixed or capital assets, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien) and (iii) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the original purchase price of such property of such property at the time it was acquired; (h) Liens on the property or assets of a corporation which becomes a Subsidiary after the date hereof securing Indebtedness permitted by subsection 7.2(c), provided that (i) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof, (ii) any such Lien is not expanded to cover any property or assets of such corporation after the time such corporation becomes a Subsidiary (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien), and (iii) the amount of Indebtedness secured thereby is not increased; (i) Liens (not otherwise permitted hereunder) which secure obligations not exceeding (as to the Borrower and all Subsidiaries) $2,500,000 in aggregate amount at any time outstanding; 71 (j) Liens created pursuant to the Security Documents; (k) Liens on the property of the Borrower or any of its Subsidiaries in favor of landlords securing licenses, subleases or leases entered into in the ordinary course of business; (l) licenses, leases or subleases permitted hereunder granted to other Persons not interfering in any material respect in the business of the Borrower or any of its Subsidiaries; (m) so long as no Default or Event of Default shall have occurred and be continuing under subsection 8(h), attachment or judgment Liens in an aggregate amount outstanding at any one time not in excess of $7,500,000; (n) Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by the Borrower, or any of its subsidiaries in the ordinary course of business; and (o) Liens in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) held by such banking institutions incurred in the ordinary course of business and which are within the general parameters customary in the banking industry. 7.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer to exist any Guarantee Obligation except: (a) Guarantee Obligations in existence on the date hereof and listed on Schedule 7.4 and extensions, renewals and replacements thereof, provided, however, that no such extension, renewal or replacement shall shorten the fixed maturity or increase the principal amount of the Indebtedness guaranteed by the original guarantee; (b) Guarantee Obligations incurred after the date hereof in an aggregate amount not to exceed $15,000,000 at any one time outstanding for the Borrower and its Subsidiaries; (c) guarantees made by the Subsidiaries of the Borrower pursuant to the Subordinated Debt Documents; (d) Guarantee Obligations under the Credit Documents; (e) the L/C Obligations; (f) Guarantee Obligations of the Borrower or any Subsidiary in respect of obligations of a Subsidiary permitted to be incurred by such Subsidiary by this Agreement; (g) Guarantee Obligations in respect of surety bonds which shall not exceed $10,000,000 at any time; 72 (h) indemnities in favor of the companies issuing title insurance policies insuring the Mortgages to induce such issuance; and (i) indemnities made in the Commitment Letter, the Credit Documents and the Transaction Documents and in the Constitutional Documents of the Borrower and its Subsidiaries. 7.5 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business, except: (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any one or more wholly owned Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or Subsidiaries shall be the continuing or surviving corporations); (b) any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other wholly owned Subsidiary of the Borrower that is a Credit Party; and (c) the Asset Contribution. 7.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person other than the Borrower or any wholly owned Subsidiary, except: (a) the sale or other disposition of obsolete or worn out property in the ordinary course of business; (b) the sale of any property or assets not otherwise permitted by this Section 7.6; provided that the Net Proceeds thereof shall be applied pursuant to subsection 2.6(b)(ii); provided, further, that (i) the aggregate amount of proceeds of all such Asset Sales does not exceed (x) $20,000,000 in fiscal year 1997 or (y) $30,000,000 since the date of this Agreement and (ii) the aggregate amount of non-cash consideration received from such Asset Sales under shall not exceed $5,000,000 since the date of this Agreement; (c) as permitted pursuant to subsection 7.5(b); (d) the sale, lease, transfer or exchange of inventory in the ordinary course of business; (e) subject to subsection 6.5, transfers resulting from any casualty or condemnation of property or assets; 73 (f) intercompany sales or transfers of assets made in the ordinary course of business; (g) licenses, leases or subleases of tangible property in the ordinary course of business; (h) any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business; (i) the sale or discount of overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof; and (j) (i) the sale of the real property used by the Borrower's Aviation Recorder Division on the date hereof (including all improvements thereto) in Sarasota, Florida, solely for cash proceeds of at least $7,500,000 and (ii) the sale of all or substantially all of the assets of the Borrower's Hycor Division (as constituted on the date hereof) solely for cash proceeds of at least $5,000,000, provided that (x) the first $20,000,000 of the proceeds of such sales are applied pursuant to subsection 2.6(b)(ii) and (y) to the extent the aggregate proceeds of asset sales permitted by this clause (j) exceed $20,000,000, the Borrower shall utilize such excess proceeds for the prepayment of Loans and the reduction of Commitments pursuant to subsection 2.6(b)(ii) (without giving effect to the proviso thereto). 7.7 Limitation on Dividends. Declare or pay any dividend (other than dividends payable solely in common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of the Borrower or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary other than Permitted Stock Payments. 7.8 Limitation on Capital Expenditures. Make or commit to make (by way of the acquisition of securities of a Person or otherwise) any expenditure in respect of the purchase or other acquisition of fixed or capital assets (excluding any such asset acquired in connection with normal replacement and maintenance programs properly charged to current operations) except for capital expenditures in the ordinary course of business not exceeding, in the aggregate for the Borrower and its Subsidiaries during any of the fiscal years of the Borrower set forth below, the amount set forth opposite such fiscal year below: Fiscal Year Amount ----------- ------ 1997 $18,500,000 1998 27,500,000 1999 27,500,000 2000 30,000,000 2001 32,500,000 2002 32,500,000 2003 35,000,000 74 2004 37,500,000 2005 and thereafter 40,000,000; provided, that up to 25% of any such amount not so expended in the fiscal year for which it is permitted above may be carried over for expenditure in the next following fiscal year. 7.9 Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person ("Investments"), except : (a) extensions of trade credit in the ordinary course of business; (b) investments in Cash Equivalents; (c) loans to officers of the Borrower listed on Schedule 7.9(c) in aggregate principal amounts outstanding not to exceed the respective amounts set forth for such officers on said Schedule; (d) loans and advances to employees of the Borrower or its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount for the Borrower and its Subsidiaries not to exceed $1,000,000 at any one time outstanding; (e) investments by the Borrower in its Subsidiaries that are Credit Parties and investments by such Subsidiaries in the Borrower and in other Subsidiaries that are Credit Parties; (f) so long as no Event of Default has occurred and is continuing, loans by the Borrower to its employees (other than any Principals or their Related Parties) in connection with (i) management incentive plans and (ii) management stock purchase plans, in an aggregate amount not to exceed $3,000,000; (g) Investments in existence on the Closing Date set forth on Schedule 7.9(g) and extensions, renewals, modifications or restatements or replacements thereof; provided that no such extension, renewal, modification or restatement shall increase the amount of the original loan, advance or investment; (h) promissory notes and other similar non-cash consideration received by the Borrower and its Subsidiaries in connection with the dispositions permitted by subsection 7.6(b); (i) Investments required by subsection 6.11 and Investments permitted by subsection 7.6(b) and subsection 7.6(j); (j) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; and 75 (k) so long as no Event of Default has occurred and is continuing, in addition to the foregoing, Investments in an aggregate amount not exceeding $15,000,000 (at cost, without regard to any write down or write up thereof) at any one time outstanding. 7.10 Limitation on Optional Payments and Modifications of Instruments and Agreements. (a) Make any optional payment or prepayment on or redemption or purchase of, or deliver any funds to any trustee for the prepayment, redemption or defeasance of, any Subordinated Debt or (b) amend, modify or change, or consent or agree to any amendment, modification or change to any of the material terms of any such Subordinated Debt Documents (other than any such amendment, modification or change which would extend the maturity or reduce the amount of any payment of principal thereof or which would reduce the rate or extend the date for payment of interest thereon). (b) Amend its Constitutional Documents in any manner which could adversely affect the rights of the Lenders under the Credit Documents or their ability to enforce the same. (c) Modify or amend, or waive any provision or condition contained in, any of the Transaction Documents in any manner that could reasonably be expected to be adverse to the Lenders. 7.11 Limitation on Transactions with Affiliates. (a) Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is (i) otherwise permitted under this Agreement, (ii) in the ordinary course of the Borrower's or such Subsidiary's business and (iii) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person which is not an Affiliate. (b) In addition, notwithstanding the foregoing, the Borrower and its Subsidiaries shall be entitled to make the following payments and/or to enter into the following transactions: (i) the payment of reasonable and customary fees and reimbursement of expenses payable to directors of the Borrower; (ii) the employment arrangements with respect to the procurement of services of directors, officers and employees in the ordinary course of business and the payment of reasonable fees in connection therewith; (iii) payments to directors and officers of the Borrower and its Subsidiaries in respect of the indemnification of such Persons in such respective capacities from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements, as the case may be, pursuant to the Constitutional Documents or other corporate action of the Borrower or its Subsidiaries, respectively, or pursuant to applicable law; and (iv) transactions described in the Transaction Documents. 76 7.12 Limitation on Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by the Borrower or any Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Subsidiary; provided that the Borrower may enter into a sale and leaseback transaction if the Borrower could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction and (b) incurred a Lien to secure such Indebtedness, in each case in accordance with the restrictions contained in this Agreement and the other Credit Documents. 7.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than December 31. 7.14 Limitation on Negative Pledge Clauses. Enter into with any Person any agreement, other than (a) this Agreement, (b) the Subordinated Debt Documents and (c) any industrial revenue bonds, purchase money mortgages or Financing Leases permitted by this Agreement (in which cases, any prohibition or limitation shall only be effective against the assets financed thereby other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien), which prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired. 7.15 Limitation on Lines of Business. Enter into any business, either directly or through any Subsidiary, except for Similar Businesses. 7.16 Designated Senior Debt. Designate any Indebtedness or other obligation, other than Indebtedness under the Credit Documents, as "Designated Senior Debt," as such term is defined in the Indenture as in effect on the Closing Date, or any comparable designation that confers upon the holders of such Indebtedness or other obligation (or any Person acting on their behalf) the right to initiate blockage periods under the Indenture or any other Indebtedness or other obligation of the Borrower and its Subsidiaries(other than as a result of a payment default). SECTION 8. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Loan or any Reimbursement Obligation when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or deemed made by the Borrower or any other Credit Party herein or in any other Credit Document or which is contained in any certificate, document or 77 financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Credit Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Borrower or any other Credit Party shall default in the observance or performance of any agreement contained in Section 7 or subsection 6.5(a) of this Agreement, Section 4 of the Parent Guarantee, Section 4 of the Subsidiary Guarantee, Section 4 of the Parent Pledge and Security Agreement, Section 4 of the Borrower Pledge and Security Agreement, or Section 4 of the Subsidiary Pledge and Security Agreement; or (d) The Borrower or any other Credit Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Credit Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days; or (e) The Borrower or any of its Subsidiaries shall (i) default (x) in any payment of principal of or interest of any Indebtedness (other than the Loans, the L/C Obligations and any intercompany debt) or Interest Rate Agreement Obligations or (y) in the payment of any Guarantee Obligation (excluding any guaranties of the Obligations), beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness, Interest Rate Agreement Obligation or Guarantee Obligation was created; or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness, Interest Rate Agreement Obligation or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; provided, however, that no Default or Event of Default shall exist under this paragraph unless (i) the aggregate amount of Indebtedness, Interest Rate Agreement Obligations and/or Guarantee Obligations in respect of which any default or other event or condition referred to in this paragraph shall have occurred shall be equal to at least $7,500,000 and (ii) such default continues for a period in excess of 10 days; or (f) (i) Holdings, the Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Holdings, the Borrower or any of 78 its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings, the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Holdings, Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings, the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, reasonably likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other similar event or condition shall occur or exist with respect to a Plan that is not in the ordinary course; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (h) One or more judgments or decrees shall be entered against Holdings, the Borrower or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance (which coverage has been acknowledged by the appropriate insurers)) of $7,500,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (i) (i) Any of the Security Documents shall cease, for any reason, to be in full force and effect (unless released by the Administrative Agent at the direction of the requisite Lenders or as otherwise permitted under this Agreement or the other Credit Documents), or the Borrower or any other Credit Party which is a 79 party to any of the Security Documents shall so assert or (ii) the Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby (and, if such invalidity is such so as to be amenable to cure without materially disadvantaging the position of the Administrative Agent and the Lenders, as the case may be, as secured parties thereunder, the Credit Party shall have failed to cure such invalidity within 30 days after notice from the Administrative Agent); or (j) the Guarantee Obligation of any Credit Party under the Credit Documents shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Credit Party or any Person acting on behalf of any Credit Party, shall deny or disaffirm its obligations under such Guarantee Obligation; (k) There shall have occurred a Change in Control; or (l) either (i) the novation of any Government Contract existing on the date of this Agreement shall not be complete and effective prior to October 31, 1998 if such failures, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (ii) the consent to assignment of claims under any Government Contract (other than any Restricted Government Contract) existing on the date of this Agreement to the Administrative Agent on behalf of the Lenders shall not have been obtained prior to October 31, 1998 if such failures, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (iii) the Governmental Authority authorized to approve any such novation or consent to any such assignment requires a condition to the effectiveness to any such novation or consent which, if agreed to by the Company, could reasonably be expected to have a Material Adverse Effect; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and the Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice of default to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and the Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable. 80 With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral to secure all obligations of the Borrower under this Agreement and the other Credit Documents. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the Notes. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the Notes shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower. The Borrower shall execute and deliver to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, such further documents and instruments as the Administrative Agent may request to evidence the creation and perfection of the within security interest in such cash collateral account. EXCEPT AS EXPRESSLY PROVIDED ABOVE IN THIS SECTION, PRESENTMENT, DEMAND, PROTEST AND ALL OTHER NOTICES OF ANY KIND ARE HEREBY EXPRESSLY WAIVED. SECTION 9. THE AGENTS; THE ARRANGER 9.1 Appointment. Each Lender hereby irrevocably designates and appoints each of the Agents as the agent of such Lender under this Agreement and the other Credit Documents, and each such Lender irrevocably authorizes each of the Agents, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against any of the Agents. 9.2 Delegation of Duties. The Agents may execute any of their duties under this Agreement and the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. None of the Agents shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 9.3 Exculpatory Provisions. Neither any of the Agents nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any 81 other Credit Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document or for any failure of the Borrower to perform its obligations hereunder or thereunder. None of the Agents shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of the Borrower. 9.4 Reliance by Agents. The Agents shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with such Agent. Except as expressly provided in this Agreement, the Agents shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 9.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that any Agent receives such a notice, such Agent shall give notice thereof to the Lenders. Each Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither any of the Agents nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by any of the Agents hereafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by any of the 82 Agents to any Lender. Each Lender represents to each of the Agents that it has, independently and without reliance upon any of the Agents or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and credit worthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any of the Agents or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and credit worthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by any of the Agents hereunder (or copies of which have been provided to the Administrative Agent pursuant to this Agreement), none of the Agents shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or credit worthiness of the Borrower which may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 9.7 Indemnification. The Lenders agree to indemnify each of the Agents in their respective capacities as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitment Percentages with respect to all Types of Loans in effect on the date on which indemnification is sought, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against any of the Agents in any way relating to or arising out of, the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any of the Agents under or in connection with any of the foregoing provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. 9.8 Agents, in Their Individual Capacities. The Agents and their respective Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Agents were not acting in such capacities hereunder and under the other Credit Documents. With respect to the Loans made or renewed by it and any Note issued to it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not an Agent, and the terms "Lender" and "Lenders" shall include the Agents in their individual capacities. 9.9 Successor Administrative Agent, Syndication Agents and Documentation Agent. The Administrative Agent, the Syndication Agent or the 83 Documentation Agent may resign as Administrative Agent, Syndication Agent or Documentation Agent, as the case may be, upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Credit Documents or if Syndication Agent or the Documentation Agent shall resign as Syndication Agent or Documentation Agent under this Agreement and the other Credit Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent (provided that it shall have been approved by the Borrower, which approval shall not be unreasonably withheld), shall succeed to the rights, powers and duties of the Administrative Agent or a Syndication Agent or the Documentation Agent, as the case may be, hereunder. Effective upon such appointment and approval, the term "Administrative Agent" or a "Syndication Agent" or "Documentation Agent," as the case may be, shall mean or include such successor agent, and the former Administrative Agent's or Syndication Agent's or Documentation Agent's, as the case may be, rights, powers and duties as Administrative Agent or Syndication Agent or Documentation Agent, as the case may be, shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or Syndication Agent or Documentation Agent, as the case may be, or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's or Syndication Agent's or Documentation Agent's resignation as Administrative Agent or Syndication Agent or Documentation Agent, as the case may be, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent or Syndication Agent or Documentation Agent, as the case may be, under this Agreement and the other Credit Documents. 9.10 The Arranger. Except as expressly set forth herein, the Arranger, in its capacity as such, shall have no duties or responsibilities, and shall incur no liabilities, under this Agreement or the other Credit Documents. SECTION 10. MISCELLANEOUS 10.1 Amendments and Waivers. Neither this Agreement nor any other Credit Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with the Borrower written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) reduce the amount or extend any scheduled date of maturity of any Loan, extend the expiration of any Letter of Credit beyond the Revolving Credit Termination Date, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, in each case without the consent of each Lender affected thereby, or increase the commitment of any Lender or extend the expiry of the commitment of any Lender without the consent of such Lender, or (ii) amend, modify or waive any 84 provision of this subsection or reduce the percentage specified in the definition of Required Lenders or Requisite Class Lenders, or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Credit Documents, in each case without the written consent of all the Lenders, or (iii) release all or substantially all of the Collateral or release all or substantially all of the Credit Parties from their Guarantee Obligations under the Credit Document without the consent of all Lenders, or (iv) amend, modify or waive any provision of Section 9 without the written consent of the then Agents, (v) amend, modify or waive any provision of subsection 2.1(b), any other provision of this Agreement relating to the Swing Line Loans or the Swing Line Note without the written consent of the Swing Line Lender, or (vi) amend, modify or waive any provision of this Agreement or any other Credit Document which would directly and adversely affect the Arrangers or the Agents or the Issuing Lender or the Swing Line Lender without the written consent of the Arranger, the Agents or the Issuing Lender or the Swing Line Lender, as the case may be. In addition to the foregoing, no amendment, modification, termination or waiver of any provision of subsection 2.5 or subsection 2.6 which has the effect of changing any interim scheduled payments, voluntary or mandatory prepayments (or the applications thereof) or Commitment reductions applicable to any Class (an "Affected Class") in a manner that disproportionately disadvantages such Class relative to the other Class shall be effective without the written concurrence of the Requisite Class Lenders of the Affected Class (it being understood and agreed that any amendment, modification, termination or waiver of any provision which only postpones or reduces any interim scheduled payment, voluntary or mandatory prepayment or Commitment reduction from those set forth in subsection 2.6 with respect to only one Class shall be deemed to not disproportionately disadvantage the other Class and, therefore, shall not require the consent of Requisite Class Lenders of such other Class). Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Agents and the Issuing Lender and all future holders of the Loans. Any extension of a Letter of Credit by the Issuing Lender shall be treated hereunder as issuance of a new Letter of Credit. In the case of any waiver, the Borrower, the Lenders and the Agents and the Issuing Lender shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. 10.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in the case of delivery by hand, when delivered, (b) in the case of delivery by mail, three days after being deposited in the mails, postage prepaid, or (c) in the case of delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows in the case of the Borrower, the Administrative Agent, the Syndication Agent and the Documentation Agent, and as set forth in Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto: The Borrower or any of its Subsidiaries: L-3 Communications Corporation 600 Third Avenue, 34th Floor New York, NY 10016 85 Attention: Robert LaPenta Fax: (212) 805-5470 Simpson Thacher & Bartlett 425 Lexington Avenue, 14th Floor New York, NY 10017-3954 Attention: Marissa C. Wesely, Esq. Fax: (212) 455-2502 The Administrative Agent: Bank of America NT & SA 335 Madison Avenue New York, NY 10017 Attention: Linda Carper Fax: (212) 503-7502 The Documentation Agent: Lehman Commercial Paper Inc. 3 World Financial Center, 9th Floor New York, New York 10285 Attention: Michelle Swanson Fax: (212) 528-0819 The Syndication Agent: Lehman Commercial Paper Inc. 3 World Financial Center, 9th Floor New York, New York 10285 Attention: Michelle Swanson Fax: (212) 528-0819 provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.7, 2.12 or 3.2 shall not be effective until received. 10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in 86 connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse each of the Agents for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees, charges and disbursements of a single counsel for the Lenders (in addition to any local counsel), (b) to pay or reimburse each Lender and each Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents, including, without limitation, the fees and disbursements of counsel to each Lender and of counsel to any Agent, (c) to pay, indemnify, and hold each Lender and each Agent and each Issuing Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Credit Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and each Arranger, each Agent and each Issuing Lender harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement or the other Credit Documents or the use of the proceeds of the Loans in connection with the Transaction, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or any of the Properties (all the foregoing in this clause (d), collectively, the "indemnified liabilities"), it being understood that the Borrower shall have an obligation hereunder to the Lender or any Agent with respect to any indemnified liabilities incurred by any Agents, Arranger or the Issuing Lender or any Lender as a result of any Materials of Environmental Concern that are first manufactured, emitted, generated, treated, released, spilled, stored or disposed of on, at or from any Property or any violation of any Environmental Law, which in any case first occurs on or with respect to such Property (i) after the Property is transferred to any Agent, Arranger, Issuing Lender or any Lender or their successors or assigns by foreclosure sale, deed in lieu of foreclosure, or similar transfer or, following such transfer, (ii) in connection with, but prior to, the sale, leasing or other transfer of such Property by such Agent, Arranger, Issuing Lender, or any Lender or their successors or assigns to one or more third parties; provided, however, that the Borrower shall have no obligation hereunder to any Agent or the Issuing Lender or any Lender with respect to otherwise indemnified liabilities arising from the gross negligence or willful misconduct of such Agent or the Issuing Lender or any such Lender, or with respect to otherwise indemnified liabilities following the sale, leasing or other transfer of such Property to one or more third parties. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 87 10.6 Successors and Assigns; Participation and Assignments. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agents and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender or any other interest of such Lender hereunder and under the other Credit Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Credit Documents, and the Borrower and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Credit Documents. No Lender shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participant's participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement or any other Credit Document except for those specified in clauses (i) and (ii) of the proviso to subsection 10.1. The Borrower agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 with respect to its participation in the Letters of Credit, the Commitments and the Loans outstanding from time to time as if it was a Lender; provided that in the case of subsection 2.15, such Participant shall have complied with the requirements of said Section; provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such subsection than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. (c) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time and from time to time assign to any Lender, any affiliate thereof or, in the case of Lender that is an investment fund which is regularly engaged in making, purchasing or investing in loans or securities, any other such fund which is under common management with such Lender, or, with the consent of the Borrower and the Agents (which in each case shall not be unreasonably withheld), to an additional bank, fund which is regularly engaged in making, purchasing or investing in loans or securities, or financial institution (an "Assignee") all or any part of its rights and obligations under this Agreement and the other Credit Documents pursuant to an Assignment and Acceptance, substantially in the form of Exhibit G, executed by such Assignee, such 88 assigning Lender (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Borrower and the Agents) and delivered to the Administrative Agent for its acceptance and recording in the Register with a copy to the Syndication Agent, provided that, in the case of any such assignment to an additional bank or financial institution, (A) either (x) such assignment is of all the rights and obligations of the assigning Lender or (y) the sum of the aggregate principal amount of the Loans, the aggregate amount of the L/C Obligations and the aggregate amount of the unused Commitments being assigned and, if such assignment is of less than all of the rights and obligations of the assigning Lender, the sum of the aggregate principal amount of the Loans, the aggregate amount of the L/C Obligations and the aggregate amount of the unused Commitments remaining with the assigning Lender are each not less than $5,000,000 (or such lesser amount as may be agreed to by the Borrower and the Agents) and (B) each Assignee which is a Non-U.S. Lender shall comply with the provisions of clause (A) of subsection 2.15(b) hereof, or, with the prior written consent of the Borrower, which shall not be unreasonably withheld, the provisions of clause (B) of subsection 2.15(b) hereof (and, in either case, with all of the other provisions of subsection 2.15(b) hereof). Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). Notwithstanding any provision of this paragraph (c) and paragraph (f) of this subsection, the consent of the Borrower shall not be required for any assignment which occurs at any time when any of the events described in Section 8(f) shall have occurred and be continuing. (d) The Administrative Agent, on behalf of the Borrower, shall maintain at the address of the Administrative Agent referred to in subsection 10.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and Commitments of and principal amounts of the Loans of each Type owing to, each Lender from time to time and the registered owners of the Obligations evidenced by the Notes. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of a Loan, a Note or other Obligation hereunder as the owner thereof for all purposes of this Agreement and the other Credit Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. Any assignment or transfer of all or part of an Obligation evidenced by a Note shall be registered in the Register only upon surrender for registration of assignment or transfer of the Note evidencing such Obligation, duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the holder thereof, and thereupon one or more new Notes shall be issued to the designated Assignee and the old Note shall be returned by the Administrative Agent to the Borrower marked "cancelled." 89 (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Borrower and the Agents) together with payment to the Administrative Agent of a registration and processing fee of $3,000 (provided that no such payment shall be required whenever LCPI or BOA is the assigning Lender), the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. (f) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee, subject to the provisions of subsection 10.15, any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement. (g) If, pursuant to this subsection 10.6, any interest in this Agreement or any Loan is transferred to any Transferee which would be a Non-U.S. Lender upon the effectiveness of such transfer, the assigning Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, (i) to represent to the assigning Lender (for the benefit of the assigning Lender, the Administrative Agent and the Borrower) that under applicable law and treaties no U.S. Taxes will be required to be withheld by the Administrative Agent, the Borrower or the assigning Lender with respect to any payments to be made to such Transferee in respect of the Loans, (ii) to furnish to the assigning Lender (and, in the case of any Assignee registered in the Register, the Administrative Agent and the Borrower such Internal Revenue Service Forms required to be furnished pursuant to subsection 2.15(b) and (iii) to agree (for the benefit of the assigning Lender, the Administrative Agent and the Borrower) to be bound by the provisions of subsection 2.15(b). (h) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law. 10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of its Loans or the Reimbursement Obligations owing to it, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans or the Reimbursement Obligations owing to it, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loans or the Reimbursement Obligations owing to it, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to 90 share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. 10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 10.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10.10 Integration. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Agents and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents. 10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 10.12 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 91 (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 10.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND (e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 10.13 Acknowledgements. The Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents; (b) none of the Arrangers, the Agents nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between any of the Agents and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 10.15 Confidentiality. Each Lender agrees to keep confidential all non-public information provided to it by the Borrower pursuant to this Agreement that is designated by the Borrower in writing as confidential; provided that nothing herein shall prevent any Lender from disclosing any such information (i) to any Agent or any other Lender or any of its Affiliates, (ii) to any Transferee or prospective Transferee or to any direct or indirect contractual counterparties in swap agreements or such contractual counterparties' professional advisors which receives such information and agrees to be bound by the confidentiality provisions hereof, 92 (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any Governmental Authority having jurisdiction over such Lender, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder. 93 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. L-3 Communications Corporation By:__________________________________ Title: Lehman Commercial Paper Inc., as Documentation Agent, Syndication Agent, Arranger and as a Lender By:__________________________________ Title: Bank of America NT & SA as Administrative Agent and as a Lender By:__________________________________ Title: CITIBANK, N.A. as a Lender By:__________________________________ Title: CREDIT LYONNAIS, NEW YORK BRANCH as Co-Agent and as a Lender By:__________________________________ Title: FLEET NATIONAL BANK, as Co-Agent and Lender By:__________________________________ Name: Title: 94 MARINE MIDLAND BANK as Co-Agent and as a Lender By:__________________________________ Title: BANK OF NOVA SCOTIA as Co-Agent and as a Lender By:__________________________________ Name: Title: BANKBOSTON, N.A. By:__________________________________ Name: Title: THE FIRST NATIONAL BANK OF BOSTON as Co-Agent and as a Lender By:__________________________________ Title: THE FIRST NATIONAL BANK OF CHICAGO as Co-Agent and as a Lender By:__________________________________ Title: THE FUJI BANK, LIMITED NEW YORK BRANCH as Co-Agent and as a Lender By:__________________________________ Title: 95 CANADIAN IMPERIAL BANK OF COMMERCE By:__________________________________ Name: Title: CITIBANK, N.A. as Co-Agent and as a Lender By:__________________________________ Title: THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P. as a Lender By:__________________________________ Title: KZH HOLDING CORPORATION II By:__________________________________ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., as a Lender By:__________________________________ Title: KZH HOLDING CORPORATION By:__________________________________ Name: Title: METROPOLITAN LIFE INSURANCE COMPANY By:__________________________________ Name: Title: 96 OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P. its General Partner By: Oak Hill Securities MGP, Inc., its General Partner By:__________________________________ Name: Title: OCTAGON CREDIT INVESTORS LOAN PORTFOLIO (a unit of the Chase Manhattan Bank) By:__________________________________ Name: Title: PARIBAS CAPITAL FUNDING LLC as a Lender By:__________________________________ Title: PILGRIM AMERICA PRIME RATE TRUST as a Lender By:__________________________________ Title: PRIME INCOME TRUST as a Lender By:__________________________________ Title: ROYALTON COMPANY as a Lender By:__________________________________ Title: 97 CRESCENT/MACHI PARTNERS L.P. By TCW Asset Management Company its Investment Manager, as a Lender By:__________________________________ Name: Title: TCW Asset Management Company as Attorney-in Fact for United Companies Life Insurance Company, as a Lender By:__________________________________ Name: Title: VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By:__________________________________ Name: Title: BANK OF MONTREAL as a Lender By:__________________________________ Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY as a Lender By:__________________________________ Title: 98 BANQUE FRANCAISE DU COMMERCE EXTERIEUR By:__________________________________ Name: Title: By:__________________________________ Name: Title: BHF BANK AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH By:__________________________________ Name: Title: CORESTATES BANK, N.A. as a Lender By:__________________________________ Title: GOLDMAN SACHS CREDIT PARTNERS, L.P. as a Lender By:__________________________________ Title: PNC BANK, NATIONAL ASSOCIATION as a Lender By:__________________________________ Name: Title: 99 SKANDINAVISKA ENSKILDA BANKEN CORPORATION as a Lender By:__________________________________ Title: SOCIETE GENERALE, NEW YORK BRANCH By:__________________________________ Name: Title: THE SUMITOMO BANK, LIMITED as a Lender By:__________________________________ Title: THE BANK OF NEW YORK as a Lender By:__________________________________ Title: THE MITSUBISHI TRUST AND BANKING CORPORATION as a Lender By:__________________________________ Title: TRANSAMERICA BUSINESS CREDIT CORPORATION By:__________________________________ Name: Title: U.S. BANK as a Lender By:__________________________________ Title: 100 L-3 COMMUNICATIONS CORPORATION FIRST AMENDMENT TO CREDIT AGREEMENT This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of August 13, 1997 and entered into by and among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation (the "BORROWER") which is wholly owned by L-3 COMMUNICATIONS HOLDINGS, INC., a Delaware corporation ("HOLDINGS"), the Lenders party to the Credit Agreement referred to below on the date hereof (the "LENDERS"), LEHMAN COMMERCIAL PAPER INC. ("LCPI") as arranger (in such capacity, the "ARRANGER"), LCPI, as syndication agent (in such capacity, the "SYNDICATION AGENT"), LCPI, as documentation agent (in such capacity, the "DOCUMENTATION AGENT") and BANK OF AMERICA NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"). All capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders, the Arranger, the Syndication Agent, the Documentation Agent and the Administrative Agent are parties to the Credit Agreement dated as of April 30, 1997 (the "CREDIT AGREEMENT"); and WHEREAS, the parties hereto wish to amend the Credit Agreement as herein provided. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO CREDIT AGREEMENT 1.1. The definition of L/C Commitment in Section 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: ""L/C Commitment": $30,000,000." 1.2. The second sentence of Section 2.2 of the Credit Agreement is hereby stricken and amended to read as follows: "Each borrowing under the Commitments shall be in an amount equal to (x) in the case of Base Rate Loans (other than Swing Line Loans), $2,000,000 or a whole multiple of $100,000 in excess thereof (or, if the then Available Commitments are less than $2,000,000, such lesser amount), (y) in the case of Swing Line Loans, as provided in subsection 2.1(b)(i) and (z) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $100,000 in excess thereof." 1.3. The last sentence of Section 2.6(a) of the Credit Agreement is hereby stricken and amended to read as follows: "Partial prepayments shall be in an aggregate principal amount of $2,000,000 or a whole multiple of $100,000 in excess thereof." 1.4. Section 2.6(b)(iv) of the Credit Agreement is hereby amended by adding the following sentence to the end of the Section: "Mandatory prepayments shall not be subject to any minimum amount requirement." 1.5. Section 2.8 of the Credit Agreement is hereby stricken and amended to read as follows: "2.8 Minimum Amounts and Maximum Number of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $100,000 in excess thereof. All Loans hereunder may be converted or continued into Base Rate Loans without reference to the minimum principal amount requirements for new Base Rate borrowings set forth in Section 2.2 above. In no event shall there be more than 15 Eurodollar Tranches outstanding at any time. 1.6. The second sentence of Section 3.5(a) of the Credit Agreement is hereby stricken and amended to read as follows: "The Issuing Lender shall provide notice to the Borrower on each Business Day on which a draft is presented indicating the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment." 1.7. Section 6.1 of the Credit Agreement is hereby stricken and amended to read as follows: "(a) as soon as available, but in any event within 95 days after the end of each fiscal year of the Borrower, (i) a copy of the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing and (ii) an unaudited unconsolidated balance sheet of Holdings prepared on an equity basis (without footnote disclosure) certified by a Responsible Officer of Holdings as being fairly stated in all material respects; (b) as soon as available, but in any event not later than 50 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Borrower and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments)." 1.8. Exhibit G to the Credit Agreement is hereby stricken an amended to read as Exhibit A hereto. 2 SECTION 2. CONDITIONS TO EFFECTIVENESS Section 1 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the "FIRST AMENDMENT EFFECTIVE DATE"): 2.1. On or before the First Amendment Effective Date, the Borrower shall have delivered to Administrative Agent executed copies of this Amendment. 2.2. On or before the First Amendment Effective Date, the Required Lenders shall have delivered to the Administrative Agent an executed original or facsimile of a counterpart of this Amendment. 2.3. The Boards of Directors of Holdings and the Borrower shall have duly authorized the execution, delivery and performance of this Amendment. SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, the Borrower represents and warrants to each Lender that the following statements are true, correct and complete: 3.1. Corporate Power and Authority. The Borrower has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT"). 3.2. Authorization of Amendment. The execution and delivery of this Amendment has been duly authorized by all necessary corporate action on the part of the Borrower. 3.3. No Conflict. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement by the Borrower does not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to the Borrower or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the Borrower or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on the Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligation of the Borrower or any of its Subsidiaries, (iii) result in or require the creation or of any Lien upon any of the properties or assets of the Borrower or any of its Subsidiaries (other than Liens created under any of the Credit Documents in favor of the Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any contractual obligation of the Borrower or any of its Subsidiaries. 3.4. Governmental Consents. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement by the Borrower does not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. 3.5. Binding Obligation. This Amendment and the Amended Agreement have been 3 duly executed and delivered by the Borrower and, when executed and delivered, will be the legally valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. 3.6. Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in Section 4 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the First Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. 3.7. Absence of Default. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a potential Event of Default. SECTION 4. MISCELLANEOUS 4.1. Reference to and Effect on the Credit Agreement and the other Credit Documents. (a) On and after the First Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. (b) Except as specifically amended by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed. (c) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under, the Credit Agreement or any of the other Credit Documents. 4.2. Fees and Expenses. The Borrower acknowledges that all costs, fees and expenses as described in Section 9 of the Credit Agreement incurred by Administrative Agent and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of the Borrower. 4.3. Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 4.4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 4 4.5. SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 10.2 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND (e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 4.6. Acknowledgements. The Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement; (b) none of the Arrangers, the Agents nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement, and the relationship between any of the Agents and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 4.7. WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL 5 ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 4.8. Confidentiality. Each Lender agrees to keep confidential all non-public information provided to it by the Borrower pursuant to this Agreement that is designated by the Borrower in writing as confidential (excluding any such information already in the possession of such Lender or provided to such Lender by a third party not in violation of this Agreement which, in either case, is not, to the knowledge of such Lender, subject to a confidentiality agreement); provided that nothing herein shall prevent any Lender from disclosing any such information (i) to any Agent or any other Lender or any of its Affiliates, (ii) to any Transferee or prospective Transferee or to any direct or indirect contractual counterparties in swap agreements or such contractual counterparties' professional advisors which receives such information and agrees to be bound by the confidentiality provisions hereof, (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any Governmental Authority having jurisdiction over such Lender, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder. 4.9. Counterparts; Effectiveness. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment shall become effective upon the execution of a counterpart hereof by the Borrower, the Required Lenders, the Arranger, the Syndication Agent, the Documentation Agent and the Administrative Agent and receipt by the Borrower and the Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. 6 In WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. L-3 COMMUNICATIONS CORPORATION By: /s/ Lawrence W. O'Brien ----------------------- Name: Lawrence O'Brien Title: Vice President & Treasurer LEHMAN COMMERCIAL PAPER INC., as Documentation Agent, Syndication Agent, Arranger and as a Lender By: /S/ Michele Swenson ----------------------- Name: Michele Swenson Title: Authorized Signatory BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent By: /s/ Dietmar Schiel ----------------------- Name: Dietmar Schiel Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Lender By: /s/ Linda A. Carper ----------------------- Name: Linda A. Carper Title: Managing Director 7 CREDIT LYONNAIS, NEW YORK BRANCH as Co-Agent and as a Lender By: /s/ Attila Koc ----------------------- Name: Attila Koc Title: FLEET NATIONAL BANK, as Co-Agent and Lender By: /s/ Roger C. Boucher ----------------------- Name: ROGER C. BOUCHER Title: VICE PRESIDENT MARINE MIDLAND BANK as Co-Agent and as a Lender By:/s/ JB Lyons ----------------------- Name: JB Lyons Title: BANK OF NOVA SCOTIA, as Co-Agent and as a Lender By: /s/ J.R. Trimble ----------------------- Name: J.R. Trimble Title: Senior Relationship Manager KZH - CRESCENT CORPORATION By: /s/ Virginia R. Conway ----------------------- Name: Virginia R. Conway Title: Authorized Agent 8 BANKBOSTON, N.A. By: /s/ Gregory R.D. Clark ----------------------- Name: Gregory R.D. Clark Title: Managing Director THE FIRST NATIONAL BANK OF CHICAGO as Co-Agent and as a Lender By: /s/ Amy L. Golz ----------------------- Name: Amy L. Golz Title: Vice President THE FUJI BANK, LIMITED NEW YORK BRANCH as Co-Agent and as a Lender By: /s/ Teiji Teramoto ----------------------- Name: Teiji Teramoto Title: Vice President & Manager CITIBANK, N.A. as Co-Agent and as a Lender By: /s/ Hans L. Christensen ----------------------- Name: Hans L. Christensen Title: Vice President 9 THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P. as a Lender By: ----------------------- Name: Title: KZH - ING-1 CORPORATION By: /s/ Virginia R. Conway ----------------------- Name: Virginia R. Conway Title: Authorized Agent KZH - SOLEIL CORPORATION By: /s/ Virginia R. Conway ----------------------- Name: Virginia R. Conway Title: Authorized Agent MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., as a Lender By: ----------------------- Name: Title: METROPOLITAN LIFE INSURANCE COMPANY By: /s/ James R. Dingler ----------------------- Name: James R. Dingler Title: Assistant Vice President 10 OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P. its General Partner By: Oak Hill Securities MGP, Inc., its General Partner By: ----------------------- Name: Title: OCTAGON CREDIT INVESTORS LOAN PORTFOLIO (a unit of the Chase Manhattan Bank) By: /s/ Richard W. Stewart ----------------------- Name: Richard W. Stewart Title: Managing Director PARIBAS CAPITAL FUNDING LLC as a Lender By: ----------------------- Name: Title: PRIME INCOME TRUST as a Lender By: ----------------------- Name: Title: 11 ROYALTON COMPANY, By Pacific Investment Management Company, as its Investment Advisor By: /s/ Ray Kennedy ----------------------- Name: Ray Kennedy Title: Vice President CRESCENT/MACHI PARTNERS L.P. By: TCW Asset Management Company, its Investment Manager, as a Lender By: /s/ Justin L. Driscoll ----------------------- Name: Justin L. Driscoll Title: Senior Vice President TCW ASSET MANAGEMENT COMPANY as Attorney-in-Fact for United Companies Life Insurance Company, as a Lender By: ----------------------- Name: Title: VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By: /s/ Jeffrey W. Maillet ----------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director 12 BANK OF TOKYO-MITSUBISHI TRUST COMPANY as a Lender By: /s/ Paul P. Malecki ----------------------- Name: Paul P. Malecki Title: Vice President NATEXIS BANQUE BFCE F/K/A BANQUE FRANCAISE DU COMMERCE EXTERIEUR By: G.K. DT ----------------------- Name: Kevin Dooley Title: Vice President By: FL ----------------------- Name: VP Title: VP BHF BANK AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH By: /s/ John Sykes /s/ Hans Sholz ----------------------------- Name: John Sykes Hans Sholz Title: AVP AVP CORESTATES BANK, N.A. as a Lender By: /s/ Matthew T. Panarzse ----------------------- Name: Matthew T. Panarzse Title: Vice President 13 GOLDMAN SACHS CREDIT PARTNERS, L.P. as a Lender By: ----------------------- Name: Title: PNC BANK, NATIONAL ASSOCIATION as a Lender By: ----------------------- Name: Title: SKANDINAVISKA ENSKILDA BANKEN CORPORATION as a Lender By: /s/ Sveriger Johansson ----------------------- Name: Sveriger Johansson Title: Vice President SOCIETE GENERALE, NEW YORK BRANCH By: /s/ Alan ZJ Zinser ----------------------- Name: Alan ZJ Zinser Title: Vice President THE SUMITOMO BANK, LIMITED as a Lender By: /s/ Suresh S. Tata ----------------------- Name: Suresh S. Tata Title: Senior Vice President 14 THE BANK OF NEW YORK as a Lender By: /s/ Kenneth P. Sneider, Jr -------------------------- Name: Kenneth P. Sneider, Jr Title: Vice President THE MITSUBISHI TRUST AND BANKING CORPORATION as a Lender By: /s/ Toshihiro Hayashi ----------------------- Name: Toshihiro Hayashi Title: Senior Vice President TRANSAMERICA BUSINESS CREDIT CORPORATION By: /s/ Perry Vavoules ----------------------- Name: Perry Vavoules Title: Senior Vice President U.S. BANK as a Lender By: /s/ Monica J. Treacy ----------------------- Name: Monica J. Treacy Title: Assistant Vice President INDOSUEZ CAPITAL FUNDING II, LTD. by Indosuez Capital as Portfolio Advisor By: /s/ Francoise Berthelot ----------------------- Name: Francoise Berthelot Title: Vice President 15 SENIOR DEBT PORTFOLIO c/o BOSTON MANAGEMENT AND RESEARCH as Investment Advisor By: /s/ Payson F. Swaffield ----------------------- Name: Payson F. Swaffield Title: Vice President PAMCO CAYMAN LTD. By: Protective Asset Management, L.L.C., as Collateral Manager By: /s/ James Dondero ----------------------- Name: James Dondero Title: CFA, CPA President Protective Asset Management Company FLOATING RATE PORTFOLIO By: Chancellor LGT Senior Secured Management, Inc., as attorney in fact By: /s/ Gregory L. Smith ----------------------- Name: Gregory L. Smith Title: Vice President 16 [BANK OF AMERICA LOGO] January 13, 1998 To: Lender Group Via Facsimile Lawrence O'Brien, Vice President and Treasurer L-3 Communications Corporation REF: L-3 COMMUNICATIONS CORPORATION Please be advised that the Second Amendment to the Credit Agreement dated April 30, 1997 among L-3 Communications Corporation (the "Borrower"), the Lenders party to the Credit Agreement, Lehman Commercial Paper Inc. as Arranger, Syndication Agent and Documentation Agent and Bank of America NT&SA as Administrative Agent, was executed by the Required Lenders, the Borrower and the Agents and became effective as of January 12, 1998. An executed copy of the Second Amendment will be sent to you shortly. Regards, /s/ Dietmar Schiel Dietmar Schiel Vice President (415) 436-2769 cc: Jacques McChesney, Latham & Watkins L-3 COMMUNICATIONS CORPORATION SECOND AMENDMENT TO CREDIT AGREEMENT This SECOND AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of January 12, 1998 and entered into by and among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation (the "BORROWER") which is wholly owned by L-3 COMMUNICATIONS HOLDINGS, INC., a Delaware corporation ("HOLDINGS"), the Lenders party to the Credit Agreement referred to below on the date hereof (the "LENDERS"), LEHMAN COMMERCIAL PAPER INC. ("LCPI") as arranger (in such capacity, the "ARRANGER"), LCPI, as syndication agent (in such capacity, the "SYNDICATION AGENT"), LCPI, as documentation agent (in such capacity, the "DOCUMENTATION AGENT") and BANK OF AMERICA NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"). All capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders, the Arranger, the Syndication Agent, the Documentation Agent and the Administrative Agent are parties to the Credit Agreement dated as of April 30, 1997, as amended August 13, 1997, (the "CREDIT AGREEMENT"); and WHEREAS, the parties hereto wish to amend the Credit Agreement as herein provided. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO CREDIT AGREEMENT 1.1. The definition of L/C Commitment in Section 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: ""L/C Commitment": $50,000,000." 1.2. Section 7.9 of the Credit Agreement is hereby stricken and amended to read as follows: "7.9 Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person ("Investments"), except: (a) extensions of trade credit in the ordinary course of business; (b) investments in Cash Equivalents; (c) loans to officers of the Borrower listed on Schedule 7.9(c) in aggregate principal amounts outstanding not to exceed the respective amounts set forth for such officers on said Schedule; (d) loans and advances to employees of the Borrower or its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount for the Borrower and its Subsidiaries not to exceed $1,000,000 at any one time outstanding; (e) investments by the Borrower in its Subsidiaries that are Credit Parties and investments by such Subsidiaries in the Borrower and in other Subsidiaries that are Credit Parties; (f) so long as no Event of Default has occurred and is continuing, loans by the Borrower to its employees (other than any Principals or their Related Parties) in connection with (i) management incentive plans and (ii) management stock purchase plans, in an aggregate amount not to exceed $3,000,000; (g) Investments in existence on the Closing Date set forth on Schedule 7.9(g) and extensions, renewals, modifications or restatements or replacements thereof; provided that no such extension, renewal, modification or restatement shall increase the amount of the original loan, advance or investment; (h) promissory notes and other similar non-cash consideration received by the Borrower and its Subsidiaries in connection with the dispositions permitted by subsection 7.6(b); (i) Investments required by subsection 6.11 and Investments permitted by subsection 7.6(b) and subsection 7.6(j); (j) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (k) so long as no Event of Default has occurred and is continuing, in addition to the foregoing, Investments in an aggregate amount not exceeding $15,000,000 (at cost, without regard to any write down or write up thereof) at any one time outstanding; (l) Investments in an aggregate amount not exceeding (i) $80.0 million in cash and (ii) the assumption or replacement of $20.0 million of letters of credit for performance (in each case, at cost, without regard to any write down or write up thereof) at any one time outstanding made pursuant to the Asset Purchase Agreement dated December 22, 1997 between the Borrower and Allied Signal pursuant to which the Borrower is purchasing all of the assets of Ocean Systems, a division of Allied Signal ("OCEAN SYSTEMS"); and (m) Investments in an aggregate amount not exceeding (i) $27.0 million in cash and (ii) the assumption or replacement of $22.0 million of letters of credit for performance (in each case, at cost, without regard to any write down or write up thereof) at any one time outstanding made pursuant to the Asset Purchase Agreement dated December 19, 1997 between the Borrower and 2 California Microwave Inc. pursuant to which the Borrower is purchasing all of the assets of Satellite Transmission Systems, a division of California Microwave Inc. ("TRANSMISSION SYSTEMS"); and SECTION 2. CONDITIONS TO EFFECTIVENESS Section 1 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the "SECOND AMENDMENT EFFECTIVE DATE"): 2.1. On or before the Second Amendment Effective Date, the Borrower shall have delivered to Administrative Agent executed copies of this Amendment. 2.2. On or before the Second Amendment Effective Date, the Required Lenders shall have delivered to the Administrative Agent an executed original or facsimile of a counterpart of this Amendment. 2.3 On or before the Second Amendment Effective Date, the Borrower shall have delivered executed copies of all documents required in order to comply with the requirements of Section 6.10 of the Credit Agreement (without giving effect to the 30 day delivery period referenced in such Section 6.10). 2.4. The Boards of Directors of Holdings and the Borrower shall have duly authorized the execution, delivery and performance of this Amendment. SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, the Borrower represents and warrants to each Lender that the following statements are true, correct and complete: 3.1. Corporate Power and Authority. The Borrower has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT"). 3.2. Authorization of Amendment. The execution and delivery of this Amendment has been duly authorized by all necessary corporate action on the part of the Borrower. 3.3. No Conflict. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement by the Borrower does not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to the Borrower or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the Borrower or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on the Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligation of the Borrower or any of its Subsidiaries, (iii) result in or require the creation or of any Lien upon any of the properties or assets of 3 the Borrower or any of its Subsidiaries (other than Liens created under any of the Credit Documents in favor of the Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any contractual obligation of the Borrower or any of its Subsidiaries. 3.4. Governmental Consents. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement by the Borrower does not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. 3.5. Binding Obligation. This Amendment and the Amended Agreement have been duly executed and delivered by the Borrower and, when executed and delivered, will be the legally valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. 3.6. Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in Section 4 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. 3.7. Absence of Default. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a potential Event of Default. SECTION 4. MISCELLANEOUS 4.1. Reference to and Effect on the Credit Agreement and the other Credit Documents. (a) On and after the Second Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. (b) Except as specifically amended by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed. (c) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under, the Credit Agreement or any of the other Credit Documents. 4 4.2. Fees and Expenses. The Borrower acknowledges that all costs, fees and expenses as described in Section 9 of the Credit Agreement incurred by Administrative Agent and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of the Borrower. 4.3. Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 4.4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 4.5. SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; (b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 10.2 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; (d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND (e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 5 4.6. Acknowledgements. The Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement; (b) none of the Arrangers, the Agents nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement, and the relationship between any of the Agents and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 4.7. WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 4.8. Confidentiality. Each Lender agrees to keep confidential all non-public information provided to it by the Borrower pursuant to this Agreement that is designated by the Borrower in writing as confidential (excluding any such information already in the possession of such Lender or provided to such Lender by a third party not in violation of this Agreement which, in either case, is not, to the knowledge of such Lender, subject to a confidentiality agreement); provided that nothing herein shall prevent any Lender from disclosing any such information (i) to any Agent or any other Lender or any of its Affiliates, (ii) to any Transferee or prospective Transferee or to any direct or indirect contractual counterparties in swap agreements or such contractual counterparties' professional advisors which receives such information and agrees to be bound by the confidentiality provisions hereof, (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any Governmental Authority having jurisdiction over such Lender, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder. 4.9. Counterparts; Effectiveness. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original (whether by facsimile or otherwise, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment shall become effective upon the execution of a counterpart hereof by the Borrower, the Required Lenders, the Arranger, the Syndication Agent, the Documentation Agent and the Administrative Agent and receipt by the Borrower and the Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. [Signature Page(s) Follow] 6 L-3 COMMUNICATIONS CORPORATION By: /s/ Lawrence W. O'Brien ---------------------------------------- Name: Lawrence W. O'Brien Title: Vice President and Treasurer LEHMAN COMMERCIAL PAPER INC., as Documentation Agent, Syndication Agent, Arranger and as a Lender By: /s/ Michele Swanson ---------------------------------------- Name: Michele Swanson Title: Authorized Signatory BANK OF AMERICA NT & SA as Administrative Agent and as a Lender By: /s/ Linda A. Carper ---------------------------------------- Name: Linda a. Carper Title: Managing Director BANKBOSTON N.A. By: /s/ Gregory R.D. Clark ---------------------------------------- Name: Gregory R.D. Clark Title: Managing Director THE BAK OF NEW YORK as a Lender By: /s/ Kenneth P. Sneider, Jr. ---------------------------------------- Name: Kenneth P. Sneider, Jr. Title: Vice President BHF-BANK AKTIEGESELLSCHAFT By: /s/ Dan Dobrjanskyj ---------------------------------------- Name: Dan Dobrjanskyj Title: Assistant Vice President By: /s/ Anthony Heyman ---------------------------------------- Name: Anthony Heyman Title: A.T. BANK OF TOKYO-MITSUBISHI TRUST COMPANY as a Lender By: /s/ David McLaughlin ---------------------------------------- Name: David Mclaughlin Title: Vice President CITIBANK, N.A. as Co-Agent and as a Lender By: /s/ Hans L. Christensen ---------------------------------------- Name: Hans L. Christensen Title: Vice President CORESTATES BANK, N.A. as a Lender By: /s/ John D. Brady ---------------------------------------- Name: John D. Brady Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH as Co-Agent and as a Lender By: /s/ Vladimir Labun ---------------------------------------- Name: Vladimir Labun Title: First Vice President-Manager THE FIRST NATIONAL BANK OF CHICAGO as Co-Agent and as a Lender By: /s/ Amy L. Robbins ---------------------------------------- Name: Amy L. Robbins Title: Vice President FLEET NATIONAL BANK as Co-Agent and Lender By: /s/ Roger C. Boucher ---------------------------------------- Name: Roger C. Boucher Title: Vice President GOLDMAN SACHS CREDIT PARTNERS, L.P. as a Lender By: /s/ John Lubein ---------------------------------------- Name: John Lubein Title: KZH-CRESCENT CORPORATION By: /s/ Virginia R. Conway ---------------------------------------- Name: Virginia R. Conway Title: Authorized Agent KZH-ING-1 CORPORATION (formerly known as KZH HOLDING CORPORATION II) By: Virginia R. Conway ---------------------------------------- Name: Virginia R. Conway Title: Aurthorized Agent KZH-SOLEIL CORPORATION (formerly known as KZH HOLDING CORPORATION) By: Virginia R. Conway ---------------------------------------- Name: Virginia R. Conway Title: Authorized Agent LEHMAN SYNDICATED LOANS, INC. By: /s/ Dennis J. Dee ---------------------------------------- Name: Dennis J. Dee Title: Vice President MARINE MIDLAND BANK as Co-Agent and as a Lender By: /s/ M.F. Brown ---------------------------------------- Name: M.F. Brown Title: Authorized Signatory METROPOLITAN LIFE INSURANCE COMPANY By: /s/ James R. Dingler ---------------------------------------- Name: James R. Dingler Title: Director THE MITSUBISHI TRUST AND BANKING CORPORATION as a Lender By: /s/ Beatrice Kossodo ---------------------------------------- Name: Beatrice Kossodo Title: Senior Vice President NATEXIS BANQUE BFCE, Formerly BANQUE FRANCAISE DU COMMERCE EXTERIEUR By: /s/ G.K. DJ -------------- Name: Kevin Dooley Title: Vice President By: /s/ Jordan Sadler ---------------------------------------- Name: Jordan Sadler Title: Associate PAMCO CAYMAN LTD. By: Protective Asset Management, L.L.C., as Collateral Manager By: /s/ James Dondero ---------------------------------------- Name: James Dondero CFA, CPA Title: President Protective Asset Management Company PRIME INCOME TRUST as a Lender By: /s/ ---------------------------------------- Name: Title: ROYALTON COMPANY as a Lender By: /s/ Raymond Kennedy ---------------------------------------- Name: Raymond Kennedy Title: Vice President SENIOR DEBT PORTFOLIO c/o BOSTON MANAGEMENT AND RESEARCH as Investment Advisor By: /s/ Payson F. Swaffield ---------------------------------------- Name: Payson F. Swaffield Title: Vice President SKANDINAVISKA ENSKILDA BANKEN CORPORATION as a Lender By: /s/ Sveriger Johansson ---------------------------------------- Name: Sveriger Johansson Title: Vice President By: /s/ Philip A. Montenuero ---------------------------------------- Name: Philip A. Montenuero Title: Vice President SOCIETE GENERALE, NEW YORK BRANCH By: /s/ Alan Zinser ---------------------------------------- Name: Alan Zinser Title: Vice President TRANSAMERICA BUSINESS CREDIT CORPORATION By: /s/ Perry Vavoules ---------------------------------------- Name: Perry Vavoules Title: Senior Vice President U.S. BANK National Association as a Lender By: /s/ Greg Wilson ---------------------------------------- Name: Greg Wilson Title: Commercial Banking Officer VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By: /s/ Jeffrey W. Maillet ---------------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN CLO1, LIMITED BY: VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC. as Collateral Manager By: /s/ Jeffrey W. Maillet ---------------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director L-3 COMMUNICATIONS CORPORATION THIRD AMENDMENT TO CREDIT AGREEMENT This THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of February 19, 1998 and entered into by and among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation (the "BORROWER"), certain of the Lenders party to the Credit Agreement referred to below on the date hereof (the "REQUIRED LENDERS"), LEHMAN COMMERCIAL PAPER INC. ("LCPI"), as arranger (in such capacity, the "ARRANGER"), LCPI, as syndication agent (in such capacity, the "SYNDICATION AGENT"), LCPI, as documentation agent (in such capacity, the "DOCUMENTATION AGENT"), and BANK OF AMERICA NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT") and as Issuing Lender (in such capacity, the "Issuing Lender"). All capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders, the Arranger, the Syndication Agent, the Documentation Agent, the Administrative Agent and the Issuing Lender are parties to the Credit Agreement, dated as of April 30, 1997, as previously amended by that certain First Amendment to Credit Agreement, dated as of August 13, 1997, and that certain Second Amendment to Credit Agreement, dated as of January 12, 1998 (collectively, the "CREDIT AGREEMENT"); and WHEREAS, the parties hereto wish to amend the Credit Agreement as herein provided. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO CREDIT AGREEMENT (a) The definition of "Business Day" in subsection 1.1 of the Credit Agreement is hereby amended by adding the words "or Foreign L/Cs" after the phrase "relates to Eurodollar Loans" therein. (b) The definition of "Consolidated EBITDA" in subsection 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: ""Consolidated EBITDA": as of the last day of any fiscal quarter, Consolidated Net Income of the Borrower, its Subsidiaries and, without duplication, the Acquired Businesses (excluding, without duplication, (x) extraordinary gains and losses in accordance with GAAP, (y) gains and losses in connection with asset dispositions whether or not constituting extraordinary gains and losses and (z) gains or losses on discontinued operations) for such period, plus (i) Consolidated Interest Expense of the Borrower, its Subsidiaries and, without duplication, the Acquired Businesses for such period, plus (ii) to the extent deducted in computing such Consolidated Net Income of the Borrower, its Subsidiaries and, without duplication, the Acquired Businesses, the sum of income taxes, depreciation and amortization for the four fiscal quarters ended on such date; provided that for any calculation of Consolidated EBITDA for any fiscal period ending during the first three full fiscal quarters following March 31, 1997, Consolidated EBITDA shall be deemed to be Consolidated EBITDA from March 31, 1997 to the last day of such period multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from March 31, 1997 to the last day of such period." (c) The definition of "Consolidated Net Income" in subsection 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: ""Consolidated Net Income": for any Person and for any fiscal period, net income of such Person, determined on a consolidated basis in accordance with GAAP." (d) The definition of "Excess Cash Flow" in subsection 1.1 of the Credit Agreement is hereby amended by deleting each reference to "Consolidated Net Income" and inserting the words "Consolidated Net Income for the Borrower and its Subsidiaries" therefor. (e) The definition of "L/C Commitment" in subsection 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: ""L/C Commitment": $200,000,000." (f) The definition of "L/C Obligations" in subsection 1.1 of the Credit Agreement is hereby amended by inserting the words "the Dollar Equivalent of" at the beginning of each of clause (a) and clause (b) of such definition. (g) The definition of "Revolving Credit Commitment" in subsection 1.1 of the Credit Agreement is hereby amended by (i) deleting the word "initially" in the last line of such definition and (ii) deleting the reference to "$100,000,000" in the last line of such definition and inserting "$200,000,000" therefor. (h) The definition of "Revolving Credit Loan Exposure" in subsection 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: ""Revolving Credit Loan Exposure": with respect to any Lender as of date of determination, (i) if there are no outstanding Letters of Credit or Revolving Credit Loans, that Lender's Revolving Credit Commitment, and (ii) otherwise, the sum of (a) the aggregate outstanding principal amount of the Revolving Credit Loans of that Lender 2 plus (b) in the event that Lender is an Issuing Lender, the Dollar Equivalent of the aggregate stated or face amount in respect of all Letters of Credit issued by that Lender and outstanding (in each case net of any participations purchased by other Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) in the event that such Lender is the Swing Line Lender, the aggregate principal amount of Swing Line Loans made by such Lender then outstanding (net of any participations purchased by other Lenders in such Swing Line Loans) plus (d) the Dollar Equivalent of the aggregate amount of all participations purchased by that Lender in any outstanding Swing Line Loans or Letters of Credit or any unreimbursed drawings under any Letters of Credit." (i) The definition of "Subordinated Debt" in subsection 1.1 of the Credit Agreement is hereby amended by inserting at the end of such definition the following: "and indebtedness outstanding under the New Subordinated Notes, if any" (j) The definition of "Transaction Documents" in subsection 1.1 of the Credit Agreement is hereby stricken and amended to read as follows: "Transaction Documents": (i) the Transaction Agreement, the Schedules thereto and the documents set forth on Schedule IV hereto, (ii) the Equity Documents, (iii) the Subordinated Debt Documents and (iv) following the issuance of the New Subordinated Notes, the New Subordinated Debt Documents." (k) The following definitions are hereby inserted in subsection 1.1 of the Credit Agreement in the appropriate alphabetical order: ""Acquired Business": a company or business unit acquired by the Borrower or any of its Subsidiaries, provided that the Borrower has delivered to the Administrative Agent historical financial statements of such company or business unit prepared in accordance with GAAP. ""Agreement Currency": as defined in subsection 10.16(b)." "Alternative Currency": any currency which as of the time of any issuance or renewal, as applicable, of a Foreign L/C is freely tradeable and convertible into Dollars and has been approved as an "Alternative Currency" for the purposes of this Agreement by the Issuing Bank." "Applicable Creditor: as defined in subsection 10.16(b)." "Calculation Date": with respect to each Foreign L/C, during the period that such Foreign L/C is outstanding (or the Reimbursement Obligation in connection therewith has not been fully satisfied) (i) the last Business Day of a fiscal month, (ii) the date on which such Letter of Credit is to be issued or renewed by the Issuing Bank, (iii) the date on 3 which any draft presented under such Letter of Credit is paid by the Issuing Bank, (iv) such other dates as the Borrower may reasonably request from time to time, and (v) such other dates as the Issuing Bank or the Administrative Agent may select from time to time, provided that the Borrower receives prompt notice thereof." ""Consolidated Interest Expense": for any Person, as of the last day of any fiscal quarter, the amount of interest expense of such Person for such period, determined on a consolidated basis in accordance with GAAP for the four fiscal quarters ended on such date; provided that for any calculation of Consolidated Interest Expense for any fiscal period ending during the first three full fiscal quarters following March 31, 1997, Consolidated Interest Expense shall be deemed to be Consolidated Interest Expense from March 31, 1997 to the last day of such period multiplied by a fraction the numerator of which is 365 and the denominator of which is the number of days from March 31, 1997 to the last day of such period." ""Dollar Equivalent": at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and (b) as to any amount denominated in an Alternative Currency, the equivalent amount in Dollars as determined on the basis of the Exchange Rate for the purchase of Dollars with such Alternative Currency as of the most recent Calculation Date." ""Domestic L/C": a Letter of Credit denominated in Dollars." ""Exchange Rate": on any day, with respect to any Alternative Currency, the spot rate at which Dollars are offered on such day by the Issuing Bank in San Francisco, California for such Alternative Currency." ""Federal Funds Effective Rate": for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the FRB (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If on any relevant day the appropriate rate for such previous day is not yet published in H.15(519), the rate for such day will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent." ""Foreign L/C": a Letter of Credit denominated in an Alternative Currency." ""Foreign L/C Obligations": at any time, an amount equal to the sum of (i) the Dollar Equivalent of the aggregate then undrawn and unexpired face amount of all then outstanding Foreign L/Cs and (ii) the Dollar Equivalent of the aggregate amount of all drawings under Foreign L/Cs which have not then been reimbursed pursuant to subsection 3.5. 4 ""Foreign L/C Overdrawn Amount": as defined in subsection 6.16." ""Foreign L/C Sublimit": $30,000,000." ""Judgment Currency": as defined in subsection 10.16 (b)." ""New Subordinated Debt Documents": the documents that govern the terms of the New Subordinated Notes, if issued." ""New Subordinated Notes": the Borrower's (i) notes issued within six months of February 19, 1998 pursuant to a public offering registered under the Securities Act or (ii) notes ("Initial New Subordinated Notes") issued within six months of February 19, 1998 pursuant to Rule 144A under the Securities Act or similar exemption from the registration requirements under the Securities Act and any notes, having the same terms as the Initial New Subordinated Notes, issued in exchange for the Initial New Subordinated Notes as contemplated by the documents governing the issuance of the Initial New Subordinated Notes, in each case expressly subordinate by their terms to the obligations of the Credit Parties under this Agreement and each other Credit Document and otherwise in form and substance satisfactory to the Agents in all respects." ""Reimbursement Amount": as defined in subsection 3.5(a)." ""Securities Act": Securities Act of 1933, as amended." ""Wide Band Assets": as defined in subsection 7.2(k)." (l) Subsection 2.6(b)(v) of the Credit Agreement is hereby stricken and amended to read as follows: "(v) If after giving effect to (i) any reduction of the Revolving Credit Commitments under subsection 2.4, 2.5 or 2.6 or (ii) any recalculation of the Exchange Rate pursuant to subsection 3.9, the aggregate outstanding principal amount of Swing Line Loans plus the aggregate outstanding principal amount of Revolving Credit Loans plus the aggregate outstanding amount of L/C Obligations shall exceed the aggregate amount of the Revolving Credit Commitments, such reduction or recalculation shall be accompanied by prepayment in the amount of such excess to be applied (x) first, to the outstanding Swing Line Loans and (y) second, to outstanding Revolving Credit Loans (in each case, together with any amounts payable under subsection 2.16)); provided that if the aggregate principal amount of Swing Line Loans and Revolving Credit Loans then outstanding is less than the amount of such excess (because Letters of Credit constitute a portion of such excess), the Borrower shall immediately, without notice or demand, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount (but in no event greater than such balance) in a cash collateral account opened by the Administrative Agent for the benefit of the Revolving Credit Lenders 5 (such deposit to be in Dollars with respect to Domestic L/Cs and the applicable Alternative Currency with respect to Foreign L/Cs). The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral to secure all obligations of the Borrower under this Agreement and the other Credit Documents. Any amounts deposited in such accounts shall be released to the Borrower on any Calculation Date on which the aggregate outstanding principal amount of Swing Line Loans plus the aggregate outstanding principal amount of Revolving Credit Loans plus the aggregate outstanding amount of L/C Obligations equals or is less than the aggregate amount of the Revolving Credit Commitments; provided that no Default or Event of Default has occurred and is continuing." (m) Subsection 2.12(a) of the Credit Agreement is hereby amended by (i) deleting the phrase ", fees or otherwise," in the third sentence of such subsection and inserting the phrase "(whether in respect of Domestic L/Cs or Foreign L/Cs), fees, expenses or otherwise," therefor and (ii) inserting at the end of the third sentence of such subsection the phrase "; provided, that, with respect to any Reimbursement Obligations of the Borrower arising from the presentment to the Issuing Lender of a draft under a Foreign L/C, the Borrower may make payment in the applicable Alternative Currency if such payment is received by the Issuing Bank on the date such draft is paid by the Issuing Bank". (n) Section 3 of the Credit Agreement is hereby stricken in its entirety and amended to read as follows: "SECTION 3 LETTERS OF CREDIT 3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue letters of credit ("Letters of Credit") for the account of the Borrower on any Business Day during the Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment, (ii) the Foreign L/C Obligations would exceed the Foreign L/C Sublimit or (iii) the Available Commitment with respect to Revolving Credit Loans of all Revolving Credit Lenders less the aggregate principal amount of the Swing Line Loans then outstanding would be less than zero. (b) Each Domestic L/C shall (i) be denominated in Dollars, (ii) be a standby letter of credit issued to support obligations of the Borrower or any of its Subsidiaries, contingent or otherwise and (iii) expire no later than the fifth Business Day prior to the Revolving Loan Termination Date. 6 (c) Each Foreign L/C shall (i) be denominated in an Alternative Currency, (ii) be a standby letter of credit issued to support obligations of the Borrower or any of its Subsidiaries, contingent or otherwise, and (iii) expire no later than the fifth Business Day prior to the Revolving Loan Termination Date. For purposes of this Agreement, the amount deemed outstanding under each Foreign L/C at any time, and the amount of the Borrower's Reimbursement Obligations under subsection 3.5 for any amounts paid by the Issuing Lender in connection with any Foreign L/C, shall be the Dollar Equivalent, as determined on the most recent Calculation Date, of (x) such Letter of Credit or (y) the Reimbursement Amount (as defined in Subsection 3.5(a)), as applicable. (d) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, Domestic L/Cs shall also be subject to the laws of the State of New York. (e) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if (i) such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law or any policies of the Issuing Lender or (ii) in the case of any Foreign L/C, it has determined that it cannot provide such Letter of Credit in the applicable Alternative Currency. 3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit at any time prior to the fifth Business Day prior to the Revolving Loan Termination Date by delivering to the Issuing Lender with a copy to the Administrative Agent at its address for notices specified herein an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower and the Administrative Agent (with copies for each Lender) promptly following the issuance thereof. 3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit fee with respect to each Letter of Credit, computed for the period from and including the date of issuance of such Letter of Credit to the expiration 7 date of such Letter of Credit at a rate per annum equal to the Applicable Margin then in effect for Eurodollar Loans, of the Dollar Equivalent of the aggregate face amount of Letters of Credit outstanding, payable in arrears on each L/C Fee Payment Date and on the Revolving Loan Termination Date; provided, that, with respect to any Foreign L/C, the Dollar Equivalent of the face amount of such Letter of Credit shall be recalculated on each Calculation Date during the period that such Letter of Credit is outstanding. Such fee shall be payable to the Administrative Agent to be shared ratably among the Revolving Credit Lenders in accordance with their respective Commitment Percentages with respect to Revolving Credit Loans. In addition, the Borrower shall pay to the Issuing Lender, for its sole account, a fee equal to 0.1250% per annum of the Dollar Equivalent of the aggregate face amount of outstanding Letters of Credit payable quarterly in arrears on each L/C Fee Payment Date and on the Revolving Loan Termination Date; provided, that, with respect to any Foreign L/C, the Dollar Equivalent of the face amount of such Letter of Credit shall be recalculated on each Calculation Date during the period that such Letter of Credit is outstanding. (b) In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. (c) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all fees and commissions received by the Administrative Agent for their respective accounts pursuant to this subsection. 3.4 L/C Participation. (a) The Issuing Lender irrevocably agrees to sell and hereby sells to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage with respect to Revolving Credit Loans from time to time in effect in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand in Dollars at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's then Commitment Percentage with respect to Revolving Credit Loans of the Dollar Equivalent of the amount of such draft (determined on the date such draft is paid), or any part thereof, which is not so reimbursed; provided that, if such demand is made prior to 11:00 A.M., New York City time, on a Business Day, such L/C Participant shall make such payment to the Issuing Lender prior to the end of 8 such Business Day and otherwise such L/C Participant shall make such payment on the next succeeding Business Day. (b) If any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate, as quoted by the Issuing Lender, during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to subsection 3.4(a) is not in fact made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Base Rate Loans hereunder. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with subsection 3.4(a), the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will, if such payment is received prior to 11:00 A.M., New York City time, on a Business Day, distribute to such L/C Participant its pro rata share thereof prior to the end of such Business Day and otherwise the Issuing Lender will distribute such payment on the next succeeding Business Day; provided, however, that in the event that any such payment received by the Issuing Lender and distributed to the L/C Participants shall be required to be returned by the Issuing Lender, each such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. 3.5 Reimbursement Obligation of the Borrower. (a) The Borrower agrees to reimburse the Issuing Lender on the same Business Day on which the Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by the Issuing Lender provided such notice is received by 1:00 P.M., New York City time, on such Business Day, and the next Business Day if such notice is received after such time. The Issuing Lender shall provide notice to the Borrower on each Business Day on which a draft is presented indicating the Dollar Equivalent of the amount of (i) such draft so paid (and, in the case of a Foreign L/C, the amount of such draft so paid stated in the applicable Alternative Currency) and (ii) any 9 taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment ((i) and (ii) collectively with any interest accruing pursuant to paragraph (b) below, the "Reimbursement Amount"). Each such payment shall be made to the Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds; provided, that, with respect to any Reimbursement Obligations of the Borrower arising from the presentment to the Issuing Lender of a draft under a Foreign L/C, the Borrower may make payment in the applicable Alternative Currency if such payment is received by the Issuing Bank on the date such draft is paid by the Issuing Bank. (b) Interest shall be payable on the Dollar Equivalent of any and all amounts remaining unpaid by the Borrower under this subsection from the date a draft presented under any Letter of Credit is paid by the Issuing Lender until payment in full (i) at the rate which would be payable on any Loans that are Base Rate Loans at such time until such payment is required to be made pursuant to subsection 3.5(a), and (ii) thereafter, at the rate which would be payable on any Loans that are Base Rate Loans at such time which were then overdue. (c) For the avoidance of doubt, subject to the provisos in the third sentence of subsection 2.12(a) and the last sentence of subsection 3.5(a) of this Agreement, all payments due from the Borrower hereunder in respect of Foreign L/Cs (and Reimbursement Obligations in connection therewith) shall be made in Dollars as provided in subsection 2.12 of this Agreement. 3.6 Obligations Absolute. (a) The Borrower's obligations under subsection 3.5(a) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender, any L/C Participant or any beneficiary of a Letter of Credit. (b) The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under subsection 3.5(a) shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged (unless the Issuing Lender has knowledge of such invalidity, fraud or forgery), (ii) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred, or (iii) any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. (c) Neither the Issuing Lender nor any L/C Participant shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except 10 for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. (d) The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender or any L/C Participant to the Borrower. 3.7 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower and the Administrative Agent of the date and the Dollar Equivalent of the amount thereof (and, in the case of a Foreign L/C, the amount thereof stated in the applicable Alternative Currency). If any draft shall be presented for payment under any Letter of Credit, the responsibility of the Issuing Lender to the Borrower in connection with such draft shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment appear on their face to be in conformity with such Letter of Credit. 3.8 Application. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall govern and control. 3.9 Determination of Exchange Rate. On each Calculation Date with respect to each outstanding Foreign L/C, the Issuing Bank shall determine the Exchange Rate as of such Calculation Date with respect to the applicable Alternative Currency and shall promptly notify the Administrative Agent and the Borrower thereof and of the Dollar Equivalent of all Foreign L/Cs outstanding on such Calculation Date. The Exchange Rate so determined shall become effective on such Calculation Date and shall remain effective until the next succeeding Calculation Date." (o) Subsection 4.21 of the Credit Agreement is hereby amended by inserting at the end of the first sentence of such subsection the phrase "and, upon consummation of the issuance of the New Subordinated Notes, the representations and warranties contained in the New Subordinated Debt Documents will be true and correct in all material respects as of the date of the respective agreements". (p) Subsection 5.2(a) of the Credit Agreement is hereby amended by inserting immediately following the words "as if made on and as of such date" in such subsection the parenthetical "(including, without limitation, the representation and warranty set forth in subsection 4.7 of this Agreement with respect to each of the Subordinated Debt Documents)". 11 (q) Subsection 6.2(c) of the Credit Agreement is hereby amended by deleting the reference to "the chief financial officer" therein and inserting the words "a Responsible Officer" therefor. (r) The following shall be added to the Credit Agreement as subsection 6.16 of the Credit Agreement: "6.16 Foreign L/Cs. Within one (1) Business Day of any day that the Foreign L/C Obligations exceed the Foreign L/C Sublimit based on the most recent Calculation Date (such excess, the "Foreign L/C Overdrawn Amount"), deposit an amount equal to the Foreign L/C Overdrawn Amount in Dollars in a cash collateral account opened by the Administrative Agent established for the benefit of the Revolving Credit Lenders; provided, that the Borrower shall not be required to make such deposits in such cash collateral account if (i) the Foreign L/C Overdrawn Amount is equal to or less than 10% of the Foreign L/C Sublimit, (ii) the Available Commitments with respect to Revolving Credit Loans of all Revolving Credit Lenders less the aggregate principal amount of the Swing Line Loans then outstanding exceeds such Foreign L/C Overdrawn Amount and (iii) the Borrower is otherwise in compliance with its obligations under this Agreement. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral to secure all obligations of the Borrower under this Agreement and the other Credit Documents. Any amounts deposited in such accounts shall be released to the Borrower on any Calculation Date on which the Foreign L/C Obligations equal or are less than the Foreign L/C Sublimit." (s) The following shall be added to the Credit Agreement as subsection 6.17 of the Credit Agreement: "6.17 New Subordinated Debt Documents. At least ten Business Days prior to the date of issuance of the New Subordinated Notes, the Borrower shall deliver to the Agents copies of the New Subordinated Debt Documents. The New Subordinated Debt Documents shall be in form and substance satisfactory to the Agents." (t) Subsection 7.2(e) of the Credit Agreement is hereby stricken and amended to read as follows: "(e) Indebtedness of the Borrower in respect of not more than (i) $225,000,000 principal amount of Subordinated Notes issued on the Closing Date and (ii) $150,000,000 principal amount of New Subordinated Notes; provided that, to the extent that any of the Net Proceeds of the New Subordinated Notes are used by the Borrower to prepay any of the Loans, such prepayments shall be subject to the provisions of Subsection 2.6(iv) of this Agreement (notwithstanding the fact that such Net Proceeds are not otherwise required to be applied to the prepayment of the Loans);" 12 (u) Subsection 7.2(k) of the Credit Agreement is hereby stricken and amended to read as follows: "(k) Up to $30,000,000 of purchase money Indebtedness the proceeds of which are utilized to acquire the real property (including improvements thereon) and related assets currently utilized by the Wide Band Systems division in Salt Lake City, Utah (the "Wide Band Assets"), on terms reasonably satisfactory to the Agents." (v) Subsection 7.4(c) of the Credit Agreement is hereby stricken and amended to read as follows: "(c) guarantees made by the Subsidiaries of the Borrower pursuant to the Subordinated Debt Documents and the New Subordinated Debt Documents; provided, that any guarantee of the New Subordinated Notes shall be expressly subordinated to all obligations of the Credit Parties under this Agreement and each other Credit Document;" (w) Subsection 7.4(g) of the Credit Agreement is hereby amended by deleting the reference to "$10,000,000" in the last line of such subsection and inserting "$30,000,000" therefor. (x) Subsection 7.8 of the Credit Agreement is hereby amended by deleting the reference to "27,500,000" for Fiscal Year 1998 and inserting "35,000,000" therefor. (y) Subsection 7.9(l) of the Credit Agreement is hereby amended by (i) deleting the words "for performance" in clause (ii) of such subsection, (ii) adding at the end of such subsection the phrase "; provided, the aggregate amount of the Investment pursuant to this subsection 7.9(l) (cash plus assumed letters of credit and/or other indebtedness) may exceed $100.0 million by $10.0 million" immediately following the phrase "Allied Signal ("Ocean Systems")" therein, and (iii) deleting the word "and". (z) Subsection 7.9 of the Credit Agreement is hereby further amended by (i) replacing the period at the end of subsection 7.9(m) with a semi-colon and (ii) adding the following to the end of subsection 7.9: "(n) Investments in an aggregate amount not exceeding $59.4 million (including all fees and expenses related thereto) made to acquire substantially all of the assets of ILEX Systems Inc. pursuant to the Asset Purchase Agreement between the Borrower and FAP Trust, dated as of February 9, 1998; (o) Investments in an aggregate amount not exceeding $30.0 million (including all fees and expenses related thereto) made to acquire the Wide Band Assets, on terms reasonably satisfactory to the Agents; and 13 (p) Investments made to acquire (i) all of the Capital Stock, or all or substantially all of the assets, of any Person (other than the Borrower or any of its Subsidiaries) that is engaged in a Similar Business, or (ii) all or substantially all of the assets of any division of any Person (other than the Borrower or any of its Subsidiaries) that is engaged in a Similar Business; provided, that at the time of each such Investment (both before and after giving effect to such Investment), there shall exist no Default or Event of Default and the aggregate consideration paid in connection with all Investments made pursuant to this subsection 7.9(p) shall not exceed $100,000,000; provided, further, that in connection with each individual, or series of related, Investments made pursuant to this subsection 7.9(p) with an aggregate consideration (i) equal to or less than $35,000,000, the Borrower shall deliver to the Administrative Agent, on or prior to the date which is ten Business Days prior to the consummation of such Investment or Investments, a certificate of a Responsible Officer that sets forth calculations that demonstrate the Borrower's compliance, after giving pro forma effect to such Investment or Investments, with each of the covenants set forth in this subsection 7 and (ii) greater than $35,000,000, the Borrower shall provide the Lenders, on or prior to the consummation of such Investment or Investments, with information and pro forma calculations in connection with such Investment or Investments as the Lenders may reasonably request and the Borrower shall have received the prior written consent of the Required Lenders regarding the making of such Investment or Investments." (aa) Subsection 7.10(a) of the Credit Agreement is hereby amended by (i) deleting the reference to "(b)" after the words "any Subordinated Debt or" therein and (ii) inserting the words "or New Subordinated Debt Documents" immediately following the reference to "Subordinated Debt Documents" therein. (ab) Subsection 7.14 of the Credit Agreement is hereby amended by inserting the words "and the New Subordinated Debt Documents" immediately following the reference to "Subordinated Debt Documents" therein. (ac) Subsection 7.16 of the Credit Agreement is hereby amended by inserting the parenthetical "(including, without limitation, the New Subordinated Debt Documents)" immediately following the fourth reference to "Indebtedness" therein. (ad) Subsection 8(c) of the Credit Agreement is hereby amended by deleting the phrase "subsection 6.5(a)" therein and inserting the phrase "subsections 6.5(a) or 6.16" therefor. (ae) The penultimate paragraph of Section 8 of the Credit Agreement is hereby amended by inserting the words "the Dollar Equivalent of" immediately following the words "an amount equal to" in the first sentence of such paragraph. 14 (af) The following shall be added to the Credit Agreement as subsection 10.16 thereof: "10.16 Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the date on which final judgment is given. (b) The obligations of the Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "Applicable Creditor") shall, notwithstanding any judgment in a currency (the "Judgment Currency") other than the currency in which such sum is stated to be due hereunder (the "Agreement Currency"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrower contained in this subsection 10.16 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder." (ag) Schedule I to the Credit Agreement is hereby replaced with the amended Schedule I attached hereto. SECTION 2. WAIVERS The Required Lenders hereby waive compliance by the Borrower with (i) the provisions of subsection 2.6(b)(iii) of the Credit Agreement for the fiscal year of the Borrower ended December 31, 1997 and (ii) the Borrower's obligation to deliver to the Administrative Agent the Supply Agreement and the Interim Services Agreement pursuant to subsection 6.15(a) of the Credit Agreement. SECTION 3. CONDITIONS TO EFFECTIVENESS Sections 1 and 2 of this Amendment shall become effective only upon the prior satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the "Third Amendment Effective Date"): (a) The Borrower shall have delivered to the Administrative Agent executed copies of this Amendment. 15 (b) The Required Lenders, the Agents and the Issuing Lender shall have each delivered to the Administrative Agent an executed original or facsimile of a counterpart of this Amendment. (c) The Borrower shall have delivered to the Administrative Agent executed copies of all documents, instruments and agreements, if any, required in order for the Borrower and its Subsidiaries to be in full compliance with the requirements of subsection 6.10 of the Credit Agreement as of the Third Amendment Effective Date (without giving effect to the thirty (30) day delivery period referenced in such subsection 6.10, but after giving effect to any acquisitions that are consummated on or prior to such date); provided that (i) any Mortgages (and related documentation), (ii) legal opinions and (iii) security documentation regarding newly-acquired Intellectual Property required to be delivered to the Administrative Agent pursuant to this subsection (c) may be delivered to the Administrative Agent within thirty (30) days after the Third Amendment Effective Date. Filings of UCC financing statements may also be accomplished during such thirty (30) day period, provided that they are executed and delivered to the Administrative Agent on or prior to the Third Amendment Effective Date. The time periods set forth in this subsection (c) may be extended by the Agents in their discretion, with notice thereof to each of the Lenders. (d) The Administrative Agent shall have received evidence satisfactory to the Administrative Agent that the Boards of Directors of Holdings and the Borrower have duly authorized the execution, delivery and performance of (i) this Amendment, (ii) the acquisition of Southern California Microwave, Inc. and the assets of the satellite transmission services division of California Microwave, Inc. and (iii) any other agreements and documents to be delivered to the Administrative Agent on the Third Amendment Effective Date. (e) The Administrative Agent shall have received evidence satisfactory to the Administrative Agent that the Board of Directors of Southern California Microwave, Inc. has duly authorized the execution, delivery and performance of the Subsidiary Guarantees and the Subsidiary Pledge and Security Agreement. (f) The Administrative Agent shall have received a legal opinion addressed to the Agents, the Arranger, the Lenders and the Issuing Bank from Simpson Thacher & Bartlett, counsel to the Borrower, in form and substance reasonably satisfactory to the Administrative Agent. (g) The Borrower shall have executed Revolving Credit Notes for the benefit of each Revolving Credit Lender in such amount as set forth across from such Revolving Credit Lender's name on Schedule I to the Credit Agreement (as amended pursuant to this Amendment). 16 SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES In order to induce the Required Lenders, the Agents and the Issuing Lender to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, the Borrower represents and warrants to each Lender, each Agent and the Issuing Lender that the following statements are true, correct and complete: (a) Corporate Power and Authority. The Borrower has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the "Amended Agreement"). (b) Authorization of Amendment. The execution and delivery of this Amendment has been duly authorized by all necessary corporate action on the part of the Borrower. (c) No Conflict. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement does not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to the Borrower or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the Borrower or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on the Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligation of the Borrower or any of its Subsidiaries (including, without limitation, the Indenture) or (iii) result in, or require the creation of, any Lien upon any of the properties or assets of the Borrower or any of its Subsidiaries (other than Liens created under any of the Credit Documents in favor of the Administrative Agent on behalf of the Lenders). (d) Governmental Consents. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement by the Borrower does not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. (e) Binding Obligation. This Amendment and the Amended Agreement have been duly executed and delivered by the Borrower and, when executed and delivered, will be the legally valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (f) Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in Section 4 of the Credit Agreement (as expressly amended hereby) are and will be true, correct and complete in all material respects on and as of the Third Amendment Effective Date to the same extent as though made on and as of that 17 date, except to the extent such representations and warranties specifically relate to an earlier date. (g) Absence of Default. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a potential Event of Default. SECTION 5. MISCELLANEOUS (a) Effect of this Amendment. On and after the Third Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. Except as specifically amended or waived by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under, the Credit Agreement or any of the other Credit Documents. (b) Fees and Expenses. The Borrower acknowledges that all costs, fees and expenses as described in Section 9 of the Credit Agreement incurred by the Agents and their counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be paid by the Borrower. (c) Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. (d) GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. (e) SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: (i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AMENDMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE 18 UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 10.2 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; (iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND (v) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. (f) Acknowledgements. The Borrower hereby acknowledges that: (i) it has been advised by counsel in the negotiation, execution and delivery of this Agreement; (ii) none of the Arranger, the Agents nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement, and the relationship between any of the Agents and the Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (iii) no joint venture is created hereby or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 19 (g) WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE ARRANGER, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEG AL ACTION OR PROCEEDING RELATING TO THIS AMENDMENT OR ANY OTH ER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. (h) Confidentiality. Each Lender agrees to keep confidential all non-public information provided to it by the Borrower pursuant to this Agreement that is designated by the Borrower in writing as confidential (excluding any such information already in the possession of such Lender or provided to such Lender by a third party not in violation of this Agreement which, in either case, is not, to the knowledge of such Lender, subject to a confidentiality agreement); provided that nothing herein shall prevent any Lender from disclosing any such information (i) to any Agent or any other Lender or any of its Affiliates, (ii) to any Transferee or prospective Transferee or to any direct or indirect contractual counterparties in swap agreements or such contractual counterparties' professional advisors which receives such information and agrees to be bound by the confidentiality provisions hereof, (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any Governmental Authority having jurisdiction over such Lender, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder. (i) Counterparts; Effectiveness. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original (whether by facsimile or otherwise), but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment shall become effective upon the execution of a counterpart hereof by the Borrower, the Required Lenders, the Syndication Agent, the Documentation Agent, the Administrative Agent, the Arranger and the Issuing Lender and receipt by the Borrower and the Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. [Signature Pages Follow] 20 L-3 COMMUNICATIONS CORPORATION By: /s/ Lawrence W. O'Brien ---------------------------------------- Name: Lawrence W. O'Brien Title: Vice President and Treasurer LEHMAN COMMERCIAL PAPER INC., as Documentation Agent, Syndication Agent, Arranger and as a Lender By: ---------------------------------------- Name: Title: LEHMAN SYNDICATED LOANS, INC. as a Lender By: ---------------------------------------- Name: Title: L-3 COMMUNICATIONS CORPORATION By: ---------------------------------------- Name: Title: LEHMAN COMMERCIAL PAPER INC., as Documentation Agent, Syndication Agent, Arranger and as a Lender By: /s/ Michele Swanson ---------------------------------------- Name: Michele Swanson Title: Authorized Signatory LEHMAN SYNDICATED LOANS, INC. as a Lender By: /s/ Dennis J. Dee ---------------------------------------- Name: Title: BANK OF AMERICA NT & SA as Administrative Agent By: ---------------------------------------- Name: Title: BANK OF AMERICA NT & SA as a Lender By: /s/ Linda A. Carper ---------------------------------------- Name: Linda a. Carper Title: Managing Director THE BANK OF NEW YORK as a Lender By: /s/ Kenneth P. Sneider, Jr. ---------------------------------------- Name: Kenneth P. Sneider, Jr. Title: Vice President THE BANK OF NOVIA SCOTIA, as Co-Agent and as a Lender By: /s/ J.R. Trimble ---------------------------------------- Name: J.R. Trimble Title: Senior Relationship Manager BANK OF TOKYO-MITSUBISHI TRUST COMPANY as a Lender By: /s/ David McLaughlin ---------------------------------------- Name: David Mclaughlin Title: Vice President BANKBOSTON N.A. By: /s/ Gregory R.D. Clark ---------------------------------------- Name: Gregory R.D. Clark Title: Managing Director BHF-BANK AKTIEGESELLSCHAFT GRAND CAYMAN BRANCH By: /s/ Dan Dobrjanskyj ---------------------------------------- Name: Dan Dobrjanskyj Title: Assistant Vice President By: /s/ Ralph Dellarocca ---------------------------------------- Name: Ralph Dellarocca Title: Assistant Treasurer CITIBANK, N.A. as Co-Agent and as a Lender By: /s/ Hans L. Christensen ---------------------------------------- Name: Hans L. Christensen Title: Vice President CORESTATES BANK, N.A. as a Lender By: /s/ John D. Brady ---------------------------------------- Name: John D. Brady Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH as Co-Agent and as a Lender By: /s/ Vladimir Labun ---------------------------------------- Name: Vladimir Labun Title: First Vice President-Manager CRESCENT/MACHI PARTNERS L.P. By: TCW Asset Management Company, its Investment Manager, as a Lender By: /s/ Justin L. Driscoll ---------------------------------------- Name: Justin L. Driscoll Title: Senior Vice President THE FIRST NATIONAL BANK OF CHICAGO as Co-Agent and as a Lender By: /s/ Amy L. Robbins ---------------------------------------- Name: Amy L. Robbins Title: Vice President FLEET NATIONAL BANK as Co-Agent and Lender By: /s/ Roger C. Boucher ---------------------------------------- Name: Roger C. Boucher Title: Vice President THE FUJI BANK, LIMITED NEW YORK BRANCH as Co-Agent and Lender By: /s/ Teiji Teramoto ---------------------------------------- Name: Teiji Teramoto Title: Vice President & Manager THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P. as a Lender By: /s/ Kathleen A. Lenarcic ---------------------------------------- Name: Kathleen A. Lenarcic Title: Vice President & Portfolio Manager ING HIGH INCOME PRINCIPALNERS. PRESEVATION FUND HOLDING, DC By: ING CAPITAL ADVISORS, INC., AS INVESTMENT ADVISOR By: /s/ Kathleen A. Lenarcic Name: Kathleen A. Lenarcic Title: Vice President & Portfolio KZH-CRESCENT CORPORATION By: /s/ Virginia R. Conway ---------------------------------------- Name: Virginia R. Conway Title: Authorized Agent KZH-ING-1 CORPORATION By: Virginia R. Conway ---------------------------------------- Name: Virginia R. Conway Title: Aurthorized Agent KZH-SOLEIL CORPORATION By: Virginia R. Conway ---------------------------------------- Name: Virginia R. Conway Title: Authorized Agent MMARINE MIDLAND BANKNC. AS CO-AGENT AND AS A LENDER By: /s/ M. F. Brown ---------------------------------------- Name: M. F. Brown Title: Authorized Signatory MARINE LYNCH SENIOR FLOATING RATE FUND, INC.,as a Lender AS A LENER By: /s/ Gilles Marchand, CFA ---------------------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory METROPOLITAN LIFE INSURANCE COMPANY By: /s/ James R. Dingler ---------------------------------------- Name: James R. Dingler Title: Director THE MITSUBISHI TRUST AND BANKING CORPORATION as a Lender By: /s/ Beatrice Kossodo ---------------------------------------- Name: Beatrice Kossodo Title: Senior Vice President NATEXIS BANQUE BFCE By: /s/ William C. Maier ---------------------------------------- Name: William C. Maier Title: Vp-Group Manager By: /s/ G. Kevin Dooley ---------------------------------------- Name: G. Kevin Dooley Title: Vice President OCTAGON CREDIT INVESTORS LOAN PORTFOLIO ( A UNIT OF THE CHASE MANHATTAN BANK) By: /s/ Richard W. Stewart ---------------------------------------- Name: Richard W. Stewart CPA Title: Managing Directorive PAMCO CAYMAN LTD.T By: Protective Asset Management, L.L.C., as Collateral Manager By: /s/ James Dondero, CFA, CPA ---------------------------------------- Name: James Dondero, CFA, CPA Title: President Protective Asset Management Company PARIBAS CAPITAL FUNDING LLC as a Lender By: /s/ ---------------------------------------- Name: Title: PNC BANK, NATIONAL ASSOCIATION as a Lender By: /s/ Gary W. Tyrrell ---------------------------------------- Name: Gary W. Tyrrell Title: Vice President ROYALTON COMPANY as a Lender By: /s/ Raymond Kennedy ---------------------------------------- Name: Raymond Kennedy Title: Vice President SENIOR DEBT PORTFOLIO c/o BOSTON MANAGEMENT AND RESEARCH By: /s/ Scott H. Page ---------------------------------------- Name: Scott H. Page Title: Vice President SKANDINAVISKA ENSKILDA BANKEN CORPORATION By: /s/ Perry Vavoules ---------------------------------------- Name: Sverten Jokanson Title: Vice President By: /s/ Philip Montemurro ---------------------------------------- Name: Philip Montemurro Title: Vice President SOCIETE GENERALE NEW YORK BRANCH By: /s/ Alan W. Einson ---------------------------------------- Name: Alan W. Einson Title: Vice President TRANSAMERICA BUSINESS CREDIT CORPORATION By: /s/ Perry Vavoules ---------------------------------------- Name: Perry Vavoules Title: Senior Vice President U.S BANK NATIONAL ASSOCIATION as a Lender By: /s/ Greg Wilson ---------------------------------------- Name: Grey Wilson Title: Commerical Banking Officer VAN kAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By: /s/ Jeffery W. Maillet ---------------------------------------- Name: Jeffery W. Maillet Title: SR. Vice PRES. & Director VAN KAMPEN CLO I, LIMITED By: Van Kampen American Capital Management, Inc., as Collateral Manager By: /s/ Jeffery W. Maillet --------------------------------------- Name: Jeffery W. Maillet Title: Senior Vice President and Director EX-99.A1 3 FORM OF TRANCHE A TERM NOTE Exhibit A-1 to Credit Agreement FORM OF TRANCHE A TERM NOTE THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT. $_________ New York, New York April 30, 1997 FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of _____________ (the "Lender") at the office of Bank of America NT & SA ("BOA"), as administrative agent (in such capacity, the "Administrative Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money of the United States of America and in immediately available funds, on the Termination Date the principal amount of (a) _____________ DOLLARS ($________), or, if less, (b) the aggregate unpaid principal amount of all Tranche A Term Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in subsections 2.7 and 2.9 of such Credit Agreement. The holder of this Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type, and amount of each Tranche A Term Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof, each conversion of all or a portion thereof to Mother Type and, in the case of Eurodollar Loans, the length of each interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement shall not affect the obligations of the Borrower in respect of such Tranche A Term Loan. This Note (a) is one of the Tranche A Term Notes referred to in the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent and Documentation Agent, and the Administrative Agent (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Credit Documents. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and 2 conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof. Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 3 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. L-3 COMMUNICATIONS CORPORATION By:________________________________ Name: Title: Schedule A to Note LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
- ------------------------------------------------------------------------------------------- Amount of Amount of Base Unpaid Amount of Amount Principal of Rate Loans Principal Base Rate Converted to Base Rate Converted to Balance of Notation Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Schedule B to Note LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Amount of Interest Amount of Eurodollar Unpaid Amount Period and Principal of Loans Principal Amount of Converted to Eurodollar Eurodollar Converted Balance of Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Exhibit A-2 to Credit Agreement FORM OF TRANCHE B TERM NOTE THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT. $_________________ New York, New York April 30, 1997 FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of ____________ (the "Lender") at the office of Bank of America NT & SA ("BOA"), as administrative agent (in such capacity, the "Administrative Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money of the United States of America and in immediately available funds, on the Termination Date the principal amount of (a) _____________ DOLLARS ($_____), or, if less, (b) the aggregate unpaid principal amount of all Tranche B Term Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in subsections 2.7 and 2.9 of such Credit Agreement. The holder of this Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type, and amount of each Tranche B Term Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof, each conversion of all or a portion thereof to another Type and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement shall not affect the obligations of the Borrower in respect of such Tranche B Term Loan. This Note (a) is one of the Tranche B Term Notes referred to in the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent and Documentation Agent, and the Administrative Agent (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Credit Documents. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and 2 conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof. Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 3 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. L-3 COMMUNICATIONS CORPORATION By: ___________________________________ Name: Title: Schedule A to Note LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
- ------------------------------------------------------------------------------------------- Amount of Amount of Base Unpaid Amount of Amount Principal of Rate Loans Principal Base Rate Converted to Base Rate Converted to Balance of Notation Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Schedule B to Note LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Amount of Interest Amount of Eurodollar Unpaid Amount Period and Principal of Loans Principal Amount of Converted to Eurodollar Eurodollar Converted Balance of Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Exhibit A-3 to Credit Agreement FORM OF TRANCHE C TERM NOTE THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT. $_____________ New York, New York April 30, 1997 FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of ___________ (the "Lender") at the office of Bank of America NT & SA ("BOA"), as administrative agent (in such capacity, the "Administrative Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money of the United States of America and in immediately available funds, on the Termination Date the principal amount of (a) _____________ DOLLARS ($_______), or, if less, (b) the aggregate unpaid principal amount of all Tranche C Term Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in subsections 2.7 and 2.9 of such Credit Agreement. The holder of this Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date. Type, and amount of each Tranche C Term Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof, each conversion of all or a portion thereof to another Type and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement shall not affect the obligations of the Borrower in respect of such Tranche C Term Loan. This Note (a) is one of the Tranche C Term Notes referred to in the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent and Documentation Agent, and the Administrative Agent (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Credit Documents. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and 2 conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof. Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 3 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. L-3 COMMUNICATIONS CORPORATION By: __________________________ Name: Title: Schedule A to Note LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
- ------------------------------------------------------------------------------------------- Amount of Amount of Base Unpaid Amount of Amount Principal of Rate Loans Principal Base Rate Converted to Base Rate Converted to Balance of Notation Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Schedule B to Note LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Amount of Interest Amount of Eurodollar Unpaid Amount Period and Principal of Loans Principal Amount of Converted to Eurodollar Eurodollar Converted Balance of Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Exhibit A-4 to Credit Agreement FORM OF REVOLVING CREDIT NOTE THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT. $____________ New York, New York ____________ __, ____ FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of __________ (the "Lender") at the office of Bank of America NT & SA ("BOA"), as administrative agent (an such capacity, the "Administrative Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money of the United States of America and in immediately available funds, on the Termination Date the principal amount of (a) _____________ DOLLARS ($_______), or, if less, (b) the aggregate unpaid principal amount of all Revolving Credit Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in subsections 2.7 and 2.9 of such Credit Agreement. The holder of this Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type, and amount of each Revolving Credit Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof, each conversion of all or a portion thereof to another Type and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement shall not affect the obligations of the Borrower in respect of such Revolving Credit Loan. This Note (a) is one of the Revolving Credit Notes referred to in the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent and Documentation Agent, and the Administrative Agent (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Credit Documents. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and 2 conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof. Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 3 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. L-3 COMMUNICATIONS CORPORATION By: _____________________________ Name: Title: Schedule A to Note LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
- ------------------------------------------------------------------------------------------- Amount of Amount of Base Unpaid Amount of Amount Principal of Rate Loans Principal Base Rate Converted to Base Rate Converted to Balance of Notation Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Schedule B to Note LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Amount of Interest Amount of Eurodollar Unpaid Amount Period and Principal of Loans Principal Amount of Converted to Eurodollar Eurodollar Converted Balance of Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Exhibit A-5 to Credit Agreement FORM OF SWING LINE NOTE THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED N THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT. $______________ New York, New York ____________ __, ____ FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of ____________ (the "Lender") at the office of Bank of America NT & SA ("BOA"), as administrative agent (in such capacity, the "Administrative Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money of the United States of America and in immediately available funds, on the Termination Date the principal amount of (a) _____________ DOLLARS ($__________), or, if less, (b) the aggregate unpaid principal amount of all Swing Line Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in subsections 2.7 and 2.9 of such Credit Agreement. The holder of this Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date. Type, and amount of each Swing Line Loan made pursuant to the Credit Agreement and the date and amount of each payment or prepayment of principal thereof, each continuation thereof, each conversion of all or a portion thereof to another Type and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement shall not affect the obligations of the Borrower in respect of such Swing Line Loan. This Note (a) is one of the Swing Line Notes referred to in the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent and Documentation Agent, and the Administrative Agent (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Credit Documents. Reference is hereby made to the Credit Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and 2 conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Note in respect thereof. Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 3 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. L-3 COMMUNICATIONS CORPORATION By: _____________________________ Name: Title: Schedule A to Note LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
- ------------------------------------------------------------------------------------------- Amount of Amount of Base Unpaid Amount of Amount Principal of Rate Loans Principal Base Rate Converted to Base Rate Converted to Balance of Notation Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
Schedule B to Note LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Amount of Interest Amount of Eurodollar Unpaid Amount Period and Principal of Loans Principal Amount of Converted to Eurodollar Eurodollar Converted Balance of Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- ===========================================================================================
EXHIBIT B-1 TO CREDIT AGREEMENT =================================================== PARENT GUARANTEE AGREEMENT made by L-3 COMMUNICATIONS HOLDINGS, INC. in favor of BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT Dated as of April 30, 1997 =================================================== TABLE OF CONTENTS Page ---- SECTION 1. DEFINED TERMS .................................................. 1 1.1 Definitions .................................................... 1 1.2 Other Definitional Provisions .................................. 2 SECTION 2. GUARANTEE ...................................................... 2 2.1 Guarantee ...................................................... 2 2.2 No Subrogation ................................................. 3 2.3 Amendments, etc. with respect to the Guaranteed Obligations .... 4 2.4 Guarantee Absolute and Unconditional ........................... 4 2.5 Reinstatement .................................................. 5 2.6 Payments ....................................................... 5 SECTION 3. REPRESENTATIONS AND WARRANTIES ................................. 5 3.1 Representations in Credit Agreement ............................ 5 SECTION 4. COVENANTS ...................................................... 5 4.1 Covenants in Credit Agreement .................................. 5 4.2 Issuance of Indebtedness ....................................... 5 4.3 Investments .................................................... 6 4.4 Activity ....................................................... 6 4.5 Distributions .................................................. 6 4.6 Reports ........................................................ 6 4.7 Certificates; Other Information ................................ 6 4.8 Payment of Obligations ......................................... 6 4.9 Inspection of Property, Books and Records; Discussions ......... 6 4.10 Notices ........................................................ 7 4.11 Further Assurance .............................................. 7 4.12 Additional Collateral .......................................... 7 4.13 Foreign Jurisdictions .......................................... 8 4.14 Maintenance of Collateral; Alterations ......................... 8 SECTION 5. MISCELLANEOUS .................................................. 8 5.1 Amendments in Writing .......................................... 8 5.2 Notices ........................................................ 8 5.3 No Waiver by Course of Conduct; Cumulative Remedies ............ 8 5.4 Enforcement Expenses; Indemnification .......................... 8 5.5 Successors and Assigns ......................................... 9 5.6 Counterparts ................................................... 9 5.7 Severability ................................................... 9 5.8 Section Headings ............................................... 9 5.9 Integration .................................................... 9 5.10 GOVERNING LAW .................................................. 9 5.11 SUBMISSION TO JURISDICTION; WAIVERS ............................ 9 5.12 Acknowledgements ............................................... 10 5.13 WAIVER OF JURY TRIAL ........................................... 10 5.14 Releases ....................................................... 11 FORM OF PARENT GUARANTEE AGREEMENT PARENT GUARANTEE AGREEMENT dated as of April 30, 1997, made by L-3 Communications Holdings, Inc., a Delaware corporation ("Holdings"), in favor of Bank of America NT & SA as Administrative Agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (collectively, the "Lenders") from time to time parties to the Credit Agreement, dated as of April 30, 1997 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among L-3 Communications Corporation, a Delaware corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"), LCPI as syndication agent (in such capacity, the "Syndication Agent" and together with the Documentation Agent and Administrative Agent, the "Agents"), LCPI as arranger (in such capacity, the "Arranger"), and the Administrative Agent. W I T N E S S E T H: WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to or for the benefit of the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower is a wholly-owned subsidiary of Holdings, and Holdings will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the several obligations of the Lenders to make their respective extensions of credit to or for the benefit of the Borrower under the Credit Agreement that Holdings shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders and the Agents; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Agents and the Lenders to enter into the Credit Agreement, and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, Holdings hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders and the Agents, as follows: SECTION 1. DEFINED TERMS 1.1 Definitions. 1.1(a) Unless otherwise defined herein, terms defined in thc Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 1.1(b) The following terms shall have the following meanings: "Agreement": this Parent Guarantee Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Guaranteed Obligations": has the meaning set forth in Section 2.1(a) hereof. "Obligations": has the meaning set forth in the Security Documents. "Parent Distributions": the collective reference to any of the following, whether direct or indirect: (i) the declaration or payment of any dividend or other distribution on or in respect of any shares of any class of any Capital Stock of Holdings, now or hereafter outstanding. (ii) any redemption, retirement, sinking fund or similar payment, purchase or other retirement for value of any such shares of Capital Stock of Holdings, now or hereafter outstanding. (iii) any other payment by Holdings to the holder of any shares of any class of the Capital Stock of Holdings in their capacity as such and (iv) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of Holdings now or hereafter outstanding; provided, however, that the term "Parent Distribution" shall not include payments of salaries or bonuses to employees of Holdings in their capacities as such. "Permitted Parent Distributions": (a) the issuance by Holdings of options or other equity securities of Holdings to outside directors, members of management or employees of Holdings in the ordinary course of business, (b) cash payments made in lieu of issuing fractional shares of Holdings' common stock or preferred stock, in an aggregate amount not to exceed $50,000 subsequent to the date hereof, (c) cash payments to repurchase Capital Stock of Holdings solely with the proceeds of dividends received from the Borrower pursuant to clause (C) of the definition of Permitted Stock Payments in the Credit Agreement; provided, however, that such payments do not exceed $5,000,000, (d) the issuance of pay-in-kind junior subordinated notes (which shall not require cash payments in respect of principal, interest or otherwise prior to the first anniversary of the Final Maturity Date), which are reasonably satisfactory in form and substance to the Agents, issued pursuant to Section 4.3 of the Subscription Agreements in connection with the exercise of the rights of the Purchasers (as defined therein) thereunder of other rights under Section 4.2 thereof and (e) the application of up to $2,000,000 of the proceeds of the sale of common stock of Holdings to management of Holdings or the Borrower, to the repurchase of common stock of Holdings; provided that (i) no more than $325,000 of such proceeds shall be applied to the repurchase of common stock of Holdings from each of Messrs. Lanza and LaPenta and (ii) the remainder of such proceeds shall be applied solely to the repurchase of common stock of Holdings from the Seller. "Subscription Agreements": (a) that certain common stock agreement dated April 30, 1997, by and between Frank C. Lanza and Holdings and (b) that certain common stock agreement dated April 30, 1997, by and between Robert V. LaPenta and Holdings, in each case, as in effect on the date hereof. 1.2 Other Definitional Provisions. 1.2(a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. 1.2(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 2 SECTION 2. GUARANTEE 2.1 Guarantee. 2.1(a) Holdings hereby unconditionally and irrevocably guarantees to the Administrative Agent, for the ratable benefit of the Lenders and the Agents and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by each of the other Credit Parties when due (whether at the stated maturity, by acceleration or otherwise) of such other Credit Party's Obligations (collectively, the "Guaranteed Obligations"). The liability of Holdings hereunder shall be joint and several with the Obligations of the other Guarantors. 2.1(b) Anything herein or in any other Credit Document to the contrary notwithstanding, the maximum liability of Holdings hereunder and under the other Credit Documents shall in no event exceed the maximum amount which can be guaranteed by Holdings under applicable federal and state laws relating to the insolvency of debtors without rending Holdings insolvent. 2.1(c) Holdings agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of Holdings hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent, on behalf of the other Agents and the Lenders, hereunder. 2.1(d) The guarantee contained in this Section 2 shall remain in full force and effect until all the Guaranteed Obligations and the obligations of Holdings under this Agreement shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated (notwithstanding that from time to time during the term of the Credit Agreement, no Loans or Letters of Credit may be outstanding). 2.1(e) No indefeasible payment made by any Credit Party or any other Person or received or collected by any of the Agents or the Lenders by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to release the liability of Holdings hereunder, and Holdings shall, notwithstanding any such payment (other than any payment made by Holdings in respect of the Guaranteed Obligations or any payment received or collected from Holdings in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability of Holdings hereunder until the Guaranteed Obligations are paid in full, no Loan or Letter of Credit shall be outstanding and the Commitments are terminated. 2.2 No Subrogation. Notwithstanding any payment made by Holdings hereunder or any set-off or application of funds of Holdings by any of the Agents or Lenders, Holdings not shall be entitled to be subrogated to any of the rights of any of the Agents or Lenders against the other Credit Parties or any collateral security or guarantee or right of offset held by any of the Agents or Lenders for the payment of all or any portion of the Guaranteed Obligations, nor shall Holdings seek or be entitled to seek any contribution or reimbursement from any of the other Credit Parties in respect of payments made by Holdings hereunder, until all amounts owing to the Agents and the Lenders by the other Credit Parties on account of the Guaranteed Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to Holdings on account of such 3 subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full, such amount shall be held by Holdings in trust for the Agents and the Lenders, segregated from other funds of Holdings. and shall, forthwith upon receipt by Holdings, be turned over to the Administrative Agent in the exact form received by Holdings (duly indorsed by Holdings to the Administrative Agent, if required), to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as the Required Lenders may determine. 2.3 Amendments, etc. with respect to the Guaranteed Obligations. Holdings shall remain obligated hereunder notwithstanding that, without any reservation of rights against Holdings and without notice to or further assent by Holdings, any demand for payment of any of the Guaranteed Obligations made by any of the Agents or Lenders may be rescinded by such Agent or Lender and any of the Guaranteed Obligations continued, and the Guaranteed Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any of the Agents or Lenders, and the Credit Agreement, the other Credit Documents and any other documents executed and delivered in connection therewith may be amended, restated, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any of the Agents or Lenders for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released. None of the Agents or Lenders shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Guaranteed Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 2.4 Guarantee Absolute and Unconditional. Holdings waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any of the Agents or Lenders upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Credit Parties, on the one hand, and the Agents and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Holdings waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any of the Credit Parties with respect to the Guaranteed Obligations. Holdings understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement, this Agreement or any other Credit Document, any of the Guaranteed Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any of the Agents or Lenders, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any of the other Credit Panics or any other Person against any of the Agents or the Lenders, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any of the Credit Parties) which constitutes, or might be construed to constitute, an equitable or legal discharge of any of the other Credit Parties for the Guaranteed Obligations, or of Holdings under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against Holdings, any of the Agents or Lenders may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against any of the other Credit Parties or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by the any of the Agents or Lenders 4 to make any such demand. to pursue such other rights or remedies or to collect any payments from any of the other Credit Parties or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any of the other Credit Parties or any other Person or any such collateral security, guarantee or right of offset, shall not relieve Holdings of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any of the Agents or Lenders against Holdings. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 2.5 Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by the any of the Agents or Lenders upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any of the Credit Parties, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any of the Credit Parties or any substantial part of its property, or otherwise, all as though such payments had not been made. 2.6 Payments. Holdings hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the office of the Administrative Agent located at 335 Madison Avenue, New York, New York 10017, Attention: Linda A. Carper, fax: (212) 503-7502. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, Holdings hereby represents and warrants to each of the Agents and the Lenders that: 3.1 Representations in Credit Agreement. The representations and warranties set forth in Section 4 of the Credit Agreement, each of which is hereby incorporated herein by reference, are true and correct, and the Administrative Agent and each Lender shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Borrower's knowledge shall, for the purposes of this Section 3.1, be deemed to be a reference to Holdings' knowledge. SECTION 4. COVENANTS Holdings covenants and agrees with the Agents and the Lenders that, from and after the date of this Agreement until the Guaranteed Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 Covenants in Credit Agreement. Holdings shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by Holdings or any of its Subsidiaries. 4.2 Issuance of Indebtedness. Except for the issuance of pay-in-kind junior subordinated notes to the extent permitted by clause (v) of the definition of "Permitted Parent 5 Distributions." Holdings shall not issue, incur or assume any Indebtedness or any Guarantee Obligations other than Indebtedness and Guarantee Obligations under the Credit Documents to which it is a party. 4.3 Investments. Holdings shall not have outstanding or acquire any Investment in any Person other than Investments in Capital Stock of the Borrower and Cash Equivalents. 4.4 Activity. Holdings shall not engage in any business activity other than its ownership and voting of the Capital Stock of the Borrower and the performance of its obligations under the Credit Documents to which it is a party and the Transaction Documents to which it is a party. 4.5 Distributions. Holdings shall not make any Parent Distributions other than Parent Distributions payable solely in common stock of Holdings and Permitted Parent Distributions. 4.6 Reports. Holdings will deliver to the Administrative Agent promptly upon their becoming available, copies of all consolidated or consolidating financial statements, reports, notices and proxy statements sent or made available generally by Holdings to its security holders, of all regular and periodic reports and all registrations statements and prospectuses, if any, filed by Holdings with any securities exchange or with the Securities and Exchange Commission and of all press releases and other statements made available generally by Holdings to the public concerning Holdings. 4.7 Certificates; Other Information. Furnish to the Administrative Agent with copies for each Lender: 4.7(a) concurrently with the delivery by the Borrower of the financial statements referred to in subsection 6.1 of the Credit Agreement, a certificate of a Responsible Officer of Holdings stating that, to the best of such Officer's knowledge, during such period (i) no Subsidiary has been formed or acquired, (ii) Holdings has not changed its name, its principal place of business, its chief executive office or the location of any material item of tangible Collateral without complying with the requirements of this Agreement and the Security Documents with respect thereto and (iii) such Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; and 4.7(b) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 4.8 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Holdings or its Subsidiaries, as the case may be; provided that, notwithstanding the foregoing, Holdings and each of its Subsidiaries shall have the right to pay any such obligation and in good faith contest, by proper legal actions or proceedings, the invalidity or amount of such claims. 4.9 Inspection of Property, Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time on a Business Day and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition 6 of Holdings and its Subsidiaries with officers and employees of Holdings and its Subsidiaries and with its independent certified public accountants; provided that the Administrative Agent or such Lender shall notify Holdings prior to any contact with such accountants and give Holdings the opportunity to participate in such discussion; provided, further, that Holdings shall notify the Administrative Agent of any such visits, inspections or discussions prior to each occurrence thereof. 4.10 Notices. Promptly give notice to the Administrative Agent and each Lender of: 4.10(a) the occurrence of any Default or Event of Default; 4.10(b) any (i) default or event of default under any Contractual Obligation of Holdings or (ii) litigation, investigation or proceeding which may exist at any time between Holdings and any Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect; 4.10(c) any litigation or proceeding affecting Holdings in which the amount involved is $7,500,000 or more and not covered by insurance or in which injunctive or similar relief is sought; 4.10(d) the following events, as soon as possible and in any event within 45 days after Holdings knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any plan (other than a Multiple Employer Plan), a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or Holdings or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer Plan; and Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Holdings proposes to take with respect thereto. 4.11 Further Assurance. Upon the request of the Administrative Agent promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents (including, without limitation, financing, statements and continuation statements) for filing under the provisions of the Uniform Commercial Code or any other Requirement of Law which are necessary or advisable to maintain in favor of the Administrative Agent, for the benefit of the Lenders, Liens on the Collateral that are duly perfected in accordance with all applicable Requirements of Law. 4.12 Additional Collateral. With respect to any assets acquired after the Closing Date by Holdings that are intended to be subject to the Lien created by any of the Security Documents but which are not so subject (other than immaterial assets a Lien on which cannot be perfected by filing UCC-1 financing statements), promptly (and in any event within 30 days after the acquisition thereof): (i) execute and deliver to the Administrative Agent such amendments to the Parent Pledge and Security Agreement or such other documents as the Administrative Agent shall deem necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on such assets, (ii) take all actions necessary or advisable to cause such Lien to be duly perfected in accordance with all applicable Requirements of Law, including without limitation, the filing of financing statements in such jurisdictions 7 as may be requested by the Administrative Agent, and (ii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in clauses (i) and (ii) immediately preceding. which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. 4.13 Foreign Jurisdictions. Within 60 days following the Closing Date, (i) be duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) deliver to the Administrative Agent certificates of good standing issued by the Secretary of State (or other relevant officers) of each jurisdiction referred to in clause (i) of this subsection. 4.14 Maintenance of Collateral; Alterations. Refrain from committing any waste on any Collateral or, except in the ordinary course of its business, make any material change in the use of any Collateral. SECTION 5. MISCELLANEOUS 5.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, restated, supplemented or otherwise modified except in accordance with subsection 10.1 of the Credit Agreement. 5.2 Notices. All notices, requests and demands to or upon the Agents or Holdings hereunder shall be effected in the manner provided for in subsection 10.2 of the Credit Agreement; provided that any such notice, request or demand to or upon Holdings shall be addressed to Holdings at its notice address set forth below its signature hereto. 5.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 5.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any of the Agents or Lenders, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any of the Agents or Lenders of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, on behalf of the other Agents and the Lenders, would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 5.4 Enforcement Expenses; Indemnification. 5.4(a) Holdings agrees to pay or reimburse each of the Lenders and Agents for all its costs and expenses incurred in collecting against Holdings under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Credit Documents to which Holdings is a party, including, without limitation, the fees and disbursements of counsel to the Administrative Agent and of counsel to each of the other Agents 8 and Lenders. 5.4(b) Holdings agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Agreement. 5.4(c) Holdings agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to subsection 10.5 of the Credit Agreement. 5.4(d) The agreements in this Section 5.4 shall survive repayment of the Guaranteed Obligations and all other amounts payable under the Credit Agreement, this Agreement and the other Credit Documents. 5.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of Holdings and shall inure to the benefit of the Agents and the Lenders and their successors and assigns; provided that Holdings may not assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Required Lenders. 5.6 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 5.7 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 5.8 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 5.9 Integration. This Agreement and the other Credit Documents represent the agreement of Holdings, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the any of the Agents or Lenders relative to subject matter hereof and thereof not expressly set forth or referred to herein, the Credit Agreement or in the other Credit Documents. 5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 5.11 SUBMISSION TO JURISDICTION; WAIVERS. HOLDINGS HEREBY IRREVOCABLY AND UNCONDITIONALLY: 9 5.11(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 5.11(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 5.11(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO HOLDINGS AT ITS ADDRESS REFERRED TO IN SECTION 5.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; 5.11(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND 5.11(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 5.12 Acknowledgements. Holdings hereby acknowledges that: 5.12(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; 5.12(b) none of the Agents nor Lenders has any fiduciary relationship with or duty to Holdings arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between Holdings, on the one hand, and the Agents and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 5.12(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Agents, among the Agents and/or the Lenders or among Holdings and the Agents and/or the Lenders. 5.13 WAIVER OF JURY TRIAL. HOLDINGS AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT 10 DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 5.14 Releases. At such time as the Loans, the Reimbursement Obligations and the other Guaranteed Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and Holdings hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights shall revert to Holdings and the Administrative Agent shall execute and deliver to Holdings such documents as Holdings shall reasonably request to evidence such termination. [Signature page follows] IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written. L-3 COMMUNICATIONS HOLDINGS, INC. By: ____________________________ Name: Title: Address for Notices: 600 Third Avenue 34th Floor New York, New York 10016 Attention: ____________________ Phone: (212) 697-1111 Fax: (212)___-____ Accepted on behalf of the Agents and the Lenders as of the date first above written: BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT By: _________________________ Name: 11 EXHIBIT B-2 TO CREDIT AGREEMENT ================================================================================ SUBSIDIARY GUARANTEE AGREEMENT made by __________________________ in favor of BANK OF AMERICA NT & SA, as Administrative Agent Dated as of _______ ================================================================================ TABLE OF CONTENTS Page SECTION 1. DEFINED TERMS ................................................... 2 1.1 Definitions ..................................................... 2 1.2 Other Definitional Provisions ................................... 2 SECTION 2. GUARANTEE ....................................................... 2 2.1 Guarantee ....................................................... 2 2.2 Right of Contribution ........................................... 3 2.3 No Subrogation .................................................. 3 2.4 Amendments, etc. with respect to the Guaranteed Obligations ..... 3 2.5 Guarantee Absolute and Unconditional ............................ 4 2.6 Reinstatement ................................................... 5 2.7 Payments ........................................................ 5 SECTION 3. REPRESENTATIONS AND WARRANTIES .................................. 5 3.1 Representations in Credit Agreement ............................. 5 SECTION 4. COVENANTS ....................................................... 5 4.1 Covenants in Credit Agreement ................................... 5 SECTION 5. MISCELLANEOUS ................................................... 5 5.1 Amendments in Writing ........................................... 5 5.2 Notices ......................................................... 6 5.3 No Waiver by Course of Conduct; Cumulative Remedies ............. 6 5.4 Enforcement Expenses; Indemnification ........................... 6 5.5 Successors and Assigns .......................................... 6 5.6 Counterparts .................................................... 7 5.7 Severability .................................................... 7 5.8 Section Headings ................................................ 7 5.9 Integration ..................................................... 7 5.10 GOVERNING LAW ................................................... 7 5.11 SUBMISSION TO JURISDICTION; WAIVERS ............................. 7 5.12 Acknowledgements ................................................ 8 5.13 WAIVER OF JURY TRIAL ............................................ 8 5.14 Additional Guarantors ........................................... 8 5.15 Releases ........................................................ 8 i FORM OF SUBSIDIARY GUARANTEE AGREEMENT SUBSIDIARY GUARANTEE AGREEMENT, dated as of __________, ____ made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the "Guarantors"), in favor of Bank of America NT & SA, ("BOA") as Administrative Agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (collectively, the "Lenders") from time to time parties to the Credit Agreement, dated as of April 30, 1997 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among L-3 Communications Corporation, a Delaware corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"), LCPI as syndication agent (in such capacity, the "Syndication Agent" and together with the Documentation Agent and Administrative Agent, the "Agents"), LCPI as arranger (in such capacity, the "Arranger") and the Administrative Agent. W I T N E S S E T H: WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other Guarantor; WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Guarantors in connection with the operation of their respective businesses; WHEREAS, the Borrower and the other Guarantors are engaged in related businesses, and each Guarantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the several obligations of the Lenders to make their respective extensions of credit to or for the benefit of the Borrower under the Credit Agreement that the Guarantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders and the Agents; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Agents and the Lenders to enter into the Credit Agreement, and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, each Guarantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders and the Agents, as follows: 1 SECTION 1. DEFINED TERMS 1.1 Definitions. 1.1(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 1.1(b) The following terms shall have the following meanings: "Agreement": this Subsidiary Guarantee Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Guarantors": the collective reference to each Guarantor. "Guaranteed Obligations" has the meaning set forth in Section 2.1(a) hereof. 1.2 Other Definitional Provisions. 1.2(a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. 1.2(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. GUARANTEE 2.1 Guarantee. 2.1(a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Lenders and the Agents and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by each of the other Credit Parties when due (whether at the stated maturity, by acceleration or otherwise) of such other Credit Party's Obligations (collectively, the "Guaranteed Obligations"). The liability of the Guarantors hereunder shall be joint and several with the Obligations of all other Guarantors. 2.1(b) Anything herein or in any other Credit Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Credit Documents shall in no event exceed the maximum amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors without rendering such Guarantor insolvent. 2.1(c) Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the 2 Administrative Agent, on behalf of the other Agents and the Lenders hereunder. 2.1(d) The guarantee contained in this Section 2 shall remain in full force and effect until all the Guaranteed Obligations and the obligations of each Guarantor under this Agreement shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement, no Loans or Letters of Credit may be outstanding. 2.1(e) No indefeasible payment made by any Credit Party or any other Person or received or collected by any of the Agents or the Lenders by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to release the liability of any Guarantor hereunder, and each Guarantor shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Guaranteed Obligations or any payment received or collected from such Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability of such Guarantor hereunder until the Guaranteed Obligations are paid in full, no Loan or Letter of Credit shall be outstanding and the Commitments are terminated. 2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain jointly and severally liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder. 2.3 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by any of the Agents or Lenders, no Guarantor shall be entitled to be subrogated to any of the rights of any of the Agents or Lenders against the Other Credit Parties or any collateral security or guarantee or right of offset held by any of the Agents or Lenders for the payment of all or any portion of the Guaranteed Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from any of the Other Credit Parties or any other Guarantor in respect of payments made by such Credit Party hereunder, until all amounts owing to the Agents and the Lenders by the other Credit Parties on account of any of the Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Agents and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 2.4 Amendments. etc. with respect to the Guaranteed Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of 3 the Guaranteed Obligations made by any of the Agents or Lenders may be rescinded by such Agent and any of the Guaranteed Obligations continued, and the Guaranteed Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any of the Agents or Lenders, and the Credit Agreement, the other Credit Documents and any other documents executed and delivered in connection therewith may be amended, restated, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security guarantee or right of offset at any time held by any of the Agents or Lenders for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released. None of the Agents or Lenders shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Guaranteed Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any of the Agents or Lenders upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Agents and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any of the Credit Parties with respect to the Guaranteed Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement, this Agreement or any other Credit Document, any of the Guaranteed Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any of the Agents or Lenders, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any of the other Credit Parties or any other Person against any of the Agents or Lenders, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any of the Credit Parties) which constitutes, or might be construed to constitute, an equitable or legal discharge of any of the Credit Parties for the Guaranteed Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any of the Agents or Lenders may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against any of the other Credit Parties, any other Guarantor or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by any of the Agents or Lenders to make any such demand, to pursue such other rights or remedies or to collect any payments from any of the other Credit Parties, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any of the other Credit Parties, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any of the Agents or Lenders against any Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 4 2.6 Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by and of the Agents or Lenders upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any of the Credit Parties, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any of the Credit Parties or any substantial part of its property, or otherwise, all as though such payments had not been made. 2.7 Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the office of the Administrative Agent located at 335 Madison Avenue, New York, New York 10017, Attention: Linda A. Carper, fax: (212) 503-7502. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, each Guarantor hereby represents and warrants to each of the Agents and the Lenders that: 3.1 Representations in Credit Agreement. In the case of each Guarantor, the representations and warranties set forth in Section 4 of the Credit Agreement as they relate to such Guarantor or to the Credit Document to which such Guarantor is a party, each of which is hereby incorporated herein by reference, are true and correct, and the Administrative Agent and each Lender shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Borrower's knowledge shall, for the purposes of this Section 3.1, be deemed to be a reference to such Guarantor's knowledge. SECTION 4. COVENANTS Each Guarantor covenants and agrees with the Agents and the Lenders that, from and after the date of this Agreement until the Guaranteed Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 Covenants in Credit Agreement. In the case of each Guarantor, such Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by any of the Credit Parties. SECTION 5. MISCELLANEOUS 5.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, restated, supplemented or otherwise modified except in accordance with subsection 10.1 of the Credit Agreement. 5.2 Notices. All notices, requests and demands to or upon the Agents or any Guarantor hereunder shall be effected in the manner provided for in subsection 10.2 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed 5 to such Guarantor at its notice address set forth below its respective signature hereto. 5.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 5.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any of the Agents or Lenders, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any of the Agents or Lenders of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, on behalf of the other Agents and the Lenders, would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 5.4 Enforcement Expenses; Indemnification. 5.4(a) Each Guarantor agrees to pay or reimburse each of the Lenders and Agents for all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Credit Documents to which such Guarantor is a party, including, without limitation, the fees and disbursements of counsel to the Administrative Agent and of counsel to each of the other Agents and Lenders. 5.4(b) Each Guarantor agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Agreement. 5.4(c) Each Guarantor agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to subsection 10.5 of the Credit Agreement. 5.4(d) The agreements in this Section 5.4 shall survive repayment of the Guaranteed Obligations and all other amounts payable under the Credit Agreement, this Agreement and the other Credit Documents. 5.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Agents and the Lenders and their successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Required Lenders. 5.6 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 6 5.7 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceabilitv without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 5.8 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 5.9 Integration. This Agreement and the other Credit Documents represent the agreement of the Guarantors, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any of the Agents or Lenders relative to subject matter hereof and thereof not expressly set forth or referred to herein, the Credit Agreement or in the other Credit Documents. 5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 5.11 SUBMISSION TO JURISDICTION; WAIVERS. EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY: 5.11(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 5.11(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 5.11(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS REFERRED TO IN SUBSECTION 5.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; 5.11(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR 7 SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND 5.11(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 5.12 Acknowledgements. Each Guarantor hereby acknowledges that: 5.12(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; 5.12(b) none of the Agents nor Lenders has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between the Guarantors, on the one hand, and the Agents and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 5.12(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among Agents, among the Agents and/or the Lenders, or among the Guarantors and the Agents and/or the Lenders. 5.13 WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 5.14 Additional Guarantors. Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to subsection 6.10 of the Credit Agreement shall become a Guarantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto. 5.15 Releases. (a) At such time as the Loans, the Reimbursement Obligations and the other Guaranteed Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Guarantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights shall revert to the Guarantors and the Administrative Agent shall execute and deliver to such Guarantor such documents as such Guarantor shall reasonably request to evidence such termination. (b) At the request and sole expense of the Borrower, a Guarantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit 8 Agreement. [Signature page follows] 9 IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written. [Subsidiary Guarantors] By: _______________________________ Name: Title: Address for Notices: ___________________________________ ___________________________________ ___________________________________ Attention: Phone: ( ) ___________ Fax: ( ) ___________ Accepted on behalf of the Agents and the Lenders as of the date first above written: BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT By: ________________________ Name: Title: 10 Annex 1 to Subsidiary Guarantee Agreement ASSUMPTION AGREEMENT, dated as of ______________, _____, made by ____________________, a ________________ corporation (the "Additional Guarantor"), in favor of Bank of America NT & SA ("BOA"), as administrative agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (the "Lenders") parties to the Credit Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Credit Agreement. W I T N E S S E T H: WHEREAS, L-3 Communications Corporation, a Delaware corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as Documentation Agent, LCPI as Syndication Agent, LCPI as Arranger, and the Administrative Agent have entered into a Credit Agreement, dated as of April 30, 1997, (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"); WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Affiliates (other than the Additional Guarantor) have entered into the Subsidiary Guarantee Agreement, dated as of _________ , ____ (as amended, supplemented or otherwise modified from time to time, the "Subsidiary Guarantee Agreement") in favor of the Administrative Agent for the benefit of the Lenders; WHEREAS, the Credit Agreement requires the Additional Guarantor to become a party to the Subsidiary Guarantee Agreement; and WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Subsidiary Guarantee Agreement; NOW, THEREFORE, IT IS AGREED: 1. Subsidiary Guarantee Agreement. By executing and delivering this Assumption Agreement, the Additional Subsidiary Guarantor, as provided in Section 5.14 of the Subsidiary Guarantee Agreement, hereby becomes a party to the Subsidiary Guarantee Agreement as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder. The information set forth in Annex 1-A hereto is hereby added to the information set forth in Schedule 1 to the Subsidiary Guarantee Agreement. The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Subsidiary Guarantee Agreement is true and correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date. 2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written. [ADDITIONAL GUARANTOR} By: _______________________________ Name: Title: Address for Notices: ___________________________________ ___________________________________ ___________________________________ Attention: Phone: ( ) ___________ Fax: ( ) ___________ Accepted on behalf of the Agents and the Lenders as of the date first above written: BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT By: ________________________ Name: Title: EXHIBIT B-3 TO CREDIT AGREEMENT ================================================================================ PARENT PLEDGE AND SECURITY AGREEMENT made by L-3 COMMUNICATIONS HOLDINSG, INC. in favor of BANK OF AMERICA NT & SA, as Administrative Agent Dated as of April 30, 1997 ================================================================================ TABLE OF CONTENTS Page ---- SECTION 1. DEFINED TERMS ................................................... 1 1.1 Definitions ..................................................... 1 1.2 Other Definitional Provisions ................................... 4 SECTION 2. GRANT OF SECURITY INTEREST ...................................... 5 SECTION 3. REPRESENTATIONS AND WARRANTIES .................................. 6 3.1 Representations in Credit Agreement ............................. 6 3.2 Title; No Other Liens ........................................... 6 3.3 Perfected First Priority Liens .................................. 6 3.4 Chief Executive Office .......................................... 7 3.5 Inventory and Equipment ......................................... 7 3.6 Pledged Stock ................................................... 7 3.7 Farm Products ................................................... 7 3.8 Receivables ..................................................... 7 3.9 Contracts ....................................................... 7 3.10 Intellectual Property ........................................... 7 SECTION 4. COVENANTS ....................................................... 7 4.1 Covenants in Credit Agreement ................................... 7 4.2 Delivery of instruments and Chattel Paper ....................... 8 4.3 Payment of Obligations .......................................... 8 4.4 Maintenance of Perfected Security Interest; Further Documentation .................................................. 8 4.5 Changes in Locations, Name, etc.................................. 8 4.6 Notices ......................................................... 8 4.7 Pledged Securities .............................................. 9 SECTION 5. REMEDIAL PROVISIONS ............................................. 10 5.1 Pledged Stock ................................................... 10 5.2 Proceeds to be Turned Over To Administrative Agent .............. 11 5.3 Application of Proceeds ......................................... 11 5.4 Code and Other Remedies ......................................... 11 5.5 Registration Rights ............................................. 12 5.6 Waiver, Deficiency .............................................. 13 SECTION 6. THE ADMINISTRATIVE AGENT ........................................ 13 6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc...... 13 6.2 Duty of Administrative Agent .................................... 15 6.3 Execution of Financing Statements ............................... 15 6.4 Authority of Administrative Agent ............................... 15 SECTION 7. MISCELLANEOUS ................................................... 15 7.1 Amendments in Writing ........................................... 15 7.2 Notices ......................................................... 15 7.3 No Waiver by Course of Conduct; Cumulative Remedies ............. 16 7.4 Enforcement Expenses; Indemnification ........................... 16 7.5 Successors and Assigns .......................................... 16 i Page ---- 7.6 Set-Off ......................................................... 16 7.7 Counterparts .................................................... 17 7.8 Severability .................................................... 17 7.9 Section Headings ................................................ 17 7.10 Integration ..................................................... 17 7.11 GOVERNING LAW ................................................... 17 7.12 SUBMISSION TO JURISDICTION; WAIVERS ............................. 17 7.13 Acknowledgements ................................................ 18 7.14 WAIVER OF JURY TRIAL ............................................ 18 7.15 Releases ........................................................ 18 ii FORM OF PARENT PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT, dated as of April 30, 1997, made by L-3 Communications Holdings, Inc., a Delaware corporation ("Holdings"), in favor of Bank of America NT & SA ("BOA") as Administrative Agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (collectively, the "Lenders") from time to time parties to the Credit Agreement, dated as of April 30, 1997 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among L-3 Communications Corporation, a Delaware Company (the "Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"), LCPI as syndication agent (in such capacity, the "Syndication Agent"; and together with the Documentation Agent and Administrative Agent, the "Agents"), LCPI as arranger (in such capacity, the "Arranger") and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, Holdings will derive substantial direct and indirect benefit from the making of the extensions of credit to the Borrower under the Credit Agreement; and WHEREAS, it is a condition precedent to the several obligations of the Lenders to make their respective extensions of credit to or for the benefit of the Borrower under the Credit Agreement that Holdings shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders and the Agents; NOW, THEREFORE, in consideration of the premises and to induce the Agents and the Lenders to enter into the Credit Agreement, and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, Holdings hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders and the Agents, as follows: SECTION 1. DEFINED TERMS 1.1 Definitions. 1.1(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Farm Products, Fixtures, Instruments and Inventory. 1.1(b) The following terms shall have the following meanings: 1 "Agreement": this Parent Pledge and Security Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Collateral": as defined in Section 2. "Collateral Account": any collateral account established by the Administrative Agent as provided in subsection 5.4. "Contracts": all contracts and agreements to which Holdings is a party on the date hereof or becomes a party subsequent to the date hereof, as the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, (i) all rights of Holdings to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of Holdings to damages arising thereunder and (iii) all rights of Holdings to perform and to exercise all remedies thereunder. "Copyrights": (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed on Schedule 4), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses": any written agreement naming Holdings as licensor or licensee (including, without limitation, those listed on Schedule 4), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles": all "general intangibles" as such term is defined in Section 9-106 of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, including, without limitation, with respect to Holdings, all contracts, agreements, instruments and indentures in any form, and portions thereof, to which Holdings is a party or under which Holdings has any right, title or interest or to which Holdings or any property of Holdings is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of Holdings to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of Holdings to damages arising thereunder and (iii) all rights of Holdings to perform and to exercise all remedies thereunder, in each case to the extent the grant by Holdings of a security interest pursuant to this Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate Holdings to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by Holdings of a security interest pursuant to this Agreement in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. 2 "Intellectual Property": the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note": any promissory note evidencing loans made by Holdings to any of its Subsidiaries. "Investment Property": as defined in the California UCC. "Issuers": the collective reference to each issuer of a Pledged Security. "New York UCC": the Uniform Commercial Code as from time to time in effect in the State of New York. "Obligations": the collective reference to the unpaid principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, (i) interest accruing at the then applicable rate provided in the Credit Agreement, after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Holdings, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and (ii) any exposure of any Lender under any lockbox arrangement, controlled disbursement arrangement, checking accounts or other similar arrangements (collectively, "Cash Management Agreements") with or on behalf of Holdings and/or its Subsidiaries) to the Administrative Agent or any Lender (or, in the case of any Interest Rate Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Credit Documents, any Letter of Credit or any Interest Rate Agreement entered into by Holdings with any Lender (or any Affiliate of any Lender) or any Cash Management Agreement entered into by Holdings or any Subsidiary of Holdings with any Lender or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent and counsel to the Lenders that are required to be paid by Holdings pursuant to the terms of any of the foregoing agreements). "Patents": (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to on Schedule 4, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to on Schedule 4, and (iii) all rights to obtain any reissues or extensions of the foregoing. 3 "Patent License": all agreements, whether written or oral, providing for the grant by or to Holdings of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to on Schedule 4. "Pledged Notes": all promissory notes listed on Schedule 1, all Intercompany Notes at any time issued to any Pledgor and all other promissory notes issued to or held by Holdings (other than promissory notes issued in connection with extensions of trade credit by Holdings in the ordinary course of business). "Pledged Securities": the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock": the shares of Capital Stock listed on Schedule 1, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, Holdings while this Agreement is in effect. "Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Stock, collections thereon or distributions or payments with respect thereto. "Receivable": any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Securities Act": the Securities Act of 1933, as amended. "Trademarks": (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to on Schedule 4, and (ii) the right to obtain all renewals thereof "Trademark License": any agreement, whether written or oral, providing for the grant by or to Holdings of any right to use any Trademark, including, without limitation, any of the foregoing referred to on Schedule 4. 1.2 Other Definitional Provisions. 1.2(a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to 4 any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. 1.2(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 1.2(c) Where the context requires, terms relating to the Collateral or any part thereof shall refer to Holdings' Collateral or the relevant part thereof. SECTION 2. GRANT OF SECURITY INTEREST Holdings hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Agents and the Lenders, a security interest in, all of the following property now owned or at any time hereafter acquired by Holdings or in which Holdings now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations: 2.0(a) all Accounts; 2.0(b) all Chattel Paper; 2.0(c) all Contracts; 2.0(d) all Documents; 2.0(e) all Deposit Accounts; 2.0(0) all Equipment; 2.0(g) all Fixtures; 2.0(h) all General Intangibles; 2.0(i) all Instruments; 2.0(j) all Intellectual Property; 2.0(k) all Inventory; 2.0(l) all Investment Property; 2.0(m) all Pledged Stock; 2.0(n) all books and records pertaining to the Collateral; and 5 2.0(o) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing. Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the New York UCC, this Agreement shall not constitute an assignment of any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into the Credit Agreement and to induce the Agents and the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, Holdings hereby represents and warrants to each of the Agents and the Lenders that: 3.1 Representations in Credit Agreement. The representations and warranties set forth in Section 4 of the Credit Agreement, each of which is hereby incorporated herein by reference, are true and correct, and the Agents and the Lenders shall be entitled to rely on each of them as if they were fully set forth herein. 3.2 Title; No Other Liens. Except for the security interest granted to the Administrative Agent for the ratable benefit of the Agents and the Lenders pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, Holdings owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, pursuant to this Agreement or as are permitted by the Credit Agreement. 3.3 Perfected First Priority Liens. The security interests granted pursuant to this Agreement: 3.3(a) upon completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, as collateral security for the Obligations, enforceable in accordance with the terms hereof against all creditors of Holdings and any Persons purporting to purchase any Collateral from Holdings, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and 3.3(b) are prior to all other Liens on the Collateral in existence on the date hereof except for unrecorded Liens and other Liens or permitted by the Credit Agreement which have priority over the Liens on the Collateral by operation of law. 6 3.4 Chief Executive Office. On the date hereof, Holdings' jurisdiction of organization and the location of Holdings' chief executive office is specified on Schedule 3. 3.5 Inventory and Equipment. None of Collateral constitutes or is the Proceeds of Inventory or Equipment. 3.6 Pledged Stock. 3.6(a) The shares of Pledged Stock pledged by Holdings hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by Holdings. 3.6(b) All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable. 3.6(c) Holdings is the record and beneficial owner of, and has good and marketable title to, the Pledged Stock pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and other Liens permitted by the Credit Agreement which have priority by operation of law. 3.7 Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm Products. 3.8 Receivables. None of the Collateral constitutes or is the Proceeds of Receivables. 3.9 Contracts. None of the Collateral constitutes or is the Proceeds of Contracts. 3.9(a) Except as set forth on Schedule 5 hereto, none of the parties to any Contract is a Governmental Authority. 3.10 Intellectual Property. None of the Collateral constitutes or is the Proceeds of Intellectual Property. SECTION 4. COVENANTS Holdings covenants and agrees with the Agents and the Lenders that, from and after the date of this Agreement until the Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 Covenants in Credit Agreement. Holdings shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by any of the Credit Parties. 4.2 Delivery of Instruments and Chattel Paper. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper, 7 such Instrument or Chattel Paper shall be promptly delivered to the Administrative Agent, duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. 4.3 Payment of Obligations. Holdings will pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all material taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all material claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of Holdings and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein. 4.4 Maintenance of Perfected Security Interest; Further Documentation. 4.4(a) Holdings shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in subsection 3.3 and shall defend such security interest against the claims and demands of all Persons whomsoever. 4.4(b) Holdings will furnish to the Agents and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. 4.4(c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of Holdings, Holdings will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby. 4.5 Changes in Locations, Name, etc. Holdings will not, except upon 15 days' prior written notice to the Administrative Agent and delivery to the Administrative Agent of all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein, change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become misleading. 4.6 Notices. Holdings will advise the Agents and the Lenders promptly, in reasonable detail, of: 4.6(a) any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder, and 8 4.6(b) of the occurrence of any other event of which it is aware which could reasonably be expected to have a material adverse effect on the enforceability, or perfection or priority of, the security interests purported to be created hereby. 4.7 Pledged Securities. 4.7(a) If Holdings shall become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, Holdings shall accept the same as the agent of the Agents and the Lenders, hold the same in trust for the Agents and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by Holdings to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by Holdings and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Pledged Stock upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Stock or any property shall be distributed upon or with respect to the Pledged Stock pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security (or except as provided in the Credit Agreement) for the Obligations. Except as provided in the Credit Agreement, if any sums of money or property so paid or distributed in respect of the Pledged Stock under circumstances described in this Section 4.7(a) shall be received by Holdings, Holdings shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Lenders, segregated from other funds of Holdings, as additional collateral security for the Obligations. 4.7(b) Except as provided in the Credit Agreement, without the price written consent of the Administrative Agent, Holdings will not (i) vote to enable, or take any other action to permit, any Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Stock or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Pledged Stock or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of Holdings or the Administrative Agent to sell, assign or transfer any of the Pledged Stock or Proceeds thereof. 9 SECTION 5. REMEDIAL PROVISIONS 5.1 Pledged Stock. 5.1(a) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to Holdings of the Administrative Agent's intent to exercise its corresponding rights pursuant to subsection 5.3(b), Holdings shall be permitted to receive all cash dividends paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Stock; provided, however, that no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would materially impair the Collateral or which would result in any violation of any provision of the Credit Agreement, this Agreement or any other Credit Document. 5.1(b) If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to Holdings, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Stock and make application thereof to Obligations in such order as the Administrative Agent may determine, and (ii) any or all of the Pledged Stock shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Stock at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Stock as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by Holdings or the Administrative Agent of any right, privilege or option pertaining to such Pledged Stock, and in connection therewith, the right to deposit and deliver any and all of the Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to Holdings to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. 5.1(c) Holdings hereby authorizes and instructs each Issuer of any Pledged Stock pledged by Holdings hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from Holdings, and Holdings agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Stock directly to the Administrative Agent. 5.2 Proceeds to be Turned Over To Administrative Agent. In addition to the rights of the Agents and the Lenders specified in subsection 5.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by Holdings consisting of cash, 10 checks and other near-cash items shall be held by Holdings in trust for the Agents and the Lenders, segregated from other funds of Holdings, and shall, forthwith upon receipt by Holdings, be turned over to the Administrative Agent in the exact form received by Holdings (duly indorsed by Holdings to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by Holdings in trust for the Administrative Agent and the Lenders) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in subsection 5.5. 5.3 Application of Proceeds. At such intervals as may be agreed upon by Holdings and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent's election, the Administrative Agent may apply all or any part of Proceeds held in any Collateral Account in payment of the Obligations in such order as required by the Credit Agreement, and any part of such funds which are not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to Holdings or to whomsoever may be lawfully entitled to receive the same. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to Holdings or to whomsoever may be lawfully entitled to receive the same. 5.4 Code and Other Remedies. If an Event of Default shall occur and be continuing. the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Borrower or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of any of the Agents or Lenders or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Any Agents or Lenders shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Borrower, which right or equity is hereby waived and released. Holdings further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at Holdings' premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this subsection 5.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Agents and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the New York UCC, need the Administrative Agent account for 11 the surplus, if any, to Holdings. To the extent permitted by applicable law, Holdings waives all claims, damages and demands it may acquire against any Agents or Lenders arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 15 days before such sale or other disposition. 5.5 Registration Rights. 5.5(a) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to subsection 5.6, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, Holdings will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Holdings agrees to cause such Issuer to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. 5.5(b) Holdings recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Holdings acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. 5.5(c) Holdings agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this subsection 5.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Holdings further agrees that a breach of any of the covenants contained in this subsection 5.7 will cause irreparable injury to the Agents and the Lenders, that the Agents and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this subsection 5.7 shall 12 be specifically enforceable against Holdings, and Holdings hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 5.6 Waiver; Deficiency. Holdings waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the New York UCC. Holdings shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. SECTION 6. THE ADMINISTRATIVE AGENT 6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. 6.1(a) Holdings hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Holdings and in the name of Holdings or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, Holdings hereby gives the Administrative Agent the power and right, on behalf of Holdings, without notice to or assent by Holdings, to do any or all of the following: (i) in the name of Holdings or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or Contract or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable; (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may request to evidence the Agents' and the Lenders' security interest in such Intellectual Property and the goodwill and general intangibles of Holdings relating thereto or represented thereby; (iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; (iv) execute, in connection with any sale provided for in subsection, 5.6 or 5.7, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and 13 (v)(A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct: (B) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments. verifications, notices and other documents in connection with any of the Collateral; (D) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) defend any suit, action or proceeding brought against Holdings with respect to any Collateral; (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may reasonably deem appropriate; (G) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and Holdings' expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Agents' and the Lenders' security interests therein and to effect the intent of this Agreement, all as fully and effectively as Holdings might do. Anything in this subsection 6.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this subsection 6.1(a) unless an Event of Default shall have occurred and be continuing. 6.1(b) If Holdings fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. 6.1(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this subsection 6.1, together with interest thereon at a rate per annum equal to the rate per annum at which interest would then be payable on past due Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by Holdings, shall be payable by Holdings to the Administrative Agent on demand. 6.1(d) Holdings hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released. 14 6.2 Duty of Administrative Agent. The Administrative Agent's sole duty with respect to the custody. safekeeping and physical preservation of the Collateral in its possession. under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Holdings or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof The powers conferred on the Agents and the Lenders hereunder are solely to protect the Agents' and the Lenders' interests in the Collateral and shall not impose any duty upon any Agents or Lenders to exercise any such powers. The Agents and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to Holdings for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 6.3 Execution of Financing Statements. Pursuant to Section 9-402 of the New York UCC and any other applicable law, Holdings authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of Holdings in such form and in such offices as the Administrative Agent reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. 6.4 Authority of Administrative Agent. Holdings acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as among the Agents and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as among the Agents and Holdings, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and Holdings shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 7. MISCELLANEOUS 7.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, restated, supplemented or otherwise modified except in accordance with subsection 10.1 of the Credit Agreement. 7.2 Notices. All notices, requests and demands to or upon the Agents or Holdings hereunder shall be effected in the manner provided for in subsection 10.2 of the Credit Agreement. 7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in 15 exercising, on the part of any of the Agents or Lenders, any right, power or privilege hereunder shall operate as a waiver thereof No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any of the Agents or Lenders of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, on behalf of the other Agents and the Lenders, would otherwise have on any future occasion. The rights and remedies herein provided are cumulative. may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 7.4 Enforcement Expenses; Indemnification. 7.4(a) Holdings agrees to pay or reimburse each of the Lenders and the Agents for all its reasonable costs and expenses incurred in collecting against Holdings or otherwise enforcing or preserving any rights under this Agreement and the other Credit Documents to which Holdings is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent and of counsel to each of the other Agents and Lenders. 7.4(b) Holdings agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. 7.4(c) Holdings agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent Holdings would be required to do so pursuant to subsection 10.5 of the Credit Agreement. 7.4(d) The agreements in this subsection 7.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Credit Documents. 7.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of Holdings and shall inure to the benefit of the Agents and the Lenders and their successors and assigns; provided that Holdings may not assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. 7.6 Set-Off. Holdings hereby irrevocably authorizes each of the Agents and Lenders at any time and from time to time pursuant to subsection 10.7(a) of the Credit Agreement shall have occurred and be continuing, without notice to Holdings, any such notice being expressly waived by Holdings, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Agent or Lender to or for the credit or the account of the Borrower, or any part thereof in such amounts as such Agent or Lender may elect, against and on account of the obligations and liabilities of Holdings to such Agent or Lender hereunder and claims of every nature and description of 16 such Agent or Lender against Holdings, in any currency, whether arising hereunder, under the Credit Agreement, any other Credit Document or otherwise, as such Agent or Lender may elect, whether or not any Agent or Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. Each of the Agents and Lenders shall notify Holdings promptly of any such set-off and the application made by such Agent or Lender of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agent and Lender under this subsection 7.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Agent or Lender may have. 7.7 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7.9 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 7.10 Integration. This Agreement and the other Credit Documents represent the agreement of Holdings, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any of the Agents or Lenders relative to subject matter hereof and thereof not expressly set forth or referred to herein, the Credit Agreement or in the other Credit Documents. 7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 7.12 SUBMISSION TO JURISDICTION; WAIVERS. HOLDINGS HEREBY IRREVOCABLY AND UNCONDITIONALLY: 7.12(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 7.12(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW 17 OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 7.12(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO HOLDINGS AT ITS ADDRESS REFERRED TO IN SUBSECTION 7.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; 7.12(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND 7.12(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 7.13 Acknowledgements. Holdings hereby acknowledges that: 7.13(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; 7.13(b) none of the Agents nor Lenders has any fiduciary relationship with or duty to the Holdings arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between Holdings, on the one hand, and the Agents and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 7.13(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among Agents, among the Agents and/or the Lenders or among the Borrower and the Agents and/or the Lenders. 7.14 WAIVER OF JURY TRIAL. HOLDINGS AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 7.15 Releases. (a) At such time as the Loans, the Reimbursement Obligations and the other Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) 18 of the Administrative Agent and Holdings hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to Holdings and the Administrative Agent shall deliver to Holdings any Collateral held by the Administrative Agent hereunder, and execute and deliver to Holdings such documents as Holdings shall reasonably request to evidence such termination. (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by Holdings in a transaction permitted by the Credit Agreement, then the Administrative Agent. at the request and sole expense of Holdings, shall execute and deliver to Holdings all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. [Signature page follows] 19 IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written. L-3 COMMUNICATIONS HOLDINGS, INC. By: _________________________________ Name: Title: Address for Notices: 600 Third Avenue 34th Floor New York, New York 10016 Attention: __________________________ Phone: (212) 697-1111 Fax: (212) ___-_______ Accepted on behalf of the Agents and the Lenders as of the date first above written: BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT By: ___________________________ Name: Title: 20 Schedule 1 DESCRIPTION OF PLEDGED STOCK Pledged Stock: Issuer Class of Stock Stock Certificate No. No. of Shares - ------ -------------- --------------------- ------------- Pledged Notes: Issuer Payee Principal Amount - ------ ----- ---------------- 21 Schedule 2 FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS Uniform Commercial Code Filings ------------------------------- [List each office where a financing statement is to be filed] Patent and Trademark Filings ---------------------------- [List all filings] Actions with respect to Pledged Stock ------------------------------------- Other Actions ------------- [Describe other actions to be taken] 22 Schedule 3 LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE Holdings Location -------- -------- 23 Schedule 4 COPYRIGHTS AND COPYRIGHT LICENSES o NONE PATENTS AND PATENT LICENSES o NONE TRADEMARKS AND TRADEMARK LICENSES o NONE 24 Schedule 5 CONTRACTS WITH GOVERNMENT AUTHORITY 25 ACKNOWLEDGEMENT AND CONSENT The undersigned hereby acknowledges receipt of a copy of the Parent Pledge and Security Agreement dated as of April 30, 1997 (the "Agreement"), made by the parties thereto for the benefit of Bank of America NT & SA, as Administrative Agent. The undersigned agrees for the benefit of the Administrative Agent and the Lenders as follows: 1. The undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned. 2. The undersigned will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 4.7(a) of the Agreement. 3. The terms of Sections 5.1(a) and 5.5 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 5.1(a) or 5.5 of the Agreement. [NAME OF ISSUER] ____________________________________________ Name: ______________________________________ Title:______________________________________ Address for Notices: ____________________________________________ ____________________________________________ Fax: ______________________________________ 26 EXHIBIT B-4 TO CREDIT AGREEMENT ================================================================================ BORROWER PLEDGE AND SECURITY AGREEMENT made by L-3 COMMUNICATIONS CORPORATION in favor of BANK OF AMERICA NT & SA, as Administrative Agent Dated as of April 30, 1997 ================================================================================ TABLE OF CONTENTS Page ---- SECTION 1. DEFINED TERMS .................................................... 1 1.1 Definitions ........................................................ 1 1.2 Other Definitional Provisions ...................................... 5 SECTION 2. GRANT OF SECURITY INTEREST ....................................... 5 SECTION 3. REPRESENTATIONS AND WARRANTIES ................................... 6 3.1 Title; No Other Liens .............................................. 6 3.2 Perfected First Priority Liens ..................................... 6 3.3 Chief Executive Office ............................................. 7 3.4 Inventory and Equipment ............................................ 7 3.5 Pledged Securities ................................................. 7 3.6 Farm Products ...................................................... 7 3.7 Receivables ........................................................ 7 3.8 Contracts .......................................................... 7 3.9 Intellectual Property .............................................. 8 SECTION 4. COVENANTS ........................................................ 9 4.1 Delivery of Instruments and Chattel Paper .......................... 9 4.2 Maintenance of Insurance ........................................... 9 4.3 Payment of Obligations ............................................. 9 4.4 Maintenance of Perfected Security Interest; Further Documentation .. 9 4.5 Changes in Locations, Name, etc. ................................... 10 4.6 Notices ............................................................ 10 4.7 Pledged Securities ................................................. 10 4.8 Receivables ........................................................ 11 4.9 Contracts .......................................................... 12 4.10 Intellectual Property .............................................. 13 SECTION 5. REMEDIAL PROVISIONS .............................................. 14 5.1 Certain Matters Relating to Receivables ............................ 14 5.2 Communications with Obligors; Borrower Remains Liable .............. 16 5.3 Pledged Stock ...................................................... 16 5.4 Proceeds to be Turned Over To Administrative Agent ................. 17 5.5 Application of Proceeds ............................................ 17 5.6 Code and Other Remedies ............................................ 18 5.7 Registration Rights ................................................ 18 5.8 Waiver Deficiency .................................................. 19 SECTION 6. THE ADMINISTRATIVE AGENT ......................................... 19 6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. ....... 19 6.2 Duty of Administrative Agent ....................................... 21 6.3 Execution of Financing Statements .................................. 22 6.4 Authority of Administrative Agent .................................. 22 SECTION 7. MISCELLANEOUS .................................................... 22 7.1 Amendments in Writing .............................................. 22 Page ---- 7.2 Notices ............................................................ 22 7.3 No Waiver by Course of Conduct; Cumulative Remedies ................ 22 7.4 Enforcement Expenses; Indemnification .............................. 22 7.5 Successors and Assigns ............................................. 23 7.6 Set-Off ............................................................ 23 7.7 Counterparts ....................................................... 23 7.8 Severability ....................................................... 24 7.9 Section Headings ................................................... 24 7.10 Integration ........................................................ 24 7.11 GOVERNING LAW ...................................................... 24 7.12 SUBMISSION TO JURISDICTION; WAIVERS ................................ 24 7.13 Acknowledgements ................................................... 25 7.14 WAIVER OF JURY TRIAL ............................................... 25 7.15 Releases ........................................................... 25 7.16 Conflict ........................................................... 26 ii FORM OF BORROWER PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT, dated as of April 30, 1997, made by L-3 Communications Corporation, a Delaware corporation (the "Borrower"), in favor of Bank of America NT & SA ("BOA") as Administrative Agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (collectively, the "Lenders") from time to time parties to the Credit Agreement, dated as of April 30, 1997 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"), LCPI as syndication agent (in such capacity, the "Syndication Agent"; and together with the Documentation Agent and Administrative Agent, the "Agents"), LCPI as arranger (in such capacity, the "Arranger") and the Administrative Agent. WITNESSETH: WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the several obligations of the Lenders to make their respective extensions of credit to or for the benefit of the Borrower under the Credit Agreement that the Borrower shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders and the Agents; NOW, THEREFORE, in consideration of the premises and to induce the Agents and the Lenders to enter into the Credit Agreement, and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, Borrower hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders and the Agents, as follows: SECTION 1. DEFINED TERMS 1.1 Definitions. 1.1(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Farm Products, Fixtures, Instruments and Inventory. 1.1(b) The following terms shall have the following meanings: 1 "Agreement": the Borrower Pledge and Security Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Collateral": as defined in Section 2. "Collateral Account": any collateral account established by the Administrative Agent as provided in subsections 5.1 or 5.4. "Contracts": all contracts and agreements to which the Borrower is a party on the date hereof or becomes a party subsequent to the date hereof, as the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, (i) all rights of the Borrower to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Borrower to damages arising thereunder and (iii) all rights of the Borrower to perform and to exercise all remedies thereunder. "Copyrights": (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed on Schedule 5), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses": any written agreement naming the Borrower as licensor or licensee (including, without limitation, those listed on Schedule 5), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles": all "general intangibles" as such term is defined in Section 9-106 of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, including, without limitation, with respect to the Borrower, all contracts, agreements, instruments and indentures in any form, and portions thereof, to which the Borrower is a party or under which the Borrower has any right, title or interest or to which the Borrower or any property of the Borrower is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of the Borrower to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Borrower to damages arising thereunder and (iii) all rights of the Borrower to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Borrower of a security interest pursuant to this Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Borrower to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Borrower of a security interest pursuant to this Agreement in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. 2 "Government Contract": a Contract with a Government Authority, each as listed on Schedule 6. "Intellectual Property": the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note": any promissory note evidencing loans made by the Borrower to any of its Subsidiaries. "Investment Property": as defined in the California UCC. "Issuers": the collective reference to each issuer of a Pledged Security. "New York UCC": the Uniform Commercial Code as from time to time in effect in the State of New York. "Obligations": the collective reference to the unpaid principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, (i) interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and (ii) any exposure of any Lender under any lockbox arrangement, controlled disbursement arrangement, checking accounts or other similar arrangements (collectively, "Cash Management Agreements") with or on behalf of the Borrower and/or its Subsidiaries) to the Administrative Agent or any Lender (or, in the case of any Interest Rate Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Credit Documents, any Letter of Credit or any Interest Rate Agreement entered into by the Borrower with any Lender (or any Affiliate of any Lender) or any Cash Management Agreement entered into by the Borrower or any Subsidiary of the Borrower with any Lender or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent and counsel to the Lenders that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements). "Patents": (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to on Schedule 5, (ii) all applications for letters patent of the United States or any other country and all divisions, 3 continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to on Schedule 5, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License": all agreements, whether written or oral, providing for the grant by or to the Borrower of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to on Schedule 5. "Pledged Notes": all promissory notes listed on Schedule 1, all Intercompany Notes at any time issued to any Pledgor and all other promissory notes issued to or held by the Borrower (other than promissory notes issued in connection with extensions of trade credit by the Borrower in the ordinary course of business). "Pledged Securities": the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock": the shares of Capital Stock listed on Schedule 1, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, the Borrower while this Agreement is in effect. "Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Receivable": any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract": Government Contracts which, by their terms, prohibit the assignment of Receivables thereunder. "Securities Act": the Securities Act of 1933, as amended. "Trademarks": (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to on Schedule 5, and (ii) the right to obtain all renewals thereof. "Trademark License": any agreement, whether written or oral, providing for the grant by or to the Borrower of any right to use any Trademark, including, without limitation, any of the foregoing referred to on Schedule 5. 4 1.2 Other Definitional Provisions. 1.2(a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. 1.2(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 1.2(c) Where the context requires, terms relating to the Collateral or any part thereof shall refer to the Borrower's Collateral or the relevant part thereof. SECTION 2. GRANT OF SECURITY INTEREST Borrower hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Agents and the Lenders, a security interest in, all of the following property now owned or at any time hereafter acquired by the Borrower or in which the Borrower now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations: 2.0(a) all Accounts; 2.0(b) all Chattel Paper; 2.0(c) all Contracts; 2.0(d) all Documents; 2.0(e) all Deposit Accounts; 2.0(f) all Equipment; 2.0(g) all Fixtures; 2.0(h) all General Intangibles; 2.0(i) all Instruments; 2.0(j) all Intellectual Property; 2.0(k) all Inventory; 2.0(l) all Investment Property; 5 2.0(m) all Pledged Securities; 2.0(n) all books and records pertaining to the Collateral; and 2.0(o) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing. Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the New York UCC, this Agreement shall not constitute an assignment of any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into the Credit Agreement and to induce the Agents and the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, Borrower hereby represents and warrants to each of the Agents and the Lenders that: 3.1 Title; No Other Liens. Except for the security interest granted to the Administrative Agent for the ratable benefit of the Agents and the Lenders pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, the Borrower owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, pursuant to this Agreement or as are permitted by the Credit Agreement. 3.2 Perfected First Priority Liens. The security interests granted pursuant to this Agreement: 3.2(a) upon completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, as collateral security for the Obligations, enforceable in accordance with the terms hereof against all creditors of the Borrower and any Persons purporting to purchase any Collateral from the Borrower, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and 3.2(b) are prior to all other Liens on the Collateral in existence on the date hereof except for unrecorded Liens and other Liens or permitted by the Credit Agreement which have priority over the Liens on the Collateral by operation of law. 6 3.3 Chief Executive Office. On the date hereof, the Borrower's jurisdiction of organization and the location of the Borrower's chief executive office is specified on Schedule 3. 3.4 Inventory and Equipment. On the date hereof, the Inventory and the Equipment (other than mobile goods) are kept at the locations listed on Schedule 4. 3.5 Pledged Securities. 3.5(a) The shares of Pledged Stock pledged by the Borrower hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by the Borrower. 3.5(b) All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable. 3.5(c) Each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 3.5(d) The Borrower is the record and beneficial owner of, and has good and marketable title to, the Pledged Securities pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and other Liens permitted by the Credit Agreement which have priority by operation of law. 3.6 Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm Products. 3.7 Receivables. 3.7(a) Except as set forth on Schedule 6 hereto, none of the obligors on any material Receivable is a Governmental Authority. 3.7(b) The amounts represented by the Borrower to the Lenders from time to time as owing to the Borrower in respect of the Receivables will at such times be accurate in all material respects. 3.8 Contracts. 3.8(a) Each Contract is in full force and effect and constitutes a valid and legally enforceable obligation of the parties thereto, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 7 3.8(b) Except as set forth on Schedule 4.5 to the Credit Agreement, no consent or authorization of, filing with or other act by or in respect of any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of any of the Contracts by any party thereto other than those which have been duly obtained, made or performed, are in full force and effect and do not subject the scope of any such Contract to any material adverse limitation, either specific or general in nature. 3.8(c) Neither the Borrower nor (to the best of the Borrower's knowledge) any of the other parties to the Contracts is in default in the performance or observance of any of the terms thereof in any manner that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. 3.8(d) The right, title and interest of the Borrower in, to and under the Contracts are not subject to any defenses, offsets, counterclaims or claims that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. 3.8(e) No amount payable to the Borrower under or in connection with any Contract is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. 3.8(f) Except as set forth on Schedule 6 hereto, none of the parties to any Contract is a Governmental Authority. 3.9 Intellectual Property. 3.9(a) The Borrower owns no material Intellectual Property other than as set forth on Schedule 5. 3.9(b) On the date hereof, all material Intellectual Property is valid, subsisting, unexpired and enforceable, has not been abandoned and does not infringe the intellectual property rights of any other Person, except as could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. 3.9(c) Except as set forth in Schedule 5, on the date hereof, none of the material Intellectual Property is the subject of any licensing or franchise agreement pursuant to which the Borrower is the licensor or franchisor. 3.9(d) No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of, or the Borrower's ownership interests in, any Intellectual Property in any respect that could reasonably be expected to have a Material Adverse Effect. 3.9(e) No action or proceeding is pending, or, to the knowledge of the Borrower, threatened, on the date hereof (i) seeking to limit, cancel or question the validity of any material Intellectual Property or the Borrower's ownership interest therein, or (ii) which, if adversely determined, would have a material adverse effect on the value of any Intellectual Property. 8 SECTION 4. COVENANTS Borrower covenants and agrees with the Agents and the Lenders that, from and after the date of this Agreement until the Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 Delivery of Instruments and Chattel Paper. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be promptly delivered to the Administrative Agent, duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. 4.2 Maintenance of Insurance. 4.2(a) The Borrower will maintain, with financially sound and reputable companies, insurance policies as required by subsection 6.5 of the Credit Agreement. 4.2(b) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Administrative Agent of written notice thereof, (ii) name the Administrative Agent as insured party or loss payee, (iii) if reasonably requested by the Administrative Agent, include a breach of warranty clause and (iv) be reasonably satisfactory in all other respects to the Administrative Agent. 4.2(c) The Borrower shall deliver to the Agents and the Lenders a report of a reputable insurance broker with respect to such insurance during the month of December in each calendar year and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request. 4.3 Payment of Obligations. The Borrower will pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all material taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all material claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein. 4.4 Maintenance of Perfected Security Interest; Further Documentation. 4.4(a) The Borrower shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in subsection 3.3 and shall defend such security interest against the claims and demands of all Persons whomsoever. 4.4(b) The Borrower will furnish to the Agents and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other 9 reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. 4.4(c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of the Borrower, the Borrower will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby. 4.5 Chances in Locations, Name, etc. The Borrower will not, except upon 15 days' prior written notice to the Administrative Agent and delivery to the Administrative Agent of (a) all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein and (b) if applicable, a written supplement to Schedule 4 showing any additional location at which Inventory or Equipment shall be kept: (i) permit any of the Inventory or Equipment to be kept at a location other than those listed on Schedule 4; (ii) change the location of its chief executive office from that referred to in Section 3.4; or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become misleading. 4.6 Notices. The Borrower will advise the Agents and the Lenders promptly, in reasonable detail, of: 4.6(a) any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and 4.6(b) of the occurrence of any other event of which it is aware which could reasonably be expected to have a material adverse effect on the enforceability, or perfection or priority of, the security interests purported to be created hereby. 4.7 Pledged Securities. 4.7(a) If the Borrower shall become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange 10 for, any shares of the Pledged Stock, or otherwise in respect thereof, the Borrower shall accept the same as the agent of the Agents and the Lenders, hold the same in trust for the Agents and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by the Borrower to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by the Borrower and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security (or except as provided in the Credit Agreement) for the Obligations. Except as provided in the Credit Agreement, if any sums of money or property so paid or distributed in respect of the Pledged Securities under circumstances described in this Section 4.7(a) shall be received by the Borrower, the Borrower shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Lenders, segregated from other funds of the Borrower, as additional collateral security for the Obligations. 4.7(b) Except as provided in the Credit Agreement, without the prior written consent of the Administrative Agent, the Borrower will not (i) vote to enable, or take any other action to permit, any Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Securities or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of the Borrower or the Administrative Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof. 4.8 Receivables. 4.8(a) Other than in the ordinary course of business, the Borrower will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof. 4.8(b) The Borrower will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 5% of the aggregate amount of the then outstanding Receivables. 11 4.8(c) Upon the written request of the Required Lenders upon the occurrence and during the continuance of an Event of Default, the Borrower hereby authorizes the Administrative Agent upon prior written notice to the Borrower to (x) file a Notice of Assignment pursuant to the provisions of the Assignment of Claims Act of 1940, as amended, with the appropriate officer or officers of the appropriate Government Authority with respect to each Government Contract (other than Restricted Government Contracts) and (y) take all such other action as the Administrative Agent reasonably deems necessary to comply with the provisions of the Assignment of Claims Act of 1940, as amended, and the Borrower shall, upon written request of the Administrative Agent, promptly use its best efforts to have such Notices of Assignment executed by the appropriate officer or officers of the appropriate Government Authority; (iv) with respect to each contract, agreement or transaction pursuant to which any State or any political subdivision thereof is a party, execute and deliver all notices which are required under, and comply in all other respects with, the laws of such State to ensure that the Administrative Agent has a valid and perfected first priority security interest in such contract, agreement or transaction to the extent required by the terms of the Credit Agreement; and (v) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as the Administrative Agent may reasonably request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby. 4.9 Contracts. 4.9(a) The Borrower will perform and comply in all material respects with all its obligations under its material Contracts. 4.9(b) The Borrower will not amend, modify, terminate or waive any provision of any material Contract in any manner which could reasonably be expected to materially adversely affect the value of such material Contract as Collateral. 4.9(c) The Borrower will exercise promptly and diligently each and every right which it may have under each material Contract (other than any right of termination). 4.9(d) The Borrower will deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any material Contract that questions the validity or enforceability of such material Contract. 4.9(e) The Borrower represents and warrants that the Government Contracts referenced on Schedule 6 constitute all Government Contracts having a value equal to or in excess of $1.0 million to which the Borrower is a party on the date hereof. 4.9(f) The Borrower will, when required under Section 6.13 of the Credit Agreement, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Administrative Agent, the GC Notice Recipients with respect to any Government Contract or any other Person from time to time such documents, instruments, certificates or reports and take such further steps relating to the Collateral consisting of the Receivables in respect of Government Contracts which (i) the Administrative Agent deems necessary to perfect, preserve or protect its 12 security interest in such Collateral or (ii) shall be necessary to comply with the provisions of 31 U.S.C. ss. 3727 or 41 U.S.C. ss. 15. 4.9(g) The Borrower hereby covenants and agrees that it will not enter any Restricted Government Contracts unless the Borrower determines in good faith that it must agree to a prohibition on the assignment of Receivables arising under such Government Contract in order to obtain such Government Contract and gives the Administrative Agent written notice that it has entered into such Restricted Government Contract. 4.10 Intellectual Property. 4.10(a) The Borrower (either itself or through licensees) will (i) continue to use each material Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use, except where the failure to do so could not, individually or in the aggregate, be expected to have a Material Adverse Effect, (ii) maintain as in the past the quality of products and services offered under such material Trademark, (iii) use such material Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such material Trademark unless the Administrative Agent, for the ratable benefit of the Lenders, shall obtain a perfected security interest in such mark pursuant to this Agreement, (v) not do any act or knowingly omit to do any act whereby such material Trademark may become invalidated or impaired in any way, and (vi) use reasonable efforts to prevent any licensee or sublicensee thereof from doing any act or knowingly omitting to do any act whereby such trademark may become invalidated or impaired in any way. 4.10(b) The Borrower will not do any act, or omit to do any act, whereby any material Patent may become forfeited, abandoned or dedicated to the public and will use reasonable efforts to prevent any sublicensee from doing any act, or omitting to do any act, whereby any material Patent may become forfeited, abandoned or dedicated to the public. 4.10(c) The Borrower will not do any act or knowingly omit to do any act and will use reasonable efforts to prevent any licensee or sublicensee thereof from doing any act or knowingly omitting to do any act whereby any material portion of the material Copyrights may become invalidated or otherwise impaired. The Borrower will not do any act and will use reasonable efforts to prevent any sublicensee from doing any act whereby any material portion of the Copyrights may fall into the public domain. 4.10(d) The Borrower (either itself or through licensees) will not do any act that knowingly uses any material Intellectual Property to infringe the intellectual property rights of any other Person. 4.10(e) The Borrower will notify the Administrative Agent and the Lenders immediately if it knows that any application or registration relating to any material Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any material adverse determination or development (including, without limitation, the institution of, or any such 13 determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding the Borrower's ownership of, or the validity of, any material Intellectual Property or the Borrower's right to register the same or to own and maintain the same. 4.10(f) Whenever the Borrower, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, the Borrower shall report such filing to the Administrative Agent within 30 Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, the Borrower shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Agents' and the Lenders' security interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of the Borrower relating thereto or represented thereby. 4.10(g) The Borrower will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material Intellectual Property, including, without limitation, filing of any necessary applications for renewal, affidavits of use and affidavits of incontestability, and paying all necessary fees, except to the extent the failure to do so could not, individually or in the aggregate, be expected to have a Material Adverse Effect. 4.10(h) In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party, the Borrower shall (i) take such actions as the Borrower shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value to the Borrower and its Subsidiaries taken as a whole, promptly notify the Administrative Agent after it learns thereof and sue for infringement, misappropriation or dilution, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation or dilution. SECTION 5. REMEDIAL PROVISIONS 5.1 Certain Matters Relating to Receivables. 5.1(a) The Administrative Agent shall have the right to make test verifications of the Receivables in any manner and through any medium that it reasonably considers advisable, and the Borrower shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications. At any time and from time to time, upon the Administrative Agent's request and at the expense of the Borrower, the Borrower shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables. 14 5.1(b) The Administrative Agent hereby authorizes the Borrower to collect the Borrower's Receivables, subject to the Administrative Agent's direction and control, and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by the Borrower, (i) shall be forthwith (and, in any event, within two Business Days) deposited by the Borrower in the exact form received, duly indorsed by the Borrower to the Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Lenders only as provided in subsection 5.5, and (ii) until so turned over, shall be held by the Borrower in trust for the Agents and the Lenders, segregated from other funds of the Borrower. Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. In addition, the Administrative Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default and upon written notice to the Borrower of its intention to do so, to require the Borrower to prepare notices of assignment for each Government Contract for which it has not previously delivered a notice of assignment pursuant to Section 6.13 of the Credit Agreement and to file such notices of assignment (and any notice of assignment delivered to the Administrative Agent pursuant to Section 6.13 of the Credit Agreement) with the appropriate contracting officer of the appropriate Government Authority and to otherwise notify the account debtors or obligors under any Receivables of the assignment of such Receivables to the Administrative Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Borrower thereunder directly to the Administrative Agent and, upon such notification and at the expense of the Borrower, to enforce collection of any such Receivables, and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Borrower might have done. After receipt by the Borrower of the notice from the Administrative Agent referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including instruments) received by the Borrower in respect of the Receivables shall be received in trust for the benefit of the Administrative Agent, the Agents, the Lenders, the Issuing Banks and the other Holders hereunder, shall be segregated from other funds of the Borrower and shall be forthwith paid over to the Administrative Agent in the same form as so received (with any necessary indorsement) to be applied to the Obligations in accordance with Section 8 of the Credit Agreement and (ii) the Borrower shall not adjust, settle or compromise the amount or payment of any Account, release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon. 5.1(c) At the Administrative Agent's request, the Borrower shall deliver to the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all original orders, invoices and shipping receipts. 5.2 Communications with Obligors; Borrower Remains Liable. 5.2(a) The Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Receivables and parties to the Contracts to verify with them to the 15 Administrative Agent's satisfaction the existence, amount and terms of any Receivables or Contracts. 5.2(b) Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, the Borrower shall notify obligors on the Receivables and parties to the Contracts that the Receivables and the Contracts have been assigned to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect thereof shall be made directly to the Administrative Agent. 5.2(c) Anything herein to the contrary notwithstanding, the Borrower shall remain liable under each of the Receivables and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or the receipt by any Agent or Lender of any payment relating thereto, nor shall any Agent or Lender be obligated in any manner to perform any of the obligations of the Borrower under or pursuant to any Receivable (or any agreement giving rise thereto) or Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 5.3 Pledged Stock. 5.3(a) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the Borrower of the Administrative Agent's intent to exercise its corresponding rights pursuant to subsection 5.3(b), the Borrower shall be permitted to receive all cash dividends paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities; provided, however, that no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would materially impair the Collateral or which would result in any violation of any provision of the Credit Agreement, this Agreement or any other Credit Document. 5.3(b) If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the Borrower, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make application thereof to the Borrower Obligations in such order as the Administrative Agent may determine, and (ii) any or all of the Pledged Securities shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Securities as if it were the 16 absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by the Borrower or the Administrative Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to the Borrower to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. 5.3(c) The Borrower hereby authorizes and instructs each Issuer of any Pledged Securities pledged by the Borrower hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from the Borrower, and the Borrower agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent. 5.4 Proceeds to be Turned Over To Administrative Agent. In addition to the rights of the Agents and the Lenders specified in subsection 5.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by the Borrower consisting of cash, checks and other near-cash items shall be held by the Borrower in trust for the Agents and the Lenders, segregated from other funds of the Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to the Administrative Agent in the exact form received by the Borrower (duly indorsed by the Borrower to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by the Borrower in trust for the Administrative Agent and the Lenders) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in subsection 5.5. 5.5 Application of Proceeds. At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent's election, the Administrative Agent may apply all or any part of Proceeds held in any Collateral Account in payment of the Obligations in such order as required by the Credit Agreement, and any part of such funds which are not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to the Borrower or to whomsoever may be lawfully entitled to receive the same. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same. 5.6 Code and Other Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing 17 or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Borrower or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of any of the Agents or Lenders or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Any Agents or Lenders shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Borrower, which right or equity is hereby waived and released. The Borrower further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at the Borrower's premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this subsection 5.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Agents and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the New York UCC, need the Administrative Agent account for the surplus, if any, to the Borrower. To the extent permitted by applicable law, the Borrower waives all claims, damages and demands it may acquire against any Agents or Lenders arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 15 days before such sale or other disposition. 5.7 Registration Rights. 5.7(a) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to subsection 5.6, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the Borrower will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. The Borrower agrees to cause such Issuer to comply with the provisions of the securities or "Blue Sky" laws of 18 any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. 5.7(b) The Borrower recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Borrower acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. 5.7(c) The Borrower agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this subsection 5.7 valid and binding and in compliance with any and all other applicable Requirements of Law. The Borrower further agrees that a breach of any of the covenants contained in this subsection 5.7 will cause irreparable injury to the Agents and the Lenders, that the Agents and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence. that each and every covenant contained in this subsection 5.7 shall be specifically enforceable against the Borrower, and the Borrower hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 5.8 Waiver; Deficiency. The Borrower waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the New York UCC. The Borrower shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. SECTION 6. THE ADMINISTRATIVE AGENT 6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. 6.1(a) The Borrower hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Borrower and in the name of the Borrower or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, the Borrower hereby gives 19 the Administrative Agent the power and right, on behalf of the Borrower, without notice to or assent by the Borrower, to do any or all of the following: (i) in the name of the Borrower or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or Contract or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable; (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may request to evidence the Agents' and the Lenders' security interest in such Intellectual Property and the goodwill and general intangibles of the Borrower relating thereto or represented thereby; (iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; (iv) execute, in connection with any sale provided for in subsection, 5.6 or 5.7, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and (v)(A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) defend any suit, action or proceeding brought against the Borrower with respect to any Collateral; (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may reasonably deem appropriate; (G) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and the Borrower's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, 20 preserve or realize upon the Collateral and the Agents' and the Lenders' security interests therein and to effect the intent of this Agreement, all as fully and effectively as the Borrower might do. Anything in this subsection 6.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this subsection 6.1(a) unless an Event of Default shall have occurred and be continuing. 6.1(b) If the Borrower fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. 6.1(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this subsection 6.1, together with interest thereon at a rate per annum equal to the rate per annum at which interest would then be payable on past due Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the Borrower, shall be payable by the Borrower to the Administrative Agent on demand. 6.1(d) The Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released. 6.2 Duty of Administrative Agent. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Borrower or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Agents and the Lenders hereunder are solely to protect the Agents' and the Lenders' interests in the Collateral and shall not impose any duty upon any Agents or Lenders to exercise any such powers. The Agents and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to the Borrower for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 6.3 Execution of Financing Statements. Pursuant to Section 9-402 of the New York UCC and any other applicable law, the Borrower authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of the Borrower in such form and in such offices as the Administrative Agent reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. 21 6.4 Authority of Administrative Agent. The Borrower acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as among the Agents and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as among the Agents and the Borrower, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and the Borrower shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 7. MISCELLANEOUS 7.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, restated, supplemented or otherwise modified except in accordance with subsection 10.1 of the Credit Agreement. 7.2 Notices. All notices, requests and demands to or upon the Agents or the Borrower hereunder shall be effected in the manner provided for in subsection 10.2 of the Credit Agreement. 7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any of the Agents or Lenders, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any of the Agents or Lenders of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, on behalf of the other Agents and the Lenders, would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 7.4 Enforcement Expenses; Indemnification. 7.4(a) The Borrower agrees to pay or reimburse each of the Lenders and the Agents for all its reasonable costs and expenses incurred in collecting against the Borrower or otherwise enforcing or preserving any rights under this Agreement and the other Credit Documents to which the Borrower is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent and of counsel to each of the other Agents and Lenders. 7.4(b) The Borrower agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. 22 7.4(c) The Borrower agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to subsection 10.5 of the Credit Agreement. 7.4(d) The agreements in this subsection 7.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Credit Documents. 7.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of the Borrower and shall inure to the benefit of the Agents and the Lenders and their successors and assigns; provided that the Borrower may not assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. 7.6 Set-Off. The Borrower hereby irrevocably authorizes each of the Agents and Lenders at any time and from time to time pursuant to subsection 10.7(a) of the Credit Agreement shall have occurred and be continuing, without notice to the Borrower, any such notice being expressly waived by the Borrower, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Agent or Lender to or for the credit or the account of the Borrower, or any part thereof in such amounts as such Agent or Lender may elect, against and on account of the obligations and liabilities of the Borrower to such Agent or Lender hereunder and claims of every nature and description of such Agent or Lender against the Borrower, in any currency, whether arising hereunder, under the Credit Agreement, any other Credit Document or otherwise, as such Agent or Lender may elect, whether or not any Agent or Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. Each of the Agents and Lenders shall notify the Borrower promptly of any such set-off and the application made by such Agent or Lender of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agent and Lender under this subsection 7.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Agent or Lender may have. 7.7 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7.9 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 23 7.10. Integration. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any of the Agents or Lenders relative to subject matter hereof and thereof not expressly set forth or referred to herein, the Credit Agreement or in the other Credit Documents. 7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 7.12 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: 7.12(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 7.12(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 7.12(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS REFERRED TO IN SUBSECTION 7.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; 7.12(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION, AND 7.12(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 24 7.13 Acknowledgements. The Borrower hereby acknowledges that: 7.13(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; 7.13(b) none of the Agents nor Lenders has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between the Borrower, on the one hand, and the Agents and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and 7.13(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among Agents, among the Agents and/or the Lenders or among the Borrower and the Agents and/or the Lenders. 7.14 WAIVER OF JURY TRIAL. THE BORROWER AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 7.15 Releases. (a) At such time as the Loans, the Reimbursement Obligations and the other Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and the Borrower hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Borrower and the Administrative Agent shall deliver to the Borrower any Collateral held by the Administrative Agent hereunder, and execute and deliver to the Borrower such documents as the Borrower shall reasonably request to evidence such termination. (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by the Borrower in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of the Borrower, shall execute and deliver to the Borrower all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. 7.16 Conflict. In the event there is a conflict between the terms of this Agreement and the Credit Agreement, the Credit Agreement shall control. [Signature page follows] 25 IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written. L-3 COMMUNICATIONS CORPORATION By: ----------------------------- Name: Title: Address for Notices: 600 Third Avenue 34th Floor New York, New York 10016 Attention: ---------------------- Phone:(212) 697-1111 Fax: (212) ___-_____ Accepted on behalf of the Agents and the Lenders as of the date first above written: BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT By: -------------------------- Name: Title: 26 Schedule 1 DESCRIPTION OF PLEDGED SECURITIES Pledged Stock: Issuer Class of Stock Stock Certificate No. No. of Shares - ----------------------- ------------------ ----------------------- ------------- Pledged Notes: Issuer Payee Principal Amount - ------------------------------- -------------------------- --------------------- 27 Schedule 2 FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS Uniform Commercial Code Filings [List each office where a financing statement is to be filed] Patent and Trademark Filings [List all filings] Actions with respect to Pledged Stock Other Actions [Describe other actions to be taken] 28 Schedule 3 LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE Borrower Location -------- -------- 29 Schedule 4 LOCATION OF INVENTORY AND EQUIPMENT Borrower Locations -------- --------- 30 Schedule 5 COPYRIGHTS AND COPYRIGHT LICENSES PATENTS AND PATENT LICENSES TRADEMARKS AND TRADEMARK LICENSES 31 Schedule 6 GOVERNMENT CONTRACTS 32 ACKNOWLEDGEMENT AND CONSENT The undersigned hereby acknowledges receipt of a copy of the Borrower Pledge and Security Agreement dated as of April 30, 1997 (the "Agreement"), made by the parties thereto for the benefit of Bank of America NT & SA, as Administrative Agent. The undersigned agrees for the benefit of the Administrative Agent and the Lenders as follows: 1. The undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned. 2. The undersigned will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 4.7(a) of the Agreement. 3. The terms of Sections 5.3(a) and 5.7 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 5.3(a) or 5.7 of the Agreement. [NAME OF ISSUER] ------------------------------- Name: -------------------------- Title: -------------------------- Address for Notices: ------------------------------- ------------------------------- Fax: --------------------------- 33 EXHIBIT B-5 TO CREDIT AGREEMENT ================================================================================ SUBSIDIARY PLEDGE AND SECURITY AGREEMENT made by L-3 COMMUNICATIONS HOLDINGS, INC. in favor of BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT Dated as of ________ __, ___ ================================================================================ TABLE OF CONTENTS Page ---- SECTION 1. DEFINED TERMS ................................................ 2 1.1 Definitions ................................................. 2 1.2 Other Definitional Provisions ............................... 5 SECTION 2. GRANT OF SECURITY INTEREST ................................... 5 SECTION 3. REPRESENTATIONS AND WARRANTIES ............................... 6 3.1 Representations in Credit Agreement ......................... 6 3.2 Title; No Other Liens ....................................... 7 3.3 Perfected First Priority Liens .............................. 7 3.4 Chief Executive Office ...................................... 7 3.5 Inventory and Equipment ..................................... 7 3.6 Farm Products ............................................... 7 3.7 Pledged Securities .......................................... 7 3.8 Receivables ................................................. 8 3.9 Contracts ................................................... 8 3.10 Intellectual Property ....................................... 9 SECTION 4. COVENANTS .................................................... 9 4.1 Covenants in Credit Agreement ............................... 9 4.2 Delivery of Instruments and Chattel Paper ................... 9 4.3 Maintenance of Insurance .................................... 9 4.4 Payment of Obligations ...................................... 10 4.5 Maintenance of Perfected Security Interest; Further Documentation ............................................... 10 4.6 Chances in Locations, Name, etc ............................. 10 4.7 Notices ..................................................... 11 4.8 Pledged Securities .......................................... 11 4.9 Receivables ................................................. 12 4.10 Contracts ................................................... 13 4.11 Intellectual Property ....................................... 14 SECTION 5. REMEDIAL PROVISIONS ......................................... 15 5.1 Certain Matters Relating to Receivables ..................... 15 5.2 Communications with Obligors; Grantors Remain Liable ........ 16 5.3 Pledged Stock ............................................... 17 5.4 Proceeds to be Turned Over To Administrative Agent .......... 18 5.5 Application of Proceeds ..................................... 18 5.6 Code and Other Remedies ..................................... 18 5.7 Registration Rights ......................................... 19 5.8 Waiver: Deficiency .......................................... 20 SECTION 6. THE ADMINISTRATIVE AGENT .................................... 20 6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc . 20 6.2 Duty of Administrative Agent ................................ 22 6.3 Execution of Financing Statements ........................... 22 6.4 Authority of Administrative Agent ........................... 22 SECTION 7. MISCELLANEOUS ............................................... 23 7.1 Amendments in Writing ....................................... 23 7.2 Notices ..................................................... 23 7.3 No Waiver by Course of Conduct; Cumulative Remedies ......... 23 7.4 Enforcement Expenses; Indemnification ....................... 23 7.5 Successors and Assigns ...................................... 24 7.6 Set-Off ..................................................... 24 7.7 Counterparts ................................................ 24 7.8 Severability ................................................ 24 7.9 Section Headings ............................................ 24 7.10 Integration ................................................. 24 7.11 GOVERNING LAW ............................................... 25 7.12 SUBMISSION TO JURISDICTION; WAIVERS ......................... 25 7.13 Acknowledgements ............................................ 25 7.14 WAIVER OF JURY TRIAL ........................................ 26 7.15 Additional Grantors ......................................... 26 7.16 Releases .................................................... 26 7.17 Conflict .................................................... 26 ii FORM OF SUBSIDIARY PLEDGE AND SECURITY AGREEMENT SUBSIDIARY PLEDGE AND SECURITY AGREEMENT, dated as of ________, ____, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the "Grantors"), in favor of Bank of America NT & SA, ("BOA") as Administrative Agent (in such capacity, the "Administrative Agent") for the banks and other financial institutions (collectively, the "Lenders") from time to time parties to the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among L-3 Communications Corporation, a Delaware corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"), LCPI as syndication agent (in such capacity, the "Syndication Agent" and together with the Documentation Agent and Administrative Agent, the "Agents"), LCPI as arranger (in such capacity, the "Arranger") and the Administrative Agent. W I T N E S S E T H: WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other Grantor; WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses; WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the several obligations of the Lenders to make their respective extensions of credit to or for the benefit of the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders and the Agents; NOW, THEREFORE, in consideration of the premises and to induce the Agents and the Lenders to enter into the Credit Agreement, and to induce the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders and the Agents, as follows: 1 SECTION 1. DEFINED TERMS 1.1 Definitions. 1.1(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Farm Products, Fixtures, Instruments and Inventory. 1.1(b) The following terms shall have the following meanings: "Agreement": this Subsidiary Pledge and Security Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Collateral": as defined in Section 2. "Collateral Account": any collateral account established by the Administrative Agent as provided in subsection 5.1 or 5.4. "Contracts": all contracts and agreements to which the Borrower is a party on the date hereof or becomes a party subsequent to the date hereof, as the same may be amended, supplemented or otherwise modified from time to time, including, without limitation, (i) all rights of any Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to damages arising thereunder and (iii) all rights of any Grantor to perform and to exercise all remedies thereunder. "Copyrights": (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed on Schedule 5), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses": any written agreement naming any Grantor as licensor or licensee (including, without limitation, those listed on Schedule 5), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles": all "general intangibles" as such term is defined in Section 9-106 of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, including, without limitation, with respect to any Grantor, all contracts, agreements, instruments and indentures in any form, and portions thereof, to which such Grantor is a party or under which such Grantor has any right, title or interest or to which such Grantor or any property of such Grantor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all 2 rights of such Grantor to damages arising thereunder and (iii) all rights of such Grantor to perform and to exercise all remedies thereunder, in each case to the extent the grant by such Grantor of a security interest pursuant to this Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate such Grantor to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by such Grantor of a security interest pursuant to this Agreement in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. "Government Contract": a Contract with a Government Authority, each as listed on Schedule 6. "Holdings": L-3 Communications Holdings, Inc. "Intellectual Property": the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note": any promissory note evidencing loans made by any Grantor to Holdings, the Borrower or any of their respective Subsidiaries. "Investment Property": as defined in the California UCC. "Issuers": the collective reference to each issuer of a Pledged Security. "New York UCC": the Uniform Commercial Code as from time to time in effect in the State of New York. "Obligations": the collective reference to the unpaid principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, (i) interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and (ii) any exposure of any Lender under any lockbox arrangement, controlled disbursement arrangement, checking accounts or other similar arrangements (collectively, "Cash Management Agreements") with or on behalf of the Borrower and/or its Subsidiaries) to the Administrative Agent or any Lender (or, in the case of any Interest Rate Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute 3 or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Credit Documents, any Letter of Credit or any Interest Rate Agreement entered into by the Borrower with any Lender (or any Affiliate of any Lender) or any Cash Management Agreement entered into by the Borrower or any Subsidiary of the Borrower with any Lender or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent and counsel to the Lenders that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements). "Patents": (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to on Schedule 5, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to on Schedule 5, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License": all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to on Schedule 5. "Pledged Notes": all promissory notes listed on Schedule 1, all Intercompany Notes at any time issued to any Pledgor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business). "Pledged Securities": the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock": the shares of Capital Stock listed on Schedule 1, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect. "Proceeds": all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Receivable": any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract": Government Contracts which, by their terms, prohibit the assignment of Receivables thereunder. 4 "Securities Act": the Securities Act of 1933, as amended. "Trademarks": (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to on Schedule 5, and (ii) the right to obtain all renewals thereof. "Trademark License": any agreement, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to on Schedule 5. 1.2 Other Definitional Provisions. 1.2(a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified. 1.2(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 1.2(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor's Collateral or the relevant part thereof. SECTION 2. GRANT OF SECURITY INTEREST Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Agents and the Lenders, a security interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations: 2.0(a) all Accounts; 2.0(b) all Chattel Paper; 2.0(c) all Contracts; 2.0(d) all Deposit Accounts; 5 2.0(e) all Documents; 2.0(f) all Equipment; 2.0(g) all Fixtures; 2.0(h) all General Intangibles; 2.0(i) all Instruments; 2.0(j) all Intellectual Property; 2.0(k) all Inventory; 2.0(l) all Investment Property; 2.0(m) all Pledged Securities; 2.0(n) all books and records pertaining to the Collateral; and 2.0(o) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing. Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the New York UCC, this Agreement shall not constitute an assignment of any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agents and the Lenders to enter into the Credit Agreement and to induce the Agents and the Lenders to make their respective extensions of credit to or for the benefit of the Borrower thereunder, each Grantor hereby represents and warrants to each of the Agents and the Lenders that: 3.1 Representations in Credit Agreement. In the case of each Grantor, the representations and warranties set forth in Section 4 of the Credit Agreement as they relate to such Grantor, each of which is hereby incorporated herein by reference, are true and correct, and each of the Agents and Lenders shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Borrower's knowledge shall, for the purposes of this Section 4.1, be deemed to be a reference to such Grantor's knowledge. 3.2 Title; No Other Liens. Except for the security interest granted to the Administrative Agent for the ratable benefit of the Agents and the Lenders pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, such Grantor owns each 6 item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, pursuant to this Agreement or as are permitted by the Credit Agreement. 3.3 Perfected First Priority Liens. The security interests granted pursuant to this Agreement: 3.3(a) upon completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Agents and the Lenders, as collateral security for the Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and 3.3(b) are prior to all other Liens on the Collateral in existence on the date hereof except for unrecorded Liens and other Liens or permitted by the Credit Agreement which have priority over the Liens on the Collateral by operation of law. 3.4 Chief Executive Office. On the date hereof, such Grantor's jurisdiction of organization and the location of such Grantor's chief executive office is specified on Schedule 3. 3.5 Inventory and Equipment. On the date hereof, the Inventory and the Equipment (other than mobile goods) are kept at the locations listed on Schedule 4. 3.6 Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm Products. 3.7 Pledged Securities. 3.7(a) The shares of Pledged Stock pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor. 3.7(b) All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable. 3.7(c) Each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 7 3.7(d) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Pledged Securities pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and other Liens permitted by the Credit Agreement which have priority by operation of law. 3.8 Receivables. 3.8(a) Except as set forth on Schedule 6 hereto, none of the obligors on any material Receivable is a Governmental Authority. 3.8(b) The amounts represented by such Grantor to the Lenders from time to time as owing to such Grantor in respect of the Receivables will at such times be accurate in all material respects. 3.9 Contracts. 3.9(a) Each Contract is in full force and effect and constitutes a valid and legally enforceable obligation of the parties thereto, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 3.9(b) Except as set forth on Schedule 4.5 to the Credit Agreement, no consent or authorization of, filing with or other act by or in respect of any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of any of the Contracts by any party thereto other than those which have been duly obtained, made or performed, are in full force and effect and do not subject the scope of any such Contract to any material adverse limitation, either specific or general in nature. 3.9(c) Neither such Grantor nor (to the best of such Grantor's knowledge) any of the other parties to the Contracts is in default in the performance or observance of any of the terms thereof in any manner that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. 3.9(d) The right, title and interest of such Grantor in, to and under the Contracts are not subject to any defenses, offsets, counterclaims or claims that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. 3.9(e) No amount payable to such Grantor under or in connection with any Contract is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. 3.9(f) Except as set forth on Schedule 6 hereto, none of the parties to any Contract is a Governmental Authority. 3.10 Intellectual Property. 8 3.10(a) Each Grantor owns no material Intellectual Property other than as set forth on Schedule 5. 3.10(b) On the date hereof, all material Intellectual Property is valid, subsisting, unexpired and enforceable, has not been abandoned and does not infringe the intellectual property rights of any other Person, except as could not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. 3.10(c) Except as set forth in Schedule 5, on the date hereof, none of the material Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor. 3.10(d) No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of, or such Grantor's ownership interests in, any Intellectual Property in any respect that could reasonably be expected to have a Material Adverse Effect. 3.10(e) No action or proceeding is pending, or, to the knowledge of such Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question the validity of any Intellectual Property or such Grantor's ownership interest therein, or (ii) which, if adversely determined, would have a material adverse effect on the value of any Intellectual Property. SECTION 4. COVENANTS Each Grantor covenants and agrees with the Agents and the Lenders that, from and after the date of this Agreement until the Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 Covenants in Credit Agreement. In the case of each Grantor, such Grantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by any of the Credit Parties. 4.2 Delivery of Instruments and Chattel Paper. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be promptly delivered to the Administrative Agent, duly indorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. 4.3 Maintenance of Insurance. 4.3(a) Such Grantor will maintain, with financially sound and reputable companies, insurance policies as required by subsection 6.5 of the Credit Agreement. 4.3(b) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Administrative Agent of written notice thereof, (ii) name the Administrative 9 Agent as insured party or loss payee, (iii) if reasonably requested by the Administrative Agent, include a breach of warranty clause and (iv) be reasonably satisfactory in all other respects to the Administrative Agent. 4.3(c) The Borrower shall deliver to the Agents and the Lenders a report of a reputable insurance broker with respect to such insurance during the month of December in each calendar year and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request. 4.4 Payment of Obligations. Such Grantor will pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all material taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all material claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein. 4.5 Maintenance of Perfected Security Interest; Further Documentation. 4.5(a) Such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in subsection 3.3 and shall defend such security interest against the claims and demands of all Persons whomsoever. 4.5(b) Such Grantor will furnish to the Agents and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. 4.5(c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby. 4.6 Changes in Locations, Name, etc. Such Grantor will not, except upon 15 days' prior written notice to the Administrative Agent and delivery to the Administrative Agent of (a) all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein and (b) if applicable, a written supplement to Schedule 4 showing any additional location at which Inventory or Equipment shall be kept: 10 (i) permit any of the Inventory or Equipment to be kept at a location other than those listed on Schedule 4; (ii) change the location of its chief executive office from that referred to in Section 3.4; or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become misleading. 4.7 Notices. Such Grantor will advise the Agents and the Lenders promptly, in reasonable detail, of: 4.7(a) any Lien (other than security interests created hereby or Liens permitted under the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and 4.7(b) of the occurrence of any other event of which it is aware which could reasonably be expected to have a material adverse effect on the enforceability, or perfection or priority of, the security interests purported to be created hereby. 4.8 Pledged Securities. 4.8(a) If such Grantor shall become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Agents and the Lenders, hold the same in trust for the Agents and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security (or except as provided in the Credit Agreement) for the Obligations. Except as provided in the Credit Agreement, if any sums of money or property so paid or distributed in respect of the Pledged Securities under circumstances described in this Section 4.8(a) shall be received by such Grantor, such Grantor shall, until such money or property is paid or delivered to the 11 Administrative Agent, hold such money or property in trust for the Lenders, segregated from other funds of such Grantor, as additional collateral security for the Obligations. 4.8(b) Except as provided in the Credit Agreement, without the prior written consent of the Administrative Agent, such Grantor will not (i) vote to enable, or take any other action to permit, any Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Pledged Securities or Proceeds thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Pledged Securities or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Pledged Securities or Proceeds thereof. 4.8(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in subsection 5.8(a) with respect to the Pledged Securities issued by it and (iii) the terms of subsections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to subsections 6.3(c) or 6.7 with respect to the Pledged Securities issued by it. 4.9 Receivables. 4.9(a) Other than in the ordinary course of business, such Grantor will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof. 4.9(b) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 5% of the aggregate amount of the then outstanding Receivables. 4.9(c) Upon the written request of the Required Lenders upon the occurrence and during the continuance of an Event of Default, each Grantors hereby authorizes the Administrative Agent upon prior written notice to such Grantor to (x) file a Notice of Assignment pursuant to the provisions of the Assignment of Claims Act of 1940, as amended, with the appropriate officer or officers of the appropriate Government Authority with respect to each Government Contract (other than Restricted Government Contracts) and (y) take all such other action as the Administrative Agent reasonably deems necessary to comply with the provisions of the Assignment of Claims Act of 1940, as amended, and each Grantor shall, upon written request of the Administrative Agent, promptly use its best efforts to have such Notices of Assignment 12 executed by the appropriate officer or officers of the appropriate Government Authority; (iv) with respect to each contract, agreement or transaction pursuant to which any State or any political subdivision thereof is a party, execute and deliver all notices which are required under, and comply in all other respects with, the laws of such State to ensure that the Administrative Agent has a valid and perfected first priority security interest in such contract, agreement or transaction to the extent required by the terms of the Credit Agreement; and (v) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as the Administrative Agent may reasonably request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby. 4.10 Contracts. 4.10(a) Such Grantor will perform and comply in all material respects with all its obligations under the Contracts. 4.10(b) Such Grantor will not amend, modify, terminate or waive any provision of any material Contract in any manner which could reasonably be expected to materially adversely affect the value of such material Contract as Collateral. 4.10(c) Such Grantor will exercise promptly and diligently each and every material right which it may have under each Contract (other than any right of termination). 4.10(d) Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any material Contract that questions the validity or enforceability of such material Contract. 4.10(e) Each Grantor represents and warrants that (i) the Government Contracts referenced on Schedule 6 constitute all Government Contracts having a value equal to or in excess of $1.0 million to which such Grantor is a party on the date hereof. 4.10(f) Each Grantor will, when required under Section 6.13 of the Credit Agreement, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Administrative Agent, the GC Notice Recipients with respect to any Government Contract or any other Person from time to time such documents, instruments, certificates or reports and take such further steps relating to the Collateral consisting of the Receivables in respect of Government Contracts which (i) the Administrative Agent deems necessary to perfect, preserve or protect its security interest in such Collateral or (ii) shall be necessary to comply with the provisions of 31 U.S.C. ss. 3727 or 41 U.S.C. ss. 15. 4.10(g) Each Grantor hereby covenants and agrees that it will not enter any Restricted Government Contracts unless such Grantor determines in good faith that it must agree to a prohibition on the assignment of Receivables arising under such Government Contract in order to obtain such Government Contract and gives the Administrative Agent written notice that it has entered into such Restricted Government Contract. 4.11 Intellectual Property. 13 4.11(a) Such Grantor (either itself or through licensees) will (i) continue to use each material Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use, except where the failure to do so could not, individually or in the aggregate, be expected to have a Material Adverse Effect, (ii) maintain as in the past the quality of products and services offered under such material Trademark, (iii) use such material Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such material Trademark unless the Administrative Agent, for the ratable benefit of the Lenders, shall obtain a perfected security interest in such mark pursuant to this Agreement, (v) not do any act or knowingly omit to do any act whereby such material Trademark may become invalidated or impaired in any way, and (vi) use reasonable efforts to prevent any licensee or sublicensee thereof from doing any act or knowingly omitting to do any act whereby such trademark may become invalidated or impaired in any way. 4.11(b) Such Grantor will not do any act, or omit to do any act, whereby any material Patent may become forfeited, abandoned or dedicated to the public and will use reasonable efforts to prevent any sublicensee from doing any act, or omitting to do any act, whereby any material Patent may become forfeited, abandoned or dedicated to the public. 4.11(c) Such Grantor will not do any act or knowingly omit to do any act and will use reasonable efforts to prevent any licensee or sublicensee thereof from doing any act or knowingly omitting to do any act whereby any material portion of the material Copyrights may become invalidated or otherwise impaired. Such Grantor will not do any act and will use reasonable efforts to prevent any sublicensee from doing any act whereby any material portion of the Copyrights may fall into the public domain. 4.11(d) Such Grantor (either itself or through licensees) will not do any act that knowingly uses any material Intellectual Property to infringe the intellectual property rights of any other Person. 4.11(e) Such Grantor will notify the Administrative Agent and the Lenders immediately if it knows that any application or registration relating to any material Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any material adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor's ownership of, or the validity of, any material Intellectual Property or such Grantor's right to register the same or to own and maintain the same. 4.11(f) Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent within 30 Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, such 14 Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Agents' and the Lenders' security interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby. 4.11(g) Such Grantor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material Intellectual Property, including, without limitation, filing of any necessary applications for renewal, affidavits of use and affidavits of incontestability and paying all necessary fees, except to the extent the failure to do so could not, individually or in the aggregate, be expected to have a Material Adverse Effect. 4.11(h) In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value to the Borrower and its Subsidiaries taken as a whole, promptly notify the Administrative Agent after it learns thereof and sue for infringement, misappropriation or dilution, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation or dilution. SECTION 5. REMEDIAL PROVISIONS 5.1 Certain Matters Relating to Receivables. 5.1(a) The Administrative Agent shall have the right to make test verifications of the Receivables in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications. At any time and from time to time, upon the Administrative Agent's request and at the expense of the relevant Grantor, such Grantor shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables. 5.1(b) The Administrative Agent hereby authorizes each Grantor to collect such Grantor's Receivables, subject to the Administrative Agent's direction and control, and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Lenders only as provided in subsection 5.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Agents and the Lenders, segregated from other 15 funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. In addition, the Administrative Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default and upon written notice to such Grantor of its intention to do so, to require the Grantor to prepare notices of assignment for each Government Contract for which it has not previously delivered a notice of assignment pursuant to Section 6.13 of the Credit Agreement and to file such notices of assignment (and any notice of assignment delivered to the Administrative Agent pursuant to Section 6.13 of the Credit Agreement) with the appropriate contracting officer of the appropriate Government Authority and to otherwise notify the account debtors or obligors under any Receivables of the assignment of such Receivables to the Administrative Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Grantor thereunder directly to the Administrative Agent and, upon such notification and at the expense of the Grantor, to enforce collection of any such Receivables, and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Grantor might have done. After receipt by the Grantor of the notice from the Administrative Agent referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including instruments) received by the Grantor in respect of the Receivables shall be received in trust for the benefit of the Administrative Agent, the Agents, the Lenders, the Issuing Banks and the other Holders hereunder, shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Administrative Agent in the same form as so received (with any necessary indorsement) to be applied to the Obligations in accordance with Section 8 of the Credit Agreement and (ii) the Grantor shall not adjust, settle or compromise the amount or payment of any Account, release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon. 5.1(c) At the Administrative Agent's request, each Grantor shall deliver to the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all original orders, invoices and shipping receipts. 5.2 Communications with Obligors; Grantors Remain Liable. 5.2(a) The Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Receivables and parties to the Contracts to verify with them to the Administrative Agent's satisfaction the existence, amount and terms of any Receivables or Contracts. 5.2(b) Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables and parties to the Contracts that the Receivables and the Contracts have been assigned to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect thereof shall be made directly to the Administrative Agent. 5.2(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with 16 the terms of any agreement giving rise thereto. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or the receipt by any Agent or Lender of any payment relating thereto, nor shall any Agent or Lender be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto) or Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 5.3 Pledged Stock. 5.3(a) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent's intent to exercise its corresponding rights pursuant to subsection 5.3(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Stock and all payments made in respect of the Pledged Notes, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged Securities; provided, however, that no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would materially impair the Collateral or which would result in any violation of any provision of the Credit Agreement, this Agreement or any other Credit Document. 5.3(b) If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) any or all of the Pledged Securities shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Pledged Securities at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. 17 5.3(c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Securities directly to the Administrative Agent. 5.4 Proceeds to be Turned Over To Administrative Agent. In addition to the rights of the Agent and the Lenders specified in subsection 5.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the Agents and the Lenders, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent and the Lenders) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in subsection 5.5. 5.5 Application of Proceeds. At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent's election, the Administrative Agent may apply all or any part of Proceeds held in any Collateral Account in payment of the Obligations in such order as required by the Credit Agreement, and any part of such funds which are not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to the Borrower or to whomsoever may be lawfully entitled to receive the same. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same. 5.6 Code and Other Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of any of the Agents or Lenders or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Any Agents or 18 Lenders shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor's premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this subsection 5.6, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Agents and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against any Agents or Lenders arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 15 days before such sale or other disposition. 5.7 Registration Rights. 5.7(a) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to subsection 5.6, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. 5.7(b) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if 19 such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. 5.7(c) Each Grantor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this subsection 5.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that a breach of any of the covenants contained in this subsection 5.7 will cause irreparable injury to the Agents and the Lenders, that the Agents and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this subsection 5.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 5.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the New York UCC. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. SECTION 6. THE ADMINISTRATIVE AGENT 6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. 6.1(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following: (i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or Contract or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable; 20 (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may request to evidence the Agents' and the Lenders' security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby; (iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof; (iv) execute, in connection with any sale provided for in subsection 5.6 or 5.7, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and (v)(A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may reasonably deem appropriate; (G) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent's option and such Grantor's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Agents' and the Lenders' security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. Anything in this subsection 6.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this subsection 6.1(a) unless an Event of Default shall have occurred and be continuing. 6.1(b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. 21 6.1(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this subsection 6.1, together with interest thereon at a rate per annum equal to the rate per annum at which interest would then be payable on past due Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand. 6.1(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released. 6.2 Duty of Administrative Agent. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Agents and the Lenders hereunder are solely to protect the Administrative Agents' and the Lenders' interests in the Collateral and shall not impose any duty upon any Agents or Lender to exercise any such powers. The Agents and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 6.3 Execution of Financing Statements. Pursuant to Section 9-402 of the New York UCC and any other applicable law, each Grantor authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent reasonably determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. 6.4 Authority of Administrative Agent. Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as among the Agents and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as among the Agents and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 7. MISCELLANEOUS 22 7.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, restated, supplemented or otherwise modified except in accordance with subsection 10.1 of the Credit Agreement. 7.2 Notices. All notices, requests and demands to or upon the Agents or any Grantor hereunder shall be effected in the manner provided for in subsection 10.2 of the Credit Agreement. 7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any of the Agents or Lenders, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any of the Agents or Lenders of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent, on behalf of other Agents and the Lenders, would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 7.4 Enforcement Expenses; Indemnification. 7.4(a) Each Grantor agrees to pay or reimburse each of the Lenders and the Agents for all its reasonable costs and expenses incurred in collecting against such Grantor or otherwise enforcing or preserving any rights under this Agreement and the other Credit Documents to which such Grantor is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent and of counsel each of the other Agents and Lenders. 7.4(b) Each Grantor agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement. 7.4(c) Each Grantor agrees to pay, and to save the Agents and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to subsection 10.5 of the Credit Agreement. 7.4(d) The agreements in this subsection 7.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Credit Documents. 7.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Agents and the Lenders and their 23 successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent. 7.6 Set-Off. Each Grantor hereby irrevocably authorizes each of the Agents and Lenders at any time and from time to time pursuant to subsection 10.7(a) of the Credit Agreement shall have occurred and be continuing, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor; to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Agent or Lender to or for the credit or the account of such Grantor, or any part thereof in such amounts as such Agent or Lender may elect, against and on account of the obligations and liabilities of such Grantor to such Agent or Lender hereunder and claims of every nature and description of such Agent or Lender against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any other Credit Document or otherwise, as such Agent or Lender may elect, whether or not any Agent or Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. Each of the Agents and Lenders shall notify such Grantor promptly of any such set-off and the application made by such Agent or Lender of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Agent and Lender under this subsection 7.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Agent or Lender may have. 7.7 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7.9 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 7.10 Integration. This Agreement and the other Credit Documents represent the agreement of the Grantors, the Agents and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any of the Agents or Lenders relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Credit Documents. 7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 24 7.12 SUBMISSION TO JURISDICTION; WAIVERS. EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY: 7.12(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 7.12(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 7.12(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH GRANTOR AT ITS ADDRESS REFERRED TO IN SUBSECTION 7.2 OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; 7.12(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND 7.12(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 7.13 Acknowledgements. Each Grantor hereby acknowledges that: 7.13(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents to which it is a party; 7.13(b) none of the Agents nor Lenders has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between the Grantors, on the one hand, and the Agents and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor, and 7.13(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Agents, among the Agents and/or the Lenders or among the Grantors and the Agents and/or the Lenders. 25 7.14 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 7.15 Additional Grantors. Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to subsection 6.10 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex I hereto. 7.16 Releases. (a) At such time as the Loans, the Reimbursement Obligations and the other Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors and the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination. (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. At the request and sole expense of the Borrower, a Grantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Grantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement. 7.17 Conflict. In the event there is a conflict between the terms of this Agreement and the Credit Agreement, the Credit Agreement shall control. [Signature page follows] 26 IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written. [NAMES OF SUBSIDIARIES] By: ----------------------- Name: Title: Address for Notices: ___________________________ ___________________________ ___________________________ Attention: Phone:( ) ___________ Fax: ( ) ___________ Accepted on behalf of the Agents and the Lenders as of the date first above written: BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT By: ------------------------------- Name: Title: 27 Schedule 1 DESCRIPTION OF PLEDGED SECURITIES Pledged Stock: Issuer Class of Stock Stock Certificate No. No. of Shares - ------------------- ---------------- ----------------------- --------------- Pledged Notes: Issuer Payee Principal Amount - ------------------- ---------------- ----------------------- 28 Schedule 2 FILINGS AND OTHER ACTIONS REQUIRED TO PERFECT SECURITY INTERESTS Uniform Commercial Code Filings ------------------------------- [List each office where a financing statement is to be filed] Patent and Trademark Filings ---------------------------- [List all filings] Actions with respect to Pledged Stock ------------------------------------- Other Actions ------------- [Describe other actions to be taken] 29 Schedule 3 LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE Grantor Location ------- -------- 30 Schedule 4 LOCATION OF INVENTORY AND EQUIPMENT Grantor Locations ------- --------- 31 Schedule 5 COPYRIGHTS AND COPYRIGHT LICENSES PATENTS AND PATENT LICENSES TRADEMARKS AND TRADEMARK LICENSES 32 Schedule 6 GOVERNMENT CONTRACTS 33 ACKNOWLEDGEMENT AND CONSENT The undersigned hereby acknowledges receipt of a copy of the Subsidiary Pledge and Security Agreement dated as of _________ __, ___ (the "Agreement"), made by the Grantors parties thereto for the benefit of Bank of America NT & SA, as Administrative Agent. The undersigned agrees for the benefit of the Administrative Agent and the Lenders as follows: 1. The undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned. 2. The undersigned will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 4.8(a) of the Agreement. 3. The terms of Sections 5.3(a) and 5.7 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 5.3(a) or 5.7 of the Agreement. [NAME OF ISSUER] ____________________________________________ Name:_______________________________________ Title:______________________________________ Address for Notices: ____________________________________________ ____________________________________________ Fax: _______________________________________ 34 EXHIBIT C-1 TO CREDIT AGREEMENT [FORM OF MORTGAGE] - -------------------------------------------------------------------------------- REAL ESTATE MORTGAGE among L-3 COMMUNICATIONS CORPORATION, as Mortgagor, and BANK OF AMERICA NT & SA, as Administrative Agent, as Mortgagee Dated as of April 30, 1997 - -------------------------------------------------------------------------------- This document was prepared by, and after recording should be returned to: Latham & Watkins 885 Third Avenue New York, New York Attn: Rose Greenberg, Esq. REAL ESTATE MORTGAGE THIS REAL ESTATE MORTGAGE, dated as of the 30 day of April 1997, between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation ("Mortgagor"), having its principal office at 600 Third Avenue, 34th Floor, New York, New York 10016, and BANK OF AMERICA NT & SA, a Delaware corporation ("Mortgagee"), having an office at 335 Madison Avenue, New York, New York 10017, as Administrative Agent for the lenders (the "Lenders") under that certain Credit Agreement, dated as of April 30, 1997 (the "Credit Agreement"), among Mortgagor, Mortgagee, Lenders and Lehman Commercial Paper Inc., as Arranger, Syndication Agent and Documentation Agent. W I T N E S S E T H TO SECURE: (i) The Principal sum of up to a maximum of TWO HUNDRED SEVENTY FIVE MILLION ($275,000,000) as evidenced by, and all of Mortgagor's obligations under, the promissory notes dated as of the date hereof (the "Notes") from Mortgagor in favor of Mortgagee; (ii) performance and observance of each term to be performed by Mortgagor under the Credit Agreement and any of the Credit Documents; (iii) performance and observance of each term contained in this Mortgage and payment of all sums payable by Mortgagor to Mortgagee as provided in this Mortgage; and (iv) future obligations of Mortgagor to Mortgagee and future advances by Mortgagee under the Credit Agreement. Mortgagor hereby conveys, grants, assigns, transfers and sets over to Mortgagee the following (collectively, the "Mortgaged Property"): (A) the real property described in Exhibit _____ attached hereto and made a part hereof (the "Premises"); (B) all buildings, improvements and fixtures now or hereafter located or erected on the Premises (the "Improvements"); (C) any and all leases, underlettings and licenses of the Premises or Improvements, or any part thereof, now existing or hereafter entered into by Mortgagor, including, without limitation, upon the happening and during the continuance of an Event of Default, the right to receive and collect the rents, issues and profits derived or to be derived by Mortgagor therefrom; and (D) all right, title and interest of Mortgagor in and to (i) all and singular, the tenements, hereditaments, rights of way, easements, waters, water courses, riparian rights, appendages and appurtenances and property rights belonging or in any way pertaining to the 2 Premises or the Improvements and (ii) all estate, right, title, claim or demand whatsoever, either in law or in equity, in possession or expectancy, of, in and to the Premises and the Improvements. TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and assigns forever. IN THE EVENT Mortgagor shall perform its obligations under the Credit Agreement in accordance with the terms thereof and shall pay all of the sums payable hereunder by Mortgagor, and shall comply with the terms hereunder, then this Mortgage shall be null and void and of no further force and effect and shall be released by the Mortgagee at the expense of Mortgagor. SECTION 1. COVENANTS Mortgagor covenants with Mortgagee as follows: 1.1 Definitions. As used in this Mortgage, all capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Credit Agreement: Default Rate: Citibank Base Rate as announced from time to time plus 5% per year. Events of Default: (a) any Event of Default or (b) the default in the payment of any Imposition required to be paid under this Mortgage. Loss Proceeds: all insurance proceeds, condemnation awards or other compensation in respect of a condemnation or casualty affecting all or a portion of the Mortgaged Property. Mortgage: this instrument, and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders and replacements of this instrument. Requirements of Law: all laws, ordinances, orders, judgments, rules and regulations applicable to the Mortgaged Property. Taking: a taking of all or any part of the Mortgaged Property or any interest therein or right accruing thereto, as the result of or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, or a change of grade affecting the Mortgaged Property or any part thereof. 1.2 Payment of Indebtedness. Mortgagor shall pay the indebtedness secured by this Mortgage in accordance with the terms of the Credit Agreement and perform each obligation to be performed under this Mortgage and any of the other Credit Documents. 1.3 Insurance. (a) Mortgagor shall maintain with insurers approved by Mortgagee: 3 (i) Insurance covering the Improvements against loss or damage by fire, lightning, vandalism and malicious mischief and by such other, further and additional risks as now are or hereafter may be covered by the standard extended coverage endorsement in amounts not less than the full insurable value (actual replacement value less actual physical depreciation); (ii) If the Mortgaged Property is located within a flood hazard area, flood insurance in such amounts as provided in Section 6.5 of the Credit Agreement; (iii) Comprehensive public liability, property damage and business interruption insurance applicable to the Mortgaged Property in such amounts as provided in Section 6.5 of the Credit Agreement; (iv) During the course of any construction or repair of the Improvements, workers' compensation insurance in amounts reasonably satisfactory to Mortgagee; (v) During the course of any construction or repair of Improvements, builder's completed value risk insurance against "all risks of physical loss," including collapse and transit coverage, during construction of the Improvements, covering the total value of work performed and equipment, supplies and materials furnished; (vi) Boiler and machinery insurance covering pressure vessels, air tanks, boilers, machinery, pressure piping, heating, air conditioning and elevator equipment and escalator equipment, provided the Improvements contain equipment of such nature, and insurance against loss of occupancy or use arising from any such breakdown, in amounts reasonably satisfactory to Mortgagee; and (vii) Such other insurance, and in such amounts, as reasonably may be required by Mortgagee against the same or other hazards. All policies of insurance shall, except for workers' compensation insurance, name Mortgagee as additional named insured and loss payee as its interest may require. (b) Mortgagor will make all payments for insurance premiums and will deliver to Mortgagee, promptly upon request, copies of all insurance policies required hereunder (or, in the case of blanket policies, certificates thereof) together with evidence of payment of all premiums due thereon. (c) Any amounts advanced or expended by Mortgagee to pay costs of collection of insurance proceeds hereunder, including, without limitation, reasonable attorneys' fees, costs and disbursements, shall be paid by Mortgagor to Mortgagee on demand, together with interest thereon at the Default Rate, and shall be deemed part of the indebtedness secured by this Mortgage. 1.4 Maintenance, Repairs, Additions, etc. Mortgagor shall (a) maintain the Mortgaged Property in good condition and repair (including, without limitation, any repair or rebuilding required as a result of any damage, destruction or Taking of the Mortgaged Property), wear and tear excepted, and shall not commit or suffer any waste thereof, (b) not materially alter or demolish the Mortgaged Property except to the extent that such alterations do not decrease the value of the Mortgaged Property and that any replacements will be of like or better quality than the 4 Improvements which were altered or demolished and (c) subject to subsection 1.6, comply with all Requirements of Law affecting the Mortgaged Property. 1.5 Impositions. (a) Prior to delinquency, Mortgagor shall pay (i) all real estate taxes or assessments and special assessments for local improvements, sewer rents, water rates and any other charges in lieu of or in substitution of real estate taxes or assessments and (ii) any license fee, tax or assessment imposed on Mortgagee and measured by or based in whole or in part upon the amount of the outstanding obligations secured hereby ((i) and (ii), collectively, the "Impositions"). (b) Mortgagor shall furnish Mortgagee upon request within 30 days after the date upon which any such Imposition is payable hereunder by Mortgagor, official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Mortgagee, evidencing the payment thereof. (c) If requested by Mortgagee, after any default hereunder in the payment of Impositions or after the occurrence of any Event of Default, Mortgagor shall cause to be furnished to Mortgagee a tax report of a type, duration and prepared by a company reasonably satisfactory to Mortgagee, covering the Mortgaged Property. 1.6 Permitted Contests. Mortgagor may contest, after notice to Mortgagee, any Imposition or Requirement of Law, provided that (a) in the case of an unpaid Imposition such proceedings shall suspend the collection thereof from Mortgagor, Mortgagee and the Mortgaged Property, (b) neither the Mortgaged Property nor any interest therein would be in danger of being sold, forfeited or lost, (c) in the case of a Requirement of Law, neither Mortgagor nor Mortgagee would be in any danger of any additional civil or any criminal liability for failure to comply therewith, and (d) Mortgagor shall have set aside on its books adequate reserves with respect thereto, and shall have furnished such security as may be reasonably requested by Mortgagee. 1.7 Expenses of Litigation. All sums reasonably incurred by Mortgagee for the expense of any litigation (including, without limitation, reasonable attorneys' fees and expenses) to prosecute or defend the rights and lien created by this Mortgage shall be paid by Mortgagor on demand, together with interest thereon at the Default Rate, and shall be deemed part of the indebtedness secured by this Mortgage. 1.8 Casualty or Taking of the Mortgaged Property. (a) In the event of a condemnation of all or substantially all of the Mortgaged Property, all Loss Proceeds in respect of such condemnation shall be paid to Administrative Agent on behalf of Mortgagee (as agent for all of the Lenders) and applied to the indebtedness due to Mortgagee and the other Lenders under the Credit Agreement, with any excess to be paid to Mortgagor. (b) Subject to subsection (c) below, in the event of damage to or destruction of the Mortgaged Property, or in the event of a partial condemnation of the Mortgaged Property, all Loss Proceeds shall be paid to Mortgagor, and Mortgagor shall commence to repair and restore the Mortgaged Property pursuant to Section 6.5(b) of the Credit Agreement. (c) If pursuant to Section 6.5(b) of the Credit Agreement Loss Proceeds are required to be paid to the Administrative Agent and held as collateral for application in accordance with the Security Documents, such Loss Proceeds shall be applied, and repair and restoration shall be undertaken, as follows: Mortgagor shall commence to repair and restore the Mortgaged Property 5 pursuant to plans and specifications approved by Mortgagee, in its reasonable discretion, within ninety (90) days from the date of such condemnation, damage or destruction, and shall complete the same with reasonable diligence and as promptly as may be practicable after Mortgagee approves the plans and specifications. Any Loss Proceeds received in connection with such condemnation, damage or destruction shall be payable to Mortgagee to be applied in accordance with the following provisions: (i) If the Loss Proceeds received are less than $50,000, then such proceeds shall be given to Mortgagor to be held in trust for Mortgagee and the Lenders and applied only for the purpose of repairing, restoring, replacing or rebuilding the Mortgaged Property. Any excess held by Mortgagor, after such restoration, may be retained by Mortgagor. (ii) In all other cases, the net amount of the Loss Proceeds on account of such condemnation, damage or destruction to the Mortgaged Property, after reimbursement out of such proceeds for any costs and expenses (including reasonable attorneys' fees and disbursements) for collection thereof (such net proceeds and deposits, and any other deposits made therein as provided below, being herein collectively called the "Fund") shall be received and held by Mortgagee and applied in accordance with the following provisions: (A) If the net amount of Loss Proceeds shall be insufficient to pay the entire cost of restoring the Mortgaged Property (as estimated by a registered architect or professional engineer reasonably satisfactory to Mortgagee, which estimate shall be delivered to Mortgagee before the commencement of any such work), Mortgagor shall, prior to allowing such work to commence, deposit the amount of the deficiency into the Fund, and thereafter from time to time such additional amounts as shall be needed to meet any increases in estimates made by said registered architect or professional engineer. If the net amount of said proceeds shall be insufficient to pay the entire cost of such work, Mortgagor shall pay and be responsible for the deficiency. (B) Mortgagor shall be entitled out of the Fund to ninety percent (90%) of the cost of making temporary repairs or doing other work to protect the Mortgaged Property pending adjustment of the insurance loss or the making of permanent repairs, restoration, replacements or rebuilding. (C) Mortgagor shall be entitled out of the Fund to payments from time to time as the work progresses in amounts equal to a maximum of ninety percent (90%) of the cost of labor and material incorporated into and used in such work and architects' and engineers' fees, provided and upon condition that (1) the work shall have been done in accordance with the plans and specifications therefor, any other requirements contained in this Section, (2) the remaining amount of the Fund shall be sufficient to pay in full for all of the remaining work, and (3) a certificate of an independent registered architect or professional engineer satisfactory to Mortgagee stating that such conditions have been met shall have been delivered to Mortgagee. (D) Mortgagor shall be entitled out of the Fund to the remaining ten percent (10%) of the cost of labor and material incorporated into and used in such work and architects' and engineers' fees when such work shall have been fully completed and paid for and a certificate of an independent registered architect or professional engineer satisfactory to Mortgagee stating that such conditions have been met shall have been delivered to Mortgagee. (E) At Mortgagee's request, Mortgagor shall furnish to Mortgagee at the time of any such progress or final payment, a title search or other evidence reasonably satisfactory to 6 Mortgagee (including waivers of lien agreements from the general contractor supervising such work, or in the absence of a general contractor, all contractors, materialmen and others providing labor or services in connection therewith) that the Mortgaged Property and the interests therein of Mortgagee and Mortgagor shall be free from (1) liens for labor performed or claimed to have been performed or materials supplied or claimed to have been supplied, unless the same are bonded, and (2) chattel mortgages, conditional sales contacts, title retention agreements, security interests and agreements, financing agreements, financing statements and any similar agreements, in connection with such work. Notwithstanding any provision to the contrary, Mortgagor shall not be entitled to any amount out of the Fund (x) while any such lien or other encumbrance shall remain unsatisfied of record, unless in the case of a lien the same is bonded or (y) during the continuance of any Event of Default. (F) If any of such Loss Proceeds shall remain after the full completion of, and payment for, such repairs, restoration, replacements or rebuilding, the excess shall be paid to Mortgagor. 1.9 Inspection. Mortgagee and any persons authorized by Mortgagee shall have the right to enter and inspect the Mortgaged Property at all reasonable times upon reasonable notice. 1.10 Utilities. Mortgagor shall pay when due all utility, sprinkler system and protective services charges which are furnished to the Mortgaged Property, whether public or private. 1.11 Action by Mortgagee to Preserve Mortgaged Property. Should Mortgagor fail to make any payment or do any act as and in the manner provided in this Mortgage, Mortgagee without obligation so to do and without notice to or demand upon Mortgagor and without releasing Mortgagor from any obligation, may make or do the same in such manner and to such extent as it may deem necessary therefor. Mortgagor shall, upon demand therefor by Mortgagee pay all reasonable costs and expenses incurred by Mortgagee in connection with the exercise by Mortgagee of the foregoing rights (including, without limitation, reasonable attorneys' fees and expenses) together with interest thereon from the date of each such expenditure until paid, calculated at the Default Rate and the same shall be deemed part of the indebtedness secured by this Mortgage. SECTION 2. DEFAULT 2.1 Remedies. (a) Upon the occurrence of any Event of Default, in addition to any other rights and remedies Mortgagee may have pursuant to the Credit Documents, or as provided by law, and without limitation, (a) if such event is an Event of Default specified in clause (a) or (b) of Section 8 of the Credit Agreement, automatically the indebtedness secured hereby and all other amounts owing under this Mortgage and the other Credit Documents immediately shall become due and payable, and (b) if such event is any other Event of Default, by `notice to Mortgagor, Mortgagee may declare the indebtedness secured hereby and all other amounts payable under this Mortgage and the other Credit Documents to be immediately due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. In addition, upon the occurrence of any Event of Default, Mortgagee may immediately take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, including, without limitation, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee: 7 (i) Mortgagee may, to the extent permitted by applicable law, (A) institute and maintain an action of mortgage foreclosure against all or any part of the Mortgaged Property, (B) institute and maintain an action on the Notes, or (C) take such other action at law or in equity for the enforcement of this Mortgage or any of the Credit Documents as the law may allow. Mortgagee may proceed in any such action to final judgment and execution thereon for all sums due hereunder, together with interest thereon at the Default Rate and all costs of suit, including, without limitation, reasonable attorneys' fees and disbursements. Interest at the Default Rate shall be due on any judgment obtained by Mortgagee from the date of judgment until actual payment is made of the full amount of the judgment. (ii) Mortgagee may personally, or by its agents, attorneys and employees and without regard to the adequacy or inadequacy of the Mortgaged Property or any other collateral as security for the indebtedness and obligations secured hereby enter into and upon the Mortgaged Property and each and every part thereof and exclude Mortgagor and its agents and employees therefrom without liability for trespass, damage or otherwise (Mortgagor hereby agreeing to surrender possession of the Mortgaged Property to Mortgagee upon demand at any such time) and use, operate, manage, maintain and control the Mortgaged Property and every part thereof. Following such entry and taking of possession, Mortgagee shall be entitled, without limitation, (x) to lease all or any part or parts of the Mortgaged Property for such periods of time and upon such conditions as Mortgagee may, in its discretion, deem proper, (y) to enforce, cancel or modify any Lease and (z) generally to execute, do and perform any other act, deed, matter or thing concerning the Mortgaged Property as Mortgagee shall deem appropriate as fully as Mortgagor might do. (b) The holder of this Mortgage, in any action to foreclose it, shall be entitled to the appointment of a receiver. In case of a foreclosure sale, the Mortgaged Property may be sold, at Mortgagee's election, in one parcel or in more than one parcel and Mortgagee is specifically empowered, (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Mortgaged Property to be held. (c) In the event of any breach of any of the covenants, agreements, terms or conditions contained in this Mortgage, and notwithstanding to the contrary any exculpatory or non-recourse language which may be contained herein, Mortgagee shall be entitled to enjoin such breach and obtain specific performance of any covenant, agreement, term or condition and Mortgagee shall have the right to invoke any equitable right or remedy as though other remedies were not provided for in this Mortgage. 2.2. Appointment of Receiver. If an Event of Default shall have occurred and be continuing, Mortgagee, shall, as a matter of right, be entitled to the appointment of a receiver for the Mortgaged Property, and Mortgagor hereby consents to such appointment and waives notice of any application therefor. 2.3 Remedies, etc. Cumulative. Each right, power and remedy of Mortgagee provided for herein and now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative, and the exercise by Mortgagee of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by Mortgagee of any or all such other rights, powers or remedies. SECTION 3. MISCELLANEOUS 8 3.1 Agreement. This Mortgage has been executed and delivered pursuant to the Credit Agreement and is entitled to the benefits thereof. 3.2 Notices. All notices, requests, demands and other communications hereunder shall be given as provided in the Credit Agreement. 3.3 No Oral Modification. This Mortgage may not be changed or terminated orally. 3.4 Terms Subject to Applicable Law. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this Mortgage invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. In the event any one or more of the terms contained in this Mortgage shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term hereof. 3.5 Successors and Assigns. All terms of this Mortgage shall run with the land and bind Mortgagor, its successors and assigns, and all persons claiming under or through Mortgagor or any such successor or assign and shall inure to the benefit of Mortgagee, and its successors and assigns. 3.6 Warranty of Title. Mortgagor represents that it has good and marketable fee simple title to the Mortgaged Property, subject only to the permitted exceptions shown on the title insurance policy delivered to the Mortgagee pursuant to subsection 5.1(r) of the Credit Agreement and to other Liens permitted under Section 7.3 of the Credit Agreement, and has the right to mortgage the Mortgaged Property. Mortgagor will warrant and defend to Mortgagee such title and the lien and interest of this Mortgage as a valid and enforceable first mortgage thereon. 3.7 Multiple Security. If (a) the Premises shall consist of one or more parcels, whether or not contiguous and whether or not located in the same county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter hold or be the beneficiary of one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the indebtedness secured hereby upon other property in the State in which the Premises are located (whether or not such property is owned by Mortgagor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, Mortgagee may, at its election, commence or consolidate in a single trustee's sale or foreclosure action, as the case may be, all sale or foreclosure proceedings against all such collateral securing the indebtedness secured hereby (including the Mortgaged Property), which action may be brought or consolidated in the courts of, or sale conducted in, any county in which any of such collateral is located. Mortgagor acknowledges that the right to maintain a consolidated sale or foreclosure action is a specific inducement to Mortgagee and the Lenders to extend the indebtedness secured hereby, and Mortgagor expressly and irrevocably waives any objections to the commencement or consolidation of the sale or foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have. Mortgagor further agrees that if Mortgagee shall be prosecuting one or more sales, foreclosure or other proceedings against a portion of the Mortgaged Property or against any collateral other than the Mortgaged Property, which collateral directly or indirectly secures the indebtedness secured hereby, or if Mortgagee shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral (or, in the case 9 of sale, shall have met the statutory requirements therefor with respect to such collateral), then, whether or not such proceedings are being maintained or judgments were obtained in or outside the State in which the Premises are located, Mortgagee may commence or continue any sale or foreclosure proceedings and exercise its other remedies granted in this Mortgage against all or any part of the Mortgaged Property and Mortgagor waives any objections to the commencement or continuation of a foreclosure of this Mortgage or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this Mortgage or such other proceedings on such basis. The commencement or continuation of proceedings to sell the Mortgaged Property, to foreclose this Mortgage or the exercise of any other rights hereunder or the recovery of any judgment by Mortgagee or the occurrence of any sale in any such proceedings shall not prejudice, limit or preclude Mortgagee's right to commence or continue one or more sales, foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the State in which the Premises are located) which directly or indirectly secures the indebtedness secured hereby, and Mortgagor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other sales, foreclosure or proceedings or exercise of any remedies in such sales, foreclosure or proceedings based upon any action or judgment connected to this Mortgage, and Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other sales, foreclosures or proceedings or any sale or action under this Mortgage on such basis. 3.8. Receipt of Copy. Mortgagor acknowledges that it has received a true copy of this Mortgage. 3.9. Future Advances. State Specific Clauses. [Insert additional state required clauses.] 10 IN WITNESS WHEREOF, this Mortgage has been duly executed by Mortgagor and its corporate seal has been duly affixed hereto. ATTEST ____________________ [corporate seal] By: By: --------------------------- ------------------------- Name: Name: Title: Title: The address of the within-named Mortgagee is: - -------------------------------------------------------------------------------- For the Mortgagee --------------------------------- Name: Title: 11 [ACKNOWLEDGEMENT] 12 EXHIBIT ___ to Mortgage REAL PROPERTY DESCRIPTION 13 EXHIBIT C-2 TO CREDIT AGREEMENT - -------------------------------------------------------------------------------- DEED OF TRUST among L-3 COMMUNICATIONS CORPORATION, as Grantor, and [__________], as Trustee and BANK OF AMERICA NT & SA, as Administrative Agent, as Beneficiary Dated as of April 30, 1997 - -------------------------------------------------------------------------------- This document was prepared by, and after recording should be returned to: Latham & Watkins 885 Third Avenue New York, New York 10022 Attn: Rose Greenberg, Esq. DEED OF TRUST THIS DEED OF TRUST, dated as of the 30 day of April, 1997 ("Deed of Trust"), among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation ("Grantor"), having its principal office at 600 Third Avenue, 34th Floor, New York, New York 10016; _________________ ("Trustee"), having an address at _______________; and BANK OF AMERICA NT & SA, a Delaware corporation, ("Beneficiary"), having an office at 335 Madison Avenue, New York, New York 10017, as Administrative Agent for the lenders (the Lenders") under that certain Credit Agreement, dated as of April 30, 1997 (the "Credit Agreement"), among Grantor, Grantee, Lenders and Lehman Commercial Paper Inc., as Arranger, Sydication Agent and Documentation Agent. W I T N E S S E T H TO SECURE: (i) The Principal sum of up to a maximum of TWO HUNDRED SEVENTY FIVE MILLION ($275,000,000) as evidenced by, and all of Grantor's obligations under, the promissory notes dated as of the date hereof (the "Notes") from Grantor in favor of Beneficiary; (ii) performance and observance of each term to be performed by Grantor under the Credit Agreement and any of the Credit Documents: and (iii) performance and observance of each term contained in this Deed of Trust and payment of all sums payable by Grantor to Beneficiary as provided in this Deed of Trust; (iv) future obligations of Grantor to Beneficiary and future advances by Beneficiary under the Credit Agreement. Grantor hereby conveys, grants, assigns, transfers and sets over to Trustee the following (collectively, the "Trust Property"): (A) the real property described in Exhibit A attached hereto and made a part hereof (the "Premises"); (B) all buildings, improvements and fixtures now or hereafter located or erected on the Premises (the "Improvements"); (C) any and all leases, underlettings and licenses of the Premises or Improvements, or any part thereof, now existing or hereafter entered into by Grantor, including, without limitation, upon the happening and during the continuance of an Event of Default, the right to receive and collect the rents, issues and profits derived or to be derived by Grantor therefrom; and 1 (D) all right, title and interest of Grantor in and to (i) all and singular, the tenements, hereditaments, rights of way, easements, waters, water courses, riparian rights, appendages and appurtenances and property rights belonging or in any way pertaining to the Premises or the Improvements and (ii) all estate, right, title, claim or demand whatsoever, either in law or in equity, in possession or expectancy, of, in and to the Premises and the Improvements. TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors and assigns forever. IN TRUST, NEVERTHELESS, upon the terms and trust herein set forth for the benefit and security of Beneficiary. IN THE EVENT Grantor shall perform its obligations under the Subsidiaries' Guarantee in accordance with the terms thereof and shall pay all of the sums payable under the Subsidiaries' Guarantee and hereunder by Grantor, and shall comply with the terms hereunder, then this Deed of Trust shall be null and void and of no further force and effect and shall be released by the Trustee at the direction of Beneficiary at the expense of Grantor. SECTION 1. COVENANTS Grantor covenants with Beneficiary as follows: 1.1 Definitions. As used in this Deed of Trust all capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Credit Agreement: Deed of Trust: this instrument, and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders and replacements of this instrument. Default Rate: Citibank Base Rate as announced from time to time, plus 5% per year. Events of Default: (a) any Event of Default or (b) the default in the payment of any Imposition required to be paid under this Deed of Trust. Loss Proceeds: all insurance proceeds, condemnation awards or other compensation in respect of a condemnation or casualty affecting all or a portion of the Trust Property. Requirements of Law: all laws, ordinances, orders, judgments, rules and regulations applicable to the Trust Property. Taking: a taking of all or any part of the Trust Property or any interest therein or right accruing thereto, as the result of or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, or a change of grade affecting the Trust Property or any part thereof. 2 1.2 Payment of Indebtedness. Grantor shall pay the indebtedness secured by this Deed of Trust in accordance with the terms of the Subsidiaries' Guarantee and perform each obligation to be performed under this Deed of Trust and any of the other Credit Documents. 1.3 Insurance. (a) Grantor shall maintain with insurers approved by Beneficiary: (i) Insurance covering the Improvements against loss or damage by fire, lightning, vandalism and malicious mischief and by such other, further and additional risks as now are or hereafter may be covered by the standard extended coverage endorsement in amounts not less than the full insurable value (actual replacement value less actual physical depreciation); (ii) If the Trust Property is located within a flood hazard area, flood insurance in such amounts as provided in Section 6.5 of the Credit Agreement; (iii) Comprehensive public liability, property damage and business interruption insurance applicable to the Trust Property in such amounts as provided in Section 6.5 of the Credit Agreement; (iv) During the course of any construction or repair of the Improvements, workers' compensation insurance in amounts reasonably satisfactory to Beneficiary; (v) During the course of any construction or repair of Improvements, builder's completed value risk insurance against "all risks of physical loss," including collapse and transit coverage, during construction of the Improvements, covering the total value of work performed and equipment, supplies and materials furnished; (vi) Boiler and machinery insurance covering pressure vessels, air tanks, boilers, machinery, pressure piping, heating, air conditioning and elevator equipment and escalator equipment, provided the Improvements contain equipment of such nature, and insurance against loss of occupancy or use arising from any such breakdown, in amounts reasonably satisfactory to Beneficiary; and (vii) Such other insurance, and in such amounts, as reasonably may be required by Beneficiary against the same or other hazards. All policies of insurance shall, except for workers' compensation insurance, name Beneficiary as additional named insured and loss payee as its interest may require. (b) Grantor will make all payments for insurance premiums and will deliver to Beneficiary, promptly upon request, copies of all insurance policies required hereunder (or, in the case of blanket policies, certificates thereof) together with evidence of payment of all premiums due thereon. (c) Any amounts advanced or expended by Beneficiary to pay costs of collection of insurance proceeds hereunder, including, without limitation, reasonable attorneys' fees, costs and disbursements, shall be paid by Grantor to Beneficiary on demand, together with interest thereon at the Default Rate, and shall be deemed part of the indebtedness secured by this Deed of Trust. 3 1.4 Maintenance, Repairs, Additions, etc. Grantor shall (a) maintain the Trust Property in good condition and repair (including, without limitation, any repair or rebuilding required as a result of any damage, destruction or Taking of the Trust Property), wear and tear excepted, and shall not commit or suffer any waste thereof, (b) not materially alter or demolish the Trust Property except to the extent that such alterations do not decrease the value of the Trust Property and that any replacements will be of like or better quality than the Improvements which were altered or demolished and (c) subject to subsection 1.6, comply with all Requirements of Law affecting the Trust Property. 1.5 Impositions. (a) Prior to delinquency, Grantor shall pay (i) all real estate taxes or assessments and special assessments for local improvements, sewer rents, water rates and any other charges in lieu of or in substitution of real estate taxes or assessments and (ii) any license fee, tax or assessment imposed on Beneficiary and measured by or based in whole or in part upon the amount of the outstanding obligations secured hereby ((i) and (ii), collectively, the "Impositions"). (b) Grantor shall furnish Beneficiary upon request within 30 days after the date upon which any such Imposition is payable hereunder by Grantor, official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Beneficiary, evidencing the payment thereof. (c) If requested by Beneficiary, after any default hereunder in the payment of Impositions or after the occurrence of any Event of Default, Grantor shall cause to be furnished to Beneficiary a tax report of a type, duration and prepared by a company reasonably satisfactory to Beneficiary, covering the Trust Property. 1.6 Permitted Contests. Grantor may contest, after notice to Beneficiary, any Imposition or Requirement of Law, provided that (a) in the case of an unpaid Imposition, such proceedings shall suspend the collection thereof from Grantor, Beneficiary and the Trust Property, (b) neither the Trust Property nor any interest therein would be in danger of being sold, forfeited or lost, (c) in the case of a Requirement of Law, neither Grantor nor Beneficiary would be in any danger of any additional civil or any criminal liability for failure to comply therewith, and (d) Grantor shall have set aside on its books adequate reserves with respect thereto, and shall have furnished such security as may be reasonably requested by Beneficiary. 1.7 Expenses of Litigation. All sums reasonably incurred by Beneficiary for the expense of any litigation (including, without limitation, reasonable attorneys' fees and expenses) to prosecute or defend the rights and lien created by this Deed of Trust shall be paid by Grantor on demand, together with interest thereon at the Default Rate, and shall be deemed part of the indebtedness secured by this Deed of Trust. 1.8 Casualty or Taking of the Trust Property. (a) In the event of a condemnation of all or substantially all of the Trust Property, all Loss Proceeds in respect of such condemnation award shall be paid to Administrative Agent on behalf of Beneficiary (as agent for all of the Lenders) and applied to the indebtedness due to Beneficiary and the Lenders under the Credit Agreement, with any excess to be paid to Grantor. (b) Subject to subsection (c) below, in the event of damage to or destruction of the Trust Property, or in the event of a partial condemnation of the Trust Property, all Loss Proceeds shall be paid to Grantor, and Grantor shall commence to repair and restore the Trust Property pursuant to Section 6.5(b) of the Credit Agreement. 4 (c) If pursuant to Section 6.5(b) of the Credit Agreement Loss Proceeds are required to be paid to the Administrative Agent and held as collateral for application in accordance with the Security Documents, such Loss Proceeds shall be applied, and repair and restoration shall be undertaken, as follows: Grantor shall commence to repair and restore the Trust Property pursuant to plans and specifications approved by Beneficiary, in its reasonable discretion, within ninety (90) days from the date of such condemnation, damage or destruction, and shall complete the same with reasonable diligence and as promptly as may be practicable after Beneficiary approves the plans and specifications. Any Loss Proceeds received in connection with such condemnation, damage or destruction shall be payable to Beneficiary to be applied in accordance with the following provisions: (i) If the Loss Proceeds received are less than $50,000, then such proceeds shall be given to Grantor to be held in trust for Beneficiary and the Lenders and applied only for the purpose of repairing, restoring, replacing or rebuilding the Trust Property. Any excess held by Grantor, after such restoration, may be retained by Grantor. (ii) In all other cases, the net amount of the Loss Proceeds on account of such condemnation, damage or destruction to the Trust Property, after reimbursement out of such proceeds for any costs and expenses (including reasonable attorneys' fees and disbursements) for collection thereof (such net proceeds and deposits, and any other deposits made therein as provided below, being herein collectively called the "Fund") shall be received and held by Beneficiary and applied in accordance with the following provisions: (A) If the net amount of Loss Proceeds shall be insufficient to pay the entire cost of restoring the Trust Property (as estimated by a registered architect or professional engineer reasonably satisfactory to Beneficiary, which estimate shall be delivered to Beneficiary before the commencement of any such work), Grantor shall, prior to allowing such work to commence, deposit the amount of the deficiency into the Fund, and thereafter from time to time such additional amounts as shall be needed to meet any increases in estimates made by said registered architect or professional engineer. If the net amount of said proceeds shall be insufficient to pay the entire cost of such work, Grantor shall pay and be responsible for the deficiency. (B) Grantor shall be entitled out of the Fund to ninety percent (90%) of the cost of making temporary repairs or doing other work to protect the Trust Property pending adjustment of the insurance loss or the making of permanent repairs, restoration, replacements or rebuilding. (C) Grantor shall be entitled out of the Fund to payments from time to time as the work progresses in amounts equal to a maximum of ninety percent (90%) of the cost of labor and material incorporated into and used in such work and architects' and engineers' fees, provided and upon condition that (1) the work shall have been done in accordance with the plans and specifications therefor, any other requirements contained in this Section, (2) the remaining amount of the Fund shall be sufficient to pay in full for all of the remaining work, and (3) a certificate of an independent registered architect or professional engineer satisfactory to Beneficiary stating that such conditions have been met shall have been delivered to Beneficiary. (D) Grantor shall be entitled out of the Fund so the remaining ten percent (10%) of the cost of labor and material incorporated into and used in such work and architects' and engineers' fees when such work shall have been fully completed and paid for and a certificate of an 5 independent registered architect or professional engineer satisfactory to Beneficiary stating that such conditions have been met shall have been delivered to Beneficiary. (E) At Beneficiary's request, Grantor shall furnish to Beneficiary at the time of any such progress or final payment, a title search or other evidence reasonably satisfactory to Beneficiary (including waivers of lien agreements from the general contractor supervising such work, or in the absence of a general contractor, all contractors, materialmen and others providing labor or services in connection therewith) that the Trust Property and the interests therein of Beneficiary and Grantor shall be free from (1) liens for labor performed or claimed to have been performed or materials supplied or claimed to have been supplied, unless the same are bonded, and (2) chattel mortgages, conditional sales contacts, title retention agreements, security interests and agreements, financing agreements, financing statements and any similar agreements, in connection with such work. Notwithstanding any provision to the contrary, Grantor shall not be entitled to any amount out of the Fund (x) while any such lien or other encumbrance shall remain unsatisfied of record, unless in the case of a lien the same is bonded or (y) during the continuance of any Event of Default. (F) If any of such Loss Proceeds shall remain after the full completion of, and payment for, such repairs, restoration, replacements or rebuilding, the excess shall be paid to Grantor. 1.9 Inspection. Beneficiary and any persons authorized by Beneficiary shall have the right to enter and inspect the Trust Property at all reasonable times upon reasonable notice. 1.10 Utilities. Grantor shall pay when due all utility, sprinkler system and protective services charges which are furnished to the Trust Property, whether public or private. 1.11 Action by Mortgagee to Preserve Trust Property. Should Grantor fail to make any payment or do any act as and in the manner provided in this Deed of Trust, Beneficiary without obligation so to do and without notice to or demand upon Grantor and without releasing Grantor from any obligation, may make or do the same in such manner and to such extent as it may deem necessary therefor. Grantor shall, upon demand therefor by Beneficiary pay all reasonable costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing rights (including, without limitation, reasonable attorneys' fees and expenses) together with interest thereon from the date of each such expenditure until paid, calculated at the Default Rate and the same shall be deemed part of the indebtedness secured by this Deed of Trust. SECTION 2. DEFAULT 2.1 Remedies. (a) Upon the occurrence of any Event of Default, in addition to any other rights and remedies Beneficiary may have pursuant to the Credit Documents, or as provided by law, and without limitation, (a) if such event is an Event of Default specified in clause (a) or (b) of Section 8 of the Credit Agreement, automatically the indebtedness secured hereby and all other amounts owing under the Deed of Trust and the other Credit Documents immediately shall become due and payable, and (b) if such event is any other Event of Default, by notice to Grantor, Beneficiary may declare the indebtedness secured hereby and all other amounts payable under this Deed of Trust and the other Credit Documents to be immediately due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. In addition, upon the occurrence of any Event of Default, Beneficiary may immediately take such action, without notice or demand, as it deems advisable to 6 protect and enforce its rights against Grantor and in and to the Trust Property, including, without limitation, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner as Beneficiary may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Beneficiary: (i) Beneficiary may, to the extent permitted by law, elect to cause the Trust Property or any part thereof to be sold as follows: The Trustee, his successor or substitute, is authorized and empowered and it shall be his special duty at the request of Beneficiary to enter and take possession of the Trust Property, and before or after such entry to [INSERT STATE SPECIFIC REQUIREMENTS FOR SALE] advertise the sale of the Trust Property for ___ days by ___ weekly notices in some newspaper published in the county where such sale is to be made and to sell the Trust Property or any part thereof situated in the State(s) of [________] at the [courthouse door of any county] in the State(s) of [_______________] in which any part of the Trust Property is situated, at public vendue to the highest bidder for cash between the hours of [__________________] of the day fixed in the notice. Said sale shall be free from equity of redemption, statutory right of redemption, homestead, dower, and all other rights and exemptions of every kind, all of which are hereby waived, and the Trustee shall execute a conveyance to the purchaser and deliver possession to the purchaser, which Grantor binds itself shall be given without obstruction, hindrance or delay. Any sale made by the Trustee hereunder may be as an entirety or in such parcels or parts as Beneficiary may request, and any sale may be adjourned by announcement at the time and place appointed for such sale without further notice except as may be required by law. The sale by the Trustee of less than the whole of the Trust Property shall not exhaust the power of sale herein granted, and the Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Trust Property shall be sold; and, if the proceeds of such sale of less then the whole of the Trust Property shall be less than the aggregate of the indebtedness secured hereby and the expense of executing this trust as provided herein, this Deed of Trust and the lien hereof shall remain in full force and effect as to the unsold portion of the Trust Property just as though no sale had been made; provided, however, that Grantor shall never have any right to require the sale of less than the whole of the Trust Property but Beneficiary shall have the right, at its sole election, to request the Trustee to sell less than the whole of the Trust Property. After each sale, the Trustee shall make to the purchaser or purchasers at such sale good and sufficient conveyances, conveying the property so sold to the purchaser or purchasers with general warranty of title as then possessed by the Trustee, and after each sale the Trustee shall receive the proceeds of said sale or sales and apply the same as herein provided. The power of sale granted herein shall not be exhausted by any sale held hereunder by the Trustee or his substitute or successor, and such power of sale may be exercised from time to time and as many times as the Beneficiary may deem necessary until all the Trust Property has been duly sold and all secured indebtedness has been fully paid. In the event any sale hereunder is not completed or is defective in the opinion of the Beneficiary, such sale shall not exhaust the power of sale hereunder and the Beneficiary shall have the right to cause a subsequent sale or sales to be made hereunder. Any and all statements of fact or other recitals made in any deed or deeds given by the Trustee or any successor or substitute appointed hereunder as to nonpayment of the indebtedness secured hereby or as to the occurrence of any default, or as to Beneficiary having declared all such indebtedness to be due and payable, or as to the request to sell, or as to notice of time, place and terms of sale and the properties to be sold having been duly given, or as to the refusal, failure or inability to act of the Trustee or any substitute or successor, or as to the appointment of any substitute or successor, shall be taken as prima facie evidence of the truth of the facts so stated and 7 recited. [The Trustee, his successor or substitute, may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by the Trustee, including the posting of notices and the conduct of sale, but in the name and on behalf of the Trustee, his successor or substitute.] This Deed of Trust shall be effective as a mortgage as well as a deed of trust and upon the occurrence of a default may be foreclosed as to any of the Trust Property in any manner permitted by the laws of the State[s] of [_____________] or of any other state in which any part of the Trust Property is situated, and any foreclosure suit may be brought by the Trustee or by Beneficiary. In the event a foreclosure hereunder shall be commenced by the Trustee, or his substitute or successor, Beneficiary may at any time before the sale of the Trust Property direct the said Trustee to abandon the sale, and may then institute suit for the collection of the indebtedness and obligations secured hereby, and for the foreclosure of the lien of this Deed of Trust. It is agreed that if Beneficiary should institute a suit for the collection of the secured indebtedness and for the foreclosure of the lien of this Deed of Trust, Beneficiary may at any time before the entry of a final judgment in said suit dismiss the same, and require the Trustee, his substitute or successor to sell the property in accordance with the provisions of this Deed of Trust. (ii) Beneficiary may, to the extent permitted by applicable law, (A) institute and maintain an action of judicial foreclosure against all or any part of the Trust Property, (B) institute and maintain an action on the Subsidiaries' Guarantee, or (C) take such other action at law or in equity for the enforcement of this Deed of Trust or any of the Credit Documents as the law may allow. Beneficiary may proceed in any such action to final judgment and execution thereon for all sums due hereunder, together with interest thereon at the Default Rate and all costs of suit, including, without limitation, reasonable attorneys' fees and disbursements. Interest at the Default Rate shall be due on any judgment obtained by Beneficiary from the date of judgment until actual payment is made of the full amount of the judgment. (iii) Beneficiary may personally, or by its agents, attorneys and employees and without regard to the adequacy or inadequacy of the Trust Property or any other collateral as security for the indebtedness and obligations secured hereby enter into and upon the Trust Property and each and every part thereof and exclude Grantor and its agents and employees therefrom without liability for trespass, damage or otherwise (Grantor hereby agreeing to surrender possession of the Trust Property to Beneficiary upon demand at any such time) and use, operate, manage, maintain and control the Trust Property and every part thereof. Following such entry and taking of possession, Beneficiary shall be entitled, without limitation, (x) to lease all or any part or parts of the Trust Property for such periods of time and upon such conditions as Beneficiary may, in its discretion, deem proper, (y) to enforce, cancel or modify any lease on such property and (z) generally to execute, do and perform any other act, deed, matter or thing concerning the Trust Property as Beneficiary shall deem appropriate as fully as Grantor might do. (b) Beneficiary, in any action to foreclose this Deed of Trust in a judicial procedure or in connection with the exercise of any non-judicial power of sale by Trustee, shall be entitled to the appointment of a receiver. In case of a trustee's sale or foreclosure sale, the Trust Property may be sold, at Beneficiary's election, in one parcel or in more than one parcel and Beneficiary is specifically empowered (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Trust Property to be held. 8 (c) In the event of any breach of any of the covenants, agreements, terms or conditions contained in this Deed of Trust, Beneficiary or Trustee shall be entitled to enjoin such breach and obtain specific performance of any covenant, agreement, term or condition and Beneficiary and Trustee shall have the right to invoke any equitable right or remedy as though other remedies were not provided for in this Deed of Trust. 2.2. Appointment of Receiver. If an Event of Default shall have occurred and be continuing, Beneficiary, shall, as a matter of right, be entitled to the appointment of a receiver for the Trust Property, and Grantor hereby consents to such appointment and waives notice of any application therefor. 2.3 Remedies, etc. Cumulative. Each right, power and remedy of Beneficiary provided for herein and now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative, and the exercise by Beneficiary of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by Beneficiary of any or all such other rights, powers or remedies. SECTION 3. MISCELLANEOUS 3.1 Agreement. This Deed of Trust has been executed and delivered pursuant to the Credit Agreement and is entitled to the benefits thereof. 3.2 Notices. All notices, requests, demands and other communications hereunder shall be given as provided in the Credit Agreement, except that notices to Trustee shall be given at the address set forth at the beginning of this Deed of Trust. 3.3 No Oral Modification. This Deed of Trust may not be changed or terminated orally. 3.4 Terms Subject to Applicable Law. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this Deed of Trust invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. In the event any one or more of the terms contained in this Deed of Trust shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term hereof. 3.5 Successors and Assigns. All terms of this Deed of Trust shall run with the land and bind Grantor, its successors and assigns, and all persons claiming under or through Grantor or any such successor or assign and shall inure to the benefit of Trustee and Beneficiary, and their respective successors and assigns. 3.6 Warranty of Title. Grantor represents that it has good and marketable fee simple title to the Trust Property, subject only to the permitted exceptions shown on the title insurance policy delivered to the Beneficiary pursuant to subsection 5.1(r) of the Credit Agreement and to other Liens permitted under Section 7.3 of the Credit Agreement, and has the right to mortgage the Trust Property. Grantor will warrant and defend to Beneficiary such title and the lien and interest of this Deed of Trust as a valid and enforceable first deed of trust thereon. 9 3.7 Successor Trustee. Beneficiary shall have the right to appoint a substitute, or a successor trustee, to act as Trustee hereunder by written designation. Such right shall extend to the appointment of other successor and substitute trustees successively until the indebtedness hereby secured has been paid in full or until the Trust Property is sold hereunder, and each substitute and successor trustee shall succeed to all of the rights and powers of the original Trustee named herein. [ADD ADDITIONAL STATE SPECIFIC REQUIREMENTS] 3.8 Multiple Security. If (a) the Premises shall consist of one or more parcels, whether or not contiguous and whether or not located in the same county, or (b) in addition to this Deed of Trust, Beneficiary shall now or hereafter hold or be the beneficiary of one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the indebtedness secured hereby upon other property in the State in which the Premises are located (whether or not such property is owned by Grantor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, Beneficiary may, at its election, commence or consolidate in a single trustee's sale or foreclosure action, as the case may be, all sale or foreclosure proceedings against all such collateral securing the indebtedness secured hereby (including the Trust Property), which action may be brought or consolidated in the courts of, or sale conducted in, any county in which any of such collateral is located. Grantor acknowledges that the right to maintain a consolidated sale or foreclosure action is a specific inducement to Beneficiary and the Lenders to extend the indebtedness secured hereby, and Grantor expressly and irrevocably waives any objections to the commencement or consolidation of the sale or foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have. Grantor further agrees that if Trustee or Beneficiary shall be prosecuting one or more sales, foreclosure or other proceedings against a portion of the Trust Property or against any collateral other than the Trust Property, which collateral directly or indirectly secures the indebtedness secured hereby, or if Beneficiary shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral (or, in the case of a trustee's sale, shall have met the statutory requirements therefor with respect to such collateral), then, whether or not such proceedings are being maintained or judgments were obtained in or outside the State in which the Premises are located, Beneficiary may commence or continue any sale or foreclosure proceedings and exercise its other remedies granted in this Deed of Trust against all or any part of the Trust Property and Grantor waives any objections to the commencement or continuation of a sale of the Premises or foreclosure of this Deed of Trust or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this Deed of Trust or such other proceedings on such basis. The commencement or continuation of proceedings to sell the Trust Property in a trustee's sale, to foreclose this Deed of Trust or the exercise of any other rights hereunder or the recovery of any judgment by Beneficiary or the occurrence of any sale by the Trustee in any such proceedings shall not prejudice, limit or preclude Beneficiary's right to commence or continue one or more sales, foreclosure or other proceedings or obtain a judgment against (or, in the case of a trustee's sale, to meet the statutory requirements for, any such sale of) any other collateral (either in or outside the State in which the Premises are located) which directly or indirectly secures the indebtedness secured hereby, and Grantor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other sales, foreclosure or proceedings or exercise of any remedies in such sales, foreclosure or proceedings based upon any action or judgment connected to this Deed of Trust, and Grantor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other sales, foreclosure or proceedings or any sale or action under this Deed of Trust on such basis. 10 3.9. Receipt of Copy. Grantor acknowledges that it has received a true copy of this Deed of Trust. 3.10. State Specific Clauses. [ADD ADDITIONAL STATE REQUIRED CLAUSES] 11 IN WITNESS WHEREOF, this Deed of Trust has been duly executed by Grantor and its corporate seal has been duly affixed hereto. _________________________________ By: _____________________________ Name: Title: 12 [ACKNOWLEDGEMENT] 13 EXHIBIT A to Deed of Trust REAL PROPERTY DESCRIPTION 14 EXHIBIT D-1 [LETTERHEAD OF SIMPSON THACHER & BARTLETT] April 30, 1997 Lehman Commercial Paper Inc., as Arranger, Syndication Agent and Documentation Agent 3 World Financial Center, 9th Floor New York, New York 10285 Bank of America NT & SA, as Administrative Agent 335 Madison Avenue New York, New York 10017 The Lenders Listed on Schedule 1 hereto Ladies and Gentlemen: We have acted as special counsel to L-3 Communications Holdings, Inc., a Delaware corporation ("Holdings"), and L-3 Communications Corporation, a Delaware corporation (the "Borrower", collectively with Holdings, the "Loan Parties"), in connection with the preparation, execution and delivery of the following documents: (i) the Credit Agreement dated as of April 30, 1997 (the "Credit Agreement") among the Borrower, the Lenders parties thereto, Lehman Commercial Paper Inc., as Arranger, Syndication Agent and Documentation Agent, and Bank of America NT & SA, as Administrative Agent, (ii) the Notes, (iii) the Parent Pledge and Security Agreement, (iv) the Borrower Pledge and Security Agreement, (v) the Parent Guarantee and (vi) the SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -2- April 30, 1997 Mortgages (the documents referred to in clauses (i) through (vi) are referred to herein collectively as the "Loan Documents"). Terms defined in the Loan Documents are used herein as therein defined. This opinion is being delivered to you pursuant to Section 5.1(p) of the Credit Agreement. In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of each of the Loan Documents. In addition, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, instruments and other documents and have made such other investigations as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth. For the purposes hereof, we have assumed, with your permissions, the genuineness of all signatures, the legal capacity of natural persons and the authenticity and regularity of all documents examined by us. As to questions of fact relevant to this opinion, we have relied upon, and assume the accuracy of, the representations and warranties of the Loan Parties in the Loan Documents and have relied upon certificates and oral or written statements and other information of public officials, officers and representatives of the Loan Parties and others and assume compliance on the part of all parties to the Loan Documents with their covenants and agreements contained therein. In rendering the opinions expressed below, we have assumed, with your permission and without any independent investigation or verification of any kind, that (a) the Loan Documents constitute the valid and legally binding obligations of each party to SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -3- April 30, 1997 the Loan Documents other than the Loan Parties, enforceable against such parties in accordance with their respective terms, and (b) the execution, delivery and performance by each Loan Party of each Loan Document to which it is a party do not (i) contravene, or require any order, consent, approval, license, authorization, validation, filing, recording, registration or exemption not obtained or made under, any applicable provision of any law, statute, rule or regulation (other than any law, statute, rule or regulation of the United States of America or the State of New York and the Delaware General Corporation Law) or any order, writ, injunction or decree of any court or other governmental authority binding upon such Loan Party or (ii) contravene, or require any consent not obtained under, any contractual obligation applicable to or binding upon such Loan Party (other than the Transaction Documents). Based upon the foregoing, and subject to the qualifications and limitations stated herein, we are of the opinion that: 1. The Borrower has been duly incorporated and is validly existing and in good standing under the laws of the State of Delaware with corporate power and authority to conduct its business as now conducted and to own, or hold under lease, its assets and to enter into the Credit Agreement, the Notes, the Borrower Pledge and Security Agreement, and the Mortgages (collectively, the "Borrower Credit Documents") and perform its obligations thereunder. Based solely on certificates from public officials, we confirm that the Borrower is qualified to do business in each State where such qualification is required, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. 2. Holdings has been duly incorporated and is validly existing and in good standing under the laws of the State of Delaware with corporate power and authority to conduct its business as now conducted and to own, or hold under lease, its assets and to enter into the Parent Guarantee and the Parent Pledge and Security Agreement (collectively, the "Guarantor Documents") and perform its obligations SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -4- April 30, 1997 thereunder. Based solely on certificates from public officials, we confirm that Holdings is qualified to do business in New York. 3. The execution, delivery and performance of the Borrower Credit Documents have been duly authorized by all necessary corporate action of the Borrower, and the Borrower Credit Documents have been duly executed and delivered by the Borrower. 4. The execution, delivery and performance of the Guarantor Documents have been duly authorized by all necessary corporate action of Holdings, and the Guarantor Documents have been duly executed and delivered by Holdings. 5. Each of the Borrower Credit Documents (other than any Mortgage which by its terms is governed by the laws of a jurisdiction other than New York State) constitutes a legally valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. 6. Each of the Guarantor Documents constitutes a legally valid and binding obligation of Holdings, enforceable against Holdings in accordance with its terms. 7. The execution and delivery of the Borrower Credit Documents by the Borrower, the borrowing and granting of security interests by the Borrower under the Borrower Credit Documents and the consummation of the Transaction on the date hereof do not: (a) violate any federal or New York statute, rule or regulation applicable to the Borrower or the Delaware General Corporation Law (including, without limitation, Regulation G, T, U or X of the Board of Governors of the Federal Reserve System, but excluding any government procurement statute or regulations issued pursuant thereto, as to which we understand that you have obtained the opinion of Fried, Frank, Harris, Schriver & Jacobsen), (b) violate the provisions of its certificate of incorporation or by-laws, (c) result in (i) the breach of or a default under any of the Transaction Documents to which the Borrower is a party or (ii) the creation of any lien under any of the Transaction Documents to which the Borrower is a party, except for liens arising under the Security Documents (as defined below), or (d) require any consents, approvals, authorizations, registrations, declarations or filings by the Borrower under any federal or New York State statute, rule or regulation applicable to the Borrower, except (i) the filing of the Financing Statements (as defined below) naming the Borrower as the debtor, (ii) approvals required by the Hart-Scott-Rodino Antitrust Improvements Act which have been obtained, (iii) the consents under the Assignment of Claims Act and (iv) those other consents, approvals, authorizations, registrations, declarations and filings required under any federal or New York State statute, rule or regulation and listed on Schedule 4.4 to the Credit Agreement. SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -5- April 30, 1997 8. The execution and delivery of the Guarantor Documents by Holdings, the making of the guarantee and granting of the security interests by Holdings under the Guarantor Documents and the consummation of the Transaction on the date hereof do not: (a) violate any federal or New York statute, rule or regulation applicable to Holdings or the Delaware General Corporation Law (including, without limitation. Regulation G, T, U or X of the Board of Governors of the Federal Reserve System, but excluding any government procurement statute or regulations issued pursuant thereto, as to which we understand that you have obtained the opinion of Fried, Frank, Harris, Schriver & Jacobsen), (b) violate the provisions of its certificate of incorporation or by-laws, (c) result in (i) the breach of or a default under any of the Transaction Documents to which Holdings is a party or (ii) the creation of any lien under any of the Transaction Documents to which Holdings is a party, except for liens arising under the Security Documents (as defined below), or (d) require any consents, approvals, authorizations, registrations, declarations or filings by Holdings under any federal or state statute, rule or regulation applicable to Holdings, except (i) the filing of the Financing Statements (as defined below) naming Holdings as the debtor, (ii) approvals required by the Hart-Scott-Rodino Antitrust Improvements Act which have been obtained, (iii) the consents under the Assignment of Claims Act and (iv) those other consents, approvals, authorizations, registrations, declarations and filings required under any federal or New York State statute, rule or regulation and listed on Schedule 4.4 to the Credit Agreement. 9. The provisions of the Borrower Pledge and Security Agreement are effective to create valid security interests in favor of the Administrative Agent in that portion of the collateral described in the Borrower Pledge and Security Agreement which is subject to Article 9 of the New York UCC (the "Borrower Collateral") as security for the payment, to the extent set forth therein, of all obligations of the Borrower to the Agents and the Lenders under the Borrower Credit Documents. 10. The provisions of the Parent Pledge and Security Agreement are effective to create valid security interests in favor of the Administrative Agent in that portion of the collateral described in the Parent Pledge and Security Agreement which is subject to Article 9 of the New York UCC (the "Parent Collateral" and, together with the Borrower Collateral, the "Collateral") as security for the payment, to the extent set forth therein, of all obligations of the Holdings to the Agents and the Lenders under the Guarantor Documents. 11. The UCC-1 financing statements naming the Borrower as debtor which are attached hereto as Exhibit A (the "Borrower Financing Statements") and the UCC-1 financing statements naming Holdings as debtor which are attached hereto SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -6- April 30, 1997 as Exhibit B (the "Holdings Financing Statements"; the Borrower Financing Statements and the Holdings Financing Statements, collectively, the "Financing Statements") are in appropriate form for filing in the Office of the Secretary of State of New York, the Office of the New York City Register and the Office of the Suffolk County Clerk (collectively, the "Filing Offices"). Upon the proper filing of the Financing Statements in the Filing Offices, the security interest in favor of the Administrative Agent in the Collateral will be perfected to the extent a security interest in such Collateral can be perfected by filing a financing statement under the provisions of the New York UCC. 12. Assuming the Administrative Agent takes possession of and holds the shares of capital stock listed on Schedule 1 to the Parent Pledge and Security Agreement (the "Pledged Shares"), delivered to the Administrative Agent pursuant to the Parent Pledge and Security Agreement, with undated stock powers duly indorsed in blank, in the State of New York, the Parent Pledge and Security Agreement will create a valid and perfected security interest in favor of the Administrative Agent in the rights in such Pledged Shares which Holdings has or has actual authority to convey, as security for the payment, to the extent set forth in the Parent Pledge and Security Agreement, of all obligations of Holdings to the Lenders under the Guarantor Documents. 13. The Borrower's authorized capital stock consists of 100 shares of common stock, all of which have been duly authorized and validly issued, are fully paid and nonassessable, are free of preemptive rights and, based solely on our review of the Borrower's stock records, are owned of record by Holdings free and clear of all liens, claims, charges, or encumbrances other than Liens created or permitted by the Security Documents. Holdings has no direct or indirect Subsidiaries other than the Borrower. 14. Assuming the Mortgage covering the Borrower's real property located in Hauppauge, New York (the "New York Mortgage") is recorded in the appropriate public records and that all necessary mortgage recording taxes have been paid, the New York Mortgage will constitute a valid and enforceable lien on the property described therein, securing the Borrower's obligations under the Notes. 15. The Borrower is not an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. 16. Holdings is not an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -7- April 30, 1997 17. The choice of New York law to govern each Loan Document in which such choice is stipulated is a valid and effective choice of law under the laws of the State of New York. Our opinions in paragraphs 5 and 6 above are subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. Our opinions in paragraphs 5 and 6 above are also subject to the qualification that certain remedial and exculpatory provisions of, and waivers of rights contained in, the Borrower Pledge and Security Agreement, the Parent Pledge and Security Agreement and the New York Mortgage (together, the "Security Documents") are or may be unenforceable in whole or in part under the laws of the State of New York, but such laws do not, in our opinion, make the remedies afforded by the Security Documents inadequate for the practical realization of the benefits intended to be provided thereby. Our opinions in paragraph 9, 10 and 11 above are limited to Article 9 of the New York UCC and our opinion in paragraph 12 above is limited to Article 8 of the New York UCC and therefore those opinion paragraphs do not address (i) the laws of jurisdictions other than New York, (ii) the laws of New York except for Article 8 or 9, as the case may be, of the New York UCC, (iii) collateral of a type not subject to Article 8 or 9, as the case may be, of the New York UCC and (iv) what law governs perfection of the security interests granted in the collateral covered by this opinion letter under New SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -8- April 30, 1997 York UCC ss. 9-103. Our opinions in paragraphs 9, 10, 11 and 12 above should be interpreted in accordance with the Special Report by the TriBar Opinion Committee: U.C.C. Security Interest Opinions. 49 Bus. Law. 359 (1993). With your permission, we express no opinion as to (a) the perfection of the Administrative Agent's security interests in Pledged Securities with respect to which a security interest may be perfected only through methods other than the possession of certificates representing the Pledged Securities; (b) any provision of the Loan Documents which is intended (i) to establish any standard as the measure of the performance by any party thereto of such party's obligations of good faith, diligence, fair dealing, reasonableness or care or the fulfillment of the duties imposed on any secured creditor with respect to the disposition or redemption of collateral, accounting for surplus proceeds of collateral or accepting collateral in discharge of liabilities owed to any creditor or unsecured creditor or (ii) to permit modification thereof only by means of an agreement in writing signed by the parties thereto; (c) except as set forth in paragraphs 9, 10, 11 and 12 above, the attachment, creation, perfection, enforceability or priority of any liens or security interests purported to be granted under the Loan Documents; (d) any provision of the Loan Documents (i) requiring payment of attorneys' fees, except to the extent a court determines such fees to be reasonable or (ii) waiving objections based on forum non-conveniens; (e) the effect of the compliance or noncompliance with any federal or state laws or regulations applicable to the Lenders or their affiliates because of their legal or regulatory status or the nature of their businesses; (f) any provision of the SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -9- April 30, 1997 Loan Documents insofar as it purports to grant a right of setoff in respect of any Loan Party's or its subsidiaries' assets (i) to any person other than a creditor of such Loan Party or subsidiary, as the case may be, or (ii) to any Lender in an amount greater than the amount owing by such Loan Party or subsidiary, as the case may be, to such Lender; (g) the right, title or interest of any person in or to, or the condition of title or ownership of, or the existence of, any property purported to be subject to the Loan Documents; (h) Section 2.9(c) of the Credit Agreement (and corresponding provisions in each of the other Loan Documents) insofar as they relate to post-judgment or default interest rates or interest on overdue amounts; (i) any provision of the Loan Documents which purports to require that any collateral or property be held in trust or imposes fiduciary duties on any party thereto; (j) any provisions of any Loan Document that provides that a Loan Party's liability thereunder shall not be affected by action or failure to act on the part of the beneficiaries of any Loan Document or by amendments or waivers of provisions of documents governing the guaranteed or secured obligations; (k) with respect to the validity, binding effect or enforceability of any provision of any Loan Document which purports to authorize you to sign or file financing statements or other documents without the signature of the applicable Loan Party (except to the extent a secured party may execute and file financing statements without the signature of the debtor under Section 9-402(2) of the New York UCC); (l) as to the enforceability of the indemnification provisions of the Loan Documents insofar as said provisions contravene public policy; and (m) the enforceability of the provisions of any agreement or document to the extent SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -10- April 30, 1997 that such provisions constitute a waiver of illegality as a defense to performance of contract obligations or any other defense to performance which cannot, as a matter of law, be effectively waived. We wish to point out that (a) in the case of property that becomes collateral under the Loan Documents after the date hereof, Section 552 of Title 11 of the United States Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case and (b) the perfection of the Administrative Agent's security interest in proceeds is limited to the extent set forth in 9-306 of the New York UCC. In addition, we express no opinion as to the enforceability of any provision of any Loan Document whereby any Loan Party purports to submit to the subject matter jurisdiction of the United States District Court for the Southern District of New York. We note the limitations of 28 U.S.C. ss. 1332 on federal court jurisdiction where diversity of citizenship is lacking, and we also note that such submissions cannot supersede that court's discretion in determining whether to transfer an action from one federal court to another under 28 U.S.C. ss. 1404(a). We are members of the Bar of the State of New York and we express no opinion as to the laws of any jurisdiction other than the federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware. We express no opinion as to the enforceability, attachment, creation, SIMPSON THACHER & BARTLETT Lehman Commercial Paper Inc. Bank of America NT & SA -11- April 30, 1997 perfection or priority of any security interest in or lien on patents, trade names, trademarks, copyrights, other intellectual property or any agreements, licenses or instruments relating thereto. This opinion is rendered to you in connection with the above-described transactions. This opinion may not be relied upon by you for any other purpose, or relied upon by any other person, firm or corporation without our prior written consent. Very truly yours, /s/ Simpson Thacher & Bartlett SIMPSON THACHER & BARTLETT Schedule 1 LENDERS LEHMAN COMMERCIAL PAPER INC. BANK OF AMERICA NT & SA CREDIT LYONNAIS, NEW YORK BRANCH FLEET NATIONAL BANK MARINE MIDLAND BANK BANK OF NOVA SCOTIA BANKBOSTON, N.A. THE FIRST NATIONAL BANK OF CHICAGO THE FUJI BANK, LIMITED NEW YORK BRANCH CANADIAN IMPERIAL BANK OF COMMERCE CITIBANK, N.A. THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P. KZH HOLDING CORPORATION II KZH HOLDING CORPORATION MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. METROPOLITAN LIFE INSURANCE COMPANY OAK HILL SECURITIES FUND, L.P. OCTAGON CREDIT INVESTORS LOAN PORTFOLIO (a unit of the Chase Manhattan Bank) PARIBAS CAPITAL FUNDING LLC PILGRIM AMERICA PRIME RATE TRUST PRIME INCOME TRUST ROYALTON COMPANY CRESCENT / MACH I PARTNERS L.P. UNITED COMPANIES LIFE INSURANCE COMPANY VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST BANK OF MONTREAL BANK OF TOKYO - MITSUBISHI TRUST COMPANY BANQUE FRANCAISE DU COMMERCE EXTERIEUR BHF - BANK AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH CORESTATES BANK, N.A. GOLDMAN SACHS CREDIT PARTNERS L.P. PNC BANK, NATIONAL ASSOCIATION SKANDINAVISKA ENSKILDA BANKEN CORPORATION SOCIETE GENERALE, NEW YORK BRANCH THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH THE BANK OF NEW YORK THE MITSUBISHI TRUST AND BANKING CORPORATION TRANSAMERICA BUSINESS CREDIT CORPORATION U.S. BANK EXHIBIT A STATE OF NEW YORK Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1 - -------------------------------------------------------------------------------- This FINANCING STATEMENT is presented to a Filing Officer for filing pursuant to the Uniform Commercial Code - -------------------------------------------------------------------------------- No of Additional Sheets Presented - -------------------------------------------------------------------------------- 1. Debtor(s) (Last Name First) and Address(es) L-3 COMMUNICATIONS CORPORATION 600 Third Avenue, 34th Fl. New York, New York 10016 13-3937436 - -------------------------------------------------------------------------------- 2. Secured Party(ies) Name(s) and Address(es) BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT 335 Madison Avenue New York, New York 10017 94-168-7665 - -------------------------------------------------------------------------------- 3. |_| The debtor is a transmitting utility - -------------------------------------------------------------------------------- 4. For Filing Officer Date, Time No Filing Office - -------------------------------------------------------------------------------- 5. This Financing Statement covers the following types (or items) of property: All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the collateral; and proceeds and products of the foregoing as more particularly defined and described on Exhibit A attached hereto and made a part hereof. FILED WITH: NEW YORK COUNTY |X| Products of the Collateral are also covered - -------------------------------------------------------------------------------- 6. Assignee(s) of Secured Party and Address(es) - -------------------------------------------------------------------------------- 7. |_| The described crops are growing or to be grown on* |_| The described goods are to be affixed to* |_| The timber to be cut or minerals or the like (including oil and gas) is on* *(Describe Real Estate Below) - -------------------------------------------------------------------------------- 8. Describe Real Estate Here: |_| This statement is to be indexed in the Real Estate Records No. & Street Town or City County Section Block Lot - -------------------------------------------------------------------------------- 9. Name of a Record Owner - -------------------------------------------------------------------------------- 10. This statement is filed without the debtor's signature to perfect a security interest in collateral (check appropriate box) |_| under a security agreement signed by debtor authorizing secured party to file this statement, or |_| which is proceeds of the original collateral described above in which a security interest was perfected, or |_| acquired after a change of name, identity or corporate structure of the debtor, or |_| as to which the filing has lapsed, or already subject to a security interest in another jurisdiction: |_| when the collateral was brought into this state, or |_| when the debtor's location was changed to this state L-3 COMMUNICATIONS CORPORATION BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT - ----------------------------------- ----------------------------------- By /s/ [Illegible] By /s/ [Illegible] -------------------------------- ------------------------------------ Signature(s) of Debtor(s) Signature(s) of Secured Party(ies) (1) Filing Officer Copy - Numerical STANDARD FORM - FORM UCC-1 - -------------------------------------------------------------------------------- INSTRUCTIONS (1) Remove Secured Party and Debtor copies and send other three copies to the filing officer. (2) Filing fee - for filing in the office of the Secretary of State, see section 96-a of the Executive Law; for filing in the office of the County Clerk or New York City Register see section 8021(f) at the Civil Practice Law and Rules; or you may contact any of the respective offices for information relative to fees. (3) If the space provided for any item(s) on the form is inadequate, the item(s) should be continued on additional sheets, preferably 7-1" x 10" or 7-1" x 8". Only one copy of such additional sheets need be presented to the filing officer with a set of three copies of this financing statement. (4) If collateral is crops or goods which are or are to become fixtures or timber to be cut, or minerals or the like (including oil and gas), check the appropriate box in Item 7; check the box in Item 8 the real estate by street and number, if any or if none, by description sufficient to identify it, such as "The real property described in Liber ____ of Deeds (or Mortgages) at Page ____", and by city or town and county, if any, and if in New York City, or Nassau or Onondaga County where the "block" system of recording or registering and indexing conveyances is in use, by the number of the Block and of the Section, if any, and of the Lot, if any, of the real estate involved. Also give the name(s) of a record owner of the real estate in Item 9. (5) When a copy of the security agreement is used as a Financing Statement, the filing fee is that of a non-standard form filing. It is requested that it be accompanied by a completed but unsigned set of these forms. (6) At the time of original filing, filing officer will return second copy as an acknowledgement. EXHIBIT A TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING L-3 COMMUNICATIONS CORPORATION, AS DEBTOR AND BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT, AS SECURED PARTY ================================================================================ DEBTOR: SECURED PARTY L-3 Communications Corporation Bank of America NT & SA, as _____________________________ Administrative Agent _____________________________ _____________________________ _____________________________ _____________________________ _____________________________ Fed. Taxpayer I.D. # __________ ================================================================================ The Collateral covered by this financing statement includes all of the above-named Debtor's right, title and interest in, all of the following property now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right (collectively, the "Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; Real Property-Related Collateral; books and records pertaining to the Collateral; and to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided, however, except as permitted by Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not include any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. As used herein: (a) The following terms which are defined in the Uniform Commercial Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, Instruments and Inventory. (b) The following terms shall have the following meanings: "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. 1 "Contracts" means all contracts and agreements to which the Debtor is or becomes a party, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder. "Credit Agreement" means that certain Credit Agreement dated as of April 30. 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. "Copyrights" means (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses" means any written agreement naming the Debtor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles" means all "general intangibles" as such term is defined in Section 9-106 of the NY UCC and, in any event, including, without limitation, with respect to the Debtor, all contracts, agreements, instruments and indentures in any form, and portions thereof, to which the Debtor is a party or under which the Debtor has any right, title or interest or to which the Debtor or any property of the Debtor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Debtor of a security interest in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Debtor to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Debtor of a security interest to the Secured Party in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. 2 "Government Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Government Contract" means a Contract with a Government Authority. "Intellectual Property" means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note" means any promissory note evidencing loans made by the Debtor to any of its subsidiaries. "Investment Property" has the meaning ascribed thereto in the Uniform Commercial Code as in effect on April 30, 1997 in the State of California. "Patents" means (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License" means all agreements, whether written or oral, providing for the grant by or to the Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Pledged Notes" means all promissory notes, all Intercompany Notes at any time issued to the Debtor and all other promissory notes issued to or held by the Debtor (other than promissory notes issued in connection with extensions of trade credit by the Debtor in the ordinary course of business). "Pledged Securities" means the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock" means all shares of Capital Stock, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may from time to time be issued or granted to, or held by, the Debtor. 3 "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the NY UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Real Property-Related Collateral" means (i) all buildings, improvements and fixtures (the "Improvements") now or hereafter located or erected on the real property described in Exhibit A to each of the Mortgages (as such term is defined in the Credit Agreement (as defined above)) (the "Premises"), (ii) any and all leases, underlettings and licenses of the Premises or Improvements, or any part thereof, now existing or hereafter entered into by the mortgagors, and/or grantors, as applicable, under the Mortgages (collectively, the "Grantor"), including, without limitation, upon the happening and during the continuance of an Event of Default (as defined in the Credit Agreement), the right to receive and collect the rents, issues and profits derived or to be derived by the Grantor therefrom, and (iv) all right, title and interest of Grantor in and to (a) all and singular, the tenements, hereditaments, rights of way, easements, waters, water courses, riparian rights, appendages and appurtenances and property rights belonging or in any way pertaining to the Premises or the Improvements and (b) all estate, right, title, claim or demand whatsoever, either in law or in equity, in possession or expectancy, of, in and to the Premises and the Improvements. "Receivable" means any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract" means Government Contracts which, by their terms, prohibit the assignment or Receivables thereunder. "Trademarks" means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, and (ii) the right to obtain all renewals thereof. "Trademark License" means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right to use any Trademark. The Secured Party acts as "Administrative Agent" for the various "Lenders" from time to time party to that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation 4 agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. Debtor: L-3 COMMUNICATIONS CORPORATION By: /s/ [Illegible] --------------------------------- Name: Title: 5 STATE OF NEW YORK Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1 - -------------------------------------------------------------------------------- This FINANCING STATEMENT is presented to a Filing Officer for filing pursuant to the Uniform Commercial Code - -------------------------------------------------------------------------------- No. of Additional Sheets Presented - -------------------------------------------------------------------------------- 1. Debtor(s) (Last Name First) and Address(es) L-3 COMMUNICATIONS CORPORATION 600 Third Avenue, 34th Fl. New York, New York 10016 13-3937436 - -------------------------------------------------------------------------------- 2. Secured Party(ies) Name(s) and Address(es) BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT 335 Madison Avenue New York, New York 10017 94-168-7665 - -------------------------------------------------------------------------------- 3. |_| The debtor is a transmitting utility - -------------------------------------------------------------------------------- 4. For Filing Officer Date, Time No Filing Office - -------------------------------------------------------------------------------- 5. This Financing Statement covers the following types (or items) of property: All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the collateral; and proceeds and products of the foregoing as more particularly defined and described on Exhibit A attached hereto and made a part hereof. FILED WITH: Secretary of State |X| Products of the Collateral are also covered - -------------------------------------------------------------------------------- 6. Assignee(s) of Secured Party and Address(es) - -------------------------------------------------------------------------------- 7. |_| The described crops are growing or to be grown on* |_| The described goods are to be affixed to* |_| The timber to be cut or minerals or the like (including oil and gas) is on* *(Describe Real Estate Below) - -------------------------------------------------------------------------------- 8. Describe Real Estate Here: |_| This statement is to be indexed in the Real Estate Records No. & Street Town or City County Section Block Lot - -------------------------------------------------------------------------------- 9. Name of a Record Owner - -------------------------------------------------------------------------------- 10. This statement is filed without the debtor's signature to perfect a security interest in collateral (check appropriate box) |_| under a security agreement signed by debtor authorizing secured party to file this statement, or |_| which is proceeds of the original collateral described above in which a security interest was perfected, or |_| acquired after a change of name, identity or corporate structure of the debtor, or |_| as to which the filing has lapsed, or already subject to a security interest in another jurisdiction: |_| when the collateral was brought into this state, or |_| when the debtor's location was changed to this state L-3 COMMUNICATIONS CORPORATION BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT - ----------------------------------- ----------------------------------- By /s/ [Illegible] By /s/ [Illegible] -------------------------------- ------------------------------------ Signature(s) of Debtor(s) Signature(s) of Secured Party(ies) (1) Filing Officer Copy - Numerical STANDARD FORM - FORM UCC-1 - -------------------------------------------------------------------------------- INSTRUCTIONS (1) Remove Secured Party and Debtor copies and send other three copies to the filing officer. (2) Filing fee - for filing in the office of the Secretary of State, see section 96-a of the Executive Law; for filing in the office at the County Clerk or New York City Register see section 8021(f) at the Civil Practice Law and Rules; or you may contact any at the respective offices for information relative to fees. (3) If the space provided for any item(s) on the form is inadequate, the item(s) should be continued on additional sheets, preferably 7-1" x 10" or 7-1" x 8". Only one copy of such additional sheets need be presented to the filing officer with a set of three copies of this financing statement. (4) If collateral is crops or goods which are or are to become fixtures or timber to be cut, or minerals or the like (including oil and gas), check the appropriate box in Item 7; check the box in Item 8 the real estate by street and number, if any or if none, by description sufficient to identify it, such as "The real property described in Liber ____ of Deeds (or Mortgages) at Page ____", and by city or town and county, if any, and if in New York City, or Nassau or Onondaga County where the "block" system of recording or registering and indexing conveyances is in use, by the number of the Block and of the Section, if any, and of the Lot, if any, of the real estate involved. Also give the name(s) of a record owner of the real estate in Item 9. (5) When a copy of the security agreement is used as a Financing Statement, the filing fee is that of a non-standard form filing. It is requested that it be accompanied by a completed but unsigned set of these forms. (6) At the time of original filing, filing officer will return second copy as an acknowledgement. EXHIBIT A TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING L-3 COMMUNICATIONS CORPORATION, AS DEBTOR AND BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT, AS SECURED PARTY ================================================================================ DEBTOR: SECURED PARTY: L-3 Communications Corporation Bank of America NT & SA, as _____________________________ Administrative Agent _____________________________ _____________________________ _____________________________ _____________________________ _____________________________ Fed. Taxpayer I.D. # __________ ================================================================================ The Collateral covered by this financing statement includes all of the above-named Debtor's right, title and interest in, all of the following property now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right (collectively, the "Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; Real Property-Related Collateral; books and records pertaining to the Collateral; and to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided, however, except as permitted by Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not include any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. As used herein: (a) The following terms which are defined in the Uniform Commercial Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, Instruments and Inventory, (b) The following terms shall have the following meanings: "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. 1 "Contracts" means all contracts and agreements to which the Debtor is or becomes a party, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder. "Credit Agreement" means that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. "Copyrights" means (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses" means any written agreement naming the Debtor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles" means all "general intangibles" as such term is defined in Section 9-106 of the NY UCC and, in any event, including, without limitation, with respect to the Debtor, all contracts, agreements, instruments, and indentures in any form, and portions thereof, to which the Debtor is a party or under which the Debtor has any right, title or interest or to which the Debtor or any property of the Debtor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Debtor of a security interest in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Debtor to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Debtor of a security interest to the Secured Party in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. 2 "Government Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Government Contract" means a Contract with a Government Authority. "Intellectual Property" means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note" means any promissory note evidencing loans made by the Debtor to any of its subsidiaries. "Investment Property" has the meaning ascribed thereto in the Uniform Commercial Code as in effect on April 30, 1997 in the State of California. "Patents" means (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License" means all agreements, whether written or oral, providing for the grant by or to the Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Pledged Notes" means all promissory notes, all Intercompany Notes at any time issued to the Debtor and all other promissory notes issued to or held by the Debtor (other than promissory notes issued in connection with extensions of trade credit by the Debtor in the ordinary course of business). "Pledged Securities" means the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock" means all shares of Capital Stock, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may from time to time be issued or granted to, or held by, the Debtor. 3 "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the NY UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Real Property-Related Collateral" means (i) all buildings, improvements and fixtures (the "Improvements") now or hereafter located or erected on the real property described in Exhibit A to each of the Mortgages (as such term is defined in the Credit Agreement (as defined above)) (the "Premises"), (ii) any and all leases, underlettings and licenses of the Premises or Improvements, or any part thereof, now existing or hereafter entered into by the mortgagors and/or grantors, as applicable, under the Mortgages (collectively, the "Grantor"), including, without limitation, upon the happening and during the continuance of an Event of Default (as defined in the Credit Agreement), the right to receive and collect the rents, issues and profits derived or to be derived by the Grantor therefrom, and (iv) all right, title and interest of Grantor in and to (a) all and singular, the tenements, hereditaments, rights of way, easements, waters, water courses, riparian rights, appendages and appurtenances and property rights belonging or in any way pertaining to the Premises or the Improvements and (b) all estate, right, title, claim or demand whatsoever, either in law or in equity, in possession or expectancy, of, in and to the Premises and the Improvements. "Receivable" means any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract" means Government Contracts which, by their terms, prohibit the assignment or Receivables thereunder. "Trademarks" means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, and (ii) the right to obtain all renewals thereof. "Trademark License" means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right to use any Trademark. The Secured Party acts as "Administrative Agent" for the various "Lenders" from time to time party to that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation 4 agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. Debtor: L-3 COMMUNICATIONS CORPORATION By: /s/ [Illegible] --------------------------------- Name: Title: 5 STATE OF NEW YORK Exhibit B Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1 - -------------------------------------------------------------------------------- This FINANCING STATEMENT is presented to a Filing Officer for filing pursuant to the Uniform Commercial Code - -------------------------------------------------------------------------------- No. of Additional Sheets Presented - -------------------------------------------------------------------------------- 1. Debtor(s) (Last Name First) and Address(es) L-3 COMMUNICATIONS HOLDINGS, INC. 600 Third Avenue, 34th Fl. New York, New York 10016 13-3937434 - -------------------------------------------------------------------------------- 2. Secured Party(ies) Name(s) and Address(es) BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT 335 Madison Avenue New York, New York 10017 94-168-7665 - -------------------------------------------------------------------------------- 3. |_| The debtor is a transmitting utility - -------------------------------------------------------------------------------- 4. For Filing Officer Date, Time No Filing Office - -------------------------------------------------------------------------------- 5. This Financing Statement covers the following types (or items of) property: All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the collateral; and proceeds and products of the foregoing as more particularly defined and described on Exhibit A attached hereto and made a part hereof. Filed with New York County |X| Products of the Collateral are also covered - -------------------------------------------------------------------------------- 6. Assignee(s) of Secured Party and Address(es) - -------------------------------------------------------------------------------- 7. |_| The described crops are growing or to be grown on* |_| The described goods are to be affixed to* |_| The timber to be cut or minerals or the like (including oil and gas) is on* *(Describe Real Estate Below) - -------------------------------------------------------------------------------- 8. Describe Real Estate Here: |_| This statement is to be indexed in the Real Estate Records No. & Street Town or City County Section Block Lot - -------------------------------------------------------------------------------- 9. Name of a Record Owner - -------------------------------------------------------------------------------- 10. This statement is filed without the debtor's signature to perfect a security interest in collateral (check appropriate box) |_| under a security agreement signed by debtor authorizing secured party to file this statement, or |_| which is proceeds of the original collateral described above in which a security interest was perfected, or |_| acquired after a change of name, identity or corporate structure of the debtor, or |_| as to which the filing has lapsed, or already subject to a security interest in another jurisdiction: |_| when the collateral was brought into this state, or |_| when the debtor's location was changed to this state L-3 COMMUNICATIONS HOLDINGS, INC. BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT - ----------------------------------- ----------------------------------- By /s/ [Illegible] By /s/ [Illegible] -------------------------------- ------------------------------------ Signature(s) of Debtor(s) Signature(s) of Secured Party(ies) (1) Filing Officer Copy - Numerical STANDARD FORM - FORM UCC-1 - -------------------------------------------------------------------------------- INSTRUCTIONS (1) Remove Secured Party and Debtor copies and send other three copies to the filing officer. (2) Filing fee - for filing in the office of the Secretary of State, see section 96-a of the Executive Law; for filing in the office of the County Clerk or New York City Register see section 8021(f) at the Civil Practice Law and Rules; or you may contact any of the respective offices for information relative to fees. (3) If the space provided for any item(s) on the form is inadequate, the item(s) should be continued on additional sheets, preferably 7-1" x 10" or 7-1" x 8". Only one copy of such additional sheets need be presented to the filing officer with a set of three copies of this financing statement. (4) If collateral is crops or goods which are or are to become fixtures or timber to be cut, or minerals or the like (including oil and gas), check the appropriate box in Item 7; check the box in Item 8 the real estate by street and number, if any or if none, by description sufficient to identify it, such as "The real property described in Liber ____ of Deeds (or Mortgages) at Page ____", and by city or town and county, if any, and if in New York City, or Nassau or Onondaga County where the "block" system of recording or registering and indexing conveyances is in use, by the number of the Block and of the Section, if any, and of the Lot, if any, of the real estate involved. Also give the name(s) of a record owner of the real estate in Item 9. (5) When a copy of the security agreement is used as a Financing Statement, the filing fee is that of a non-standard form filing. It is requested that it be accompanied by a completed but unsigned set of these forms. (6) At the time of original filing, filing officer will return second copy as an acknowledgement. EXHIBIT A TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING L-3 COMMUNICATIONS HOLDINGS, INC., AS DEBTOR AND BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT, AS SECURED PARTY ================================================================================ DEBTOR: SECURED PARTY: L-3 Communications Holdings, Inc. Bank of America NT & SA, as 600 Third Avenue, 34th Floor Administrative Agent New York, New York 10016 335 Madison Avenue New York, New York 10017 Fed. Taxpayer I.D. # 13-3937434 ================================================================================ The Collateral covered by this financing statement includes all of the above-named Debtor's right, title and interest in, all of the following property now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right (collectively, the "Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the Collateral; and to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided, however, except as permitted by Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not include any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. As used herein: (a) The following terms which are defined in the Uniform Commercial Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, Instruments and Inventory, (b) The following terms shall have the following meanings: "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. 1 "Contracts" means all contracts and agreements to which the Debtor is or becomes a party, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder. "Copyrights" means (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses" means any written agreement naming the Debtor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles" means all "general intangibles" as such term is defined in Section 9-106 of the NY UCC and, in any event, including, without limitation, with respect to the Debtor, all contracts, agreements, instruments, and indentures in any form, and portions thereof, to which the Debtor is a party or under which the Debtor has any right, title or interest or to which the Debtor or any property of the Debtor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Debtor of a security interest in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Debtor to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Debtor of a security interest to the Secured Party in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. "Government Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Government Contract" means a Contract with a Government Authority. 2 "Intellectual Property" means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note" means any promissory note evidencing loans made by the Debtor to any of its subsidiaries. "Investment Property" has the meaning ascribed thereto in the Uniform Commercial Code as in effect on April 30, 1997 in the State of California. "Patents" means (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License" means all agreements, whether written or oral, providing for the grant by or to the Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Pledged Notes" means all promissory notes, all Intercompany Notes at any time issued to the Debtor and all other promissory notes issued to or held by the Debtor (other than promissory notes issued in connection with extensions of trade credit by the Debtor in the ordinary course of business). "Pledged Securities" means the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock" means all shares of Capital Stock, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may from time to time be issued or granted to, or held by, the Debtor. "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the NY UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. 3 "Receivable" means any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract" means Government Contracts which, by their terms, prohibit the assignment or Receivables thereunder. "Trademarks" means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, and (ii) the right to obtain all renewals thereof. "Trademark License" means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right to use any Trademark. The Secured Party acts as "Administrative Agent" for the various "Lenders" from time to time party to that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. Debtor: L-3 COMMUNICATIONS HOLDINGS, INC. By: /s/ [Illegible] --------------------------------- Name: Title: 4 STATE OF NEW YORK Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1 - -------------------------------------------------------------------------------- This FINANCING STATEMENT is presented to a Filing Officer for filing pursuant to the Uniform Commercial Code - -------------------------------------------------------------------------------- No. of Additional Sheets Presented - -------------------------------------------------------------------------------- 1. Debtor(s) (Last Name First) and Address(es) L-3 COMMUNICATIONS HOLDINGS, INC. 600 Third Avenue, 34th Fl. New York, New York 10016 13-3937434 - -------------------------------------------------------------------------------- 2. Secured Party(ies) Name(s) and Address(es) BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT 335 Madison Avenue New York, New York 10017 94-168-7665 - -------------------------------------------------------------------------------- 3. |_| The debtor is a transmitting utility - -------------------------------------------------------------------------------- 4. For Filing Officer Date, Time No Filing Office - -------------------------------------------------------------------------------- 5. This Financing Statement covers the following types (or items) of property: All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the collateral; and proceeds and products of the foregoing as more particularly defined and described on Exhibit A attached hereto and made a part hereof. Filed with Secretary of State |X| Products of the Collateral are also covered - -------------------------------------------------------------------------------- 6. Assignee(s) of Secured Party and Address(es) - -------------------------------------------------------------------------------- 7. |_| The described crops are growing or to be grown on* |_| The described goods are to be affixed to* |_| The timber to be cut or minerals or the like (including oil and gas) is on* *(Describe Real Estate Below) - -------------------------------------------------------------------------------- 8. Describe Real Estate here: |_| This statement is to be indexed in the Real Estate Records No. & Street Town or City County Section Block Lot - -------------------------------------------------------------------------------- 9. Name of a Record Owner - -------------------------------------------------------------------------------- 10. This statement is filed without the debtor's signature to perfect a security interest in collateral (check appropriate box) |_| under a security agreement signed by debtor authorizing secured party to file this statement, or |_| which is proceeds of the original collateral described above in which a security interest was perfected, or |_| acquired after a change of name, identity or corporate structure of the debtor, or |_| as to which the filing has lapsed, or already subject to a security interest in another jurisdiction: |_| when the collateral was brought into this state, or |_| when the debtor's location was changed to this state L-3 COMMUNICATIONS HOLDINGS, INC. BANK OF AMERICA NT & SA, as ADMINISTRATIVE AGENT - ----------------------------------- ----------------------------------- By /s/ [Illegible] By /s/ [Illegible] -------------------------------- ------------------------------------ Signature(s) of Debtor(s) Signature(s) of Secured Party(ies) (1) Filing Officer Copy - Numerical STANDARD FORM - FORM UCC-1 - -------------------------------------------------------------------------------- INSTRUCTIONS (1) Remove Secured Party and Debtor copies and send other three copies to the filing officer. (2) Filing fee - for filing in the office of the Secretary of State, see section 96-a of the Executive Law; for filing in the office of the County Clerk or New York City Register see section 8021(f) at the Civil Practice Law and Rules; or you may contact any of the respective offices for information relative to fees. (3) If the space provided for any item(s) on the form is inadequate, the item(s) should be continued on additional sheets, preferably 7-1" x 10" or 7-1" x 8". Only one copy of such additional sheets need be presented to the filing officer with a set of three copies of this financing statement. (4) If collateral is crops or goods which are or are to become fixtures or timber to be cut, or minerals or the like (including oil and gas), check the appropriate box in Item 7; check the box in Item 8 the real estate by street and number, if any or if none, by description sufficient to identify it, such as "The real property described in Liber ____ of Deeds (or Mortgages) at Page ____", and by city or town and county, if any, and if in New York City, or Nassau or Onondaga County where the "block" system of recording or registering and indexing conveyances is in use, by the number of the Block and of the Section, if any, and of the Lot, if any, of the real estate involved. Also give the name(s) of a record owner of the real estate in Item 9. (5) When a copy of the security agreement is used as a Financing Statement, the filing fee is that of a non-standard form filing. It is requested that it be accompanied by a completed but unsigned set of these forms. (6) At the time of original filing, filing officer will return second copy as an acknowledgement. EXHIBIT A TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING L-3 COMMUNICATIONS HOLDINGS, INC. AS DEBTOR AND BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT, AS SECURED PARTY ================================================================================ DEBTOR: SECURED PARTY: L-3 Communications Holdings, Inc. Bank of America NT & SA, as 600 Third Avenue, 34th Floor Administrative Agent New York, New York 10016 305 Madison Avenue New York, New York 10017 Fed. Taxpayer I.D. # 13-3937434 ================================================================================ The Collateral covered by this financing statement includes all of the above-named Debtor's right, title and interest in, all of the following property now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right (collectively, the "Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the Collateral; and to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided, however, except as permitted by Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not include any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. As used herein: (a) The following terms which are defined in the Uniform Commercial Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, Instruments and Inventory, (b) The following terms shall have the following meanings: "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. 1 "Contracts" means all contracts and agreements to which the Debtor is or becomes a party, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder. "Copyrights" means (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses" means any written agreement naming the Debtor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles" means all "general intangibles" as such term is defined in Section 9-106 of the NY UCC and, in any event, including, without limitation, with respect to the Debtor, all contracts, agreements, instruments and indentures in any form, and portions thereof, to which the Debtor is a party or under which the Debtor has any right, title or interest or to which the Debtor or any property of the Debtor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Debtor of a security interest in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Debtor to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Debtor of a security interest to the Secured Party in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. "Government Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Government Contract" means a Contract with a Government Authority. 2 "Intellectual Property" means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note" means any promissory note evidencing loans made by the Debtor to any of its subsidiaries. "Investment Property" has the meaning ascribed thereto in the Uniform Commercial Code as in effect on April 30, 1997 in the State of California. "Patents" means (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License" means all agreements, whether written or oral, providing for the grant by or to the Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Pledged Notes" means all promissory notes, all Intercompany Notes at any time issued to the Debtor and all other promissory notes issued to or held by the Debtor (other than promissory notes issued in connection with extensions of trade credit by the Debtor in the ordinary course of business). "Pledged Securities" means the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock" means all shares of Capital Stock, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may from time to time be issued or granted to, or held by, the Debtor. "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the NY UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. 3 "Receivable" means any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract" means Government Contracts which, by their terms, prohibit the assignment or Receivables thereunder. "Trademarks" means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, and (ii) the right to obtain all renewals thereof. "Trademark License" means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right to use any Trademark. The Secured Party acts as "Administrative Agent" for the various "Lenders" from time to time party to that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. Debtor: L-3 COMMUNICATIONS HOLDINGS By: /s/ [Illegible] --------------------------------- Name: Title: 4 EXHIBIT A TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING L-3 COMMUNICATIONS HOLDINGS, INC. AS DEBTOR AND BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT, AS SECURED PARTY ================================================================================ DEBTOR: SECURED PARTY: L-3 Communications Holdings, Inc. Bank of America NT & SA, as 600 Third Avenue, 34th Floor Administrative Agent New York, New York 10016 305 Madison Avenue New York, New York 10017 Fed. Taxpayer I.D. # 13-3937434 ================================================================================ The Collateral covered by this financing statement includes all of the above-named Debtor's right, title and interest in, all of the following property now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right (collectively, the "Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory; Investment Property; Pledged Securities; books and records pertaining to the Collateral; and to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided, however, except as permitted by Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not include any Contract, General Intangible, Patent License or Trademark License to the extent that such Contract, General Intangible, Patent License or Trademark License, or the instruments giving the same, would prohibit such assignment. As used herein: (a) The following terms which are defined in the Uniform Commercial Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, Instruments and Inventory, (b) The following terms shall have the following meanings: "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. 1 "Contracts" means all contracts and agreements to which the Debtor is or becomes a party, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder. "Credit Agreement" means that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. "Copyrights" means (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof. "Copyright Licenses" means any written agreement naming the Debtor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright. "General Intangibles" means all "general intangibles" as such term is defined in Section 9-106 of the NY UCC and, in any event, including, without limitation, with respect to the Debtor, all contracts, agreements, instrument, and indentures in any form, and portions thereof, to which the Debtor is a party or under which the Debtor has any right, title or interest or to which the Debtor or any property of the Debtor is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (i) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii) all rights of the Debtor to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Debtor of a security interest in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, would not give any other party to such contract, agreement, instrument or indenture the right to terminate its obligations thereunder, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Debtor to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Debtor of a security interest to the Secured Party in any Receivable or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. 2 "Government Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Government Contract" means a Contract with a Government Authority. "Intellectual Property" means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom. "Intercompany Note" means any promissory note evidencing loans made by the Debtor to any of its subsidiaries. "Investment Property" has the meaning ascribed thereto in the Uniform Commercial Code as in effect on April 30, 1997 in the State of California. "Patents" means (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, and (iii) all rights to obtain any reissues or extensions of the foregoing. "Patent License" means all agreements, whether written or oral, providing for the grant by or to the Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Pledged Notes" means all promissory notes, all Intercompany Notes at any time issued to the Debtor and all other promissory notes issued to or held by the Debtor (other than promissory notes issued in connection with extensions of trade credit by the Debtor in the ordinary course of business). "Pledged Securities" means the collective reference to the Pledged Notes and the Pledged Stock. "Pledged Stock" means all shares of Capital Stock, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may from time to time be issued or granted to, or held by, the Debtor. 3 "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the NY UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto. "Real Property-Related Collateral" means (i) all buildings, improvements and fixtures (the "Improvements") now or hereafter located or erected on the real property described in Exhibit A to each of the Mortgages (as such term is defined in the Credit Agreement (as defined above)) (the "Premises"), (ii) any and all leases, underlettings and licenses of the Premises or Improvements, or any part thereof, now existing or hereafter entered into by the mortgagors and/or grantors, as applicable, under the Mortgages (collectively, the "Grantor"), including, without limitation, upon the happening and during the continuance of an Event of Default (as defined in the Credit Agreement), the right to receive and collect the rents, issues and profits derived or to be derived by the Grantor therefrom, and (iv) all right, title and interest of Grantor in and to (a) all and singular, the tenements, hereditaments, rights of way, easements, waters, water courses, riparian rights, appendages and appurtenances and property rights belonging or in any way pertaining to the Premises or the Improvements and (b) all estate, right, title, claim or demand whatsoever, either in law or in equity, in possession or expectancy, of, in and to the Premises and the Improvements. "Receivable" means any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account). "Restricted Government Contract" means Government Contracts which, by their terms, prohibit the assignment or Receivables thereunder. "Trademarks" means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, and (ii) the right to obtain all renewals thereof. "Trademark License" means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right to use any Trademark. The Secured Party acts as "Administrative Agent" for the various "Lenders" from time to time party to that certain Credit Agreement dated as of April 30, 1997 by and among L-3 Communications Corporation, a Delaware corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and documentation agent and Bank of America NT & SA, as administrative agent for the Lenders, as the same be amended, restated and/or otherwise modified from time to time. Debtor: L-3 COMMUNICATIONS CORPORATION By: /s/ [Illegible] --------------------------------- Name: Title: 4 EXHIBIT D-2 [Letterhead of FRIED, FRANK, HARRIS, SHRIVER & JACOBSON] WRITER'S DIRECT LINE 202/639-7130 Lehman Commercial Paper Inc., as Arranger, Syndication Agent and Documentation Agent 3 World Financial Center, 9th Floor New York, New York 10285 Bank of America NT & SA. as Administrative Agent 335 Madison Avenue New York, New York 10017 The Lenders Listed on Schedule I hereto Ladies and Gentlemen: We are acting as special counsel to L-3 Communications Corporation, a Delaware corporation (the "Company"), regarding Federal Government contract matters, in connection with the Credit Agreement dated April 30, 1997. We are delivering this opinion pursuant to Section 5.1(p)(i) of the Credit Agreement. Capitalized terms used herein have the meaning given them in the Credit Agreement unless such terms are otherwise defined herein. Since we have acted only as special counsel to the Company, we have limited knowledge of the affairs of the Company. This opinion is therefore based on such knowledge of the affairs of the Company as we may have acquired in the course of the instant representation. We convened our review on February 20, 1997 and, as instructed by the client, completed the review by February 25, 1997. In connection with our engagement, we visited Communications Systems, Camden, NJ; Wideband, Salt Lake City, Utah; Advanced Recorders, Sarasota, Florida; Conic, San Diego, California; and Display Systems, Atlanta, Georgia; Telemetry & Instrumentation, San Diego, California and Randtron, Menlow Park, California. We did not visit Hycor, Microcom and Narda East and West. In connection with this review, we reviewed only those contracts specified on Exhibit A. Accordingly, the opinions set forth below are limited only to those contracts. To the extent that it may be relevant to the opinions expressed herein, we have assumed that the parties to the agreements described herein (other than the parties whose actions are the NEW YORK WASHINGTON LOS ANGELES LONDON FRIED, FRANK, HARRIS, SHRIVER & JACOBSON Lehman Commercial Paper Inc. Bank of America NT & SA April 30, 1997 Page 2 subject of our opinions) have the power to enter into and perform such agreements and that such agreements have been duly authorized, executed and delivered by, and constitute legal, valid and binding obligations of, such parties. We have examined and relied upon the originals, or certified, conformed or reproduced copies of all records, documents, certificates or other instruments as in our judgment are necessary or appropriate to enable us to render the opinions expressed below. In all such examinations we have assumed the genuineness of all signatures on original or certified, conformed or reproduction copies and the conformity to original or certified copies of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to such opinions, we have relied upon, and assumed the accuracy of, certificates of public officials and oral or written statements or certificates of officers or representatives of the Company and others. Based upon and subject to the foregoing, and further subject to the limitations and qualifications below, we are of the opinion that as of the date hereof: (i) None of the execution, delivery or performance by the Loan Parties of the Credit Agreement or the transactions contemplated thereby, compliance by the Loan Parties with the provisions of the Credit Agreement nor consummation by the Loan Parties of the transactions contemplated thereby: (i) with respect to U.S. Government procurement matters (limited to our review of the contracts set forth on Exhibit A hereto) requires any consent, approval, authorization or other order of, or registration or filing with any federal court, federal regulatory body, U.S. administrative agency or other federal governmental body, agency or official having authority over government procurement matters (except for those governmental consents, approvals, authorizations or other orders of, or registrations or filings with, any federal court, federal regulatory body, U.S. administrative agency or other federal governmental body, agency or official having authority over federal government procurement matters contemplated in the Transaction Agreement, the Shareholders Agreement and the Credit Agreement, and except where the failure to obtain governmental consents, approvals, authorizations or other orders of, or registrations or filings with, any federal court, federal regulatory body, U.S. administrative agency or other federal governmental body, agency or official having authority over FRIED, FRANK, HARRIS, SHRIVER & JACOBSON Lehman Commercial Paper Inc. Bank of America NT & SA April 30, 1997 Page 3 federal government procurement matters would not have material adverse effect on the consummation by the Company of the transactions contemplated by the Purchase Agreement, the Credit Agreement, and the Transaction Agreement) or (ii) conflicts or will conflict with or constitutes or will constitute a material breach of, or material default under any material government procurement contract (limited to our review of the contracts set forth on Exhibit A hereto and with the exception of those governmental consents, approvals, authorizations or other orders of, or registrations or filings with, any federal court, federal regulatory body, U.S. administrative agency or other federal governmental body, agency or official having authority over government procurement matters contemplated in the Transaction Agreement, the Shareholders Agreement and the Credit Agreement) or will violate, in any material respect, any law, statute, ordinance, governmental rule, regulation, regarding U.S. Government procurement contracts to which it or its property or assets may be subject or will result in the creation or imposition of any material lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument (limited to our review of the contracts set forth on Exhibit A hereto) to which it is a party or by which it may be bound or to which any of its property or assets is subject pursuant to any government procurement contract (limited to our review of the contracts set forth on Exhibit A hereto). Our opinions also are subject to the effect of, and we express no opinion therein as to the application of notifications regarding any outstanding advance payments, disposition of pension plans or other post-retirement benefits. Our opinions are also subject to the effect of, and we express no opinion therein as to the environmental, intellectual property, labor or tax laws relating to the U.S. government contracts. The opinions expressed herein are limited to the federal laws of the United States. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON Lehman Commercial Paper Inc. Bank of America NT & SA April 30, 1997 Page 4 The opinions expressed herein are solely for your benefit and may not be relied upon in any manner or for any purpose by any other person and may not be quoted in whole or in part without our prior written consent. Very truly yours, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: /s/ James J. McCullough -------------------------------------- James J. McCullough EXHIBIT A Telemetry & Instrumentation Purchase Order No. 1288468 (Sales Order 14921) Intra Lockheed Martin Work Transfer Agreement ("IWTA") No. AY-12-30001 (Sales Order 15705) Purchase Order No. 231-5-20023 (Sales Order 14923) IWTA No. BY-12-00001 & 2 (Sales Order 15605) Purchase Order No. 0277-6003601 (Sales Order 15361) Contract No. F04611-93-D-0010 (Sales Order 16125 & 5008) Contract No. NASIO 96013(B) (Sales Order 15538) Purchase Order No. RQ33367, (Sales Order 15151 & 15686) Purchase Order No. 229, (Sales Order 15251) Purchase Order No. X10/45070814, (Sales Order 15684) IWTA Nos. OD 96390 & OD 7042, (Sales Order 15537 & 15698) Contract No. GS03F-5087 (Sales Order 15643) Conic/TerraCom Purchase Order No. 633EW (Sales Order 5512) Purchase Order No. M6J3BSA-587 408D (Sales Order 5434) Purchase Order No. S-612418-EKW (Sales Order 5283) Purchase Order No. DP5-020005 (Sales Order 5264) Purchase Order No. 1-3199675 (Sales Order 5218) Purchase Order No. HE 36722159 (Sales Order 5189) Purchase Order Nos. I-3199674 & I-3199675 (Sales Orders 5117 & 5218) Purchase Order No. Z50791 (Sales Order 5105) Purchase Order No. 51340015 (Sales Order 5087) Purchase Order No. GGM57112 (Sales Order 5078) Purchase Order No. Z50809 (Sales Order 5058) Purchase Order No. PP5-535015 (Sales Order 4964) Purchase Order No. Various (Sales Order 4962) Purchase Order No. 100662000 (Sales Order 4956 & 5126) Prime Contract Order No. F 08626-95-0216 (Sales Order 4955) Purchase Order No. KS-612039R (Sales Order 4909) Purchase Order No. 109177455/459 (Sales Order 4614) Purchase Order No. C0041/93 (Sales Order 4536) Purchase Order No. RL1-1200 44 (Sales Order 4283) Inter Company Work Transfer Agreement ("IWTA") with Lockheed Martin Integrated Systems (not yet listed on the Computer Sale Order listing): TerraCom Purchase Order 1/200-96 (Sales Order 8058) -2- Communications Systems P.O. 940S9011 - A - International Space Station Alpha MDA904-94-C-B091 - A - LMD/KP 2.0 LRIP N00024-92-C-4164 - A - AN/STC-2 FY 92-94 N00024-91-C-4122 - A - AN/STC-2 FY 90/91 MDA904-94-C-8028 - A - Nervetrunk HW/SW Supp N00024-95-C-4079 - A - IVCS FY95/96 Prod MDA904-94-C-8075 - A - FIRESTAR T&M MDA904-95-C-4051 - A - STE NAS 5-32542 - A - NOAA N & N1 P.O. CSD-IMSE-97-003 - A - IMSE Program (FMS) MDA904-93-G-0055 - 5002 - A - ANSWERER LRIP N00039-90-C-0011 I - A - IRR Training Support N00019-95-C-0199 - A - AMODSM P.O. 4500010122 - A - Common Tier 1 MDA904-96-C-1641 - A - ANSWERER Production N00039-96-C-0039 - A - Baseband (SBCS) Switch MDA904-96-D-0025-0005 - A - STE 1st Prod CLASS 95-C-6880 - A - Centerboard Support N66001-97-C-0130 - A - IRR Field Support N66001-95-C-0003 - A - IRR PDSS FY95-96 P.O. UAF1D7680D - A - D-5 Trans/Preamplifier Inc XII CLASS 317069 - A - Refurbishment #7 CLASS 97-C-6462 - A - CROSSHAIR N00383-89-G-K214 - 7004-A - P3C Repairs DABT63-95-C-0052 - A - IUGS Data Fusion P.O. CO-7382-SAT - A - NATO PTS MDA904-95-C-3189 - A - FIREONE P.O. 4405/2 - A - IREMBASS New Zealand MDA904-95-C-5554 - A - Microbic Software Support P.O. 470506 - A - DCR-500 Spares N00104-96-C-AA33 - A - Depot Repairs MDA904-94-C-B031 - A - HGPCLSI Study MDA904-96-C-P018 - A - NUTSEDGE MDA904-96-C-0291 - A - Maroon Archer OM&E Wideband Systems TACAWS (No. DAAH0l94CR250) - Internal No.: _______ IWTA supporting the Raptor Program - Internal No.: 41812 EIS Support Contract - Internal No.: 400164 IWTA LDS-A2 ENG SU - Internal No.: 400167 IWTA GPS-OCS Support - Internal No.: 400138 BGPHES Production - Internal No.: 41785 -3- ABIT (Airborne Information Transmission) Phase IV (No. F33657-95-C-5404) - Internal No. 41786 Ridex (No. F33615-94-C-1566) - Internal No.: 41736 TEUAV Predator (No. N0001994C0069) - Internal No.: 41725 HSS Systems (P.O. #6451) - Internal No.: 41751 IWTA ULTRA-High Resolution Digital Framing Electro-Optical Camera - Internal No.: 41802 CHBDL (Common High Band Width Data Link) Stage III Production (N00039-91-C-0027) - Internal Nos. 41800 and 41801 HSS System (P.O. #65586 - Internal No.: 41787 Depot Support Contract (No. SC-96-773043) - Internal No.: 400092 LAMPS Flir (SC No. 608793) - Internal No.: 41724 Predator Support (No. N00019-95-G-0135) - Internal No.: OCB28 National Tests Facility Operations and Maintenance - Internal No.: 400018 IWTA between LMFSC and LMTCS - Internal No.: _______ ISISS Contract - Internal No.: OS4417 GFY 97 Fielded Systems Technology (No. F09604-97-C-0011) - Internal No.: 41797 Tactical Interoperable Ground Data Link Phase I (TIGDL) (No. F0960496-C-0104) - Internal No. 41788 GFY 96 SR YEA - Internal No.: 41764 Direct Air-Satellite Relay ("DASR") - Internal No.: 41734 Guardrail A/B - Internal No.: 41682 GFY 93 DATALINK (No. F0900493-C-0011) - Internal No.: 41692 GFY 94 Data Link (No. F09604-94-C-0011) - Internal No.: 41717 GFY 95 SR.Y (No. F09604-95-C-0011) - Internal No.: 41735 Advanced Recorders NOO163-96-D-0007 N00383-96-G-017J N00383-93-D-033U Randtron Purchase Order No. IG0069922 Purchase Order No. SG006881 Purchase Order No. WT26342 Intra Lockheed Work Transfer ("IWT") Purchase Order No. 4325851 Purchase Order 4334545 Purchase Order No. 4325851 Purchase Order Amendment B2C452-95 regarding Job 1500000 Purchase Order No. 21-19577 regarding prime contract number N00019-94-C-0020 Purchase Order No. 21-19577. Amendment 17 Purchase Order No. 22-06002. Amendment 2 referencing Contract N00019-94-C-0020 Purchase Order No. E60119L -4- Purchase Order No. 22-12213 Purchase Order No. E6011 Purchase Order No. 601119L. Chance Order No. 002 Change Order 5 to LSC Work Order S-95-102 Subcontract No. H-1565118 Subcontract 92-7807-G-00l Master Purchase Order from Lockheed. Ft. Worth Purchase Order No. M3324 Master Purchase Order No. M3696 for Job Nos. 1880400, 1880500 and 1880600 Contract F42620-93-D-01999 Subcontract S612187RSC Purchase Order under Contract No. DAAB07-94-DM758 Purchase Order under Contract No. N00019-94-C-0020 Purchase Order to Remec Components dated August 5, 1996 Purchase Order under Contract No. DAAB07-94-D-M758 Display Systems E-2C Programs. P.O. Nos. 22-12200 2209601 21-75010 4010382 22-09505 590697W F-14. Development. P.O. No. 19-84457 F-14. Lot 1. P.O. No. 21-39015 V -22. Development. P.O. Nos. AEF960 AEF961 AEF962 AEF963 ADA855 ADA849 V-22. LRIP. P.O. Nos. AET310 AEL725 Contract No. N00019-94-C-0059 Contract No. N00383-95-G-002A P.O. No. 96054-0519 95342-0844 96068-0563 Doc. =71245 Exhibit E to Credit Agreement FORM OF BORROWING CERTIFICATE Pursuant to subsection 5.1(j) of the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among L-3 Communications Corporation, a Delaware corporation (the "Borrower"), the several banks and other financial institutions from time to time parties thereto (the "Lenders"), Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent, and Documentation Agent, and Bank of America NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), the undersigned hereby delivers this Certificate. The Borrower hereby requests that a [Eurodollar] [Base Rate] Loan be made in the aggregate principal amount of ________________ on _____________, [with an Interest Period of __ months]. The undersigned hereby certifies as follows: (a)The representations and warranties made by the Borrower and each of its Subsidiaries and each of the other Credit Parties in the Credit Documents are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof (except to the extent they relate to a particular date, in which case they shall remain true and correct as of such date); and (b) No Default or Event of Default has occurred and is continuing on the date hereof or after giving effect to the Loans and other extensions of credit requested to be made on such date. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Credit Agreement. The Borrower agrees that if prior to the time of the borrowing requested hereby any matter certified to herein by it will not be true and correct in all material respects at such time as if then made, it will immediately so notify the Administrative Agent. Except to the extent, if any, that prior to the time of the borrowing requested hereby the Administrative Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed once again to be certified as true and correct in all material respects at the date of such borrowing as if then made. Please wire transfer the proceeds of the borrowing to the account of the Borrower at ________________ Routing No.: _____________ (Account No.__________), or as otherwise directed by the Borrower on the attached Schedule I. 2 The Borrower has caused this Borrowing Certificate to be executed and delivered, and the certification and warranties contained herein to be made, by its Responsible Officer this ___ day of ______________________, _____. L-3 COMMUNICATION CORPORATION By: ________________________ Name: Title: Exhibit F to Credit Agreement FORM OF EXEMPTION CERTIFICATE Referenceis made to the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among L-3 Communications Corporation, a Delaware Corporation (the "Borrower"), the several banks and other financial institutions from time to time parties thereto (the "Lenders"), Lehman Commercial Paper Inc, ("LCPI") as Arranger, Syndication Agent and Documentation Agent, and Bank of America NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Capitalized terms used herein that are not defined herein shall have the meanings ascribed to them in the Credit Agreement. _______________________ (the "Non-U.S. Lender") is providing this certificate pursuant to subsection 2.15(b) of the Credit Agreement. Under penalties of perjury, the Non-U.S. Lender hereby represents and warrants that: 1.The Non-U.S. Lender is the sole record and beneficial owner of the Note(s) in respect of which it is providing this certificate and it shall remain the sole beneficial owner of such Note(s) at all times during which it is the record holder of such Note(s). 2.The Non-U.S. Lender is not a "bank" for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In this regard, the Non-U.S. Lender further represents and warrants that: (a)the Non-U.S. Lender is not subject to regulatory or other legal requirements as a bank in any jurisdiction; (b) the Non-U.S. Lender has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements; (c) the Non-U.S. Lender is not a 10-percent shareholder within the meaning of Section 881(c)(3)(B) of the Code; (d) the Non-U.S. Lender is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code; 2 3. The Non-U.S. Lender meets all of the requirements under Code Section 871(h) or 881(c) to be eligible for a complete exemption from withholding of U.S. Taxes on interest payments made to it under the Credit Agreement. IN WITNESS WHEREOF, the undersigned has duly executed this certificate. [NAME OF NON-U.S. LENDER] By: _________________________________ Name: Title: Date:___________________ Exhibit G to Credit Agreement FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among L-3 Communication Corporation, a Delaware corporation, (the "Borrower"), the Lenders named therein, Lehman Commercial Paper Inc, ("LCPI"), as Arranger, Syndication Agent and Documentation Agent, and Bank of America NT & SA ("BOA"), as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. The Assignor identified on Schedule I hereto (the "Assignor") and the Assignee identified on Schedule I hereto (the "Assignee") agree as follows: 1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below), the interest described in Schedule I hereto (the "Assigned Interest") in and to the Assignor's rights and obligations under the Credit Agreement with respect to the credit facility contained in the Credit Agreement as set forth on Schedule I hereto (the "Assigned Facility"), in a principal amount for the Assigned Facility as set forth on Schedule I hereto. 2. The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or with respect to the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Credit Document or any other instrument or document furnished pursuant thereto, other than that the Assignor has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any such adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, any of its Subsidiaries or any other obligor or the performance or observance by the Borrower, any of its Subsidiaries or any other obligor of any of their respective obligations under the Credit Agreement or any other Credit Document or any other instrument or document furnished pursuant hereto or thereto; and (c) attaches any Notes held by it evidencing the Assigned Facilities and (i) requests that the Administrative Agent, upon request by the Assignee, exchange the attached Notes for a new Note or Notes payable to the Assignee and (ii) if the Assignor has retained any interest in the Assigned Facility, requests that the Administrative Agent exchange the attached Notes for a new Note or Notes payable to the Assignor, in each case in amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date). 3. The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to subsection 4.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it will, independently and without reliance upon 2 the Assignor, the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to subsection 2.15(b) of the Credit Agreement. 4. The effective date of this Assignment and Acceptance shall be the Effective Date of Assignment described in Schedule I hereto (the "Effective Date"). Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance and recording by the Administrative Agent). 5. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to the Effective Date and to the Assignee for amounts which have accrued subsequent to the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. 6. From and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the other Credit Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed as of the date first above written by their respective duly authorized officers on Schedule I hereto. Schedule I to Assignment and Acceptance Name of Assignor: __________________________________ Name of Assignee: __________________________________ Effective Date of Assignment: _________________________ Credit Principal Commitment Percentage Assigned(1) Facility Assigned Amount Assigned --------------------------------- - ----------------- --------------- $ _______ _______________% [Name of Assignee] [Name of Assignor] By: __________________________________ By: __________________________________ Title: Title: Accepted: Consented To: BANK OF AMERICA NT & SA, L-3 COMMUNICATION CORPORATION(2) as Administrative Agent By: __________________________________ By: __________________________________ Title: Title: - ---------- (1) Calculate the Commitment Percentage that is assigned to at least 9 decimal places and show as a percentage of the aggregate commitments of all Lenders. (2) The Credit Agreement provides that the consent of the Borrower is required unless the assignee already is a Lender under the Credit Agreement. Schedule I To Credit Agreement
Commitments and Addresses Tranche A Term Tranche B Term Tranche C Term Revolving Credit Loan Loan Loan Lenders/Address for Notices Commitment Commitment Commitment Commitment LEHMAN COMMERCIAL PAPER INC. 4,400,000.00 9,050,000.00 10,000,000.00 6,900,000.00 3 World Financial Center, 9th Floor New York, New York 10285 Attention: Michelle Swanson Telecopy: (212) 525-0819 BANK OF AMERICA NT & SA 4,400,000.00 3,300,000.00 0.00 0.00 335 Madison Avenue New York, New York 10017 Attention: Linda A. Carper Telecopy: (212) 503-7502 CITIBANK, N.A. 4,400,000.00 3,300,000.00 0.00 0.00 CREDIT LYONNAIS, NEW YORK 4,400,000.00 3,300,000.00 0.00 0.00 BRANCH FLEET NATIONAL BANK 4,400,000.00 3,300,000.00 0.00 0.00 MARINE MIDLAND BANK 4,400,000.00 3,300,000.00 0.00 0.00 BANK OF NOVA SCOTIA 4,400,000.00 3,300,000.00 0.00 0.00 BANKBOSTON, N.A. 4,400,000.00 3,300,000.00 0.00 0.00 THE FIRST NATIONAL BANK OF 4,400,000.00 3,300,000.00 0.00 0.00 CHICAGO THE FUJI BANK LIMITED NEW 4,400,000.00 3,300,000.00 0.00 0.00 YORK BRANCH CANADIAN IMPERIAL BANK OF 0.00 1,375,000.00 2,500,000.00 1,650,000.00 COMMERCE CITIBANK, N.A. 0.00 1,375,000.00 2,500,000.00 1,650,000.00 THE ING CAPITAL SENIOR 0.00 687,500.00 1,250,000.00 825,000.00 SECURED HIGH INCOME FUND, L.P. KZH HOLDING CORPORATION II 0.00 687,500.00 1,250,000.00 825,000.00 KZH HOLDING CORPORATION 0.00 1,375,000.00 2,500,000.00 1,650,000.00 MERRILL LYNCH SENIOR 0.00 1,375,000.00 2,500,000.00 1,650,000.00 FLOATING RATE FUND, INC. METROPOLITAN LIFE INSURANCE 0.00 1,375,000.00 2,500,000.00 1,650,000.00 COMPANY OAK HILL SECURITIES FUND, L.P. 0.00 1,375,000.00 2,500,000.00 1,650,000.00 OCTAGON CREDIT INVESTORS 0.00 1,375,000.00 2,500,000.00 1,650,000.00 LOAN PORTFOLIO (a unit of the Chase Manhattan Bank) PARIBAS CAPITAL FUNDING LLC 0.00 1,375,000.00 2,500,000.00 1,650,000.00 PILGRIM AMERICA PRIME RATE 0.00 1,375,000.00 2,500,000.00 1,650,000.00 TRUST PRIME INCOME TRUST 0.00 1,375,000.00 2,500,000.00 1,650,000.00 ROYALTON COMPANY 0.00 1,375,000.00 2,500,000.00 1,650,000.00
CRESCENT / MACH I PARTNERS L.P. 0.00 687,500.00 2,075,000.00 0.00 UNITED COMPANIES LIFE 0.00 687,500.00 425,000.00 1,650,000.00 INSURANCE COMPANY VAN KAMPEN AMERICAN CAPITAL 0.00 1,375,000.00 2,500,000.00 1,650,000.00 PRIME RATE INCOME TRUST BANK OF MONTREAL 4,000,000.00 3,000,000.00 0.00 0.00 BANK OF TOKYO - MITSUBISHI 4,000,000.00 3,000,000.00 0.00 0.00 TRUST COMPANY BANQUE FRANCAISE DU 4,000,000.00 3,000,000.00 0.00 0.00 COMMERCE EXTERIEUR BHF - BANK 4,000,000.00 3,000,000.00 0.00 0.00 AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH CORESTATES BANK, N.A. 4,000,000.00 3,000,000.00 0.00 0.00 GOLDMAN SACHS CREDIT 4,000,000.00 3,000,000.00 0.00 0.00 PARTNERS L.P. PNC BANK, NATIONAL 4,000,000.00 3,000,000.00 0.00 0.00 ASSOCIATION SKANDINAVISKA ENSKILDA 4,000,000.00 3,000,000.00 0.00 0.00 BANKEN CORPORATION SOCIETE GENERALE, NEW YORK 4,000,000.00 3,000,000.00 0.00 0.00 BRANCH THE SUMITOMO BANK, LIMITED, 4,000,000.00 3,000,000.00 0.00 0.00 NEW YORK BRANCH THE BANK OF NEW YORK 4,000,000.00 3,000,000.00 0.00 0.00 THE MITSUBISHI TRUST AND 4,000,000.00 3,000,000.00 0.00 0.00 BANKING CORPORATION TRANSAMERICA BUSINESS CREDIT 4,000,000.00 3,000,000.00 0.00 0.00 CORPORATION U.S. BANK 4,000,000.00 3,000,000.00 0.00 0.00
Schedule II to Credit Agreement PRICING GRID
Debt Tranche A Term Tranche A Term Tranche B Tranche B Tranche C Tranche C Commitment Ratio Loss and Loss and Term Loan Term Loan Term Loan Term Loan Fee* Revolving Credit Revolving Credit Applicable Applicable Applicable Applicable Facility Facility Margin- Margin- Margin- Margin- Applicable Applicable Eurodollar Base Rate Eurodollar Base Rate Margin-Eurodollar Margin-Base Rate Rate Rate* Rate* - ------------------------------------------------------------------------------------------------------------------------------- 24.75x 225 125 250 150 275 175 50 24.25x 200 100 250 150 275 175 50 23.75x 175 75 250 150 275 175 37.5 23.75x 150 5O 250 150 275 175 37.5
- ---------- * Notwithstanding the foregoing grid: (a) the Applicable Margin for the Tranche A Term Loan and the Revolving Credit Facility for the 5 months following the Closing Date will be 1.25% for Base Rate Loans and 2.25% for Eurodollar Loans, and (b) the Commitment Fee rate Revolving Credit Facility for the 5 months following the Closing Date will be 0.50%. Schedule III to the Credit Agreement REAL PROPERTY TO BE MORTGAGED Property Location 1. 6000 Fruitville Road, Sarasota, FL 2. 6755, 6761, 6765 Peachtree Industrial Boulevard, Atlanta, GA 3. 1355 Bluegrass Lakes Parkway, Alpharetta, Georgia 4. 10 Gill Street, Woburn, MA 5. 300 Neck Road Haverhill, MA 6. 965 Thomas Drive. Warminster, PA 7. 435 Moreland Road, Hauppauge, NY 8. 9020 Balboa Avenue, San Diego, CA Schedule IV to the Credit Agreement TRANSACTION DOCUMENTS 1. Transaction Agreement, dated as of March 28, 1997, by and among Lockheed Martin Corporation, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza, Robert V. Lapenta and L-3 Communications Holdings, Inc., as the same may be amended from time to time. 2. Transfer Agreement, dated as of March 28, 1997, by and between Lockheed Martin and L-3 Communications, as the same may be amended from time to time. 3. Exchange Agreement, dated as of the Closing Date, by and between Lockheed Martin Corporation and L-3 Communications Holdings, Inc., as the same may be amended from time to time. 4. Common Stock Subscription Agreements, dated as of the Closing Date and entered into by each of Lockheed Martin and Lehman Brothers Capital Partners III, L.P., Frank C. Lanza and Robert V. LaPenta, as the same may be amended from time to time. 5. Stockholders Agreement, dated as of the Closing Date by and among L-3 Communications Holdings, Inc., Lockheed Martin, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza and Robert V. LaPenta, as the same may be amended from time to time. 6. L-3 Communications Holdings, Inc., Certificate of Incorporation, as the same may be amended from time to time. 7. L-3 Communications Holdings, Inc., By-Laws, as the same may be amended from time to time. 8. Any exhibits or attachments to any of the foregoing. Schedule 4.4 to the Credit Agreement REQUIRED CONSENTS 1. Compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 2. Compliance with any applicable requirements of the New Jersey Industrial Site Recovery Act. 3. The facilities clearance requirements of the Defense Investigative Service of the United States Department of Defense ("DIS"), as set forth in the DIS Industrial Security Regulation and the DIS Industrial Security Manual, as each may be amended from time to time. 4. The novation of the government contracts as contemplated by Section 7.08 of the Transaction Agreement. 5. Compliance with any applicable requirements of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any state securities or "Blue Sky" law, in connection with the issuance of the Subordinated Debt. 6. The Consents and Approvals Required Prior to Closing attached hereto. 7. Such other consents, approvals, authorizations, permits and filings the failure to obtain or make would not have, in the aggregate, a Material Adverse Effect on the business conducted by the Borrower. CONSENTS AND APPROVALS REQUIRED PRIOR TO CLOSING Conic Business Unit 1. Permit to Operate Wave Solder Machine - Permit No. 910189. 2. Permit to Operate Paint Spray Booth - Permit No. 911333. 3. Permit to Operate Paint Spray Booth - Permit No. 911334. 4. Permit to Operate Paint Spray Booth - Permit No. 911335. 5. Letter from California Water Resources Control Board dated May 16, 1996 re: acknowledgement of Lockheed as general Permittee. 6. Food Establishment Wastewater Discharge Permit issued on 2/15/96 - Fac. No. 123-00014, expiration date 11/1/97. Wideband Systems Business Unit 1. State of Utah, Department of Environmental Quality, Division of Water Quality, Storm Water Permit No. UTR000412, issued August 13, 1996. 2. Salt Lake City Fire Department Hazardous Material Permit dated January 28, 1997. 3. State of Utah, Department of Environmental Quality, Division of Solid and Hazardous Waste, EPA Identification No. UTR 000000307, Dated: May 6, 1996. 4. State of Utah, Department of Environmental Quality, Division of Air Quality, Approval Order No. DAQE-1017-96, Dated: October 30, 1996. 5. Salt Lake City Corporation, Waste Water Division, Department of Public Utilities, Industrial Wastewater Discharge Permit #8-95-01. Issue Date: September 24, 1996. 6. Lease: Farnsworth Peak, Salt Lake City, Utah (prior landlord consent). 7. Lease: 3201 Skyway Drive, Santa Maria, CA (prior landlord consent). 2 8. Lease dated May 4, 1995 with Harris Trust & Savings Bank, as amended (prior landlord consent). 9. Lease dated May 5, 1995 with Unisys Corporation, as amended (prior landlord consent). 10. Lease dated November 1, 1995 with KSL, as amended (prior landlord consent). 11. Lease dated February 1, 1992 with The Mutual Life Insurance Company of New York, as amended (prior landlord consent). 12. Lease dated November 15, 1984 with Airport Business Park Limited Partnership, as amended (prior landlord consent). 13. Lease dated May 31, 1996 between The Prudential Insurance Company of America, a New Jersey corporation, as landlord, and Lockheed Martin IMS, as tenant, a portion of the premises of which are sublet to the business unit (prior landlord consent). 14. Software license with Mentor Graphics dated July 1, 1995 (consent of third party). Randtron Business Unit 1. Three 1997 Fire Protection Permits issued by the Menlo Park Fire Protection District. 2. Notice of Intent Forms for permitted facilities showing the change of name and transmittal letter to the State Water Resources Control Board dated 4/30/96. 3. Mandatory Wastewater Discharge Permit WB 960401-4 issued by South Bayside System Authority and transmittal letter dated 10/30 - 11/8/96. 4. Mandatory Wastewater Discharge Permit WB 960401-1 issued by South Bayside System Authority and transmittal letter dated 10/30 - 11/8/96. 5. Permit to Operate for Plant No. 2877 issued by the Bay Area Air Quality Management District with expiration date of 12/1/97. 6. Permits to Operate Liquified Petroleum Gas Tank Nos.: 20501-86, 1598-72, 3181-87, 3182-87, 3188-87, 865-83, 3302-91, 21025-88, 3182-91, all issued by the Division of Occupational Safety and Health. 3 7. Renewal of Radiation Machines Tubes Registration sent by the Department of Health Services Radiological Health Branch dated 3/8/96. 8. Lease: 130 Constitution Drive, Menlo Park, CA (prior landlord consent). 9. Lease: 150 Constitution Drive, Menlo Park, CA (prior landlord consent). 10. Lease: 3455 Edison Way, Redwood, CA (prior landlord consent). 11. Lease: Ox Mountain, San Mateo County, CA (prior landlord consent). 12. Lease: Skylawn, 32992 Mission Blvd., Hayward, CA (prior landlord consent). 13. Lease Agreement dated December 19, 1971 with Prime Ventures, Ltd., as amended (prior landlord consent). 14. Standard Industrial Lease dated September 1, 1981 with Menlo Associates, as amended (prior landlord consent). 15. Lease Agreement dated February 4, 1985 with C&M Investments, as amended (prior landlord consent). 16. Standard Industrial Lease Agreement with Alvin O. and Claire E. Lang dated November 21, 1984, as amended (prior landlord consent). 17. Lease Agreement dated May 1, 1994 with Eberhard P. Woertz, Trustee for Eric Eberstand Woerz Trust and Kristina Patricia Woerz Trust, as amended (prior landlord consent). 18. Lease Agreement dated as of February 15, 1972 with Skylawn, a California corporation (prior landlord consent). 19. Lease Agreement dated November 19, 1995 with James M. Portman, as amended (prior landlord consent). Narda Microwave West Business Unit 1. Permit Tracking Report dated 2/24/97. (To the extent this tracking report lists environmental permits not otherwise listed in Schedule B.03 to the Transaction Agreement, we would like those permits as well.) 4 2. Sacramento Metropolitan Air Quality Agreement District Permit No. 10043 to operate Vapor Degreaser, expires 7/1/93. 3. Renewal Invoice No. 950016 due 3/21/96 for Permit No. 10043. 4. Renewal of Radiation Machine (Tubes) Registration No. C0049556 dated 10/11/95. 5. Air Quality Permit No. 10043 issued by the Sacramento Metropolitan Air Quality Management District to operate a vapor degreaser. 6. Lease dated August 15, 1996 with Lincoln-Whitehall Pacific, L.L.C. (prior landlord consent). 7. Lease dated February 15, 1991 with 11,000 White Rock Limited Partnership, as amended (prior landlord consent). 8. Lease dated May 31, 1996 between The Prudential Insurance Company of America, a New Jersey corporation, as landlord, and Lockheed Martin IMS, as tenant, a portion of the premises of which are sublet to the business unit (prior landlord consent). Narda East Business Unit (Includes FSI - Semiconductor) 1. EPA Notification of Hazardous Waste Activity dated: 5/20/96 (no expiration date) (authorizes hazardous waste activities) 2. Suffolk County Sewer District #18 Discharge Certification permit number: 018-001-0028 expires: 8/2/98 (authorizes industrial wastewater pretreatment and discharge limitations) 3. N.Y.S.D.E.C. Air Emissions Permit(s), permit number: 1-4734-00124/00001-0 and 00003 through 00026 expires: 11/18/97 (authorizes 24 process air emission plants) 4. N.Y.S.D.E.C. Air Emissions Permits, permit number: 1-4734-00124/00002-0 expires: 11/19/97 (authorizes operation of one stationary combustion unit) 5. Suffolk County Storage Facility for Toxic and Hazardous Materials expires: 5/31/97 (authorizes storage and handling of toxic and hazardous materials) 5 6. D.O.T. Hazardous Materials Certificate of Registration Reg. No.: 052196 011 003E, expires: 6/30/97 (authorizes shipments of hazardous materials) 7. Town of Smithtown Fire Prevention permit number: 96-5175 (flammable hazardous materials) permit number: 96-0621 (cutting and welding) permit number: 96-0622 (Spray booth) permit number: 96-0620 (compressed gases) expire: 9/97 (for all) 8. Lowell, MA Wastewater Permit--Industrial user Permit No. 031. 9. Net Leases dated April 1, 1985 with Roger P. Nordblum et al., as amended (prior landlord consent). Hycor Business Unit 1. Massachusetts permit for Class C Explosives dated November 15, 1996. 2. Massachusetts permit for various fluids dated June 9, 1996. 3. U.S. Hazardous Materials registration dated May 21, 1996. 4. U.S. Department of Transportation Explosives shipment authorization dated August 17, 1988. 5. Massachusetts permit for Class B and Class C Explosives dated October 23, 1996. 6. Massachusetts License for Class B Explosives dated December 19, 1984. 7. Massachusetts License for Class A Explosives dated October 4, 1988. 8. Massachusetts Regulation for Flamables/Explosives dated March 11, 1996. 9. Lease of explosive test site commencing January 31, 1983 with Bene Vento Sand and Gravel, Inc., as amended (prior landlord consent). Display Systems Business Unit 1. Radioactive Materials License - issued by Georgia Department of Natural Resources (one in line air deionizer) 6 2. LMDS Environmental Radioactive Materials License by GADNR referenced in 3.26.96 memo to G. Bryan from K. Flanagan. 3. Lease: 6670 Jones Mill Court, Suite F, Norcross, GA (prior landlord consent) 4. Lease, dated August 11, 1992 with D&B No.3, a Georgia partnership, as amended (prior landlord consent). Advanced Recorders Business Unit 1. Air Agency Certificate No. LD7R612J dated May 24, 1994. 2. Air Agency Certificate No. MMF321-14 dated June 7, 1996. 3. Storm Water General Permit Coverage Notice - Permit No. FLR00B068 issued by the U.S. Environmental Protection Agency. 4. Matters referred to in letter dated 9/12/96 from Florida Department of Environmental Protection accepting transfer of Post Closure Permit No. HF58-271405 and to the extent not already incorporated by reference, the facility's water use and HSWA permits. Communications Systems Business Unit 1. U.S. Nuclear Regulatory Commission Materials License No. 29-01788-03. 2. New Jersey Radioactive Materials Registration, Department of Environmental Protection, Bureau of Environmental Radiation, NRC License No. 29-01788-03. 3. Registration of x-ray machine source equipment with the State of New Jersey, Department of Environmental Protection, Bureau of Radiological Health, NJDEP Registration Numbers 101424, 102952, 103062, 103071, 103454 and 103503, "Registration of a Radiation Producing Machine." 4. The Camden County Municipal Utilities Authority, Industrial Discharge Final Permit Numbers 3669-CA-1 and 3669-CA-2. 5. New Jersey Department of Environmental Protection, Bureau of New Source Review, Form VEM-040, Report on Amendment to Permits to Construct, Install or Alter Control Apparatus or Equipment and Certificates to Operate Control Apparatus or Equipment. NJ Stack ID 7 Nos. 001, 002, 003, 005, 006, 007, 008, 009 and 010 at NJ Plant ID 50858. 6. State of New Jersey, Department of Community Affairs, Division of Fire Safety, Life Hazard Use Certificate of Registration. 7. Approval pursuant to the New Jersey Industrial Site Recovery Act of the Transaction. Telemetry & Instrumentation Business Unit 1. Lease: 15378 Avenue of Science, San Diego, CA (prior landlord consent). 2. 1175 North Courtenay Parkway, Merritt Island, FL (prior landlord consent). 3. Lease dated April 13, 1988 between Scripps Del Norte Center, Ltd. and Gould, Inc., as amended (prior landlord consent). 4. Lease Agreement dated July 20, 1989 between Dennis Oberman and Loral, as amended (prior landlord consent). 5. Commercial Lease dated February 22, 1996 with Westcourt Center Partnership (prior landlord consent). Chief Executive Office 1. Lease Agreement with 600 Third Avenue Associates (prior landlord consent). Schedule 4.5 to the Credit Agreement NO LEGAL BAR o Novations referred to in Section 6.13 of the Credit Agreement. o Consents of the lessors of the real property referred to in subsection 6.15(b). Schedule 4.6 to the Credit Agreement MATERIAL LITIGATION o Universal Navigation Corp., et al. v. Loral Corporation, et al.: the Borrower's Aviation Recorders operation ("Aviation Recorders") is subject to a suit by Universal Avionics Systems Corporation ("Universal"). Universal is seeking to recover at least $15 million in damages it alleges it incurred as a result of certain actions by Aviation Recorders in the cockpit voice recorder ("CVR") business. If this matter were determined adversely to the Borrower in a non-appealable final judgment, the Borrower could also be subject to treble damages. Universal's complaint contains the following claims: (i) antitrust claims alleging that Aviation Recorders has attempted to monopolize the CVR business by, among other things, its institution and maintenance of a bid protest, "petitioning" of the Federal Aviation Administration and foreign aviation authorities regarding CVR certification requirements and its marketing activities, and (ii) Lanham Act and common law claims arising out of alleged false statements regarding Universal's or Aviation Recorders' CVRs. Management believes that there are substantial defenses to Universal's claims and intends to defend itself vigorously. Schedule 4.8 to the Credit Agreement ADVANCED RECORDERS BUSINESS UNIT REAL PROPERTY I. Owned Real Property 1. Professional Office Lease between Loral and Sarasota County dated October 24, 1995. (i) 6000 Fruitville Road, Sarasota, Florida (ii) Loral Data Systems, Inc. Encumbrances: a. Professional office lease between Loral and Sarasota County dated October 24, 1995. b. Professional office lease between Lockheed Martin Advanced Recorders and Medical Education Technologies, Inc. dated March 10, 1997. COMMUNICATIONS SYSTEMS BUSINESS UNIT REAL PROPERTY I. Owned Real Property NONE CONIC BUSINESS UNIT REAL PROPERTY I. Owned Real Property 1. (i) 9020 Balboa Avenue, San Diego, California (ii) LMADO DISPLAY SYSTEMS BUSINESS UNIT REAL PROPERTY I. Owned Real Property 1. Peachtree Facility (i) Address - Building 1: 6765 Peachtree Industrial Blvd., Atlanta, GA 30360 Address - Building 2: 6761 Peachtree Industrial Blvd., Atlanta, GA 30360 Address - Building 3: 6755 Peachtree Industrial Blvd., Atlanta, GA 30360 (ii) Owner - Lockheed Martin Tactical Systems, Inc. 2. Alpharetta Facility (i) 1355 Bluegrass Lakes Parkway, Alpharetta, GA 30201 (ii) Owner - LMC Properties, Inc. Warranty Deed dated 7/1/96 between AEL Industries, Inc. and LMC Properties, Inc. Note: Owned subject to the following encumbrances: BlueGrass, Ltd.: Declaration of Easements BlueGrass, Ltd.: Access and Utilities Easement BlueGrass, Ltd.: Temporary Construction Access Easement BlueGrass, Ltd.: Water Retention and Detention Easements HYCOR BUSINESS UNIT REAL PROPERTY I. Owned Real Property 1. (i) Address: 300 Neck Road, Haverhill, Mass. 01830 (ii) Owner: Lockheed MArtin Tactical Systems, Inc. 2. (i) Address: 10 Gill Street, Woburn, Mass. 01801 (ii) Owner: Lockheed Martin Tactical Systems. Inc. MICROCOM BUSINESS UNIT REAL PROPERTY I. Owned Real Property 1. (i) Address: 965 Thomas Drive, Warminster, Bucks County, PA 18974 (ii) Owner: Microcom Corporation NARDA EAST BUSINESS UNIT (INCLUDES FSI - SEMICONDUCTOR) REAL PROPERTY I. Owned Real Property 1. New York (i) Address: 435 Moreland Road, Hauppauge, New York (ii) Owner: The Narda Microwave Corporation NARDA MICROWAVE WEST BUSINESS UNIT REAL PROPERTY I. Owned Real Property NONE RANDTRON BUSINESS UNIT REAL PROPERTY I. Owned Real Property NONE TELEMETRY & INSTRUMENTATION BUSINESS UNIT REAL PROPERTY I. Owned Real Property NONE WIDEBAND SYSTEMS BUSINESS UNIT REAL PROPERTY I. Owned Real Property 1. Offer to Purchase the following real property [ST-H-6(a)]: Building B (i) Address: 480 North 2200 West Street, Salt Lake City, Utah (ii) Owner: Unisys Master Pension Trust Corporation; 2. Offer to Purchase the following leased property: Building E (i) Address: 640 North 2200 West Street, Salt Lake City, Utah (ii) Owner: Unisys Master Pension Trust Corporation; Building F (i) Address: 640 North 2200 West Street, Salt Lake City, Utah (ii) Owner: Unisys Master Pension Trust Corporation. Schedule 4.9 to the Credit Agreement ADVANCED RECORDERS BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: 1. CPS-100 Non-Exclusive Licensing Agreement between Loral and Witchey/Shaw dated October 11, 1995. II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE II. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: NONE COMNILNICATIONS SYSTEMS BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances where Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: NONE II. The following are instances where the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of any other Persons: NONE III. The following are instances where Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) which Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: NONE CONIC BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: NONE II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE II. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: NONE DISPLAY SYSTEMS BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: NONE II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE II. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: NONE HYCOR BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS NONE MICROCOM BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS NONE I. II. II. IV. NARDA EAST BUSINESS UNIT (INCLUDES FSI - SEMICONDUCTOR) INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: NONE II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE II. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: 1. Letter dated 8/29/89 from The Narda Microwave Corporation to Dr. Om P. Gandhi (letter agreement granting Narda exclusive rights to certain inventions of Dr. Gandhi, including the right to patent) NARDA MICROWAVE WEST BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: 1. License for very small aperture transceiver with Titan Corporation dated 2/9/95. II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE III. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: 1. License for very small aperture transceiver with Titan Corporation dated 2/9/95. RANDTRON BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: The items and matters listed on Schedule B.10.III are incorporated herein by reference II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE II. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: NONE INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: 1. License Agreement between Loral and DataViews Corporation executed on 1/26/95 and 1/20/95, together with Letter Amendment dated 8/28/96. II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: NONE II. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: NONE IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: NONE WIDEBAND SYSTEMS BUSINESS UNIT INTELLECTUAL PROPERTY CLAIMS I. The following are instances in which Lockheed Martin does not own, free and clear of all Liens all right, title and interest in Intellectual Property used primarily in the Business: 1. Unisys has not yet provided Assignment documents for a number of patents and patent applications developed at Wideband Systems. 2. Allegation by Purdue that Unisys/Loral (Wideband Systems) has infringed two Purdue patents (4,191,031 and 4,222,115); Loral sent a response on 3/1/96 denying any infringement; no further correspondence has been received from Purdue. 3. Unisys claims that it should have retained ownership to two patent applications which Loral claimed ownership to; these are on the Transferred Asset List (08/606,285 and 08/606,378); Lockheed Martin has taken the position that they are owned by Lockheed Martin. 4. Additional payments and royalties are due to Unisys in connection with the license of Fixed Wireless Corp. technology. II. The following are instances in which the use of such Intellectual Property in connection with the operation of the Business as heretofore conducted conflicts with, infringes upon or violates the intellectual property rights of other Persons: 1. None III. The following are instances in which Lockheed Martin does not have the right to use all Intellectual Property used by the Business and necessary for the continued operation of the Business in substantially the same manner as its operations have heretofore been conducted: 1. Software license with Mentor Graphics dated July 1, 1995, permits assignment to a successor in interest with 60 days advance notice and subject to Mentor Graphics' then current transfer policy and associated transfer fees. WIDEBAND SYSTEMS BUSINESS UNIT IV. The following is a list of any Intellectual Property, (patents, copyrights, trademarks, etc.) that Lockheed Martin does not have the right to transfer or license to the Business and which are necessary for the continued operation of the Business as a whole in substantially the same manner as its operations have heretofore been conducted: None DRAFT Schedule 4.10 to the Credit Agreement TAXES NONE Schedule 4.14 to the Credit Agreement SUBSIDIARIES NONE Schedule 4.17 to the Credit Agreement FILING JURISDICTIONS UCC-1 Financing Statements I. ALABAMA a. Alabama (Secretary of State) b. Madison County, Alabama II. ARIZONA a. Arizona (Secretary of State) b. Maricopa County, Arizona III. CALIFORNIA a. California (Secretary of State) b. Los Angeles County, California c. Sacramento County, California d. San Diego County, California e. San Mateo County, California f. Santa Clara County, California g. Santa Maria County, California h. Ventura County, California IV. COLORADO a. Colorado (Secretary of State) b. El Paso County, Colorado V. GEORGIA a. Georgia (Secretary of State) b. Fulton County, Georgia c. Gwinnett County, Georgia VI. FLORIDA a. Florida (Secretary of State) b. Brevard County, Florida c. Sarasota County, Florida VII. MASSACHUSETTS a. Massachusetts (Secretary of State) b. Haverhill, Massachusetts c. Lowell, Massachusetts d. Wilmington, Massachusetts e. Woburn, Massachusetts VIII. NEW JERSEY a. New Jersey (Secretary of State) b. Camden County, New Jersey IX. NEW YORK a. New York (Secretary of State) b. Suffolk County, New York c. New York County, New York X. PENNSLYVANIA a. Pennsylvania (Secretary of State) b. Bucks County, Pennslyvania c. Montgomery County, Pennslyvania XI. UTAH a. Utah (Secretary of State) b. Salt Lake County, Utah c. Tooele County, Utah Patent and Trademarks I. U.S. Patent and Trademark Office Mortgages I. CALIFORNIA a. San Diego County, California II. FLORIDA a. Sarasota County, Florida III. GEORGIA a. Fulton County, Atlanta IV. MASSACHUSETTES a. Essex County, Massachusettes b. Middlesex County, Massachusettes V. NEW YORK a. Suffolk County, New York VI. PENNSYLVANIA a. Bucks County, Pennsylvania Schedule 6.5 to the Credit Agreement INSURANCE During the term of this contract, L3 Communications will maintain insurance coverage for amounts not less than those shown below, and with deductibles and/or self-insurance amounts not greater than those shown below:
Insurance Amounts to be Insured/ Deductibles - --------- Limits of Liability Retentions (Self Insurance) ------------------- --------------------------- "All Risks" Property $100,000,000 Loss Limit $1,500,000 per occurrence including Transit, Business with various sub-limits except 10% of Total Interruption and Boiler for flood, earthquake, Insured value per location & Machinery including windstorm and with respect to Flood & Flood & Earthquake miscellaneous coverages. Earthquake. Replacement Cost Valuation. Marine Cargo & Transit $1,000,000 $5,000 Workers Compensation Statutory $1,000,000 and Employers Liability $1,000,000 combined Automobile Liability $1,000,000 $250,000 General Liability including $1,000,000 $250,000 Non-Aviation Products Liability Excess (Umbrella) Liability $10,000,000 Excess of above primary Liability policies Aviation Products Liability $100,000,000 $5,000,000
Schedule 6.10 to the Credit Agreement CERTAIN REAL PROPERTY Part I 1. 10 Gill Street Woburn, MA 2. 300 Neck Road Haverhill, MA Part II 1. 6000 Fruitville Road, Sarasota, FL 2. 6755, 6761, 6765 Peachtree Industrial Boulevard, Atlanta, GA 3. 1355 Bluegrass Lakes Parkway, Alpharetta, Georgia 4. 10 Gill Street, Woburn, MA 5. 300 Neck Road Haverhill, MA 6. 965 Thomas Drive, Warminster, PA 7. 435 Moreland Road, Hauppauge, NY 8. 9020 Balboa Avenue, San Diego, CA Part III 1. 6755, 6761, 6765 Peachtree Industrial Boulevard, Atlanta, GA Schedule 7.2(f) to thc Credit Agreement EXISTING INDEBTEDNESS Division Amount Description - -------- ------ ----------- Microcom Business $280,439 Two capitalized leases for Unit equipment Schedule 7.3(f) to the Credit Agreement EXISTING LIENS As of April 30, 1997, the following lien search results have not yet been received: (i) Microcom Inc. - Montgomery County PA (ii) Lockheed Martin Corporation - Wilmington, MA and Lowell, MA (iii) Loral Corporation - Wilmington, MA and Lowell, MA (iv) Lockheed Martin Tactical Systems - Wilmington, MA and Lowell, MA (v) Hycor Inc. - Wilmington, MA and Lowell, MA (vi) Lockheed Martin FSI - Secretary of State, MA, Middlesex County, MA and Woburn, MA (vii) L-3 Communications Holdings, Inc. - New York County, NY (viii) L-3 Communications Corporation - New York County, NY (ix) Narda Microwave Corporation - Sacramento County, CA (x) Wideband Systems - Tooele County, UT Liens may be in existence that would be reflected in search results not yet received. This chart may be updated to reflect such liens.
Jurisdiction Secured Party File No. Collateral (Date) - ------------------------------------------------------------------------------------------------------------- Bucks Co., Meridian Leasing Inc. 92-61739 Used Machining PA P0 Box 15204 (5/21/92) Center Reading, PA 19612-5204 (Lessor) - ------------------------------------------------------------------------------------------------------------- Bucks Co., Meridian Leasing Inc. 92-61740 Various Computer PA P0 Box 15204 (5/27/92) Equipment, Computer Reading, PA 19612-5204 Peripherals (Lessor) - ------------------------------------------------------------------------------------------------------------- Bucks Co. Meridian Leasing Inc. 10746 Telemetry System PA P0 Box 15204 (10/12/93) Tester Reading, PA 19612-5204 (Lessor) - ------------------------------------------------------------------------------------------------------------- CA General Electric Capital Computer Leasing 94007615 All Equipment Leased Corporation (1/14/94) Under Master 2000 Powell Street, Suite 200 Equipment Lease Emeryville, CA 94608 - ------------------------------------------------------------------------------------------------------------- CA JLA Credit Corporation 9613560590 Rolm Phone System 970 W. 190th Street, Suite 710 (5/13/96) Torrance, CA 90502 (Lessor) - ------------------------------------------------------------------------------------------------------------- CA Konica Business Machines 9702260022 Photocopier Machine 500 Day Hill Road (1/21/97) Windsor, CT 06095 Sanwa Leasing Corporation P.O. Box 7023 Troy. MI 48007 - ------------------------------------------------------------------------------------------------------------- CA LPI Software Funding Group, Inc. 9705160201 Various Computer One Glenhardie Corp. Center (2/13/97) Software, Software 1275 Drummers Lane Licenses and Software Wayne, PA 19087 Agreements - ------------------------------------------------------------------------------------------------------------- CA MetLife Capital Credit Corporation 88089181 Various Computer Ten Stamford Forum (4/15/88) Equipment, Material Stamford, CT 06904 Handling Equipment and Laboratory Testing Continuation: 5716188-007 Equipment - new name: MetLife Capital Corporation (3/01/93) - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- CA NationsBanc Leasing Corporation of 9435160029 Airframe, Engines, North Carolina (12/15/94) Equipment NationsBank Corporate Center 100 N. Tryon Street, NC 1-007-12-01 Charlotte, NC 28255-0001 (Lessor) Vince Iaci, as Trustee UTC MCLP Aircraft Leasing Trust Agreement Dated as of November 16, 1993 10900 NE 4th Street, Suite 500 Bellevue, WA 98004 (Assignee) - ------------------------------------------------------------------------------------------------------------- CA Security Leasing Services, Inc. 93191792 Various Alarm System 1505-A N.E. Darwin Road (9/20/93) Equipment Kansas City, MO 64116 Avco Leasing Services, Inc. 3349 Michelson Drive Irvine, CA 92715 (Assignee) - ------------------------------------------------------------------------------------------------------------- Camden EUA Cogenex Corp. 0457-96 Various Energy Co., NJ Boott Mills South (2/27/96) Efficient Lighting 100 Foot of John Street Fixtures Lowell, MA 01852 - ------------------------------------------------------------------------------------------------------------- Camden EUA Cogenex Corp. 0458-96 Various Energy Co., NJ Boott Mills South (2/27/96) Efficient Lighting 100 Foot of John Street Fixtures Lowell, MA 01852 - ------------------------------------------------------------------------------------------------------------- FL Data & Electronic Services, Inc. 960000153545 Key Service Unit. P.O. Box 1585 (7/24/96) LCD Display Kit, Destin, FL 32540 Telephone Line Protector, Battery Backup Kit - ------------------------------------------------------------------------------------------------------------- FL El Camino Resources, Ltd. 970000077136 Equipment Leased 21051 Warner Center Lane (4/11/97) Under Master Lease Woodland Hills, CA 91367 (Lessor) Republic National Bank of New York 452 Fifth Avenue, Tower 25 New York, NY 10018 (Assignee) - ------------------------------------------------------------------------------------------------------------- FL IBM Federal Government Systems 950000246073 Model 9672 R21 and 6705 Rockledge Drive (12/08/95) Software Licenses Bethesda, MD 20817 - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- FL Orbotech, Inc. 960000051936 Automated Optical 44 Manning Road (3/14/96) Inspection System Billerica, MA 01821 - ------------------------------------------------------------------------------------------------------------- Fulton Co., Canon Financial Services Inc. 000794080 Fax Machine GA 200 Commerce Square Blvd. (6/14/93) Burlington, NJ 08016 - ------------------------------------------------------------------------------------------------------------- Fulton Co., Canon Financial Services Inc. 000796004 Fax Machine GA 200 Commerce Square Blvd. (7/21/93) Burlington, NJ 08016 - ------------------------------------------------------------------------------------------------------------- Fulton Co., Cencor Capital Inc. 000820250 Leased Computer GA 1701 East Woodfield Road, Suite 419 (11/8/94) Software Schaumburge, Illinois 60173 Winona National and Savings Bank P.O. Box 499, 204 Main Street Winona MN 55987 (Assignee) - ------------------------------------------------------------------------------------------------------------- Fulton Co., Cencor Capital Inc. 000820976 Leased Computer GA 1701 E. Woodfield Road, Suite 419 (11/28/94) Software Schaumburge, Ill. 60173-5129 Pioneer Bank and Trust Company 4000 West North Avenue Chicago, Illinois 60639 (Assignee) - ------------------------------------------------------------------------------------------------------------- Fulton Co., Memorandum of lease between Raldo S. Deed Book Memorandum of lease GA Rowan and Larry Morris of 5.70 acres of 2631 Pg. 261 property leased at (3/25/71) 6755-6765 Peachtree Industrial Blvd. Atlanta, GA 30360. Lease expires July 2031. - ------------------------------------------------------------------------------------------------------------- GA BancBoston Leasing Inc. 106-97-001848 Statewide 100 Federal Street (4/09/97) Authority Boston, MA 02110 - ------------------------------------------------------------------------------------------------------------- GA The Commonwealth of Australia 007-96-004149 Statewide Resident Project Team (RAAF) (9/20/96) Authority Bldg. B95, 86 South Cobb Drive Marietta, GA 30063-0584 - ------------------------------------------------------------------------------------------------------------- GA Fleet National Bank 115-97-000427 Equipment and Statewide 777 Main Street (4/01/97) Fixtures Authority Hartford, CT 06115 Meridian Trust Company (as Security Trustee) P.O. Box 16003, 35 North Sixth Street Reading, PA 19601 (Assignee) - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- GA Fleet National Rank 00520-0838 Equipment and Statewide 777 Main Street (8/21/95) Fixtures Authority Hartford, CT 06115 Meridian Trust Company 35 North Sixth Street 115-96-001368 Reading, PA 19601 (9/17/96) (Assignee) - ------------------------------------------------------------------------------------------------------------- GA Fleet National Bank 115-95-000952 Equipment and Statewide 777 Main Street (7/13/95) Fixtures Authority Hartford, CT 06115 Meridian Trust Company, (as Security 115-96-001369 Trustee) (9/17/96) P.O. Box 16003 Reading, PA 19601 (Assignee) - ------------------------------------------------------------------------------------------------------------- GA IBM Credit Corporation 033-97-00l377 Equipment Statewide 1133 Westchester Avenue (1/27/97) Authority White Plains, NY 10604 - ------------------------------------------------------------------------------------------------------------- GA Leasing Solutions, Inc. 007-96-[ILLEGIBLE] ? Statewide 10 Almaden Blvd., Suite 1500 (11/06/96) Authority San Jose, CA 95113 The First National Bank of Boston, as Agent 435 Tasso Street, Suite 250 Palo Alto, CA 94301 (Assignee) - ------------------------------------------------------------------------------------------------------------- GA Leasing Solutions, Inc. 007-96-002545 ? Statewide 10 Almaden Blvd., Suite 1500 (7/12/96) Authority San Jose, CA 95113 The First National Bank of Boston, as Agent 435 Tasso Street, Suite 250 Palo Alto, CA 94301 (Assignee) - ------------------------------------------------------------------------------------------------------------- GA Leasing Solutions, Inc. 007-96-006686 ? Statewide 10 Almaden Blvd., Suite 1500 (12/24/96) Authority San Jose, CA 95113 The First National Bank of Boston, as Agent 435 Tasso Street, Suite 250 Palo Alto, CA 94301 (Assignee) - ------------------------------------------------------------------------------------------------------------- GA Pitney Bowes Credit Corporation 044-97-003405 ? Statewide 201 Merritt Seven (4/08/97) Authority Norwalk, CT 06856 - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- [ILLEGIBLE] Shawmut Bank Connecticut, National ? ? Statewide Association Authority 777 Main Street Hartford, CT 06115 Meridian Trust Company (As Secured Trustee) P.O. Box 16003 Reading, PA 19601 (Assignee) - ------------------------------------------------------------------------------------------------------------- GA Unisys Corporation 033-96-012471 Goods/Inventory Statewide 4151 Ashford Dunwoody Road (9/09/96) Authority Atlanta, GA 30319 - ------------------------------------------------------------------------------------------------------------- Los Angeles NationsBanc Leasing Corporation of 9519260254 Airframe, Engines, CA North Carolina Equipment NationsBank Corporate Center 100 N. Tryon Street, NC 1-007-12-01 Charlotte, NC 28255-0001 (Lessor) Vince Iaci, as Trustee UTC MCLP Aircraft Leasing Trust Agreement Dated as of November 16, 1993 10900 NE 4th Street, Suite 500 Bellevue, WA 98004 (Assignee) - ------------------------------------------------------------------------------------------------------------- [ILLEGIBLE] VMX Credit Corporation 099181 Port Line Card and 1650 Zanker Road, Suite 236 (6/23/92) Names Directories San Jose, CA 95112 Hewlett-Packard Company 1563652 All Equipment leased Finance & Remarketing Division (4/08/94) pursuant to Financing 1360 Kifer Road Agreement No. 4126- Sunnyvale, CA 94086 99911 - ------------------------------------------------------------------------------------------------------------- [ILLEGIBLE] ICX Corporation 1701385 Various Computer 3 Summit Park Drive, Suite 200 5/30/95 Equipment, Electrical Cleveland, OH 44131 Equipment, Machine Tools Hitachi Credit America Corp. 777 West Putnam Avenue Greenwich, CT 06830 (Assignee) - ------------------------------------------------------------------------------------------------------------- [ILLEGIBLE] ICX Corporation 1717811 Various Computer 3 Summit Park Drive, Suite 200 (8/19/95) Equipment, Computer Cleveland, OH 44131 Software Hitachi Credit America Corp. 777 West Putnam Avenue Greenwich, CT 06830 (Assignee) - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1720128 Various Computer 3 Summit Park Drive, Suite 200 (9/4/96) Equipment, Computer Cleveland, OH 44131 Peripherals Hitachi Credit America Corp. 777 West Putnam Avenue Greenwich, CT 06830 (Assignee) - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1747596 Various Engineering 3 Summit Park Drive, Suite 200 (2/03/97) Devices, Electrical Cleveland, OH 44131 Equipment - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1744893 Various Equipment 3 Summit Park Drive, Suite 200 (1/15/97) Cleveland, OH 44131 - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1744896 Various Equipment 3 Summit Park Drive, Suite 200 (1/15/97) Cleveland, OH 44131 - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1744898 Various Equipment 3 Summit Park Drive, Suite 200 (1/15/97) Cleveland, OH 4413l - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1744901 Various Equipment 3 Summit Park Drive, Suite 200 (1/15/97) Cleveland, OH 44131 - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1751955 Various Equipment 3 Summit Park Drive, Suite 200 (2/28/97) Cleveland, OH 44131 - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1744966 Various Equipment 3 Summit Park Drive, Suite 200 (1/15/97) Cleveland, OH 44131 - ------------------------------------------------------------------------------------------------------------- NJ ICX Corporation 1749533 Various Equipment 3 Summit Park Drive, Suite 200 Cleveland, OH 44131 - ------------------------------------------------------------------------------------------------------------- NJ National Micrographics Systems Inc 1750326 Various Equipment, 11941 Bournefield Way (2/10/97) Printer Silver Spring, MD 20904 Norwest Financial LSG P.O. Box 17229 Charlotte, NC 28227 (Assignee) - ------------------------------------------------------------------------------------------------------------- NJ Pitney Bowes Credit Corporation 1672723 All Equipment subject 201 Merritt Seven (12/21/95) to Lease #0196741- Norwalk, CT 06856 001 - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- NJ Telecom Financial Services 1717308 Leased Equipment 220 Athens Way (8/16/96) Nashville, TN 37228 (Lessor) - ------------------------------------------------------------------------------------------------------------- NY BancBoston Leasing Inc. 071460 Various Computer 100 Federal Street (4/10/97) Equipment, Computer Bostom, MA 02110 Peripherals, Computer Software - ------------------------------------------------------------------------------------------------------------- NY Canon Financial Services, Inc. 067688 Graphics 200 Commerce Square Blvd. (4/04/97) Burlington, NJ 08016 (Lessor) - ------------------------------------------------------------------------------------------------------------- NY Digital Financial Services, a division of GE 091925 All Equipment Capital Corp. (5/07/96) Pursuant to DFS 1400 Computer Drive Lease Agreement No. Westborough, MA 01581 6608812-001 - ------------------------------------------------------------------------------------------------------------- NY El Camino Resources, Ltd. 073271 Various Computer 21051 Warner Center Lane (4/11/97) Equipment, Computer Woodland Hills, CA 91367 Peripherals, Computer Software Republic National Bank of New York 452 Fifth Avenue, Tower 25 New York, NY 10018 (Assignee) - ------------------------------------------------------------------------------------------------------------- NY Fleet National Bank 057968 Machine Tools, 777 Main Street (3/21/97) Production Equipment Hartford, CT 06115 (Lessor) Meridian Trust Company 35 North Sixth Street Reading, PA 19601 (Assignee) - ------------------------------------------------------------------------------------------------------------- NY Fleet National Bank 057971 Machine Tools, 777 Main Street (3/21/97) Production Equipment Hartford, CT 06115 Meridian Trust Company 35 North Sixth Street Reading, PA 19601 (Assignee) - ------------------------------------------------------------------------------------------------------------- NY General Electric Capital Corporation 109401 Universal Turning 1080 Elm Street (5/28/92) Centers, Universal Rocky Hill, CT 06067 Chucking Centers - ------------------------------------------------------------------------------------------------------------- NY Liquid Carbonic lndu. Gases 098236 Lease of 6 Ton Vessel 1280 Wall St. West (5/15/95) Lyndhurst, NJ 07071 - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- NY Meridian Trust Company 057934 Amendment of 35 North Sixth Street (3/21/97) #177404 Reading, PA 06911 - ------------------------------------------------------------------------------------------------------------- NY Metlife Capital Credit Corp. 065584 All Equipment Leased Ten Stamford Forum (3/15/88) Under Master Stamford, CT 06904 Equipment Lease Agreement Dated 3/02/88 Continuation: 044207 - new name: MetLife Capital Corporation (3/02/93) - ------------------------------------------------------------------------------------------------------------- NY Oce-USA, Inc. 047933 Oce Model 2400 with 5450 North Cumberland Ave. (3/14/94) All Spare Parts, Chicago, IL 60656 Accessories, Attachments, Replacements - ------------------------------------------------------------------------------------------------------------- NY Oce-USA, Inc. 047934 Oce Model 2500 with 5450 North Cumberland Ave. (3/14/94) All Spare Parts, Chicago, IL 60656 Accessories, Attachments, Replacements - ------------------------------------------------------------------------------------------------------------- NY Primetec Leasing, Inc. 246493 SPARCStatic and 1 New York Avenue (11/25/92) Related Accessories Framingham, MA 01701 Sanwa Business Credit Corp. 256346 One South Wacker Drive (12/09/93) Chicago, IL 60606 (Assignee) - ------------------------------------------------------------------------------------------------------------- NY Shawmut Bank, National Association 177404 Machine Tools, 777 Main Street (8/30/95) Production Equipment Hartford, CT 06115 (Lessor) Meridian Trust Company, as Security Trustee P.O. Box 16003 35 North Sixth Street Reading, PA 19601 (Assignee) - ------------------------------------------------------------------------------------------------------------- PA GE Capital Computer Leasing Corporation 24420563 Com 5/100XL, Com 6875 Jimmy Carter Blvd., Suite 3400 (6/26/95) 148188001 Norcross GA 30071 - ------------------------------------------------------------------------------------------------------------- PA GE Capital Computer Leasing Corporation 24921779 Various Computer 6875 Jimmy Carter Blvd., Suite 3400 (11/29/95) Equipment Norcross, GA 30071 - ------------------------------------------------------------------------------------------------------------- PA GE Capital Computer Leasing Corporation 26441646 Various Computer 6875 Jimmy Carter Blvd., Suite 3400 (3/10/97) Equipment, Computer Norcross, GA 30071 Peripherals (Lessor) - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- PA General Electric Capital Corporation 20841296 Universal Turning 1080 Elm Street Centers, Chucking Rocky Hill, CT 06067 Centers - ------------------------------------------------------------------------------------------------------------- PA General Electric Capital Corporation 21431745 Various Computer 44-2 Old Ridgebury Road (12/07/92) Equipment, Computer Danbury, CT 06810 Peripherals and (Lessor) Computer Software - ------------------------------------------------------------------------------------------------------------- PA Master Lease Div of Tokai Financial 21131620 PBX Phone System Services, Inc. (8/26/92) Equipment/Lease 1055 Westlakes Drive Berwyn, PA 19312 - ------------------------------------------------------------------------------------------------------------- PA Meridian Leasing Inc. 20840828 Computer System P0 Box 15204 (5/27/92) Reading, PA 19612-5204 (Lessor) - ------------------------------------------------------------------------------------------------------------- PA Meridian Leasing Inc. 20840953 Machining Center P0 Box 15204 (5/27/92) Reading, PA 19612-5204 (Lessor) - ------------------------------------------------------------------------------------------------------------- PA Meridian Leasing Inc. 22470322 Telemetry System P0 Box 15204 (10/08/93) Tester Reading, PA 19612-5204 (Lessor) - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 20860541 LaserJet Printers 275 N. Franklin Turnpike (6/02/92) Ramsey, NJ 07446 - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 21091553 Stand Alone Plain 275 N. Franklin Turnpike (8/14/92) Paper Fax Machine Ramsey, NJ 07446 - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 22760816 Various Computer 275 N. Franklin Turnpike (1/14/94) Equipment, Computer Ramsey, NJ 07446 Peripherals and Computer Software - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 22851575 Stencil Printer, 275 N. Franklin Turnpike Vacuum Fixture, Ramsey, NJ 07446 Digital Dual Arm Pick Place Dispense System, Top Batch Reflow Oven - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 22971496 On-line 275 N. Franklin Turnpike (3/30/94) Uninterruptable Power Ramsey, NJ 07446 System - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 23261012 Computer Equipment 275 N. Franklin Turnpike (6/27/94) Ramsey, NJ 07446
- ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 23420772 Various Computer 275 N. Franklin Turnpike (8/15/94) Equipment and Ramsey, NJ 07446 Computer Peripherals - ------------------------------------------------------------------------------------------------------------- PA United Financial Funding 21500639 Various Computer 275 N. Franklin Turnpike (12/29/92) Equipment, Computer Ramsey, NJ 07446 Peripherals and Computer Software - ------------------------------------------------------------------------------------------------------------- PA United Financial Corporation 22300930 Various Computer 275 N. Franklin Turnpike (8/13/93) Equipment, Computer Ramsey, NJ 07446 Peripherals and Computer Software Tilden Financial Corp. 190 Motor Parkway Hauppauge, NY 11788 (Assignee) - ------------------------------------------------------------------------------------------------------------- PA Vision Financial Group, Inc. 24941526 Apple Powerbook with 1100 Liberty Avenue (12/04/95) Powerpoint, Universal Pittsburgh, PA 15222 Notebook Case, (Lessor) Hardware Installation - ------------------------------------------------------------------------------------------------------------- Suffolk American Classic Spoec Corp 18638 Freezer Co., NY 1565D Fifth Industrial Court Bayshore, NY 11706 - -------------------------------------------------------------------------------------------------------------
Schedule 7.4 to the Credit Agreement EXISTING GUARANTEE OBLIGATIONS 1. Letters of Credit - see attached. 2. Surety Bonds - see attached. LETTERS OF CREDIT
AMOUNT EXPIRATION DIVISION BANK PROGRAM BENEFIT OF OUTSTANDING DATE -------- ---- ------- ---------- ----------- ---------- December 31, 1996 Microcom None Wideband None Display Systems None Narda West None Narda East None Randtron None Advanced Recorders None Camden ABN AMRO 1-Renbass NZ New Zealand Ministry of Defense 552,688 1/8/98 Conic Bank of America Katron 59,500 * 8/15/97 Katron 158,034 * 10/15/97 DPA 37,833 6/10/97 KTA 22,990 5/20/97 DPA 22,223 * 6/30/98 Katron 75,305 * 8/1/97 Inisel 27,475 * 7/30/97 Hycor Canadian Imperial Bank of 1264/S ROK Defense Procurement Republic of 17,796 * 12/31/97 Commerce Korea ARN AMRO 1272/Turkey Howaldtswerft Deutsche Werft, AG 64,005 * 12/31/97 ABN AMRO 1272/Turkey Blohm & Voss AG 246,645 * 7/31/98 Bayerische Landesbank 1258/Ecuador Blanco del Pacifico 5O0,000 * 10/31/97 Telemetry & Chase Manhattan Bank MOCR#2 PT Industri Pesawat Terbang 40,678 * 1/28/98 Instrumentation Nusantara Chase Manhattan Bank Komstat K.A.R.I. Imperial Bank M10724 JHT Electronics 2,000 * 11/30/98 43,450 3/31/97 --------- TOTAL 1,827,172 =========
- ------------------------ * Letter of credit agrees to listing provided by Lockheed Martin legal.
AMOUNT EXPIRATION DIVISION BANK PROGRAM BENEFIT OF OUTSTANDING DATE -------- ---- ------- ---------- ----------- ---------- March 31, 1997 Microcom None Wideband None Display Systems None Narda West State Bank of India Filters 5,640 2/18/97 Narda East None Randtron None Advanced Recorders None Camden ABN AMRO I-Renbass NZ New Zealand Ministry of Defense 921,148 1/8/98 Conic Bank of America Katron 40,000 Daeyoung 10,000 KTA 75,000 Katron 95,000 Hycor TBD 1272/Turkey Howaldtswerft Deutsche Werft, AG 48,499 Dec 1991 TBD 1277/Taiwan Defense Procurement, Taipei 292,000 April 1998 TBD F124/Germany German Gov't/Shipyard 300,000 1999 Saudi European Shipyard 600,000 1999 Telemetry & TBD MOCR #3 PT Industri Pesawat Terbang Instrumentation TBD Nusantra 50,000 Rooivalk Denel Aviation 220,000 --------- TOTAL 2,657,487 =========
Additional letters of credit as reported by Lockheed Martin legal:
AMOUNT EXPIRATION DIVISION BANK OUTSTANDING DATE - -------- ---- ----------- ---------- Conic Bank of America 5,343 6/15/97 Conic Bank of America 27,155 4/30/97 Conic Bank of America 181,169 4/30/97 Telemetry & Instrum. Bank of America 29,054 11/28/97 Telemetry & Instrum. Chase Manhattan 162,712 3/31/97 Telemetry & Instrum. Bank of America 18,092 3/1/98 ------- TOTAL 423,525 =======
SURETY BONDS
Principal Bond No. Description Obligee Eff/Exp Bond Amount - --------- -------- ----------- ------- ------- ----------- Conic Corporation 5234628 Seller State of CA 1/6/96-97 $10,000 Randtron Systems 960711003 Customs U.S. Customs 9/16/96 $100,000 Narda Microwave Corp. 960711005 Customs U.S. Customs 9/16/96 $100,000 Lockheed Martin Hycor 960711006 Customs U.S. Customs 9/16/96 $100,000 Conic Corporation 960711007 Customs U.S. Customs 9/16/96 $100,000 LM Communications 5857244 Turnpike Toll PA Turnpike Commission 4/18/96-97 $3,000
Schedule 7.9(c) to the Credit Agreement OFFICERS Division Amount Explanation - -------- ------ ----------- Display Systems $35,409 23 Employee loans Conic $10,000 1 Employee loan Narda East $14,030 28 Employee loans Schedule 7.9(g) to the Credit Agreement EXISTING INVESTMENTS Division Amount Explanation - -------- ------ ----------- Randtron $650 LM Securities and LM Tactical Systems Hycor $2,600 Hycor International; LM Tactical Systems Advanced Recorders $288,590 Medical Education Technologies, Inc. Narda West $1,060 Dynamics of America Narda East -------- Dynamics of America Attachment I LOCKHEED MARTIN PREDECESSOR BUSINESSES COMBINED FINANCIAL STATEMENTS As of December 31, 1996 and 1995 and for the three years ended December 31, 1996, 1995 and 1994 [LETTERHEAD OF COOPERS & LYBRAND] REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Lockheed Martin Corporation: We have audited the accompanying combined balance sheet of the Lockheed Martin Predecessor Businesses, as defined in Note 1 to the financial statements, (the "Businesses") as of December 31, 1996 and the related combined statements of operations and changes in invested equity and cash flows for the year then ended. These financial statements are the responsibility of the Businesses, management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of the Communications Systems Division, which statements represent total assets and sales constituting 35 percent and 30 percent of the related combined totals. These statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Communication Systems Division, is based solely on the report of the other auditors. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a tax basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the combined financial position of the Lockheed Martin Predecessor Businesses as of December 31, 1996 and their combined results of operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. 1301 Avenue of the Americas New York, New York March 20, 1997 1 [LETTERHEAD OF ERNST & YOUNG LLP] REPORT OF INDEPENDENT AUDITORS Board of Directors Lockheed Martin Corporation We have audited the combined balance sheets of Lockheed Martin Communications Systems Division, as defined in Note 1 to the financial statements, as of December 31, 1996 and 1995, and the related combined statements of operations and changes in invested equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Division's and Lockheed Martin Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a tax basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Lockheed Martin Communications Systems Division at December 31, 1996 (not presented separately herein) and 1995, and the combined results of its operations and its cash flows for the year ended December 31, 1996 (not presented separately herein), and the results of its operations and its cash flows for each of the two years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP March 7, 1997 2 Ernst & Young LLP is a member of Ernst & Young International Ltd. LOCKHEED MARTIN PREDECESSOR BUSINESSES COMBINED BALANCE SHEETS (in thousands) December 31, ------------------- 1996 1995 -------- -------- ASSETS Current assets: Contracts in process $185,320 $ 42,457 Other current assets 16,414 3,100 -------- -------- Total current assets 201,734 45,557 -------- -------- Property, plant and equipment 116,566 31,657 Less, accumulated depreciation and amortization 24,983 15,018 -------- -------- 91,683 16,539 -------- -------- Intangibles, primarily cost in excess of net assets acquired, net of amortization 282,674 157,560 Other assets 17,307 8,753 -------- -------- $593,298 $228,509 ======== ======== LIABILITIES AND INVESTED EQUITY Current liabilities: Accounts payable, trade $ 24,153 $ 9,583 Accrued employment costs 27,313 6,534 Customer advances and amounts in excess of costs incurred 14,299 1,363 Other current liabilities 27,113 6,983 -------- -------- Total current Liabilities 102,888 24,463 -------- -------- Other liabilities 18,801 9,383 Commitments and contingencies (Note 8) 473,609 154,683 -------- -------- Invested equity $593,298 $228,509 ======== ======== See notes to combined financial statements. 3 LOCKHEED MARTIN PREDECESSOR BUSINESSES COMBINED STATEMENTS OF OPERATIONS AND CHANGES IN INVESTED EQUITY (In thousands)
For the years ended December 31, --------------------------------------- 1996 1995 1994 ---- ---- ---- Sales $543,081 $186,781 $218,845 Cost of sales 499,380 162,132 210,466 -------- -------- -------- Operating income 43,681 4,549 8,379 Allocated interest expense 24,197 4,475 5,450 -------- -------- -------- Earnings before income taxes 19,494 174 2,929 Income tax expense 7,798 1,186 2,293 -------- -------- -------- Net earnings (loss) 11,696 (1,012) 636 Invested equity - beginning of year 194,883 199,505 218,943 Advances from (repayments to) Lockheed Martin 267,250 (3,831) (18,073) -------- -------- -------- Invested equity - end of year $473,609 $194,663 $199,506 ======== ======== ========
See notes to combined financial statements. 4 LOCKHEED MARTIN PREDECESSOR BUSINESSES COMBINED STATEMENTS OF CASH FLOWS (In thousands)
For the years ended December 31, --------------------------------------- 1996 1995 1994 ---- ---- ---- Operating activities: Net income $ 11,696 ($1,012) $ 636 Depreciation and amortization 25,039 11,578 11,487 Loss (gain) an disposition of property, plants and equipment 265 25 (1,078) Changes in operating assets and liabilities Contracts in process 26,103 (3,257) 14,002 Other current assets 489 788 1,502 Other assets (5,248) 1,245 2,044 Accounts payable 3,198 (643) (3,099) Accrued employment costs 2,282 (611) (528) Customer advances and amounts in excess of costs incurred (11,586) (2,041) 917 Other current liabilities 4,086 4,004 (3,304) Other liabilities (25,327) (699) (751) --------- ------- ------- Net cash from operating activities 30,999 9,383 21,808 --------- ------- ------- Investing activities: Acquisition of business (287,803) - - Capital expenditures (13,528) (5,532) (3,735) Disposition of property, plant and equipment 3,082 - - --------- ------- ------- Net cash used in investing activities (298,249) (5,532) (3,735) --------- ------- ------- Financial activities: Advances from (repayments to) Lockheed Martin 267,250 (3,831) (18,073) --------- ------- ------- Net change in cash - - - ========= ======= =======
See notes to combined financial statements. 5 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 1996 (Dollars in thousands) 1. Background and Description of Businesses On January 31, 1997, Lockheed Martin Corporation ("Lockheed Martin"), Lahman Brothers Holdings Inc. ("Lehman"), Frank C. Lanza ("Lanza") and Robert V. LaPenta ("LaPenta") entered into a Memorandum of Understanding regarding the transfer of certain businesses of Lockheed Martin to a newly formed corporation "Newco" owned by Lockheed Martin, Lehman, Lanza and LaPenta. The businesses proposed to be transferred include Lockheed Martin's Wideband Systems, Division, Communications Systems Division and Products Group, comprising eleven autonomous operations (collectively the "Lockheed Martin Predecessor Businesses" or the "Businesses"). Also included in the transaction is the acquisition of a semiconductor product line of another business and certain leasehold improvements in New York City. Effective April 1, 1996, Lockheed Martin acquired substantially all the assets and liabilities of the defense businesses of Loral Corporation (Loral), including the Wideband Systems Division and the Products Group. The acquisition of the Wideband Systems Division and Products Group businesses (the "Acquired Businesses") has been accounted for as a purchase by Lockheed Martin Communications Systems Division ("Division"). The acquisition has been reflected in these financial statements based on the purchase price allocated to those acquired businesses by Lockheed Martin. As such, the accompanying combined financial statements reflect the results of operations of the Division and the acquired businesses from the effective date of acquisition including the effects of an allocated portion of cost in excess of net assets acquired resulting from the acquisition. The assets and liabilities recorded in connection with the purchase price allocation were $400,993 and $113,190, respectively. Had the acquisition of Wideband Systems Division and the Products Group occurred on January 1, 1995, the unaudited pro forma sales and net income for the years ending December 31, 1996 and 1995 would have been $675,596 and $14,351, and $691,136 and $4,790, respectively. The pro forma results, which are based on various assumptions, are not necessarily indicative of what would have occurred had the acquisition been consummated on January 1, 1995. The Businesses are suppliers of sophisticated secure communication systems and specialized communication products including secure, high data rate communication systems, commercial fixed wireless communication products, microwave components, avionic displays and recorders and instrument products. The Company's consumers included the Department of Defense, selected U.S. government intelligence agencies, major aerospace/defense prime contractors and commercial customers. The Businesses operate primarily in one industry segment, electronic components and systems. Substantially all the Businesses' products are sold to agencies of the U.S. Government, primarily the Department of Defense, to foreign government agencies or to prime contractors or subcontractors thereof. All domestic government contracts and subcontracts of the Businesses are subject to audit and various cost controls, and include standard provisions for permission for the convenience of the U.S. Government. Multi-year U.S. Government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent year become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the government. The decline in the U.S. defense budget since the mid 1980s has resulted in program delays, cancellations and scope reduction for defense contracts in general. These events may or may not have an effect on the Businesses' programs; however, in the event that U.S. Government expenditures for products of the type manufactured by the Businesses are reduced, and not offset by greater commercial sales or other new programs or products, or acquisitions, there may be a reduction in the volume of contracts or subcontracts awarded to the Businesses. 6 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(continued) (Dollars in thousands) 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying combined financial statements reflect the Businesses' assets, liabilities and operations included in Lockheed Martin's historical financial statements that will be transferred to Newco. Intercompany accounts between Lockheed Martin and the Businesses have been included in invested equity. Significant inter-business transactions and balances have been eliminated. The assets and operations of the semiconductor product line and certain other facilities, which are not material to the combined financial statements, have been excluded from the combined financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires the Businesses' management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant of these estimates and assumptions relate to contract estimates of sales and costs, allocations from Lockheed Martin, recoverability of recorded amounts of fixed assets and cost in excess of net assets acquired, litigation and environmental obligations. Actual results could differ from these estimates. Sales and Earnings Sales and profits on cost reimbursable contracts are recognized as costs are incurred. Sales and estimated profits under long-term contracts are recognized under the percentage of completion method of accounting using the cost-to-cost method. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and realization is probable. Sales under short-term production-type contracts are recorded as units are shipped; profits applicable to such shipments are recorded pro rata, based upon estimated total profit at completion of the contract. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and realization is probable. Losses on contracts are recognized when determined. Revisions in profit estimates are reflected in the period in which the facts which require the revision become known. Contracts in Process Costs accumulated under long-term contracts include direct costs, as well as manufacturing overhead, and for government contracts, general and administrative costs, independent research and development costs and bid and proposal costs. Contracts in process contain ILLEGIBLE relating to contracts and programs for which the related operating cycles are longer that one year. In accordance with industry practice, these amounts are included in current assets. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is provided primarily using an accelerated method over the estimated useful lives (5 to 20 years) of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. Intangibles Intangibles, primarily the excess of the cost of purchased businesses over the fair value of the net assets acquired, is being amortized using a straight-line method primarily over a 40-year period. Other intangibles are 7 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(continued) (Dollars in thousands) amortized over their estimated useful lives which range from 11-15 years. Amortization expense was $10,115, $6,086 and $6,086 for 1996, 1995, and 1994, respectively. Accumulated amortization was $26,524 and $16,738 at December 31, 1996 and 1995, respectively. Intangibles include costs allocated to the Businesses relating to the Request for Funding Authorization ("RFA"), consisting of over 20 restructuring projects to reduce operating costs, initiated by General Electric ("GE") Aerospace in 1990 and to the REC Advance Agreement ("RAA"), a restructuring plan initiated after Lockheed Martin's acquisition of GE Aerospace. The RAA was initiated to close two regional electronic manufacturing centers. Restructure costs are reimbursable from the U.S. Government, if savings can be demonstrated to exceed costs. The total cost of restructuring under the RFA and the RAA represented approximately 15% of the estimated savings to the U.S. Government and, therefore, a deferred asset has been recorded by Lockheed Martin. The deferred asset is being allocated to all the former GE Aerospace sites including the Communications Systems Division, on a basis that includes manufacturing labor, overhead, and direct material less non-hardware subcontracts. As of December 31, 1996 and 1995, approximately $4,400 and $7,500, respectively of unamortized RFA and RAA costs were recorded on the Businesses' combined balance sheet in other current assets and other assets. The carrying values of intangible assets are reviewed if the facts and circumstances indicate potential impairment of their carrying value. If this review indicates that intangible assets are not recoverable, as determined based on the undiscounted cash flows of the entity required over the remaining amortization period, the Division's carrying values related to the intangible assets are reduced by the estimated shortfall of cash flows. Research and Development and Similar Costs Research and development costs sponsored by the Businesses include research and development and bid and proposal effort related to government products and services. These costs are generally are allocated among all contracts and programs in progress under U.S. Government contractual arrangements. Customer-sponsored research and development costs incurred pursuant to contracts are accounted for as contract costs. Financial Instruments At December 31, 1996, the carrying value of the Businesses' financial instrument, such as receivables, accounts payable and accrued liabilities, approximate fair value, based on the short-term maturities of these instruments. New Accounting Pronouncements Effective January 1, 1996, the Businesses adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 establishes the accounting standards for the impairment of long-lived assets, certain intangible assets and cost in excess of net assets required to be held and used for long-lived assets and certain intangible assets to be disposed of. The impact of adopting SFAS 121 was not material. Effective January 1, 1994, the Businesses adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postretirement Benefits" ("SFAS 112"). SFAS 112 requires that the cost of benefits provided to employees after employment but before retirement be recognized on an accrual basis. The adoption of SFAS 112 did not have a material impact on the combined results of operations of the Businesses. 8 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(continued) (Dollars in thousands) 3. Transactions with Lockheed Martin The Business rely on Lockheed Martin for certain services, including treasury, cash management, employee benefits, taxes, risk management, internal audit, financial reporting, contract administration and general corporate services. Although certain assets, liabilities and expenses related to these services have been allocated to Businesses, the combined financial position, results of operations and cash flows presented in the accompanying combined financial statements would not be the same as would have occurred had the Businesses been independent entities. The following describes the related party transactions. Sales of Products The Businesses sell products to Lockheed Martin and its affiliates, not sales for which were $70,658, $25,874, and $9,983 in 1996, 1995 and 1994, respectively, included in Contracts in Process are receivables from Lockheed Martin and its affiliates of $10,924 and $30 at December 31, 1996 and 1995, respectively. Allocation of Corporate Expenses The amount of allocated corporate expenses reflected in these combined financial statements has been estimated primarily on an allocation methodology prescribed by government regulations pertaining to government contractors. Allocated costs to the Businesses were $10,057, $2,964 and $4,141 in 1996, 1995 and 1994, respectively. Pensions Certain of the Businesses participate in various Lockheed Martin-sponsored pension plans covering certain employees. Eligibility for participation in these plans varies, and benefits are generally based on members' compensation and years of service. Lockheed Martin's funding policy is generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue code and regulations. Since the aforementioned pension arrangements are part of certain Lockheed Martin defined benefit plans, no separate actuarial data is available for the portion allocable to the Businesses. Therefore, no liability or asset is reflected in the accompanying combined financial statements. The Businesses have been allocated pension costs based upon participant employee headcount. Net pension expense included in the accompanying financial statements was $7,027, $4,134, and $3,675 in 1996, 1995 and 1994, respectively. Postretirement Health Care and Life Insurance Benefits In addition to participating in Lockheed Martin-sponsored pension plans, certain of the Businesses provide varying levels of health care and life insurance benefits for retired employees and dependents. Participants are eligible for these benefits when they retire from service and meet the pension plan eligibility requirements. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying a portion of the cost through contributions, deductibles and [ILLEGIBLE] provisions. Since the aforementioned postretirement benefits are part of certain Lockheed Martin postretirement arrangements, no separate actuarial data is available for the portion allocable to the Businesses. Accordingly, no liability is reflected in the accompanying financial statements. The Businesses have been allocated postretirement benefits cost based on participant employee headcount. Postretirement benefits costs included in the accompanying financial statements was $2,787, $2,124 and $1,694 in 1996, 1995 and 1994, respectively. 9 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(continued) (Dollars in thousands) Employee Savings Plans Under the various employee savings plans sponsored by Lockheed Martin, the Businesses match the contributions of participating employees up to a designated level. The extent of the match, vesting terms and the form of the matching contributions vary among the plans. Under the plans, the matching contributions, in cash, common stock or both, for 1996, 1995 and 1994 were $3,940, $1,478, and $1,842, respectively. Interest Expenses Interest expense has been allocated to the Businesses by applying Lockheed Martin's weighted average consolidated interest rate to the portion of the beginning of the period invested equity account deemed to be financed by consolidated debt, which has been determined based on Lockheed Martin's debt to equity ratio on such date, except that the acquisition of the defense business of Loral Corporation ("Loral") has been assumed to be fully financed by debt. Interest expense was calculated using the following balances and interest rates: For the years ended December 31, ----------------------------------- 1996 1995 1994 -------- -------- ----------- Invested Equity: Communications Systems Division $194,663 $199,506 $ 216,943 Wideband Systems Division and Products Group $287,803 Interest Rate 7.20% 7.40% 7.23% Income Taxes The Businesses are included in the consolidated Federal income tax return and certain combined and separate state and local income tax returns of Lockheed Martin. However, for purposes of these financial statements, the provision for income taxes is computed as if the Businesses were a separate taxpayer; accordingly, the provision for income taxes is based upon reported combined income before income taxes. Income taxes, current and deferred, are considered to have been paid or charged to Lockheed Martin and are recognized through the invested equity account with Lockheed Martin. The principal components of the deferred taxes are contract accounting methods, property, plant and equipment, goodwill amortization and timing of accruals. Statement of Cash Flows The Businesses participate in Lockheed Martin's cash management system, under which all cash is received and payments are made by Lockheed Martin. All transactions between the Businesses and Lockheed Martin have been accounted for as settled in cash at the time such transactions were recorded by the Businesses. 10 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS--(continued) (Dollars in thousands) 4. Contracts in Process Billings and accumulated costs and profits on contracts, principally with the U.S. Government, comprise the following: December 31, ------------------------------ 1996 1995 ---- ---- Billed contract receivables $ 40,299 $10,237 Other billed receivables, principally commercial 28,401 - Unbilled contract receivables 91,053 23,643 Inventoried costs 61,380 10,830 -------- ------- 221,133 44,710 Less, unliquidated progress payments (35,813) (2,253) -------- ------- $185,320 $42,457 ======== ======= The U.S. Government has title to, or a security interest in, inventories to which program payments are applied. Unbilled contract receivables represent accumulated costs and profits earned but not yet billed to customers at year-end. The Businesses believe that substantially all such amounts will be billed and collected within one year. The following data has been used in the determination of cost of sales:
1996 1995 1994 ---- ---- ---- General and administrative costs included in inventoried costs $14,700 $1,156 $ 193 General and administrative costs charged to inventory $25,400 $3,967 $3,640 Independent research and development and bid and proposal costs charged to inventory $35,300 $2,558 $2,134
5. Property, Plant and Equipment December 31, ------------------------------ 1996 1995 ---- ---- Land $ 9,200 Buildings and Improvements 27,000 Machinery, equipment, furniture and fixtures 73,137 $29,216 Leasehold improvements 7,229 2,441 -------- ------- $116,566 $31,657 ======== ======= Depreciation and amortization expense in 1996, 1995 and 1994 was $14,824, $5,492, and $5,381, respectively. 11 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS-(continued) (Dollars in thousands) 6. Income Taxes The provision for income taxes was calculated by applying statutory tax rates to the reported pretax income after considering items that do not enter into the determination of taxable income and tax credits reflected in the consolidated provision of Lockheed Martin, which are related to the Businesses. For the years ended December 31, 1996, 1995 and 1994, it is estimated that the provision for deferred taxes represent ($2,143), $3,994 and $1,252, respectively. Substantially all the income of the Businesses are from domestic operations. The effective income tax rate differs from the statutory Federal income tax rate for the following reasons: 1996 1995 1994 ---- ---- ---- Statutory Federal income tax rate 35% 34% 34% Amortization of cost in excess of net assets acquired 2 529 31 Research and development and other tax credits (2) State and local income taxes, net of Federal income tax benefits and state and local income tax credits 6 101 12 Foreign sales corporation tax benefit (1) Other, net 17 1 --- --- --- Effective income tax rates 40% 681% 78% === === === The difference between the statutory Federal income tax rate and the effective income tax rate in 1995 and 1994 is primarily due to the amortization of cost in excess of net assets acquired which is not deductible for income tax purposes. 7. Sales to Principal Customers The Businesses operate primarily in one industry segment, electronic components and systems. Sales to principal customers are as follows:
December 31, ------------------------------ 1996 1995 1994 -------- -------- -------- U.S. Government Agencies $425,033 $161,617 $216,034 Foreign (principally foreign government) 33,475 4,945 1,623 Other (principally U.S. Government agencies) 84,573 219 1,138 -------- -------- -------- $543,081 $166,781 $218,845 ======== ======== ========
8. Commitments and Contingencies The Businesses lease certain facilities and equipment under agreements expiring at various dates through 2011. At December 31, 1996, future minimum payments for noncancellable operating leases with initial or remaining terms in excess of one year are $11,400 for each of the years 1992 through 2001, and $12,300 in total thereafter. Leases covering major items of real estate and equipment contain renewal and or purchase options which may be exercised by the Businesses. Rent expense, net of sublease income from other Lockheed Martin entities, was $8,495, $4,772, and $5,597 in 1996, 1995 and 1994, respectively. 12 LOCKHEED MARTIN PREDECESSOR BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS-(continued) (Dollars in thousands) Management is continually assessing the Businesses' obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost to be incurred by the Businesses in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management of the Businesses is aware, the Businesses believe that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Businesses' results of operations. The Businesses accrue for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Businesses are engaged in providing products and services under contracts with the U.S. Government and to a lesser degree, under foreign government contracts, some of which are funded by the U.S. Government. All such contracts are subject to extensive legal and regulatory requirements, and, from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. Under government procurement regulations, an indictment of the Businesses by a federal grand jury could result in the Businesses being suspended for a period of time from eligibility for awards of new government contracts. A conviction could result in debarment from contracting with the federal government for a specified term. The Businesses are periodically subject to litigation, claims or assessments and various contingent liabilities (including environmental matters) incidental to its business. With respect to those investigative actions, items of litigation, claims or assessments of which they are aware, management of the Businesses is of the opinion that the probability is remote that, after taking into account certain provisions that have been made with respect to these matters, the ultimate resolution of any such investigative actions, terms of litigation, claims or assessments will have a material adverse effect on the financial position of results of the Businesses. 13 Attachment II L-3 Communications Holdings, Inc. Acquired-Entities Combined Statement of Net Tangible Assets December 31, 1996 With Report of Independent Auditors L-3 Communications Holdings, Inc. Acquired-Entities Combined Statement of Net Tangible Assets December 31, 1996 Contents Report of Independent Auditors.............................................1 Combined Statement of Net Tangible Assets..................................2 Notes to Combined Statement of Net Tangible Assets......................3-12 [LETTERHEAD OF ERNST & YOUNG LLP] Report of Independent Auditors Board of Directors Lockheed Martin Corporation We have audited the accompanying combined statement of net tangible assets of the L-3 Communications Holdings, Inc. Acquired-Entities (as defined in Note 1) as of December 31, 1996. This combined statement of net tangible assets is the responsibility of Lockheed Martin Corporation's and the L-3 Communications Holdings, Inc. Acquired-Entities' management. Our responsibility is to express an opinion on the combined statement of net tangible assets based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement of net tangible assets is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement of net tangible assets. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined statement of net tangible assets presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1, the accompanying combined statement of net tangible assets as of December 31, 1996 has been prepared for the purpose of complying with, and on the basis of, accounting practices specified in the Transaction Agreement (as defined in Note 1). The combined statement of net tangible assets is not intended to be a presentation in conformity with generally accepted accounting principles, nor is the statement intended to be a compete presentation of the L-3 Communications Holdings, Inc. Acquired-Entities' combined assets, liabilities and net tangible assets. In our opinion, the combined statement of net tangible assets referred to above presents fairly, in all material respects, the net tangible assets of the L-3 Communications Holdings, Inc. Acquired-Entities at December 31, 1996, on the basis of accounting described in Notes 1 and 2. The accompanying combined statement of net tangible assets has been prepared assuming that the L-3 Communications Holdings, Inc. Acquired-Entities will continue as a going concern. This report is intended solely for the information and use of the parties associated with the Transaction Agreement and should not be used for any other purpose. /s/ Ernst & Young LLP February 28, 1997, except for Note 1, as to which the date is March 31, 1997 1 Ernst & Young LLP is a member of Ernst & Young International, Ltd. L-3 Communications Holdings, Inc. Acquired-Entities Combined Statement of Net Tangible Assets December 31, 1996 -------------- (In thousands) Assets Receivables, net $ 69,884 Intercompany accounts receivables, net 10,724 Contracts in process 131,038 Property, plant and equipment, net 95,583 FSI Semiconductor Business net tangible assets 4,800 LMEAP assets 900 Other assets 16,568 -------- 329,497 Liabilities Accounts payable 34,194 Salaries, benefits and payroll taxes 23,113 Other liabilities 35,272 -------- Net tangible assets before Corporate pushdowns 236,918 Corporate pushdowns, net 600 -------- Net tangible assets $237,518 ======== See accompanying notes. 2 L-3 Communications Holdings, Inc. Acquired-Entities Combined Statement of Net Tangible Assets December 31, 1996 1. Description of Business and Basis of Presentation Description of Business On January 31, 1997, Lockheed Martin Corporation ("Lockheed Martin"), Lehman Brothers Holdings Inc. ("Lehman Holdings"), Frank C. Lanza and Rober V. LaPenta ("Individual Purchasers") entered into a Memorandum of Understanding regarding the transfer of the Products Group, Tactical Communication Systems ("Wideband Systems") and Communications Systems ("Camden") businesses of Lockheed Martin to a newly-formed corporation, L-3 Communications Holdings, Inc. ("L-3 Communications"), to be jointly owned by Lockheed Martin, Lehman Holdings and its affiliates, and the Individual Purchasers. The L-3 Communications Acquired-Entities are engaged in the design, engineering, manufacturing, integration, operation and support of a broad array of products and services for the electronics, command and control and communications industries. The L-3 Communications Acquired-Entities serve customers in both domestic and international defense, civilian, and commercial markets. The accompanying combined statement of net tangible assets of the L-3 Communications Acquired-Entities include the accounts of the following business units, which are combined for financial reporting purposes: o Wideband Systems headquartered in Salt Lake City, Utah, o Communications Systems headquartered in Camden, New Jersey, o Display Systems headquartered in Atlanta, Georgia, o Advanced Recorders headquartered in Sarasota, Florida, o Conic headquartered in San Diego, California, o Telemetry & Instrumentation headquartered in San Diego, California, o Microcom headquartered in Warminster, Pennsylvania, o Randtron headquartered in Menlo Park, California, o Microwave--Narda East headquartered in Hauppauge, New York, o Microwave--Narda West headquartered in Rancho Cordova, California, o Hycor headquartered in Woburn, Massachusetts, o FSI Semiconductor Business headquartered in Lowell, Massachusetts, and o Airport Explosive Detection Business ("EDS") headquartered in Pinellas, Florida. 3 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 1. Description of Business and Basis of Presentation (continued) Basis of Presentation The accompanying combined statement of net tangible assets as of December 31, 1996 has been prepared for the purpose of complying with, and on the basis of accounting practices specified in, the Transaction Agreement and related attachments by and among L-3 Communications, Lockheed Martin, Lehman Brothers Capital Partners III, L.P. ("Lehman"), and the Individual Purchasers dated March 28, 1997 ("Transaction Agreement"). This combined statement is not intended to be a presentation in conformity with generally accepted accounting principles, nor is this combined statement intended to be a complete presentation of the L-3 Communications Acquired-Entities' combined assets, liabilities and net tangible assets. The following intangible amounts are excluded from the accompanying combined statement of net tangible assets, (1) goodwill, and (2) intangible assets related to contracts and programs acquired. All other recorded assets are considered tangible for purposes of this financial statement. The accompanying combined statement of net tangible assets has been prepared after giving effect to the conditions or adjustments specifically referenced in the Transaction Agreement. Certain items were agreed to by and among Lockheed Martin, Lehman, the Individual Purchasers and L-3 Communications including, but not limited to: The combined statement of net tangible assets specifically excludes the following assets and liabilities: cash and cash equivalents; accounts or notes receivable or payable from or to Lockheed Martin except for receivables and payables relating to materials sold or services rendered; all obligations and liabilities of Lockheed Martin not arising out of the conduct of the business of the L-3 Communications Acquired-Entities; any reserve, liability or asset resulting from pension benefits, retirement benefits or other post-employment benefits; all accrued liabilities or benefits for current or deferred federal or state income taxes. All components of equity, including corporate intercompany advances, have been excluded from the accompanying combined statement of net tangible assets. 4 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 1. Description of Business and Basis of Presentation (continued) Basis of Presentation (continued) Pursuant to the Transaction Agreement, any reserves or liabilities for the following matters shall not be considered in the combined statement of net tangible assets: o Camden's CAS 410 Issue, o Management Incentive Compensation Plan (NYHQ), and o Advanced Recorders' Sarasota Asset Step Up Issue. The following items specifically were assigned net tangible asset (liability) values in the Transaction Agreement and are included in the combined statement of net tangible assets before Corporate pushdowns at the stated amount (in thousands): FSI (Lowell, MA) Net Tangible Assets $4,800 LMEAP Assets 900 Microcom Earn Out 0 EDS Net Assets 0 EDS M&DS Subcontract Reserve 0 ------ $5,700 ====== The following net tangible asset increases (decreases) to the historical books and records of the L-3 Communications Acquired-Entities were specifically agreed upon and valued in the Transaction Agreement and are included in the combined statement of net tangible assets before Corporate pushdowns (in thousands): All L-3 Communications Acquired-Entities' Duplicate Pension/Benefit Liabilities $ 6,000 Display Systems' Alpharetta building 4,000 Conic's LMEAP Reserve Reversal 500 Advanced Recorders' ADC Settlement (300) Wideband Systems' TSS Options (1,000) Telemetry & Instrumentation G&A Costs in Inventory (1,000) Camden's Aegis Power Supply Contract and Option (1,000) All L-3 Communications Acquired-Entities' Cash/Negative Cash (1,600) ------- $5,600 =======
5 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 1. Description of Business and Basis of Presentation (continued) Basis of Presentation (continued) The following pushdown assets (liabilities) were specifically agreed upon and valued in the Transaction Agreement and are included in the combined statement of net tangible assets as Corporate pushdowns, net (in thousands): Incurred but not reported Reserve $(4,100) Environmental Reserve (3,200) Workers Compensation (1,200) Deferred Management Incentive Compensation Plan (300) Vacation Accrual (300) NY Overlays 1,800 NY Leasehold Improvements 3,500 RFA and RAA 4,400 ------- $ 600 ======= Net tangible asset changes from the historical books and records of the L-3 Communications Acquired-Entities for the following matters were specifically prohibited in the Transaction Agreement and therefore the historical amounts are carried forward: o All L-3 Communications Acquired-Entities' Building Writedown or Writeup, o Advanced Recorders' Universal Litigation, o Advanced Recorders' G&A in Inventory, o Advanced Recorders' Reversal of Capitalized Certification Costs, o Advanced Recorders' CPS-100 Audit Labor Mischarging Allegations, o Advanced Recorders' Instrumentation Recorder Product Line, o Camden's Unreasonable Indirect Labor Allegations, o Camden's Old Receivables, o Camden's DCAA Rate Close-Out Issues, o Camden's NOAA Contract Defective Pricing Allegations, o Camden's Reversal of Division Reserve, o Camden's Truck Depot Severance Reserve, o Wideband Systems' Fixed Wiereless Loop License Agreement, Deferred Cost, and Reserve, o Wideband Systems' Severance, and o Conic's Pendleton Litigation Reserve. The above items are not intended to completely represent the terms and conditions of the Transaction Agreement. 6 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 2. Summary of Significant Accounting Policies Assumption Regarding Going Concern The accompanying combined statement of net tangible assets has been prepared assuming that the L-3 Communications Acquired-Entities will continue as a going concern. Use of Estimates The preparation of the combined statement of net tangible assets requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at December 31, 1996. The most significant of these estimates and assumptions relate to contract estimates of total costs at completion and revenues in the earnings recognition process, and commitments and contingencies. Actual results could differ from those estimates. As discussed in Note 1, the Transaction Agreement establishes the amount reported for certain assets and liabilities. These amounts have been agreed to by and among Lockheed Martin, Lehman, the Individual Purchasers and L-3 Communications and are not necessarily management's estimate of their value in accordance with generally accepted accounting principles. Revenue Recognition The following L-3 Communications Acquired-Entities generally record revenues and anticipated profits under long-term contracts on a percentage of completion cost-to-cost basis of accounting where revenues and profits are recorded based on the ration of costs incurred to estimated total costs at completion: o Wideband Systems, o Communications Systems, o Display Systems, o Microcom, and o Hycor. 7 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 2. Summary of Significant Accounting Polices (continued) Revenue Recognition (continued) The following L-3 Communications Acquired-Entities generally record revenues and profits on products and services essentially under commercial terms and conditions as units are shipped or specified tasks are completed; or on a percentage of completion basis, using units of delivery as to measurement basis for effort expended: o Advanced Recorders, o Conic, o Telemetry & Instrumentation o Randtron, o Microwave-Narda East, end o Microwave-Narda West. For all L-3 Communications Acquired-Entities, revenues under cost-reimbursement-type contracts are recorded as costs are incurred. Applicable estimated profits are included in earnings in the proportion that incurred costs bear to total estimated costs. Revenues and earnings on contracts are based, in part, on estimates. These estimates are revised periodically and adjustments to revenues and earnings resulting from such revisions are recorded on a cumulative basis in the period of revision. Incentives or penalties and awards applicable to performance on contracts are considered in estimating revenues and profit rates and are recorded when there is sufficient information to assess anticipated contract performance. Amounts representing contract change orders, claims or other items are included in revenues only when they can be reliably estimated and realization is probable. Any anticipated losses on contracts or programs are charged to earnings when identified. Such losses encompass all costs, including general and administrative expenses for L-3 Communications Acquired-Entities that include general and administrative expenses in inventory, allocable to the contracts. The L-3 Communications Acquired-Entities that expense general and administrative expenses as incurred exclude such costs in determining anticipated losses. Revenue arising from change orders or the claims process is not recognized either as income or as an offset against a potential loss until it can be reliably estimated and its realization is probable. 8 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 2. Summary of Significant Accounting Polices (continued) General and Administrative Expenses The following L-3 Communications Acquired-Entities allocate general and administrative expenses to contracts in process and therefor are included in operating costs and expenses at the time of revenue recognition: o Wideband Systems, o Communications Systems, o Display Systems, o Conic, and o Randtron. The following L-3 Communications Acquired-Entities charge general and administrative expenses to operations as incurred: o Advanced Recorders, o Telemetry & Instrumentation o Microcom, o Hycor, o Microwave-Narda East, end o Microwave-Narda West. Lockheed Martin's corporate general and administrative costs attributed to the L-3 Communications Acquired-Entities are charged to the individual entity in accordance with allocation methodologies determined by Lockheed Martin and applied to Lockheed Martin's various business units. Such expenses could vary significantly if the L-3 Communications Acquired-Entities are operating as an unaffiliated entity. Research and Development Costs Customer-sponsored research and development costs are accounted for as direct costs. Reimbursable company-sponsored research and development costs are accounted for in accordance with the Acquired-Entities' policy for general and administrative expenses. 9 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 2. Summary of Significant Accounting Policies (continued) Contracts in Process Contracts in process are stated at the lower of cost or estimated net realizable value, except for those items specifically addressed in the Transaction Agreement. Costs on contracts in process represent recoverable costs incurred for production; allocable operating overhead; and, based on entity policy, research and development and general and administrative expanses, less amounts attributed to cost of sales. Pursuant to contract provisions, agencies of the U.S. Government and other customers have title to, or a security interest in, certain inventories as a result of progress payments and advances. In accordance with industry practice, contracts in process contain amounts relating to contracts with long production cycles, a portion of which may not be realized within one year. Property, Plant and Equipment Property, plant and equipment are stated at historical book value. Depreciation is provided primarily using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvement. Certification Costs As part of the normal course of doing business, the Advanced Recorders entity is required to incur certification costs prior to the production of new products. Advanced Recorders' policy is to capitalize these costs and amortize them on a straight-line basis over a 10 year period. As of December 31, 1996, approximately $3.4 million of unamortized certification costs are included in the combined statement of net tangible assets. Financial Instruments At December 31, 1996, the carrying value of the L-3 Communications financial instruments such as receivables, accounts payable and accrued liabilities approximate fair vale, based on the short-term maturities of these instruments. 10 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 2. Summary of Significant Accounting Policies (continued) Concentration of Credit Risk The L-3 Communications Acquired-Entities conduct business with the U.S. Government and commercial enterprises. Financial instruments which potentially expose the L-3 Communications Acquired-Entities to concentrations of credit risk consist primarily of commercial receivables. To minimize this risk, ongoing credit evaluations of commercial customers' financial condition are performed. In addition, the L-3 Communications Acquired-Entities maintain allowances for potential credit losses and such losses, in the aggregate, have not exceeded management expectations. None of the L-3 Communications Acquired-Entities' commercial receivables are individually significant. Intercompany Accounts Receivable, Net All accounts receivable from and accounts payable to Lockheed Martin entities are deemed to be valid and realizable from and payable to the appropriate Lockheed Martin entities. 3. Contracts in Process Contracts in process reflected in the combined statement of net tangible assets consist of the following as of December 31, 1996 (in thousands): Work in process $ 169,667 Progress billing receivable 4,631 Less--Advances and progress payments (43,260) --------- $ 131,038 ========= Work in process includes finished goods and raw materials held in inventory. In addition, work in process includes unbilled costs incurred plus estimated earnings that will be billed to the customer upon the completion of certain milestones. Revenue which has not yet been billed is included in unbilled receivables, some of which will not be billed within one year. Under the contractual arrangements by which progress payments are received, the U.S. Government asserts that it has a security interest in the contracts process identified by the related contracts. 11 L-3 Communications Holdings, Inc. Acquired-Entities Notes to Combined Statement of Net Tangible Assets (continued) 4. Property, Plant and Equipment, net Property, plant and equipment consists of the following as of December 31, 1996 (in thousands): Land and improvements $ 10,800 Building and improvements 36,666 Machinery, equipment, furniture and fixtures 73,137 -------- 120,603 Less--Accumulated depreciation and amortization (25,020) -------- $ 95,583 ======== 5. Income Taxes The accompanying combined statement of net tangible assets excludes the L-3 Communications Acquired-Entities' assets and liabilities relating to federal and state income taxes, as discussed in Note 1. 6. Commitments and Contingencies The L-3 Communications Acquired-Entities are engaged in providing products and services under contracts with the U.S. Government and, to a lesser degree, under foreign government contracts, some of which are funded by the U.S. Government. All such contracts are subject to extensive legal and regulatory requirements, and, from time to time, agencies of the U.S. Government investigate whether the L-3 Communications Acquired-Entities were and are being conducted in accordance with these requirements. Under government regulations, an indictment of an L-3 Communications Acquired-Entity could result in the L3 Communications Acquired-Entity being suspended for a period of time from eligibility for awards of new government contracts. A conviction could result in debarment from contracting with the federal government for a specified term. The L-3 Communications Acquired-Entities are periodically subject to litigation, claims or assessments and various contingent liabilities (including environmental matters) incidental to their business. With respect to those investigative actions, items of litigation, claims or assessments of which they are aware, management of the L-3 Communications Acquired-Entities are of the opinion that, after taking into account certain provisions that have been made with respect to these matters, pushdowns and matters addressed specifically in the Transaction Agreement, the probability is remote that the ultimate resolution of any such investigative actions, items of litigation, claims or assessments will have a material adverse effect on the combined net tangible assets of the L-3 Communications Acquired-Entities. 12 Attachment III ATTACHMENT III TRANSFER AGREEMENT This Agreement is made as of the 28th day of March 1997, by and between Lockheed Martin Corporation, a Maryland corporation ("Lockheed Martin"), and L-3 Communications Holdings, Inc., Delaware corporation ("Newco"). W I T N E S S E T H : WHEREAS, the parties hereto, together with Lehman Brothers Capital Partners III, L.P., Frank C. Lanza and Robert V. LaPenta, have entered into a Transaction Agreement (the "Transaction Agreement"); and WHEREAS, in connection with the execution of the Transaction Agreement the parties hereto wish to enter into this Transfer Agreement to effect certain transactions referred to in the Transaction Agreement; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Defined terms used in this Transfer Agreement shall have the meanings specified in the Transaction Agreement (including all Exhibits, Schedules and Attachments thereto). ARTICLE II TRANSFER OF ASSETS Section 2.01. Transfer of Assets. Upon the terms and subject to the conditions set forth in this Transfer Agreement and the Transaction Agreement, Newco agrees to receive, acquire and accept from Lockheed Martin (and from each Affiliated Transferor) and Lockheed Martin agrees to transfer, convey, assign and deliver, or cause to be transferred, conveyed, assigned and delivered, to Newco effective at 12:01 a.m. (Eastern Standard Time) on the Closing Date, free and clear of all Liens, other than permitted Liens, the Transferred Assets. Section 2.02. Assumption of Liabilities. Upon the terms and subject to the conditions of this Transfer Agreement, Newco agrees, II-1 effective at 12:01 am. (Eastern Standard Time) on the Closing Date, to assume the Assumed Liabilities. Section 2.03. Assignment of Contracts and Rights. (a) Anything in this Transfer Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Transferred Asset (other than with respect to the Owned Real Property) or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without the consent of a third party thereto, would constitute a breach or other contravention thereof, be ineffective with respect to any party thereto or in any way adversely affect the rights of Newco or Lockheed Martin (or any Affiliated Transferor) thereunder. (b) With respect to any Government Contract or any claim, right or benefit arising thereunder or resulting therefrom, Lockheed Martin and Newco will use their best efforts to obtain the written consent of the other parties to such Government Contract for the assignment or novation thereof to Newco or written confirmation from such parties reasonably satisfactory in form and substance to Lockheed Martin and Newco that such consent is not required. As soon as practicable following the date hereof, (i) with respect to each Prime Government Contract to which Lockheed Martin (or any Affiliated Transferor) is a party, Lockheed Martin (or the appropriate Affiliated Transferor) shall either obtain written confirmation reasonably satisfactory in form and substance to Lockheed Martin and Newco that novation of such Prime Government Contract is not required or submit to the relevant Responsible Contracting Officer a written request in compliance with the applicable Federal Acquisition Regulation that the U.S. Government enter into a Government Contract Novation with Lockheed Martin and Newco with respect to such Prime Government Contract; and (ii) with respect to each Government Contract that is not a Prime Government Contract, Lockheed Martin (or the appropriate Affiliated Transferor) shall submit to the parties thereto documentation reasonably satisfactory in form and substance to Lockheed Martin and Newco seeking the written waiver or approval of the other contracting party or parties thereto to the transfer and assignment of all of Lockheed Martin (or the applicable Affiliated Transferor) claims, rights, benefits and obligations thereunder to Newco at the Closing. In this regard, Lockheed Martin (or the applicable Affiliated Transferor) shall take all actions required under the applicable Federal Acquisition Regulation including, without limitation, the guarantee by Lockheed Martin of Newco's obligations under any novated Government Contracts, as may be required by Federal Acquisition Regulation Section 42.104(d). Except as provided in this immediately preceding sentence, in no event shall Lockheed Martin or Newco or any of their respective Affiliates be obligated to pay any money to the U.S. Government or any other Person or to offer or grant other financial or other accommodations to the U.S. Government or any other Person in II-2 connection with obtaining any novation of a Government Contract or any such consent or waiver. (c) With respect to any Contract that is not a Government Contract or any claim, right or benefit arising thereunder or resulting therefrom, promptly after the date hereof, to the extent reasonably requested by Newco, Lockheed Martin and Newco will use their best efforts to obtain the written consent of the other parties to any such Contract for the assignment thereof to Newco, or written confirmation from such parties reasonably satisfactory in form and substance to Lockheed Martin and Newco confirming that such consent is not required. (d) If such consent, waiver or confirmation is not obtained with respect to any such Government Contract or other Contract, as among the parties hereto, Newco will obtain through a subcontracting arrangement or otherwise, and subject to Applicable Law and the terms of such Government Contract or Contract, the claims, rights and benefits of Lockheed Martin (or the applicable Affiliated Transferor) and, to the extent possible, assume the. obligations under such Contracts and Government Contracts in accordance with this Transfer Agreement, and Lockheed Martin (or the applicable Affiliated Transferor) will enforce at the request of and for the benefit of Newco, with Newco, to the extent set forth in the Transaction Agreement, assuming Lockheed Martin's (or the applicable Affiliated Transferor's) obligations, any and all claims, rights and benefits of Lockheed Martin (or the applicable Affiliated Transferor) against a third party thereto arising from any such Government Contract or Contract (including the right to elect to terminate such Government Contract or Contract in accordance with the terms thereof upon the request of Newco). Lockheed Martin (or the applicable Affiliated Transferor) will promptly pay to Newco when received all monies received by Lockheed Martin (or the applicable Affiliated Transferor) under any Transferred Asset or any claim, right or benefit arising thereunder not transferred pursuant to this Section 2.03. Section 2.04. Exchange Consideration; Closing. (a) The Exchange Consideration shall be as set forth in Section 2.02 of the Transaction Agreement, and the closing of the Transfer of the Transferred Assets and the assumption of the Assumed Liabilities hereunder shall take place as set forth in the Transaction Agreement. (b) At the Closing, Lockheed Martin and Newco shall enter into an Exchange Agreement substantially in the form of Attachment A, and Lockheed Martin (or the applicable Affiliated Transferor) shall execute, acknowledge (if appropriate) and deliver to Newco with respect to the Real Property, assignments of all of Lockheed Martin's and the Affiliated Transferors' rights and interests in the Leased Real Property and deeds with respect to all of Lockheed Martin's and the Affiliated Transferors' rights and interests in the Owned Real Property in recordable form sufficient II-3 to convey to Newco all of Lockheed Martin's and the Affiliated Transferors' rights and interests in the Owned Real Property, and bills of sale, endorsements, consents, assignments and other good and sufficient instruments of conveyance and assignment as the Purchasers and their respective counsel may reasonably request (but including, without limitation, affidavits of non-foreign status as required by Section 1445(b)(2) of the Foreign Investment and Real Property Tax Act, as amended and such other documents, affidavits and instruments to facilitate and consummate the transfer of the Owned Real Property to Newco and Newco's obtaining title insurance of the Owned Real Property to Newco and Newco's obtaining title insurance as Purchasers may reasonably request) so as to vest in Newco all of Lockheed Martin's (or the applicable Affiliated Transferor's) right, title and interest in, to and under the Transferred Assets. ARTICLE III EXCLUDED LIABILITIES Section 3.01. Satisfaction of Excluded Liabilities. Lockheed Martin agrees, on behalf of itself and its Affiliates, to pay, discharge and satisfy the Excluded Liabilities. ARTICLE IV CONDITIONS TO CLOSING Section 4.01. Conditions to the Obligations of Each Party. The obligations of Lockheed Martin and Newco to consummate the closing of the Transfer Agreement are as set forth in the Transaction Agreement. ARTICLE V SURVIVAL; INDEMNIFICATION Section 5.01. Survival Indemnification. The parties agree as to matters of survival and indemnification as set forth in Article XIII of the Transaction Agreement. ARTICLE VI TERMINATION Section 6.01. Grounds for Termination. This Agreement may be terminated as set forth in Article XIV of the Transaction Agreement. II-4 ARTICLE VII MISCELLANEOUS Section 7.01. Miscellaneous. The provisions of Article XV of the Transaction Agreement are incorporated hereby by reference. IN WITNESS WHEREOF the parties hereto here caused this Transfer Agreement to be duly executed by their respective authorized officers as of the day and year first above written. WITNESS: LOCKHEED MARTIN CORPORATION By: - ----------------------------------- ----------------------------------- Name: Title: L-3 COMMUNICATIONS HOLDINGS, INC. By: - ----------------------------------- ----------------------------------- Name: Title: II-5 Attachment A Attachment A to Transfer Agreement FORM OF EXCHANGE AGREEMENT This Exchange Agreement is made as of the _______ day of __________ 1997, by and between Lockheed Martin Corporation, a Maryland corporation ("Lockheed Martin"), and L-3 Communications Holdings, Inc., a Delaware corporation ("Newco"). W I T N E S S E T H: WHEREAS, pursuant to that certain Transfer Agreement dated March 28, 1997, by and between the undersigned (the "Transfer Agreement"), Lockheed Martin (or the applicable Affiliated Transferor) has agreed to transfer to Newco, Lockheed Martin's (and the Affiliated Transferors') interests in the Transferred Assets (as defined in the Transfer Agreement); and WHEREAS, pursuant to the Transfer Agreement, Newco has agreed, among other things, to assume certain liabilities of Lockheed Martin and its Affiliates with respect to the Transferred Assets and the Business; NOW, THEREFORE, in consideration of the transfer of the Transferred Assets, the assumption of such liabilities, the payment of the Exchange Consideration and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lockheed Martin and Newco agree as follows: 1. (a) Effective as of 12:01 a.m. (Eastern Standard Time) on the date hereof, Lockheed Martin and the Affiliated Transferors, on and subject to all of the terms and conditions of the Transaction Agreement, do hereby transfer, assign and deliver to Newco all of the right, title and interest of such Persons in, to and under the Transferred Assets. (b) Effective as of 12:01 a.m. (Eastern Standard Time) on the date hereof, Newco, on and subject to all of the terms and conditions of the Transaction Agreement, does hereby accept all of the right, title and interest of Lockheed Martin and the Affiliated Transferors in, to and under, and, on and subject to all of the terms and conditions of the Transaction Agreement, accepts all risk of loss with respect to, all of the Transferred Assets, and Newco, on and subject to all of the terms and conditions of the Transaction Agreement, assumes and agrees to pay, perform and discharge promptly and in full when due all of the Assumed Liabilities. (c) The parties hereto agree that Newco does not hereby and shall not otherwise receive or assume, as the case may be, any of the Excluded Assets or any of the Excluded Liabilities. 2. This Agreement shall be construed in accordance with and governed by the law of the State of New York without references to choice or conflict of law principles. 3. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 4. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Transfer Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. WITNESS: LOCKHEED MARTIN CORPORATION By: - ----------------------------------- ----------------------------------- Name: Title: L-3 COMMUNICATIONS HOLDINGS, INC. By: - ----------------------------------- ----------------------------------- Name: Title: - 2 - Attachment IV See Amendment No. 2 to the Transaction Agreement Attachment V See Amendment No. 2 to the Transaction Agreement Attachment VI Attachment VI ADDITIONAL MATTERS RELATING TO THE CALCULATION OF NET TANGIBLE ASSETS The Net Tangible Assets on the December Statement and the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall be in accordance with the terms and conditions of the Agreement and in accordance with GAAP, except as provided in the December Statement and this Attachment VI. The Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount will be determined on a basis consistent with the manner in which the December Statement was prepared as disclosed in the notes to the December Statement or as otherwise set forth in this Attachment VI. Therefore, the Net Tangible Assets on the December Statement and the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount may differ from the closing balances of Lockheed Martin and the Business Units on December 31, 1996 and at the close of business on the Effective Date or the Closing Date, and the opening balances of Newco on the Closing Date for tax and financial reporting purposes. Except as otherwise set forth in this Attachment VI, all principles, classifications, methods, practices, assumptions and policies used in the preparation of the December Statement (regardless of whether such principles, classifications, methods, practices, assumptions and policies are in accordance with GAAP) will be used or applied in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount. Accounting pronouncements (as defined in Statement of Auditing Standards No. 69) not used in the preparation of the December Statement will not be used in the determination of the Proposed Final Net Tangible Asset Amount or the Final Net Tangible Asset Amount. Except as otherwise set forth in this Attachment VI, the estimates used in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount will be made on a basis consistent with the principles, policies, methods, practices, factors and underlying data used in making estimates in the preparation of the December Statement. Following are additional agreements and clarifications with respect to the determination of the Net Tangible Assets on the December Statement and the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount: Adjustment of Reserves and Valuation Accounts. In the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, except as otherwise set forth in this Attachment VI, the amount of any reserves or valuation accounts shall be determined by applying methods, practices, assumptions, policies, factors and underlying data consistent with EXECUTION COPY VI-1 those used in determining the reserves or valuation accounts included in the December Statement, and there shall be no changes made to any reserves or valuation accounts (including, without limitation, contract reserves, purchase accounting reserves, allowances for bad debts, inventory reserves of any kind, warranty reserves and other reserves), except to the extent that such changes are required by changes in facts and events occurring after December 31, 1996 and before the Effective Date, it being further understood that there shall be no increase in the Proposed Final Net Tangible Asset Amount or the Final Net Tangible Asset Amount as a result of any reversal or other usage of reserves unless such reversal or usage arises out of facts or events that occur after December 31, 1996; provided, however, that notwithstanding the foregoing any reversal or other usage of the Advanced Recorders IR & VLDS Inventory Reserve of $1,100,000 million, the Advanced Recorders IR & VLDS Capitalized G&A reserve of $800,000 or the Advanced Recorders IR & VLDS fixed asset reserve of $1,030,000 in connection with any sale of all or a portion of such business to a third party prior to the Effective Date will result in a corresponding increase in the Proposed Final Net Tangible Asset Amount or the Final Net Tangible Asset Amount. Inventory. For purposes of determining the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, the parties have agreed contractually that an inventory observation, by the independent auditors as of the Effective Date, will not be conducted. Furthermore, in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, the raw materials and finished goods inventory relating to the Business shall be recorded at an amount equal to their book value as included in the December Statement, except to the extent that changes are required by normal business activities (purchases, transfers to/from work in process or cost of sales relief resulting from shipment of products) occurring after December 31, 1996 but before the close of business on the Effective Date, in each case calculated in accordance with the policies and practices reflected in the December Statement, it being understood, however, that there shall be no changes relating to the valuation, existence, or lack of existence of raw materials and finished goods inventory. Reserves for Environmental Liabilities. The amount of the reserves for Environmental Liabilities included in the December Statement shall be fixed at $3.2 million and the amount used in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall be fixed at $6.0 million. Exclusion of Certain Reserves and Liabilities. There shall not be included in the Net Tangible Assets in the December Statement or in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount any reserve or any liability to the extent such reserve or liability (i) arises out of, results from or relates to an Excluded Asset or Excluded Liability, (ii) arises out of, results from or relates to any action taken by Newco or any of the Purchasers, including but EXECUTION COPY VI-2 not limited to any actions taken in connection with the Contemplated Transactions, (iii) arises out of, results from or relates to any actions taken or contemplated to be taken by Newco, Lockheed Martin, any of the Purchasers or any of their Affiliates, contemporaneously with or subsequent to the Closing, or (iv) is indemnified against by Lockheed Martin. Estimates at Completion ("EAC"). In the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, there shall be no changes made to the EACs from those EACs used in the preparation of the December Statement, except to the extent that such changes are required by changes in facts and events occurring after December 31, 1996 and before the Effective Date. Loss Contracts. In the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, there shall be no changes made to the provisions for loss contracts from those used in the preparation of the December Statement, except to the extent that such changes are required by changes in facts and events occurring after December 31, 1996 and before the Effective Date. Due Diligence Costs; Organization of Newco. There shall be no amount accrued or reserved for in connection with the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount for any obligations or liabilities incurred in connection with Newco's, Lockheed Martin's or the Purchaser's due diligence efforts in connection with the Contemplated Transactions, including without limitation any fees and expenses of the counsel, independent accountants or other agents, advisors or consultants of Newco, Lockheed Martin or any of the Purchasers, and there shall not be considered in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount any fees, expenses, reserves (or valuation accounts) or liabilities associated with the incorporation, organization, formation, capitalization or financing of Newco or with any restructuring of the Business or any of the Business Units contemplated or implemented by Newco. Certain Expenses. There shall not be considered in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount any reserve or any liability to the extent such reserve or liability relates to fees or expenses that, in accordance with the Transaction Documents, are to be shared by Lockheed Martin and Newco including, without limitation, the fees and expenses contemplated by Section 2.03(f) and Section 15.03 of the Agreement, or in accordance with Section 15.03 of the Agreement are to be paid by Newco if the Closing occurs. Pensions, OPEBs, etc. There shall not be considered in the determination of the Net Tangible Assets on the December Statement or the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount any reserve, EXECUTION COPY VI-3 liability or asset to the extent such reserve, liability or asset arises out of, results from or relates to pension benefits, retirement benefits or other post-employment benefits. Going Concern. For purposes of determining the Net Tangible Assets in the December Statement and determining the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, Newco and the Business Units, and the businesses conducted and to be conducted by each of them, will be considered a "going concern" and all of the Transferred Assets shall be deemed to be actively used in the Business and not held for sale or disposal. Miscellaneous. The matters referenced below shall be based on the following principles: (i) the Net Tangible Assets in the December Statement and the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall not include a reserve relating to the Camden CAS 410 Issue; (ii) there shall not be considered in the Net Tangible Assets in the December Statement and the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount any reserve or liability relating to the Sarasota Asset Step-Up Issue; (iii) there shall not be considered in the Net Tangible Assets in the December Statement any reserve or liability relating to the Management Incentive Compensation Plan with respect to the personnel at the location covered by the NY Leases; (iv) the Net Tangible Assets in the December Statement and the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall include assets relating to the LMEAP Assembly Plant in Goodyear, Arizona which assets shall be recorded at $900,000 prior to the LMEAP reserve recorded by the Conic Business Unit, which reserve shall be retained by Lockheed Martin; (v) in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, the property, plant and equipment relating to the Business shall be recorded at an amount equal to their book value as included in the December Statement, except to the extent that changes are required by changes in facts and events occurring after December 31, 1996 (it being understood, however, that there shall be no such changes relating to the valuation of the property, plant or equipment), adjusted for additions or disposals and depreciation and amortization from December 31, 1996 to the close of business on the Effective Date, in each case calculated in accordance with the policies and practices reflected in the December Statement; EXECUTION COPY VI-4 (vi) the Transferred Assets and Assumed Liabilities relating to the Airport Explosive Detection Business shall be included in the Net Tangible Assets in the December Statement at $0 and shall be included in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount at ($600,000); (vii) the Net Tangible Assets in the December Statement shall include assets for the Instrumentation Recorder Product Line of the Advanced Recorders Business Unit, net of any reserves or liabilities associated with such assets, which net assets shall be recorded at $700,000; (viii) the Net Tangible Assets in the December Statement shall assume that the reserve with respect to the exercise of TSS options at the Wideband Business Unit shall be $1.0 million and such reserve used in the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall be assumed to be $2.0 million; (ix) the Net Tangible Assets in the December Statement and the determination of the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall include in the inventory of the Advanced Recorders Business Unit general and administrative expenses fixed at $4.5 million with a related reserve of $1.8 million, and such general and administrative expenses net of the related reserve shall be recorded at $0 in the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount; (x) the Net Tangible Assets in the December Statement and the determination of the Proposed Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall assume that the liability, if any, and related asset, if any, with respect to the Microcom Business' earn out obligation to its former stockholders net to $0; and (xi) for purposes of determining the Net Tangible Assets in the December Statement and determining the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, the parties have agreed contractually to the following changes to the books and records of the Business Units as of the referenced dates: December 31, 1996 Effective Date(a) ----------------- -------------- (in millions) (in millions) ALL Eliminate Cash/Negative Cash $(1.6) (b) Eliminate Duplicate Pension/Benefit 6.0 (b) Liabilities(c) Building Writedown or Writeup(c) 0.0 $ 0.0 EDS Net Assets 0.0 0.0 EDS M&DS Subcontract Reserve 0.0 (0.6)(d) EXECUTION COPY VI-5 ADVANCED RECORDERS Universal Litigation 0.0 0.0 G&A in Inventory Change(c) 0.0 (2.7) Sarasota Asset Step-Up Issue(c) 0.0 0.0 Reversal of Capitalized Certification Costs 0.0 0.0 CPS-100 Audit Labor Mischarging Allegations 0.0 0.0 ADC Settlement (0.3) (b) CAMDEN Aegis Power Supply Contract and Option (1.0) (1.0) Camden CAS 410 Issue(c) 0.0 0.0 Unreasonable Indirect Labor Allegations 0.0 0.0 Old Receivables 0.0 0.0 DCAA Rate Close-Out Issues 0.0 0.0 NOAA Contract Defective Pricing Allegations 0.0 0.0 Reversal of Division Reserve 0.0 0.0 Truck Depot Severance Reserve 0.0 (0.2) WIDEBAND Severance 0.0 0.0 TSS Options (1.0) (3.0) Reverse Fixed Wireless Loop License Agreement 0.0 0.0 Reverse Fixed Wireless Loop Deferred cost 0.0 0.0 Reverse Fixed Wireless Loop Reserve 0.0 0.0 DISPLAYS Add Alpharetta Building 4.0 (b)(e) NARDA-EAST Add FSI (Lowell, MA) Net Tangible Assets 4.8 (b) TELEMETRY & INSTRUMENTATION G&A Costs in Inventory (1.0) (1.0) CONIC Add LMEAP Assets 0.9 0.9 Pendelton Litigation Reserve 0.0 0.0 LMEAP Reserve Elimination 0.5 0.5 MICROCOM Earn Out 0.0 0.0 CORPORATE PUSHDOWNS NY Leasehold Improvements 3.5 3.5(e) NY Overlays 1.8 1.8 RFA and RAA 4.4 (b) Incurred but not reported Reserve (4.1) (4.1) Environmental Reserve(c) (3.2) (6.0) Workers Compensation (1.2) (1.2) Management Incentive Compensation Plan (NYNC) 0.0 (b) Deferred Management Incentive Compensation (0.3) (1.2) Plan Vacation Accrual (0.3) (0.3) (a) Closing reflects the agreed upon changes as of the close of business on the Effective Date. (b) To be recorded based on the actual balance (after giving effect to the December 31, 1996 adjustments) as of the close of business on the Effective Date. (c) As discussed above. (d) As referenced in clause (vi) under "Miscellaneous" above. (e) Subject to the specific provisions of clause (v) under "Miscellaneous" above. EXECUTION COPY VI-6 All amounts in parentheses in the foregoing table represent reductions to Net Tangible Assets; amounts not in parentheses represent increases in Net Tangible Assets. The parties also have agreed that, with respect to the items referenced in the foregoing table, other than as referenced above there will not be any changes to the books and records of the Business Units from December 31, 1996 to the Effective Date. EXECUTION COPY VI-7 Attachment VII ATTACHMENT VII EXCHANGE CONSIDERATION SCHEDULE Transferor Exchange Consideration ---------- ---------------------- Lockheed Martin Corporation Stock: ______ shares of Newco Class A Stock Cash: $_____ Lockheed Martin Tactical Stock: _____ shares of Systems, Inc. Newco Class A Stock Cash: $______ Randtron Systems, Inc. Stock: ______ shares of Newco Class A Stock Cash: $______ Lockheed Martin Fairchild Stock: ______ shares of Corporation Newco Class A Stock Cash: $______ Conic Corporation Stock: ______ shares of Newco Class A Stock Cash: $______ Lockheed Martin Microcom Stock: ______ shares of Corporation Newco Class A Stock Cash: $______ Lockheed Martin Hycor, Inc. Stock: ______ shares of Newco Class A Stock Cash: $______ The NARDA Microwave Stock: ______ shares of Corporation Newco Class A Stock Cash: $______ [OTHER AFFILIATED TRANSFERORS] Stock: ______ shares of Newco Class A Stock Cash: $______ EXECUTION COPY VII-1 Attachment VIII See Amendment No. 2 to the Transaction Agreement Attachment IX See Amendment No. 2 to the Transaction Agreement Attachment X See Amendment No. 2 to the Transaction Agreement Attachment XI Attachment XI EXCEPTIONS TO NON-SOLICITATION OF EMPLOYEES Exceptions to Non-Solicitation by Newco Name Division Department - ---- -------- ---------- David Butler Fairchild Defense Systems Finance John Mega TDS - East Finance Robert Leskow TDS - East Finance Richard Nortstrom TDS - East Finance Ken Goldstein Corporate Tax Michael Sanator TDS - East Procurement Robert Hagendorf Corporate Risk Management [ILLEGIBLE] Corporate ES&H [ILLEGIBLE] TDS - Akron President Lois Bailey Washington Office Export Controls Exceptions to Non-Solicitation by Lockheed Martin Name Division - ---- -------- Richard Gribble Wideband Systems Boyd Titwell EXECUTION COPY XI-1 Attachment XII Attachment XII LOCKHEED MARTIN LEGAL OPINIONS 1. Each of Lockheed Martin and each Affiliated Transferor is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on the Business as now conducted, except where the failure to have such licenses, authorizations, consents and approvals has not had, and could not reasonably be expected to have, a Material Adverse Effect on the Business. Each of Lockheed Martin and each Affiliated Transferor, as the case may be, is duly qualified to do business as a foreign corporation in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary to carry on the Business as now conducted, except where the failure to be so qualified has not had, and could not reasonably be expected to have, a Material Adverse Effect on the Business. 2. The execution, delivery and performance by Lockheed Martin and each Affiliated Transferor of each of the Transaction Documents to which it is a party and the consummation by Lockheed Martin and each Affiliated Transferor of the Contemplated Transactions are within its corporate powers and have been duly authorized by all necessary corporate action on its part. Each of the Transaction Documents to which it is a party constitutes a legal, valid and binding obligation of Lockheed Martin and each Affiliated Transferor enforceable against it in accordance with its terms (i) except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers, (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity, and (iii) except to the extent that indemnification and contribution for securities law liabilities may be unenforceable as against public policy. 3. To such counsel's knowledge, the execution, delivery and performance by Lockheed Martin and each Affiliated Transferor of the Transaction Documents to which it is a party require no action by or in respect of, or consent or approval of, or filing with, any Governmental Authority other than as may have been obtained and other than as may be referenced in Section B.03 of the Transaction Agreement or set forth in Section B.03 of the Disclosure Schedules. 4. The execution, delivery and performance by Lockheed Martin of the Transaction Documents do not and will not contravene EXECUTION COPY XII-1 or conflict with the charter or bylaws of Lockheed Martin or any Affiliated Transferor. XII-2 Attachment XIII Attachment XIII NEWCO LEGAL OPINIONS 1. Newco is a corporation duly incorporated, validly existing and in good standing under the laws of the Stare of Delaware. 2. The execution, delivery and performance by Newco of each of the Transaction Documents to which it is a party and the consummation by Newco of the Contemplated Transactions are within its corporate powers and have been duly authorized by all necessary corporate action on its part. Each of the Transaction Documents to which it is a party constitutes a legal, valid and binding obligation of Newco enforceable against it in accordance with its terms (i) except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers, (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity, and (iii) except to the extent that indemnification and contribution for securities law liabilities may be unenforceable as against public policy. 3. To such counsel's knowledge, the execution, delivery and performance by Newco of the Transaction Documents to which it is a party require no action by or in respect of, or consent or approval of, or filing with, any Governmental Authority other than as may have been obtained and other than as may be referenced in Section B.03 of the Transaction Agreement or set forth in Section B.03 of the Disclosure Schedules. 4. The execution, delivery and performance by Newco of the Transaction Documents do not and will not contravene or conflict with the charter or bylaws of Newco. EXECUTION COPY XIII-1 Attachment XIV See Amendment No. 2 to the Transaction Agreement Attachment XV Attachment XV PATENTS AND PATENT APPLICATIONS CONSTITUTING TRANSFERRED ASSETS 1. COMMUNICATIONS SYSTEMS 194 Patents (See Attached Listing) 2. WIDEBAND SYSTEMS 34 Patents, 18 Patent Applications (See Attached Listing) 3. DISPLAY SYSTEMS 1 Patent, 2 Patent Applications (See Attached Listing) 4. MICROWAVE NARDA WEST 2 Patent Applications (See Attached Listing) 5. RANDTRON 1 Patent (See Attached Listing) 6. ADVANCED RECORDERS 1 Patent, 2 Patent Applications (See Attached Listing) 7. MICROWAVE NARDA EAST 25 Patents, 5 Patent Applications (See Attached Listing) 8. HYCOR No Patents or Patent Applications 9. MICROCOM No Patents or Patent Applications 10. CONIC No Patents or Patent Applications 11. TELEMETRY & INSTRUMENTATION No Patents or Patent Applications 12. AIRPORT EXPLOSIVE DETECTION BUSINESS 4 Patent Applications (See Attached Listing) EXECUTION COPY XV-1 EX-10.2 4 INDENTURE EXHIBIT 10.2 L-3 COMMUNICATIONS CORPORATION As Issuer $225,000,000 10 3/8% SENIOR SUBORDINATED NOTES DUE 2007 INDENTURE Dated as of April 30, 1997 The Bank of New York, As Trustee ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . 1 Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . 17 Section 1.03. Incorporation by Reference of Trust Indenture Act . 17 Section 1.04. Rules of Construction . . . . . . . . . . . . . . . 17 ARTICLE 2 THE NOTES . . . . . . . . . . . . . . 18 Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . 18 Section 2.02. Execution and Authentication . . . . . . . . . . . 19 Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . 20 Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . 20 Section 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . 20 Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . 20 Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . 33 Section 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . 33 Section 2.09. Treasury Notes . . . . . . . . . . . . . . . . . . 34 Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . 34 Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . 34 Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . 34 Section 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . 35 ARTICLE 3 REDEMPTION AND PREPAYMENT . . . . . . . . . . 35 Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . 35 Section 3.02. Selection of Notes to Be Redeemed . . . . . . . . . 35 Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . 36 Section 3.04. Effect of Notice of Redemption . . . . . . . . . . 36 Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . 37 Section 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . 37 Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . 37 Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . 38 Section 3.09. Offer to Purchase by Application of Excess Proceeds 38 ARTICLE 4 COVENANTS . . . . . . . . . . . . . . 40 Section 4.01. Payment of Notes . . . . . . . . . . . . . . . . . 40 Section 4.02. Maintenance of Office or Agency . . . . . . . . . . 40 Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . 40 Section 4.04. Compliance Certificate . . . . . . . . . . . . . . 41 Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . 42 Section 4.06. [Intentionally Omitted] . . . . . . . . . . . . . . 42 Section 4.07. Restricted Payments . . . . . . . . . . . . . . . . 42 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . . . 45 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock . . . . . . . . . . . . . . . . . 45 Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . 48 Section 4.11. Transactions with Affiliates . . . . . . . . . . . 49 Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . 50 Section 4.13. Future Subsidiary Guarantees . . . . . . . . . . . 50 Section 4.14. Corporate Existence . . . . . . . . . . . . . . . . 51 Section 4.15. Offer to Repurchase Upon Change of Control . . . . 51 2 Section 4.16. No Senior Subordinated Debt . . . . . . . . . . . . 52 Section 4.17. Payments for Consent . . . . . . . . . . . . . . . 53 ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . 53 Section 5.01. Merger, Consolidation, or Sale of Assets . . . . . 53 Section 5.02. Successor Corporation Substituted . . . . . . . . . 54 ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . 54 Section 6.01. Events of Default . . . . . . . . . . . . . . . . . 54 Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . 56 Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . 56 Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . 57 Section 6.05. Control by Majority . . . . . . . . . . . . . . . . 57 Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . 57 Section 6.07. Rights of Holders of Notes to Receive Payment . . . 58 Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . 58 Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . 58 Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 58 Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . 59 ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . 59 Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . 59 Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . 60 Section 7.03. Individual Rights of Trustee . . . . . . . . . . . 61 Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . 61 Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . 61 Section 7.06. Reports by Trustee to Holders of the Notes . . . . 62 Section 7.07. Compensation and Indemnity . . . . . . . . . . . . 62 Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . 63 Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . 64 Section 7.10. Eligibility; Disqualification . . . . . . . . . . . 64 Section 7.11. Preferential Collection of Claims Against Company . 64 ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . 64 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . 64 Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . 65 Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . 65 Section 8.04. Conditions to Legal or Covenant Defeasance . . . . 66 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions . . 67 Section 8.06. Repayment to Company . . . . . . . . . . . . . . . 67 Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . 68 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . 68 Section 9.01. Without Consent of Holders of Notes . . . . . . . . 68 Section 9.02. With Consent of Holders of Notes . . . . . . . . . 69 Section 9.03. Compliance with Trust Indenture Act . . . . . . . . 70 Section 9.04. Revocation and Effect of Consents . . . . . . . . . 70 Section 9.05. Notation on or Exchange of Notes . . . . . . . . . 70 Section 9.06. Trustee to Sign Amendments, etc. . . . . . . . . . 71 3 ARTICLE 10 SUBORDINATION . . . . . . . . . . . . . 71 Section 10.01. Agreement to Subordinate . . . . . . . . . . . . . 71 Section 10.02. Liquidation; Dissolution; Bankruptcy . . . . . . . 71 Section 10.03. Default on Designated Senior Debt . . . . . . . . . 71 Section 10.04. Acceleration of Securities . . . . . . . . . . . . 72 Section 10.05. When Distribution Must Be Paid Over . . . . . . . . 72 Section 10.06. Notice by Company . . . . . . . . . . . . . . . . . 73 Section 10.07. Subrogation . . . . . . . . . . . . . . . . . . . . 73 Section 10.08. Relative Rights . . . . . . . . . . . . . . . . . . 73 Section 10.09. Subordination May Not Be Impaired by Company . . . 74 Section 10.10. Distribution or Notice to Representative . . . . . 74 Section 10.11. Rights of Trustee and Paying Agent . . . . . . . . 74 Section 10.12. Authorization to Effect Subordination . . . . . . . 75 Section 10.13. Amendments . . . . . . . . . . . . . . . . . . . . 75 ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . 75 Section 11.01. Trust Indenture Act Controls . . . . . . . . . . . 75 Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . 75 Section 11.03. Communication by Holders of Notes with Other Holders of Notes . . . . . . . . . . . . . . . . 76 Section 11.04. Certificate and Opinion as to Conditions Precedent 76 Section 11.05. Statements Required in Certificate or Opinion . . . 77 Section 11.06. Rules by Trustee and Agents . . . . . . . . . . . . 77 Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders . . . . . . . . . . . 77 Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . 77 Section 11.09. No Adverse Interpretation of Other Agreements . . . 77 Section 11.10. Successors . . . . . . . . . . . . . . . . . . . . 78 Section 11.11. Severability . . . . . . . . . . . . . . . . . . . 78 Section 11.12. Counterpart Originals . . . . . . . . . . . . . . . 78 Section 11.13. Table of Contents, Headings, etc. . . . . . . . . 78 4 EXHIBITS -------- EXHIBIT A-1 FORM OF NOTE (NON-REGULATION-S) EXHIBIT A-2 FORM OF NOTE (REGULATION S) EXHIBIT B FORM OF CERTIFICATE OF TRANSFER EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTORS EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE EXHIBIT F FORM OF NOTATION ON SENIOR SUBORDINATED NOTE RELATING TO SUBSIDIARY GUARANTEE 5 CROSS-REFERENCE TABLE Trust Indenture Act Section Indenture Section - --------------- ----------------- 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 10.03 (b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.07 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;11.02 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03;11.02 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02 (c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 11.04 (c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 11.04 (c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03, 10.04, 10.05 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05,11.02 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . 2.09 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . 6.05 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 6.04 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01 N.A. means not applicable. - -------------------- This Cross-Reference Table is not part of the Indenture. 6 This INDENTURE dated as of April 30, 1997, between L-3 Communications Corporation, a Delaware corporation (the "Company"), and The Bank of New York, as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 10 3/8% Notes due 2007 (the "Initial Notes") and the 10 3/8% Senior Notes due 2007 (the "Exchange Notes" and, together with the Initial Notes, the "Notes"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions "144A Global Note" means the global note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback) other than sales of inventory in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be 7 governed by the covenant contained in Section 4.15 and/or the covenant contained in Section 5.01 and not by the covenant contained in Section 4.10), and (ii) the issue or sale by the Company or any of its Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (A) that have a fair market value in excess of $1.0 million or (B) for net proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a transfer of assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that is permitted by the covenant contained in Section 4.07 and (iv) a disposition of Cash Equivalents in the ordinary course of business shall not be deemed to be an Asset Sale. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any domestic financial institution to the Senior Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any 8 financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody's or S&P's and in each case maturing within six months after the date of acquisition, (vi) investment funds investing 95% of their assets in securities of the types described in clauses (i)-(v) above, and (vii) readily marketable direct obligations issued by any State of the United States of America or any political subdivision thereof having maturities of not more than one year from the date of acquisition and having one of the two highest rating categories obtainable from either Moody's or S&P. "Cedel" means Cedel Bank, societe anonyme. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Principals or their Related Parties (as defined below), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares) or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill, debt issuance costs and other intangibles but excluding amortization of other prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, minus (v) non-cash items increasing such Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. 9 "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Restricted Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, (v) the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries, and (vi) the Net Income of any Restricted Subsidiary shall be calculated after deducting preferred stock dividends payable by such Restricted Subsidiary to Persons other than the Company and its other Restricted Subsidiaries. "Consolidated Net Tangible Assets" means, as of any date of determination, shareholders' equity of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, less goodwill and other intangibles (other than patents, trademarks, licenses, copyrights and other intellectual property and prepaid assets). "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the Issue Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Credit Facilities" means, with respect to the Company, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Article 2 hereof, substantially in the form of Exhibit A-1 hereto, except that such Note shall 10 not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depositary" shall mean or include such successor. "Designated Senior Debt" means (i) any Indebtedness outstanding under the Senior Credit Facilities and (ii) any other Senior Debt permitted under this Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Debt". "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that if such Capital Stock is issued to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means any public or private sale of equity securities (excluding Disqualified Stock) of the Company or Holdings, other than any private sales to an Affiliate of the Company or Holdings. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f). "Exchange Offer" has the meaning set forth in the Registration Rights Agreement has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means any Indebtedness of the Company (other than Indebtedness under the Senior Credit Facilities and the Notes) in existence on the Issue Date, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, original issue discount, non-cash 11 interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs) and (ii) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (A) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company, times (B) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Foreign Subsidiary" means a Restricted Subsidiary of the Company that was not organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the 12 American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-1 or A-2 hereto issued in accordance with Article 2 hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii) to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantors" means each Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture, and their respective successors and assigns. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or interest rates. "Holder" means a Person in whose name a Note is registered. "Holdings" means L-3 Communications Holdings, Inc. "IAI Global Note" means the global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the 13 extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest, and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel, moving and similar loans or advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the last paragraph of the covenant contained in Section 4.07. "Issue Date" means the closing date for the sale and original issuance of the Notes under this Indenture. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in The City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Lehman Investor" means Lehman Brothers Holdings Inc. and any of its Affiliates. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Initial Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give 14 any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Marketable Securities" means, with respect to any Asset Sale, any readily marketable equity securities that are (i) traded on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii) issued by a corporation having a total equity market capitalization of not less than $250.0 million; provided that the excess of (A) the aggregate amount of securities of any one such corporation held by the Company and any Restricted Subsidiary over (B) ten times the average daily trading volume of such securities during the 20 immediately preceding trading days shall be deemed not to be Marketable Securities; as determined on the date of the contract relating to such Asset Sale. "Moody's" means Moody's Investors Services, Inc. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes thereon, realized in connection with (A) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss and (iii) the cumulative effect of a change in accounting principles. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (A) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (B) is directly or indirectly liable (as a guarantor or otherwise), or (C) constitutes the lender; and (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than Indebtedness incurred under Credit Facilities) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified 15 in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a person who is not a U.S. Person. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Obligations" means any principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages (including Liquidated Damages), guarantees and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto. "Offering" means the Offering of the Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means, with respect to DTC, Euroclear or Cedel, a Person who has an account with DTC, Euroclear or Cedel, respectively (and, with respect to DTC, shall include Euroclear and Cedel). "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary of the Company that is a Guarantor (ii) any Investment in cash or Cash Equivalents; (iii) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (A) such Person becomes a Restricted Subsidiary of the Company and a Guarantor or (B) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Guarantor; (iv) any Restricted Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant contained in Section 4.10 or any disposition of assets not constituting an Asset sale; (v) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (vi) advances to employees not to exceed $2.5 million at any one time outstanding; (vii) any Investment acquired in connection with or as a result of a workout or bankruptcy of a customer or supplier; (viii) Hedging Obligations permitted to be incurred under the covenant contained in Section 4.09; (ix) any Investment in a 16 Similar Business that is not a Restricted Subsidiary; provided that the aggregate fair market value of all Investments made pursuant to this clause (ix) (valued on the date each such Investment was made and without giving effect to subsequent changes in value) may not exceed 5% of the Consolidated Net Tangible Assets of the Company; and (x) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (x) that are at the time outstanding, not to exceed $15.0 million. "Permitted Junior Securities" means Equity Interests in the Company or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Notes and the Subsidiary Guarantees are subordinated to Senior Debt pursuant to Article 10 of this Indenture. "Permitted Liens" means (i) Liens securing Senior Debt of the Company or any Guarantor that was permitted by the terms of this Indenture to be incurred; (ii) Liens in favor of the Company or any Guarantor; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any other assets of the Company or any of its Restricted Subsidiaries; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) of the second paragraph of Section 4.09 covering only the assets acquired with such Indebtedness; (vii) Liens existing on the Issue Date; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (ix) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding; (x) Liens on assets of Guarantors to secure Senior Debt of such Guarantors that was permitted by this Indenture to be incurred; (xi) Liens securing Permitted Refinancing Indebtedness, provided that any such Lien does not extend to or cover any property, shares or debt other than the property, shares or debt securing the Indebtedness so refunded, refinanced or extended; (xii) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return of money bonds and other obligations of a like nature, in each case incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); (xiii) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (xiv) Liens encumbering customary initial deposits and margin deposits, and other Liens 17 incurred in the ordinary course of business that are within the general parameters customary in the industry, in each case securing Indebtedness under Hedging Obligations; and (xv) Liens encumbering deposits made in the ordinary course of business to secure nondelinquent obligations arising from statutory or regulatory, contractual or warranty requirements of the Company or its Subsidiaries for which a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses and prepayment premiums incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Permitted Securities" means, with respect to any Asset Sale, Voting Stock of a Person primarily engaged in one or more Similar Businesses; provided that after giving effect to the Asset Sale such Person shall become a Restricted Subsidiary and a Guarantor. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Principals" means any Lehman Investor, Lockheed Martin Corporation, Frank C. Lanza and Robert V. LaPenta "Private Placement Legend" means the legend set forth in Section 2.07(g)(i) to be placed on all Notes issued under this Indenture except as otherwise permitted by the provisions of this Indenture. "Purchase Agreement" means the Purchase Agreement, dated April 25, 1997, among the Company, Lehman Brothers Inc. and BancAmerica Securities, Inc. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. 18 "Registration Rights Agreement" means the Registration Rights Agreement, dated as of April, 30 1997, by and among the Company, Lehman Brothers Inc. and BancAmerica Securities, Inc., as such agreement may be amended, modified or supplemented from time to time. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a global Note bearing the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Regulation S, or a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate. "Regulation S Permanent Global Note" means a permanent global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period. "Regulation S Temporary Global Note" means a single temporary global Note in the form of Note attached hereto as Exhibit A-2 bearing the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Regulation S. "Related Party" with respect to any Principal means (i) any controlling stockholder, 50% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (ii) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a more than 50% controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause (i). "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Debt. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Notes" means the 144A Global Note, the IAI Global Note and the Regulation S Global Notes, each of which shall bear the Private Placement Legend. "Restricted Investment" means an Investment other than a Permitted Investment. 19 "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" means, with respect to any Person, each Subsidiary of such Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 under the Securities Act. "Rule 144A" means Rule 144A under the Securities Act. "Rule 903" means Rule 903 under the Securities Act. "Rule 904" means Rule 904 under the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Credit Facilities" means the credit agreement, dated as of the Issue Date among the Company and a syndicate of banks and other financial institutions led by Lehman Commercial Paper Inc., as syndication agent, and any related notes, collateral documents, letters of credit and guarantees, including any appendices, exhibits or schedules to any of the foregoing (as the same may be in effect from time to time), in each case, as such agreements may be amended, modified, supplemented or restated from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid or extended from time to time (whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise). "Senior Debt" means (i) all Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities and all Hedging Obligations with respect thereto, (ii) any other Indebtedness permitted to be incurred by the Company or any of its Restricted Subsidiaries under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not include (i) any liability for federal, state, local or other taxes owed or owing by the Company, (ii) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any Indebtedness that is incurred in violation of this Indenture. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Similar Business" means a business, a majority of whose revenues in the most recently ended calendar year were derived from (i) the sale of defense products, electronics, communications systems, aerospace products, avionics products and/or communications products, (ii) any services related thereto, (iii) any business or activity that is reasonably similar thereto or 20 a reasonable extension, development or expansion thereof or ancillary thereto, and (iv) any combination of any of the foregoing. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (A) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (B) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "S&P" means Standard and Poor's Corporation. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Transaction Documents" means this Indenture, the Notes, the Purchase Agreement and the Registration Rights Agreement. "Transfer Restricted Securities" means securities that bear or are required to bear the Private Placement Legend set forth in Section 2.06(g)(i) hereof. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Global Note" means one or more global Notes, in the form of Exhibit A-1 attached hereto, that do not and are not required to bear the Private Placement Legend and are deposited with and registered in the name of the Depositary or its nominee. "Unrestricted Definitive Note" means one or more Definitive Notes that do not and are not required to bear the Private Placement Legend. "Unrestricted Subsidiaries" means any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (iii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries 21 has any direct or indirect obligation (A) to subscribe for additional Equity Interests or (B) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; (iv) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries; and (v) has at least one director on its board of directors that is not a director or executive officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (B) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned" means, when used with respect to any Subsidiary or Restricted Subsidiary of a Person, a Subsidiary (or Restricted Subsidiary, as appropriate) of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as appropriate) of such Person and one or more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as appropriate) of such Person. 22 Section 1.02. Other Definitions. Defined in Term Section "Affiliate Transaction" . . . . . . . . . . . . . 4.11 "Asset Sale Offer" . . . . . . . . . . . . . . . 3.09 "Bankruptcy Law" . . . . . . . . . . . . . . . . 4.01 "Change of Control Offer" . . . . . . . . . . . . 4.15 "Change of Control Payment" . . . . . . . . . . . 4.15 "Change of Control Payment Date" . . . . . . . . 4.15 "Covenant Defeasance" . . . . . . . . . . . . . . 8.03 "Event of Default" . . . . . . . . . . . . . . . 6.01 "Excess Proceeds" . . . . . . . . . . . . . . . . 4.10 "incur" . . . . . . . . . . . . . . . . . . . . . 4.09 "Legal Defeasance" . . . . . . . . . . . . . . . 8.02 "Offer Amount" . . . . . . . . . . . . . . . . . 3.09 "Offer Period" . . . . . . . . . . . . . . . . . 3.09 "Paying Agent" . . . . . . . . . . . . . . . . . 2.03 "Purchase Date" . . . . . . . . . . . . . . . . . 3.09 "Registrar" . . . . . . . . . . . . . . . . . . . 2.03 "Restricted Payments" . . . . . . . . . . . . . . 4.07 Section 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; 23 (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2 THE NOTES Section 2.01. Form and Dating. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 or A-2 hereto. The Notes may be issued in the form of Definitive Notes or Global Notes, as specified by the Company. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. Notes issued in global form shall be substantially in the form of Exhibit A-1 or A-2 attached hereto (including the Global Note Legend and the "Schedule of Exchanges in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A-1 or A-2 attached hereto (but without the Global Note Legend and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note (attached hereto as Exhibit A-2 and bearing the legend set forth in Section 2.06(g)(iii) hereof), which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period 24 shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by the Agent Members through Euroclear or Cedel Bank. Section 2.02. Execution and Authentication. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers, authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. 25 Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. Section 2.04. Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. Section 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA Section 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the 26 Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.11 hereof. Every Note authenticated and made available for delivery in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be authenticated and made available for delivery in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the procedures of the Depositary therefor. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. The Trustee shall have no obligation to ascertain the Depositary's compliance with any such restrictions on transfer. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period transfers of beneficial interests in the Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred only to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests (other than transfers of beneficial interests in a 27 Global Note to Persons who take delivery thereof in the form of a beneficial interest in the same Global Note), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in the specified Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer ore exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture, the Notes and otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in another Restricted Global Note if the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver (x) a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, (y) to the extent required by item 3(d) of Exhibit B hereto, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such beneficial interest is being transferred in compliance with any 28 applicable blue sky securities laws of any State of the United States and (z) if the transfer is being made to an Institutional Accredited Investor and effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A under the Securities Act, Rule 144 under the Securities Act or Rule 904 under the Securities Act, a certificate from the transferee in the form of Exhibit D hereto. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. Beneficial interests in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in the Unrestricted Global Note or transferred to Persons who take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in the Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such beneficial interest is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been 29 issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in any Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon receipt by the Registrar of the following documentation (all of which may be submitted by facsimile): (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(d) thereof, a certificate from the transferee to the effect set forth in Exhibit D hereof and, to the extent required by item 3(d) of Exhibit B, an Opinion of Counsel from the transferee or the transferor reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such beneficial interest is being transferred in compliance with any applicable blue sky securities laws of any State of the United States; 30 (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Definitive Notes issued in exchange for beneficial interests in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such names and in such authorized denominations as the holder shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Definitive Notes issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be (A) exchanged for a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act or (B) transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the conditions set forth in clause (A) above or unless the transfer is pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (ii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or 31 (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company, to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such beneficial interest in a Restricted Global Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iii) If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Definitive Notes issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such names and in such authorized denominations as the holder shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Definitive Notes issued in exchange for a beneficial interest pursuant to this section 2.06(c)(iii) shall not bear the Private Placement Legend. Beneficial interests in an Unrestricted Global Note cannot be exchanged for a Definitive Note bearing the Private Placement Legend or transferred to a Person who takes delivery thereof in the form of a Definitive Note bearing the Private Placement Legend. (d) Transfer or Exchange of Definitive Notes for Beneficial Interests. (i) If any Holder of Restricted Definitive Notes proposes to exchange such Notes for a beneficial interest in a Restricted Global Note or to transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global 32 Note, then, upon receipt by the Registrar of the following documentation (all of which may be submitted by facsimile): (A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Definitive Notes are being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Definitive Notes are being transferred to a Non- U.S. Person in an offshore transaction in accordance with Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Definitive Notes are being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Definitive Notes are being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(d) thereof, a certificate from the transferee to the effect set forth in Exhibit D hereof and, to the extent required by item 3(d) of Exhibit B, an Opinion of Counsel from the transferee or the transferor reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such Definitive Notes are being transferred in compliance with any applicable blue sky securities laws of any State of the United States; (F) if such Definitive Notes are being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Definitive Notes are being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Definitive Notes, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note. (ii) A Holder of Restricted Definitive Notes may exchange such Notes for a beneficial interest in the Unrestricted Global Note or 33 transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in the Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Definitive Notes are being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) A Holder of Unrestricted Definitive Notes may exchange such Notes for a beneficial interest in the Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in the Unrestricted Global Note. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the Unrestricted Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. 34 If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above. (e) Transfer and Exchange of Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, pursuant to the provisions of this Section 2.06(e). (i) Restricted Definitive Notes may be transferred to and registered in the name of Persons who take delivery thereof if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver (x) a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, (y) to the extent required by item 3(d) of Exhibit B hereto, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such beneficial interest is being transferred in compliance with any applicable blue sky securities laws of any State of the United States and (z) if the transfer is being made to an Institutional Accredited Investor and effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A under the Securities Act, Rule 144 under the Securities Act or Rule 904 under the Securities Act, a certificate from the transferee in the form of Exhibit D hereto. (ii) Restricted Definitive Notes may be exchanged by any Holder thereof for an Unrestricted Definitive Note or transferred to Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement 35 and the holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Restricted Definitive Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iii) A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request for such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for or transferred to Persons who take delivery thereof in the form of a Restricted Definitive Note. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by persons that are not (x) broker-dealers, (y) Persons participating in the distribution of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the Company and accepted for exchange in the exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted 36 Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and make available for delivery to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (b) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY 37 MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee or by the Depositary at the direction of the Trustee, to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note, by the Trustee or by the Depositary at the direction of the Trustee, to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. 38 (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. Section 2.07. Replacement Notes. If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon the written order of the Company signed by two Officers of the Company, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. 39 If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Trustee knows are so owned shall be so disregarded. Section 2.10. Temporary Notes. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Company signed by two Officers of the Company. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. Section 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are 40 Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. Section 2.13. CUSIP Numbers. The Company in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Section 3.02. Selection of Notes to Be Redeemed. If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for 41 partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 3.03. Notice of Redemption. Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed (including CUSIP Numbers, if any) and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the 42 redemption date at the redemption price. A notice of redemption may not be conditional. Section 3.05. Deposit of Redemption Price. Prior to 11:00 a.m. on the Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 3.07. Optional Redemption. (a) Except as set forth in clause (b) of this Section 3.7, the Notes shall not be redeemable at the Company's option prior to May 1, 2002. Thereafter, the Notes shall be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on May 1 of the years indicated below: Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . 105.188% 2003 . . . . . . . . . . . . . . . . . 103.458% 2004 . . . . . . . . . . . . . . . . 101.729% 2005 and thereafter . . . . . . . . . 100.000% (b) Notwithstanding the foregoing clause (a), during the first 36 months after the Issue Date, the Company may on any one or more occasions redeem up to an aggregate of 35% of the Notes originally issued at a redemption price of 109.375% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption 43 date, with the net cash proceeds of one or more Equity Offerings by the Company or the net cash proceeds of one or more Equity Offerings by Holdings that are contributed to the Company as common equity capital; provided that at least 65% of the Notes originally issued remain outstanding immediately after the occurrence of each such redemption; and provided, further, that any such redemption must occur within 120 days of the date of the closing of such Equity Offering. Section 3.08. Mandatory Redemption. Except as set forth under Sections 4.10 and 4.15, the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. Section 3.09. Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; 44 (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. 45 ARTICLE 4 COVENANTS Section 4.01. Payment of Notes. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. Section 4.03. Reports. Whether or not required by the rules and regulations of the Securities and Exchange Commission (the "Commission"), so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes: 46 (a) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separately from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants, and (b) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the Commission's rules and regulations. In addition, whether or not required by the rules and regulations of the Commission, following the consummation of the Exchange Offer contemplated by the Registration Rights Agreement, the Company shall file a copy of all such information and reports with the Commission for public availability within the time periods set forth in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Subsidiary Guarantors have agreed that, for so long as any Notes remain outstanding and are required to bear the Private Placement Legend, they shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Subject to the provisions of Article 7, delivery of such reports, information and documents to the Trustee is for informational proposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). Section 4.04. Compliance Certificate. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with 47 respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, as soon as possible and in any event within five Business Days after any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06. Intentionally omitted. Section 4.07. Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than (A) dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities); (ii) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company 48 or any direct or indirect parent of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (ii) through (vii) of the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company from a contribution to its common equity capital or the issue or sale since the Issue Date of Equity Interests of the Company (other than Disqualified Stock) or of Disqualified Stock or debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or Disqualified Stock or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or convertible debt securities that have been converted into Disqualified Stock), plus (iii) to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the amount of cash received in connection therewith (or from the sale of Marketable Securities received in connection therewith), plus (iv) to the extent not already included in such Consolidated Net Income of the Company for such period and without duplication, (A) 100% of the aggregate amount of cash received as a dividend from an Unrestricted Subsidiary, (B) 100% of the cash received upon the sale of Marketable Securities received as a dividend from an Unrestricted Subsidiary, and (C) 100% of the net assets of any Unrestricted Subsidiary on the date that it becomes a Restricted Subsidiary. The foregoing provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, other Equity 49 Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness (other than intercompany Indebtedness) in exchange for, or with the net cash proceeds from an incurrence of, Permitted Refinancing Indebtedness; (iv) the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company or Holdings held by any future, present or former employee, director or consultant of the Company or any Subsidiary or Holdings issued pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided, however, that the aggregate amount of Restricted Payments made under this clause (iv) does not exceed $1.5 million in any calendar year and provided further that cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Company shall not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Indenture; (v) repurchases of Equity Interests deemed to occur upon exercise of stock options upon surrender of Equity Interests to pay the exercise price of such options; (vi) payments to Holdings (A) in amounts equal to the amounts required for Holdings to pay franchise taxes and other fees required to maintain its legal existence and provide for other operating costs of up to $500,000 per fiscal year and (B) in amounts equal to amounts required for Holdings to pay federal, state and local income taxes to the extent such income taxes are actually due and owing; provided that the aggregate amount paid under this clause (B) does not exceed the amount that the Company would be required to pay in respect of the income of the Company and its Subsidiaries if the Company were a stand alone entity that was not owned by Holdings; and (vii) other Restricted Payments in an aggregate amount since the Issue Date not to exceed $20.0 million. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated shall be deemed to be Restricted Payments at the time of such designation and shall reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments shall be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation shall only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by Section 4.07 were computed. 50 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(A) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (B) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries, or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (A) the provisions of security agreements that restrict the transfer of assets that are subject to a Lien created by such security agreements, (B) the provisions of agreements governing Indebtedness incurred pursuant to clause (v) of the second paragraph of Section 4.09, (C) this Indenture and the Notes, (D) applicable law, (E) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred, (F) by reason of customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (G) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in this clause (iii) on the property so acquired, (H) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced, (I) contracts for the sale of assets, including, without limitation, customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, (J) agreements relating to secured Indebtedness otherwise permitted to be incurred pursuant to 4.09 and 4.12 that limit the right of the debtor to dispose of the assets securing such Indebtedness, (K) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, or (L) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business. Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company shall not issue any Disqualified Stock and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that the Company and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue shares of preferred stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four 51 full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The provisions of the first paragraph of this Section 4.09 shall not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of term Indebtedness under Credit Facilities (and the guarantee thereof by the Guarantors); provided that the aggregate principal amount of all term Indebtedness outstanding under all Credit Facilities after giving effect to such incurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (i), does not exceed an amount equal to $175.0 million less the aggregate amount of all repayments, optional or mandatory, of the principal of any Indebtedness under a Credit Facility (or any such Permitted Refinancing Indebtedness) that have been made since the Issue Date; (ii) the incurrence by the Company of revolving credit Indebtedness and letters of credit (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) under Credit Facilities (and the guarantee thereof by the Guarantors); provided that the aggregate principal amount of all revolving credit Indebtedness outstanding under all Credit Facilities after giving effect to such incurrence, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (ii), does not exceed an amount equal to $100.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied to repay any such Indebtedness (including any such Permitted Refinancing Indebtedness) pursuant to Section 4.10; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company and the Guarantors of the Notes and the Subsidiary Guarantees; (v) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (v), not to exceed $30.0 million at any time outstanding; (vi) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in connection with the acquisition of 52 assets or a new Restricted Subsidiary; provided that such Indebtedness was incurred by the prior owner of such assets or such Restricted Subsidiary prior to such acquisition by the Company or one of its Restricted Subsidiaries and was not incurred in connection with, or in contemplation of, such acquisition by the Company or one of its Restricted Subsidiaries; and provided further that the principal amount (or accreted value, as applicable) of such Indebtedness, together with any other outstanding Indebtedness incurred pursuant to this clause (vi), does not exceed $10.0 million; (vii) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness that was permitted by this Indenture to be incurred; (viii) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of workers' compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; (ix) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (x) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (A) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (B)(1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or one of its Restricted Subsidiaries and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or one of its Restricted Subsidiaries shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; 53 (xi) the incurrence by the Company or any of the Guarantors of Hedging Obligations that are incurred for the purpose of (A) fixing, hedging or capping interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or (B) protecting the Company and its Restricted Subsidiaries against changes in currency exchange rates; (xii) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; (xiii) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xiii), and the issuance of preferred stock by Unrestricted Subsidiaries; (xiv) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiaries in the ordinary course of business; and (xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (xv), not to exceed $50.0 million. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness shall not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.09. Section 4.10. Asset Sales. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 80% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, consists of cash, Cash Equivalents and/or Marketable Securities; provided, however, that (A) the amount of any Senior Debt of the Company or such Restricted Subsidiary that is assumed by the transferee in any such transaction and (B) any consideration received by the Company or such Restricted Subsidiary, as the case may be, that consists of (1) all or substantially all of the assets of one or more Similar Businesses, (2) other 54 long-term assets that are used or useful in one or more Similar Businesses and (3) Permitted Securities shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds, at its option, (i) to repay Indebtedness under a Credit Facility, or (ii) to the acquisition of Permitted Securities, all or substantially all of the assets of one or more Similar Businesses, or the making of a capital expenditure or the acquisition of other long-term assets in a Similar Business. Pending the final application of any such Net Proceeds, the Company may temporarily reduce Indebtedness under a Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph shall be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Section 4.11. Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $3.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The foregoing provisions shall not prohibit: (i) any employment agreement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; (ii) any transaction with a Lehman 55 Investor; (iii) any transaction between or among the Company and/or its Restricted Subsidiaries; (iv) transactions between the Company or any of its Restricted Subsidiaries, on the one hand, and Lockheed Martin or any of its Subsidiaries, on the other hand, on terms that are not materially less favorable to the Company or the applicable Restricted Subsidiary of the Company than those that could have been obtained from an unaffiliated third party; provided that (A) in the case of any such transaction or series of related transactions pursuant to this clause (iv) involving aggregate consideration in excess of $1.0 million but less than $25.0 million, such transaction or series of transactions (or the agreement pursuant to which the transactions were executed) was approved by the Company's Chief Executive Officer or Chief Financial Officer and (B) in the case of any such transaction or series of related transactions pursuant to this clause (iv) involving aggregate consideration equal to or in excess of $25.0 million, such transaction or series of related transactions (or the agreement pursuant to which the transactions were executed) was approved by a majority of the disinterested members of the Board of Directors; (v) any transaction pursuant to and in accordance with the provisions of the Transaction Documents as the same are in effect on the Issue Date; and (vi) any Restricted Payment that is permitted by the provisions of Section 4.07. Section 4.12. Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens. Section 4.13. Future Subsidiary Guarantees If the Company or any of its Subsidiaries shall acquire or create a Subsidiary (other than a Foreign Subsidiary or an Unrestricted Subsidiary) after the Issue Date, then such Subsidiary shall execute a Subsidiary Guarantee, in the form of the Supplemental Indenture attached hereto as Exhibit E, and the Form of Notation on Senior Subordinated Note, attached hereto as Exhibit F, and deliver an opinion of counsel as to the validity of such Subsidiary Guarantee, in accordance with the terms of this Indenture. The Subsidiary Guarantee of each Guarantor will be subordinated to the prior payment in full of all Senior Debt of such Guarantor, which would include the guarantees of amounts borrowed under the Senior Credit Facilities. The obligations of each Guarantor under its Subsidiary Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person (except the Company or another Guarantor) unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes and this Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; (iii) the Company (A) would be permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test 56 set forth in Section 4.09 or (B) would have a pro forma Fixed Charge Coverage Ratio that is greater than the actual Fixed Charge Coverage Ratio for the same four-quarter period without giving pro forma effect to such transaction. Notwithstanding the foregoing paragraph, (i) any Guarantor may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) any Guarantor may merge with an Affiliate that has no significant assets or liabilities and was incorporated solely for the purpose of reincorporating such Guarantor in another State of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of Section 4.10. Section 4.14. Corporate Existence. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. Section 4.15. Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"). Such notice, which shall govern the terms of the Change of Control offer, shall state: (i) that the Change of Control Offer is being made pursuant to 57 this Section 4.15 and that all Notes tendered will be accepted for payment; (ii) the purchase price and the purchase date; (iii) that any Note not tendered will continue to accrue interest; (iv) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (v) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (vii) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. Prior to mailing a Change of Control Offer, but in any event within 90 days following a Change of Control, the Company shall either repay all outstanding Senior Debt or offer to repay all Senior Debt and terminate all commitments thereunder of each lender who has accepted such offer or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this Section 4.15. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Section 4.16. No Senior Subordinated Debt. The Company shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Notes. No Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate 58 or junior in right of payment to any Senior Debt of a Guarantor and senior in any respect in right of payment to any of the Subsidiary Guarantees. Section 4.17. Payments for Consent. Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets. The Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made, after giving pro forma effect to such transaction as if such transaction had occurred at the beginning of the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such transaction either (A) would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 or (B) would have a pro forma Fixed Charge Coverage Ratio that is greater than the actual Fixed Charge Coverage Ratio for the same four-quarter period without giving pro forma effect to such transaction. Notwithstanding clause (iv) in the immediately foregoing paragraph, (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate that has no significant assets or liabilities and was incorporated solely for the purpose of reincorporating the Company in 59 another State of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby. Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Company defaults in the payment when due of interest on , or Liquidated Damages, if any, with respect to, the Notes and such default continues for a period of 30 days (whether or not prohibited by the subordination provisions of this Indenture); (b) the Company defaults in the payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of this Indenture); (c) the Company fails to comply with any of the provisions of Section 4.10, 4.15, or 5.01 hereof; (d) the Company fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture or the Notes for 60 days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, together with the principal 60 amount of any other such Indebtedness, the maturity of which has been so accelerated, aggregates $10.0 million or more; (f) the Company or any of its Restricted Subsidiaries is subject to a final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (g) the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days; or (i) Except as permitted herein, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. 61 Section 6.02. Acceleration. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, however, that so long as any Designated Senior Debt is outstanding, such declaration shall not become effective until the earlier of (i) the day which is five Business Days after receipt by the Representatives of Designated Senior Debt of such notice of acceleration or (ii) the date of acceleration of any Designated Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Restricted Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce this Indenture or the Notes except as provided in this Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of this Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to May 1, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to May 1, 2002, then the premium specified below shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes during the twelve-month period ending on May 1 of the years indicated below: Year Percentage ---- ---------- 1997 . . . . . . . . . . . . . . . . . 115.562% 1998 . . . . . . . . . . . . . . . . . 113.833% 1999 . . . . . . . . . . . . . . . . . 112.104% 2000 . . . . . . . . . . . . . . . . . 110.375% 2001 . . . . . . . . . . . . . . . . . 108.646% 2002 . . . . . . . . . . . . . . . . . 106.917% Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. 62 Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount at maturity of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. 63 Section 6.07. Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09. Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: 64 First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith or negligence on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of 65 this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in such document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. 66 (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (h) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture. (i) Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in 67 the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06. Reports by Trustee to Holders of the Notes. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. Section 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee or any predecessor Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Trustee shall have a lien prior to the Notes as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 7.07, except with respect to funds held in trust for the benefit of the Holders of particular Notes. 68 The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. Section 7.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent 69 jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. 70 Section 8.02. Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Sections 2.06, 2.07, 2.10 and 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. Section 8.03. Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 and Article 5 hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. 71 Section 8.04. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Liquidated Damages, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article 8 concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an opinion of counsel to the effect that on the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, 72 insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 8.06. Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, 73 shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Notes. Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to provide for the assumption of the Company's obligations to the Holders of the Notes in the case of a merger or consolidation pursuant to Article 5 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; or (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be 74 obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02. With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15 hereof) and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes). Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided, that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 180 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent 75 of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 4.10 and 4.15 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or interest on the Notes; or (g) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof). (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. Section 9.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 9.04. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. Section 9.05. Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in 76 exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 9.06. Trustee to Sign Amendments, etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 SUBORDINATION Section 10.01. Agreement to Subordinate. The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. Section 10.02. Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of Senior Debt shall be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt, whether or not an allowable claim in any such proceeding) before the Holders of Notes will be entitled to receive any payment with respect to the Notes, and until all Obligations with respect to Senior Debt are paid in full, any distribution to which the Holders of Notes would be entitled shall be made to the holders of Senior Debt (except, in each case, that Holders of Notes may receive Permitted Junior Securities and payments made from the trust described under Article 8). Section 10.03. Default on Designated Senior Debt. The Company may not make any payment or distribution to the Trustee or any Holder in respect of Obligations with respect to the Notes and may not acquire from the Trustee or any Holder any Notes for cash or property (other than (i) securities that are subordinated to at least the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange 77 for Senior Indebtedness and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof) until all principal and other Obligations with respect to the Senior Indebtedness have been paid in full if: (i) a default in the payment of any principal or other Obligations with respect to Designated Senior Indebtedness occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Designated Senior Indebtedness; or (ii) a default, other than a payment default, on Designated Senior Indebtedness occurs and is continuing that then permits holders of the Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Representative with respect to such Designated Senior Debt. If the Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (i) at least 365 days shall have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest on the Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived or cured for a period of not less than 180 days. The Company may and shall resume payments on and distributions in respect of the Notes and may acquire them upon the earlier of: (1) the date upon which the default is cured or waived, or (2) in the case of a default referred to in Section 10.03(ii) hereof, 179 days pass after notice is received if the maturity of such Designated Senior Indebtedness has not been accelerated, if this Article otherwise permits the payment, distribution or acquisition at the time of such payment or acquisition. Section 10.04. Acceleration of Securities. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of the acceleration. Section 10.05. When Distribution Must Be Paid Over. In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Article 10 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Debt may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt remaining unpaid to the extent 78 necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or negligence of the Trustee. Section 10.06. Notice by Company. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article 10, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt as provided in this Article 10. The Trustee shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Indebtedness (or a trustee or agent on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee or agent on behalf of any such holder). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the extent to which such person is entitled to participate in such evidence is not furnish, the Trustee may defer any payment which it may be required to make for the benefit of such person pursuant to the terms of this Indenture pending judicial determination as to the rights of such person to receive such payment. Section 10.07. Subrogation. After all Senior Debt is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Debt. A distribution made under this Article 10 to holders of Senior Debt that otherwise would have been made to Holders of Notes is not, as between the Company and Holders, a payment by the Company on the Notes. Section 10.08. Relative Rights. This Article 10 defines the relative rights of Holders of Notes and holders of Senior Debt. Nothing in this Indenture shall: 79 (1) impair, as between the Company and Holders of Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (2) affect the relative rights of Holders of Notes and creditors of the Company other than their rights in relation to holders of Senior Debt; or (3) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Notes. If the Company fails because of this Article 10 to pay principal of or interest on a Note on the due date, the failure is still a Default or Event of Default. Section 10.09. Subordination May Not Be Impaired by Company. No right of any holder of Senior Debt to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. Section 10.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. Section 10.11. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least three Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article 10. Only the Company or a Representative may give the notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. 80 The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 10.12. Authorization to Effect Subordination. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the credit agents are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. Section 10.13. Amendments. The provisions of this Article 10 shall not be amended or modified without the written consent of the holders of at least 75% in aggregate principal amount of the Notes then outstanding if such amendment would adversely affect the rights of Holders of Notes. ARTICLE 11 MISCELLANEOUS Section 11.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control. Section 11.02. Notices. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: L-3 Communications Corporation 600 Third Avenue, 34th Floor, New York, New York 10016 Attention: Vice President-Finance (Fax: 212-805-5470) With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: Andrew R. Keller (Fax: 212-455-2502) 81 If to the Trustee: The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration (Fax: 212-815-5915) The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. Section 11.03. Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 11.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. 82 Section 11.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 11.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders. No director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes and this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. Section 11.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Section 11.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. 83 Section 11.10. Successors. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 11.11. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.12. Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 11.13. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] 84 SIGNATURES Dated as of April 30, 1997 L-3 Communications Corporation By:____________________________ Name: Title: The Bank of New York By: /s/ Marie E. Trimboli Name: Marie E. Trimboli Title: Assistant Treasurer 85 Dated as of April 30, 1997 L-3 Communications Corporation By: /s/ M.T. Strianese Name: Michael T. Strianese Title: Vice President and Controller The Bank of New York By:______________________________ Name: Title: 86 EXHIBIT A-1 (Face of Note) CUSIP/CINS ____________ 10 3/8% Senior Subordinated Notes due 2007 No. ___ $__________ L-3 COMMUNICATIONS CORPORATION promises to pay to __________________________________________________ or registered assigns, the principal sum of ________________________________________________ Dollars on May 1, 2007. Interest Payment Dates: May 1, and November 1 Record Dates: April 15, and October 15 Dated: _______________, 199__ L-3 Communications Corporation By:______________________________ Name: Title: By:______________________________ Name: Title: This is one of the [Global] Notes referred to in the (SEAL) within-mentioned Indenture: Dated: The Bank of New York, as Trustee By:__________________________________ 87 (Back of Note) 10 3/8% Senior Subordinated Notes due 2007 [THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.] [THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. - -------------------- This paragraph should be included only if the Note is issued in global form. This paragraph should be included only if applicable pursuant to the terms of the Indenture. 88 1. Interest. L-3 Communications Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 10 3/8% per annum from April 30, 1997 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages, if any, semi-annually on May 1 and November 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"), with the same force and effect as if made on the date for such payment. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be November 1, 1997. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate then in effect to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the April 15 or October 15 next (whether or not a Business Day) preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within The City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent if such Holders shall be registered Holders of at least $250,000 in principal amount of the Notes. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Indenture. The Company issued the Notes under an Indenture dated as of April 30, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such 89 terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $225.0 million in aggregate principal amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. Optional Redemption. (a) Except as set forth in clause (b) of this paragraph 5, the Notes shall not be redeemable at the Company's option prior to May 1, 2002. Thereafter, the Notes shall be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on May 1 of the years indicated below: Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . 105.188% 2003 . . . . . . . . . . . . . . . . . 103.458% 2004 . . . . . . . . . . . . . . . . 101.729% 2005 and thereafter . . . . . . . . . 100.000% (b) Notwithstanding the foregoing, during the first 36 months after the date of the Indenture, the Company may on any one or more occasions redeem up to an aggregate of 35% of the Notes originally issued at a redemption price of 109.375% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Company or the net cash proceeds of one or more Equity Offerings by Holdings that are contributed to the Company as common equity capital; provided that at least 65% of the Notes originally issued remain outstanding immediately after the occurrence of each such redemption; and provided, further, that any such redemption must occur within 120 days of the date of the closing of such Equity Offering. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% of aggregate principle amount thereof plus accrued and unpaid interest, if any, to the date of purchase (in either case, the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. 90 (b) If the Company or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% thereof on the date fixed for the closing of such offer or 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such 91 Holder, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. Defaults and Remedies. An "Event of Default" occurs if: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the covenants contained in sections 4.10, 4.15 or 5.10 of the Indenture; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates $10.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, however, that so long as any Designated Senior Debt is outstanding, such declaration shall not become effective until the earlier of (i) the day which is five Business Days after receipt by the Representatives of Designated Senior Debt of such notice of acceleration or (ii) the date of acceleration of any Designated Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Restricted Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs 92 prior to May 1, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to May 1, 2002, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. 13. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights of Holders of Transfer Restricted Securities. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Transferred Restricted Securities shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of April 30, 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 19. The internal law of the State of New York shall govern and be used to construe this Note, without regard to the principles of conflicts of laws. 93 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: L-3 Communications Corporation 600 Third Avenue, 34th Floor, New York, New York 10016 Attention: Vice President-Finance (Fax: 212-805-5470) 94 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ---------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ____________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. - ---------------------------------------------------------------------------- Date: _____________________________ Your Signature:____________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. 95 Option of Holder to Elect Purchase If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: /_/ Section 4.10 /_/ Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $___________ Date:____________________ Your Signature:________________________________ (Sign exactly as your name appears on the Note) Tax Identification No.: _______________________ Signature Guarantee. 96 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made: Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Principal Principal following such officer of Date of Amount of this Amount of this decrease (or Trustee or Note Exchange Global Note Global Note increase) Custodian - -------- --------------- --------------- --------------- -------------- - -------------------- This should be included only if the Note is issued in global form. 97 EXHIBIT A-2 (Face of Regulation S Temporary Global Note) CUSIP/CINS __________ 10 3/8% Senior Subordinated Notes due 2007 No. ___ $__________ L-3 Communications Corporation promises to pay to ____________________________________________________ or registered assigns, the principal sum of ___________________________________________________ Dollars on ___________, 2007. Interest Payment Dates: May 1, and November 1 Record Dates: April 15, and October 15 Dated: _______________, 199__ L-3 Communications Corporation By:______________________________ Name: Title: By:______________________________ Name: Title: This is one of the [Global] Notes referred to in the (SEAL) within-mentioned Indenture: Dated: The Bank of New York, as Trustee By:__________________________________ 98 (Back of Regulation S Temporary Global Note) 10 3/8% Senior Subordinated Notes due 2007 [THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.] [THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.] [THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.] - -------------------- This paragraph should be included only if applicable pursuant to the terms of the Indenture. This paragraph should be included only if the Note is issued in global form. This paragraph should be included only if applicable pursuant to the terms of the Indenture. 99 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. L-3 Communications Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 10 3/8% per annum from April 30, 1997 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages, if any, semi-annually on May 1 and November 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"), with the same force and effect as if made on the date for such payment. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be November 1, 1997. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate then in effect to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Senior Subordinated Notes under the Indenture. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the April 15 or October 15 (whether or not a Business Day) next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, interest and Liquidated Damages at the office or agency of the Company maintained for such purpose within The City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent if such Holders shall be registered Holders of at least $25,000 in principal amount of the Notes. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 100 3. Paying Agent and Registrar. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Indenture. The Company issued the Notes under an Indenture dated as of April 30, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $225.0 million in aggregate principal amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. Optional Redemption. The Notes shall not be redeemable at the Company's option prior to May 1, 2002. Thereafter, the Notes shall be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on May 1 of the years indicated below: Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . 105.188% 2003 . . . . . . . . . . . . . . . . . 103.458% 2004 . . . . . . . . . . . . . . . . 101.729% 2005 and thereafter . . . . . . . . . 100.000% Notwithstanding the foregoing, during the first 36 months after the date of the Indenture, the Company may on any one or more occasions redeem up to an aggregate of 35% of the Notes originally issued at a redemption price of 109.375% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings by the Company or the net cash proceeds of one or more Equity Offerings by Holdings that are contributed to the Company as common equity capital; provided that at least 65% of the Notes originally issued remain outstanding immediately after the occurrence of each such redemption; and provided, further, that any such redemption must occur within 120 days of the date of the closing of such Equity Offering. 6. Mandatory Redemption. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to make an offer (a "Change of Control Offer") to repurchase all or any part 101 (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase price equal to 101% thereof on the date of purchase or 101% of the aggregate principal amount at maturity thereof plus accrued and unpaid interest, if any, to the date of purchase (in either case, the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Subsidiary consummates any Asset Sales, within five Business Days of each date on which the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% thereof on the date fixed for the closing of such offer or 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. 8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note. 102 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. Defaults and Remedies. An "Event of Default" occurs if: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the covenants contained in sections 4.10, 4.15 or 5.10 of the Indenture; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates $10.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, however, that so long as any Designated Senior Debt is outstanding, such declaration shall not become effective until the earlier of (i) the day which is five Business Days after receipt by the Representatives of Designated Senior Debt of such notice of acceleration or (ii) the date of acceleration of any Designated Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Restricted Subsidiary, all outstanding 103 Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to May 1, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to May 1, 2002, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. 13. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights of Holders of Transfer Restricted Securities. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Transferred Restricted Securities shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of April 30, 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 104 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 19. The internal law of the State of New York shall govern and be used to construe this Note, without regard to the principles of conflicts of laws. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: L-3 Communications Corporation 600 Third Avenue, 34th Floor, New York, New York 10016 Attention: Vice President-Finance (Fax: 212-805-5470) 105 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ---------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. - ---------------------------------------------------------------------------- Your Signature:____________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. 106 Option of Holder to Elect Purchase If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: /_/ Section 4.10 /_/ Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $___________ Date:____________________ Your Signature:________________________________ (Sign exactly as your name appears on the Note) Tax Identification No.: _______________________ Signature Guarantee. 107 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary Global Note, have been made: Principal Amount of Amount of Amount of this Signature of decrease in increase in Global Note authorized Principal Principal following such officer of Date of Amount of this Amount of this decrease (or Trustee or Note Exchange Global Note Global Note increase) Custodian - -------- --------------- --------------- --------------- -------------- - -------------------- This should be included only if the Note is issued in global form. 108 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER L-3 Communications Corporation 600 Third Avenue, 34th Floor, New York, New York 10016 [Registrar address block] Re: 10 3/8% Senior Subordinated Notes, Due 2007. Reference is hereby made to the Indenture, dated as of April 30, 1997 (the "Indenture"), between L-3 Communications Corporation, as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. /_/ Check if Transferee will take delivery of Book-Entry Interests in the 144A Global Note or Definitive Notes Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Book-Entry Interests or Definitive Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Book-Entry Interests or Definitive Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. /_/ Check if Transferee will take delivery of Book-Entry Interests in the Temporary Regulation S Global Note, the Regulation S Global Note or Definitive Notes pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any 109 Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. /_/ Check and complete if Transferee will take delivery of Book-Entry Interests in the IAI Global Note or Definitive Notes pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to Book-Entry Interests in Restricted Global Notes and Definitive Notes bearing the Private Placement Legend and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any State of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) /_/ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) /_/ such Transfer is being effected to the Company or a subsidiary thereof, or (c) /_/ such Transfer is being effected pursuant to an effective registration statement under the Securities Act; or (d) /_/ such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that the Transfer complies with the transfer restrictions applicable to Book-Entry Interests in a Restricted Global Note or Definitive Notes bearing the Private Placement Legend and the requirements of the exemption claimed, which certification is supported by (x) if such Transfer is in respect of a principal amount of Notes at the time of Transfer of $250,000 or more, a certificate executed by the Transferee in the form of Exhibit D to the Indenture, or (y) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that (1) such Transfer is in compliance with the Securities Act and (2) such Transfer complies with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the 110 transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act. 4. /_/ Check if Transferee will take delivery of Book-Entry Interests in the Unrestricted Global Note or in Definitive Notes that do not bear the Private Placement Legend. (a) /_/ Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interests or Definitive Notes will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Definitive Notes bearing the Private Placement Legend and in the Indenture. (b) /_/ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interests or Definitive Notes will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Definitive Notes bearing the Private Placement Legend and in the Indenture. (c) /_/ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interests or Definitive Notes will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Definitive Notes bearing the Private Placement Legend and in the Indenture. 111 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ------------------------------------ [Insert Name of Transferor] By: _________________________ Name: Title: Dated: ______________, ____ 112 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) /_/ Book-Entry Interests in the: (i) /_/ 144A Global Note (CUSIP ________), or (ii) /_/ Regulation S Global Note (CUSIP ________), or (iii) /_/ IAI Global Note (CUSIP ________); or (b) /_/ Restricted Definitive Notes. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) /_/ Book-Entry Interests in the: (i) /_/ 144A Global Note (CUSIP ________), or (ii) /_/ Regulation S Global Note (CUSIP ________), or (iii) /_/ IAI Global Note (CUSIP ________); or (iv) /_/ Unrestricted Global Note (CUSIP ________); or (b) /_/ Restricted Definitive Notes; or (c) /_/ Definitive Notes that do not bear the Private Placement Legend, in accordance with the terms of the Indenture. 113 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE L-3 Communications Corporation 600 Third Avenue, 34th Floor, New York, New York 10016 Attention: Vice President-Finance (Fax: 212-805-5470) Re:10 3/8% Senior Subordinated Notes, Due 2007 (CUSIP ________) Reference is hereby made to the Indenture, dated as of April __, 1997 (the "Indenture"), between L-3 Communications Corporation, as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Holder") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Holder hereby certifies that: 1. Exchange of Restricted Definitive Notes or Restricted Book-Entry Interests for Definitive Notes that do not bear the Private Placement Legend or Unrestricted Book-Entry Interests (a) /_/ Check if Exchange is from Restricted Book-Entry Interest to Unrestricted Book-Entry Interest. In connection with the Exchange of the Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry Interests in an equal principal amount, the Holder hereby certifies (i) the Unrestricted Book-Entry Interests are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) /_/ Check if Exchange is from Restricted Book-Entry Interest to Definitive Notes that do not bear the Private Placement Legend. In connection with the Exchange of the Holder's Restricted Book-Entry Interests for Definitive Notes that do not bear the Private Placement Legend, the Holder hereby certifies (i) the Definitive Notes are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Notes are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 114 (c) /_/ Check if Exchange is from Restricted Definitive Notes to Unrestricted Book-Entry Interests. In connection with the Holder's Exchange of Restricted Definitive Notes for Unrestricted Book-Entry Interests, (i) the Unrestricted Book-Entry Interests are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) /_/ Check if Exchange is from Restricted Definitive Notes to Definitive Notes that do not bear the Private Placement Legend. In connection with the Holder's Exchange of a Restricted Definitive Note for Definitive Notes that do not bear the Private Placement Legend, the Holder hereby certifies (i) the Definitive Notes that do not bear the Private Placement Legend are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Notes are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. Exchange of Restricted Definitive Notes or Restricted Book-Entry Interests for Restricted Definitive Notes or Restricted Book-Entry Interests (a) /_/ Check if Exchange is from Restricted Book-Entry Interests to Restricted Definitive Note. In connection with the Exchange of the Holder's Restricted Book-Entry Interest for Restricted Definitive Notes with an equal principal amount, (i) the Restricted Definitive Notes are being acquired for the Holder's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Notes issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Notes and in the Indenture and the Securities Act. (b) /_/ Check if Exchange is from Restricted Definitive Notes to Restricted Book-Entry Interests. In connection with the Exchange of the Holder's Restricted Definitive Note for Restricted Book-Entry Interests in the [CHECK ONE] /_/ 144A Global Note, /_/ Regulation S Global Note, /_/ IAI Global Note with an equal principal amount, (i) the Definitive Notes are being acquired for the Holder's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Definitive Note and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Book-Entry Interests issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed 115 on the relevant Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ------------------------------------ [Insert Name of Holder] By: _________________________ Name: Title: Dated: _____________, ______ 116 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR L-3 Communications Corporation 600 Third Avenue, 34th Floor, New York, New York 10016 Attention: Vice President-Finance (Fax: 212-805-5470) Re: 10 3/8% Senior Subordinated Notes, Due 2007 Reference is hereby made to the Indenture, dated as of April 30, 1997 (the "Indenture"), between L-3 Communications Corporation, as issuer (the "Company"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount at maturity of: (a) /_/ Book-Entry Interests, or (b) /_/ Definitive Notes, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Notes or Book-Entry Interests from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 117 3. We understand that, on any proposed resale of the Notes or Book-Entry Interests, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Notes or Book-Entry Interests therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or Book-Entry Interests purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. ------------------------------------ [Insert Name of Accredited Investor] By: _________________________ Name: Title: Dated: _____________, ______ 118 EXHIBIT E Form of Supplemental Indenture to Be Delivered by Guaranteeing Subsidiary Supplemental Indenture (this "Supplemental Indenture"), dated as of ________________, between __________________ (the "Guaranteeing Subsidiary"), a subsidiary of L-3 Communications Corporation (or its permitted successor), a Delaware corporation (the "Company"), and The Bank of New York, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of April 30, 1997 providing for the issuance of an aggregate principal amount of up to $225,000,000 of 10 3/8% Senior Notes due 2007 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Subsidiary Guarantee"); and WHEREAS, pursuant to Section 4.13 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees as follows: (a) The Guaranteeing Subsidiary, jointly and severally with all other Guaranteeing Subsidiaries, if any, unconditionally guarantees to each Holder of a Senior Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, regardless of the validity and enforceability of the Indenture, the Notes or the Obligations of the Company under the Indenture or the Notes, that: (i) the principal of, premium and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium and interest on the Notes, to the extent lawful, and all other Obligations of the Company to the Holders or the Trustee thereunder or under the Indenture will be promptly paid in full, all in accordance with the terms thereof; and 119 (ii) in case of any extension of time for payment or renewal of any Notes or any of such other Obligations, that the same will be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. (b) Notwithstanding the foregoing, in the event that this Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Guaranteeing Subsidiary under this Supplemental Indenture and its Subsidiary Guarantee shall be reduced to the maximum amount permissible under such fraudulent conveyance or similar law. 3. Execution and Delivery of Subsidiary Guarantees. (a) To evidence its Subsidiary Guarantee set forth in this Supplemental Indenture, the Guaranteeing Subsidiary hereby agrees that a notation of such Subsidiary Guarantee substantially in the form of Exhibit F to the Indenture shall be endorsed by an officer of such Guaranteeing Subsidiary on each Senior Note authenticated and delivered by the Trustee after the date hereof. (b) Notwithstanding the foregoing, the Guaranteeing Subsidiary hereby agrees that its Subsidiary Guarantee set forth herein shall remain in full force and effect notwithstanding any failure to endorse on each Senior Note a notation of such Subsidiary Guarantee. (c) If an Officer whose signature is on this Supplemental Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Senior Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. (d) The delivery of any Senior Note by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of the Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of the Guaranteeing Subsidiary. (e) The Guaranteeing Subsidiary hereby agrees that its obligations hereunder shall be unconditional, regardless of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (f) The Guaranteeing Subsidiary hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that 120 its Subsidiary Guarantee made pursuant to this Supplemental Indenture will not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (g) If any Holder or the Trustee is required by any court or otherwise to return to the Company or the Guaranteeing Subsidiary, or any Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guaranteeing Subsidiary, any amount paid by either to the Trustee or such Holder, the Subsidiary Guarantee made pursuant to this Supplemental Indenture, to the extent theretofore discharged, shall be reinstated in full force and effect. (h) The Guaranteeing Subsidiary agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The Guaranteeing Subsidiary further agrees that, as between the Guaranteeing Subsidiary, on the one hand, and the Holders and the Trustee, on the other hand: (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of the Subsidiary Guarantee made pursuant to this Supplemental Indenture, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby; and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guaranteeing Subsidiary for the purpose of the Subsidiary Guarantee made pursuant to this Supplemental Indenture. (i) The Guaranteeing Subsidiary shall have the right to seek contribution from any other non-paying Guaranteeing Subsidiary so long as the exercise of such right does not impair the rights of the Holders or the Trustee under the Subsidiary Guarantee made pursuant to this Supplemental Indenture. 4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms. (a) Except as set forth in Articles 4 and 5 of the Indenture, nothing contained in the Indenture, this Supplemental Indenture or in the Notes shall prevent any consolidation or merger of the Guaranteeing Subsidiary with or into the Company or any other Guaranteeing Subsidiary or shall prevent any transfer, sale or conveyance of the property of the Guaranteeing Subsidiary as an entirety or substantially as an entirety, to the Company or any other Guaranteeing Subsidiary. (b) Except as set forth in Article 4 of the Indenture, nothing contained in the Indenture, this Supplemental Indenture or in the Notes shall prevent any consolidation or merger of the 121 Guaranteeing Subsidiary with or into a corporation or corporations other than the Company or any other Guaranteeing Subsidiary (in each case, whether or not affiliated with the Guaranteeing Subsidiary), or successive consolidations or mergers in which a Guaranteeing Subsidiary or its successor or successors shall be a party or parties, or shall prevent any sale or conveyance of the property of a Guaranteeing Subsidiary as an entirety or substantially as an entirety, to a corporation other than the Company or any other Guaranteeing Subsidiary (in each case, whether or not affiliated with the Guaranteeing Subsidiary) authorized to acquire and operate the same; provided, however, that the Guaranteeing Subsidiary hereby covenants and agrees that (i) subject to the Indenture, upon any such consolidation, merger, sale or conveyance, the due and punctual performance and observance of all of the covenants and conditions of the Indenture and this Supplemental Indenture to be performed by such Guaranteeing Subsidiary, shall be expressly assumed (in the event that the Guaranteeing Subsidiary is not the surviving corporation in the merger), by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the corporation formed by such consolidation, or into which the Guaranteeing Subsidiary shall have been merged, or by the corporation which shall have acquired such property and (ii) immediately after giving effect to such consolidation, merger, sale or conveyance no Default or Event of Default exists. (c) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee made pursuant to this Supplemental Indenture and the due and punctual performance of all of the covenants and conditions of the Indenture and this Supplemental Indenture to be performed by the Guaranteeing Subsidiary, such successor corporation shall succeed to and be substituted for the Guaranteeing Subsidiary with the same effect as if it had been named herein as the Guaranteeing Subsidiary; provided that, solely for purposes of computing Consolidated Net Income for purposes of clause (b) of the first paragraph of Section 4.07 in the Indenture, the Consolidated Net Income of any Person other than Central Tractor Farm & Country, Inc. and its Restricted Subsidiaries shall only be included for periods subsequent to the effective time of such merger, consolidation, combination or transfer of assets. Such successor corporation thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon the Notes issuable under the Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture and this Supplemental Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture and this Supplemental Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. 122 5. Releases. (a) Concurrently with any sale of assets (including, if applicable, all of the Capital Stock of the Guaranteeing Subsidiary), all Liens, if any, in favor of the Trustee in the assets sold thereby shall be released; provided that in the event of an Asset Sale, the Net Proceeds from such sale or other disposition are treated in accordance with the provisions of Section 4.10 of the Indenture. If the assets sold in such sale or other disposition include all or substantially all of the assets of the Guaranteeing Subsidiary or all of the Capital Stock of the Guaranteeing Subsidiary, then the Guaranteeing Subsidiary (in the event of a sale or other disposition of all of the Capital Stock of such Guaranteeing Subsidiary) or the Person acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guaranteeing Subsidiary) shall be released from and relieved of its obligations under this Supplemental Indenture and its Subsidiary Guarantee made pursuant hereto; provided that in the event of an Asset Sale, the Net Proceeds from such sale or other disposition are treated in accordance with the provisions of Section 4.10 of the Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate to the effect that such sale or other disposition was made by the Company or the Guaranteeing Subsidiary, as the case may be, in accordance with the provisions of the Indenture and this Supplemental Indenture, including without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of the Guaranteeing Subsidiary from its obligations under this Supplemental Indenture and its Subsidiary Guarantee made pursuant hereto. If the Guaranteeing Subsidiary is not released from its obligations under its Subsidiary Guarantee, it shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of such Guaranteeing Subsidiary under the Indenture as provided in this Supplemental Indenture. (b) Upon the designation of a Guaranteeing Subsidiary as an Unrestricted Subsidiary in accordance with the terms of the Supplemental Indenture, such Guaranteeing Subsidiary shall be released and relieved of its obligations under its Subsidiary Guarantee and this Supplemental Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such designation of such Guaranteeing Subsidiary as an Unrestricted Subsidiary was made by the Company in accordance with the provisions of this Supplemental Indenture, also including without limitation Section 4.07 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of such Guaranteeing Subsidiary from its obligations under its Subsidiary Guarantee. Any Guaranteeing Subsidiary not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any 123 Guaranteeing Subsidiary under the Indenture as provided in Article 10. 6. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Senior Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 8. Counterparts The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. 124 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: ____________ ___, ____ [GUARANTEEING SUBSIDIARY] By: _______________________________ Name: Title: Dated: ____________ ___, ____ The Bank of New York as Trustee By: _______________________________ Name: Title: 125 EXHIBIT F Form of Notation on Senior Subordinated Note Relating to Subsidiary Guarantee Each Guaranteeing Subsidiary (as defined in the Supplemental Indenture (the "Supplemental Indenture") among _______________ and _________________, (i) has jointly and severally unconditionally guaranteed (a) the due and punctual payment of the principal of, premium and interest on the Notes, whether at maturity or an interest payment date, by acceleration, call for redemption or otherwise, (b) the due and punctual payment of interest on the overdue principal and premium of, and interest on the Notes, and (c) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the same will be promptly paid in full when due in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise and (ii) has agreed to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee. Notwithstanding the foregoing, in the event that the Subsidiary Guarantee of any Guaranteeing Subsidiary would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of such Guaranteeing Subsidiary under its Subsidiary Guarantee shall be reduced to the maximum amount permissible under such fraudulent conveyance or similar law. No past, present or future director, officer, employee, agent, incorporator, stockholder or agent of any Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantee, Indenture, any supplemental indenture delivered pursuant to the Indenture by such Guaranteeing Subsidiary or any Subsidiary Guarantees, or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Senior Note waives and releases all such liability. This Subsidiary Guarantee shall be binding upon each Guaranteeing Subsidiary and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Senior Note upon which this Subsidiary Guarantee is noted have been executed by the Trustee under 126 the Indenture by the manual signature of one of its authorized officers. Capitalized terms used herein have the meaning assigned to them in the Indenture. [GUARANTEEING SUBSIDIARY] By:_______________________ Name: Title: 127 EX-10.5 5 EMPLOYMENT AGREEMENT EXHIBIT 10.5 EMPLOYMENT AGREEMENT AGREEMENT, made April 30, 1997 by and between L-3 Communications Holdings, Inc., a Delaware corporation (the "Company") and Frank C. Lanza (the "Executive"). RECITALS In order to induce Executive to serve as the Chairman and Chief Executive Officer of the Company, the Company desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement. Executive is willing to accept such employment and perform services for the Company, on the terms and conditions hereinafter set forth. It is therefore hereby agreed by and between the parties as follows: 1. Employment. 1.1 Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term hereof as its Chairman and Chief Executive Officer. In his capacity as the Chairman and Chief Executive Officer of the Company, Executive shall report to the Board of Directors of the Company (the "Board") and shall have the customary powers, responsibilities and authorities of chairmen and chief executive officers of corporations of the size, type and nature of the Company, as it exists from time to time, and as are assigned by the Board. 1.2 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the Chairman and Chief Executive Officer of the Company commencing as of the date hereof (the "Commencement Date") and agrees to devote his full business time and efforts to the 1 performance of services, duties and responsibilities in connection therewith, subject at all times to review and control of the Board. In addition, during the Initial Term and any Renewal Term, (i) the Company agrees to nominate Executive for election to the Board and use its best efforts to cause his election to the Board and Executive agrees to serve on the Board of the Company and (ii) during the Term of Employment, Executive also agrees to serve, if elected, as an officer and/or director of any Subsidiary of the Company, without the payment of any additional compensation therefor. Upon the termination of Executive's employment for any reason, Executive shall resign as a member of the Board of the Company or any Subsidiary of the Company. 1.3 Nothing in this Agreement shall preclude Executive from engaging in charitable work and community affairs, from managing any investment made by him with respect to which Executive is not substantially involved with the management or operation of the entity in which Executive has invested (provided that no such investment in publicly traded equity securities or other property may exceed 5% of the equity of any entity, without the prior approval of the Board) or from serving, subject to the prior approval of the Board, as a member of boards of directors or as a trustee of any other corporation, association or entity, to the extent that any of the above activities do not materially interfere with the performance of his duties hereunder. For purposes of the preceding sentence, any approval by the Board required therein shall not be unreasonably withheld. 2. Term of Employment. Executive's term of employment under this Agreement (the "Term of Employment") shall commence on the Commencement Date and, subject to the terms hereof, shall terminate on the earlier of (i) the fifth anniversary of the Commencement Date (the "Initial Term") or (ii) termination of Executive's employment pursuant to this Agreement. Notwithstanding the foregoing, subsequent to the Initial Term, Executive's 2 Term of Employment under this Agreement shall automatically renew annually for one year renewal terms (the "Renewal Term") unless either party shall deliver to the other written notice, at least 90 days prior to the expiration of the Initial Term or any Renewal Term, that the Term of Employment shall not be extended. In such event, the Term of Employment will end at its then scheduled expiration date and shall not be further extended except by written agreement of the Company and Executive. 3. Compensation. 3.1 Salary. During the Initial Term of Executive's employment under the terms of this Agreement, the Company shall pay Executive a base salary ("Base Salary") at an initial rate of $750,000 per annum. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. During the Term of Employment, the Board shall, in good faith, review, at least annually, the Executive's Base Salary in accordance with the Company's customary procedures and practices regarding the salaries of senior executives and may, if determined by the Board to be appropriate, increase Executive's Base Salary following such review. Increases in the rate of salary, once granted, shall not be subject to revocation or decrease thereafter, and "Base Salary" for all purposes herein shall be deemed to be a reference to such higher amount. 4. Employee Benefits. 4.1 Equity and Stock Options. Simultaneously with the execution of this Agreement, the Company and Executive are entering into the Subscription Agreement, the Option Agreement and the Stockholders' Agreement in the forms attached hereto as Exhibits A, B and C, respectively (the "Ancillary Documents"). Executive shall not be eligible to receive any stock option or other equity incentive other than as set forth in the Ancillary Documents. 3 4.2 Employee Benefit Programs, Plans and Practices. The Company shall provide Executive while employed hereunder with coverage under such employee benefits (commensurate with his position in the Company and to the extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company makes available to its senior executives. 4.3 Vacation. Executive shall be entitled to twenty (20) business days paid vacation each calendar year, which shall be taken at such times as are consistent with Executive's responsibilities hereunder. Any vacation days not taken during the calendar year in which they are accrued may be carried over into the next subsequent year. 5. Expenses. Subject to prevailing Company policy or such guidelines as may be established by the Board, the Company will reimburse Executive for all reasonable expenses incurred by Executive in carrying out his duties. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) The Company or Executive may terminate Executive's Term of Employment at any time for any reason by written notice at least thirty (30) days in advance. If Executive's employment is terminated (i) by the Company other than for Cause (as defined in Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii) by Executive for Good Reason (as defined in Section 6.1(b) hereof) prior to the end of the Initial Term or any Renewal Term, the Company shall continue to pay Executive's Base Salary through the end of the Initial Term or the Renewal Term (the "Continuation Period"), as the case may be, with such payments to be made in accordance with the terms of Section 3.1. (the "Severance Payments"). In addition, the Company shall continue to provide Executive during the Continuation Period with life insurance, medical and hospitalization benefits (collectively, the "Continuation Benefits") comparable to those provided to other senior executives; provided, however, 4 that any such coverage shall terminate to the extent that Executive is offered or obtains comparable life insurance, medical or hospitalization benefits coverage from any other employer during the Continuation Period. Notwithstanding the foregoing, if Executive breaches any provision of Section 11 hereof, the remaining balance of the Severance Payments and any Continuation Benefits shall be forfeited. Executive shall be entitled to receive the benefits, if any, provided under the employee benefit programs, plans and practices referred to in Section 4.2, in accordance with their terms. (b) For purposes of this Agreement, "Good Reason" shall mean any of the following (without Executive's express prior written consent): (i) A reduction by the Company in Executive's Base Salary (in which event Severance Payments shall be made based upon Executive's Base Salary in effect prior to any such reduction); or (ii) Any material diminution or material adverse change in Executive's titles, duties or responsibilities, unless due to a promotion or increased responsibility of Executive. (c) Termination by Executive for Good Reason shall be made by delivery to the Company by Executive of written notice, given at least 45 days prior to such termination, which sets forth the conduct believed to constitute Good Reason; provided, however, that the Company shall have the opportunity to cure the Good Reason during the first 30 days of such notice period and if the Good Reason is cured within such 30-day period, Executive's notice of termination shall be deemed withdrawn. If no notice is given within 90 days of the event giving rise to Good Reason, the Good Reason shall be deemed waived. 6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In the event that Executive's employment is terminated (i) by the Company for Cause, as hereinafter defined or (ii) by Executive other than for Good Reason, Disability or death, Executive shall only be entitled to receive (A) any Base Salary accrued but unpaid prior to such termination and (B) any 5 benefits provided under the employee benefit programs, plans and practices referred to in Section 4.2 hereof, in accordance with their terms. After the termination of Executive's employment under this Section 6.2, the obligations of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall thereupon cease and terminate. (b) As used herein, the term "Cause" shall be limited to (i) gross neglect of or willful and continuing refusal by Executive to substantially perform Executive's duties hereunder (other than due to death or Disability, as such term is defined in Section 6.3 hereof), (ii) any breach of the provisions of Section 11 of this Agreement by Executive, (iii) willfully engaging in conduct that is demonstrably injurious to the Company or the Company's subsidiaries or affiliates by Executive or (iv) conviction of, or plea of nolo contendere, by Executive to (a) any felony or (b) a misdemeanor involving moral turpitude. Termination of Executive pursuant to this Section 6.2 shall be made by delivery to Executive of written notice, given at least 30 days prior to such Termination, from the Board specifying the particulars of the conduct by Executive set forth in any of clauses (i) through (iv) above. Termination shall be effected by a majority vote of the Board at a meeting at which Executive shall have had the opportunity (along with counsel) to be heard unless within 30 days after receiving such notice, Executive shall have cured Cause to the reasonable satisfaction of the Board; provided, however, that no cure shall be possible if termination for Cause is made pursuant to this Section 6.2(b)(ii) or (iv). As long as Executive is on the Board, he shall reasonably cooperate to cause a valid Board meeting to occur. 6.3 Disability. In the event of the Disability (as defined below) of Executive during the Term of Employment, the Company may terminate Executive's Term of Employment upon written notice to Executive (or 6 Executive's personal representative, if applicable) effective upon the date of receipt thereof (the "Disability Commencement Date"). The obligation of the Company to make any further payments under this Agreement shall, except for earned but unpaid Base Salary, cease as of the Disability Commencement Date; provided, however, that Executive shall continue to receive payments equal to Executive's Base Salary otherwise payable under this Agreement for a period equal to the lesser of (i) six months after the date of the occurrence of the incapacity causing Executive's Disability and (ii) the number of months otherwise remaining in the Term of Employment, in either case, reduced by the amount of any disability payments otherwise payable to Executive under any insurance program of the Company. The term "Disability," for purposes of this Agreement, shall mean Executive's absence from the full-time performance of Executive's duties pursuant to a reasonable determination made in accordance with the Company's disability plan that Executive is disabled as a result of incapacity due to physical or mental illness that lasts, or is reasonably expected to last, for at least six months. 6.4 Death. In the event of Executive's death during his Term of Employment hereunder or at any time thereafter while payments are still owing to Executive under the terms of this Agreement, all obligations of the Company to make any further payments, other than the obligation to pay any accrued but unpaid Base Salary or remaining payments that were payable to Executive by reason of his termination of employment under Section 6.1 to which Executive was entitled at the time of his death, shall terminate upon Executive's death, and benefits shall become payable under the Company's life and accidental death insurance program in accordance with its terms. Benefits under all other employee benefit programs, plans and practices shall be paid in accordance with their terms. 6.5 No Further Notice or Compensation. Executive understands and agrees that he shall not be entitled to any further notice or compensation 7 upon Termination of Employment under this Agreement, other than amounts specified in this Section 6 and the Ancillary Documents. Executive shall not have any obligation to seek comparable employment following such termination or resignation, nor shall any compensation received from any subsequent employment reduce the Company's obligations hereunder. 6.6 Executive's Duty to Provide Materials. Upon the termination of the Term of Employment for any reason, Executive or his estate shall surrender to the Company all correspondence, letters, files, contracts, mailing lists, customer lists, advertising materials, ledgers, supplies, equipment, checks, and all other materials and records of any kind that are the property of the Company or any of its subsidiaries or affiliates, that may be in Executive's possession or under his control, including all copies of any of the foregoing; provided, however, Executive shall not be required to surrender his personal rolodex, telephone book, appointment book and personal materials acquired by Executive prior to the date hereof. 7. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: with a copy to: Alvin H. Brown, Esq. Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 To Executive: Frank C. Lanza 37 Murray Hill Road Scarsdale, NY 10583 with a copy to: Robert C. Schwenkel Fried, Frank, Harris, Shriver & Jacobson 1 New York Plaza New York, New York 10004 8 Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of sending shall constitute the time at which notice was given. 8. Separability. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. 9. Assignment. This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or, in the case of the Options, by trust for the benefit of Executive's spouse and/or children or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of the Company hereunder. 10. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 11. Nondisclosure of Confidential Information: Non-Competition. (a) While employed by the Company, and at any time thereafter, the Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except (i) while employed 9 by the Company, in the business of and for the benefit of the Company or (ii) when required to do so by applicable law, by a court, by any governmental agency, or by any administrative body or legislative body (including a committee thereof); provided, however, that Executive shall give reasonable notice under the circumstances to the Company that he has been notified that he will be required to so disclose as soon as possible after receipt of such notice in order to permit the Company to take whatever action it reasonably deems necessary to prevent such disclosure and Executive shall cooperate with the Company to the extent that it reasonably requests him to do so. For purposes of this Section 11(a), "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its affiliates or customers, that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof). (b) In consideration of the Company's obligations under this Agreement, Executive agrees that during the period of his employment hereunder and for a period of twelve (12) months thereafter, without the prior written consent of the Board, (A) he will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any entity which is in competition with the business of the Company or its subsidiaries and (B) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or offer employment to any person who is or has been employed by the Company or its subsidiaries at any time during the twelve (12) months immediately preceding such solicitation; provided, however, that if the Executive's employment terminates following the 10 expiration of the Initial Term, this subsection 11(b) shall only be effective during the period, if any, that the Company pays the Executive the Severance Payments. (c) For purposes of this Section 11, an entity shall be deemed to be in competition with the Company if it is principally involved in the purchase, sale or other dealing in any property or the rendering of any service purchased, sold, dealt in or rendered by the Company as a part of the business of the Company within the same geographic area in which the Company effects such sales or dealings or renders such services. Notwithstanding this subsection 11(c) or subsection 11(b), nothing herein shall (i) prohibit Executive from serving as an officer, employee or independent consultant of any business unit or subsidiary which would not otherwise be in competition with the Company or its subsidiaries, but which business unit is a part of, or which subsidiary is controlled by, or under common control with, an entity that would be in competition with the Company or its subsidiaries, so long as Executive does not engage in any activity which is in competition with any business of the Company or its subsidiaries or (ii) be construed so as to preclude Executive from investing in any publicly or privately held company, provided Executive's beneficial ownership of any class of such company's securities does not exceed 5% of the outstanding securities of such class. (d) Executive agrees that this covenant not to compete is reasonable under the circumstances and will not interfere with his ability to earn a living or to otherwise meet his financial obligations. Executive and the Company agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants contained in this Section 11 would 11 irreparably injure the Company. Accordingly, Executive agrees that, in the event the Company determines that Executive has breached the covenants contained in this Section 11, the Company may, in addition to pursuing any other remedies it may have in law or in equity, cease making any payments otherwise required by this Agreement and obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive. 12. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 13. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 13 are in addition to the survivorship provisions of any other section of this Agreement. 14. Dispute Resolution; Legal Fees. Any dispute or controversy arising under or in connection with this Agreement shall be resolved by the court with the appropriate jurisdiction in the State of New York. The prevailing party shall be entitled to be reimbursed for any reasonable legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 12 15. Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of New York, without reference to rules relating to conflicts of law. 16. Effect on Prior Agreements. This Agreement and the Ancillary Documents contain the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding, both written and oral, between the Company, any affiliate of the Company or any predecessor of the Company or affiliate of the Company and Executive. 17. Withholding. The Company shall be entitled to withhold from payment any amount of withholding required by law. 18. Survival. Notwithstanding the expiration of the term of this Agreement, the provisions of Section 11 hereunder shall remain in effect as long as is reasonably necessary to give effect thereto in accordance with the terms hereof. 19. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. L-3 Communications Holdings, Inc. By /s/ Michael T. Strianese Name: Michael T. Strianese Title: Vice President, Finance and Controller /s/ Frank C. Lanza 13 EXHIBIT A COMMON STOCK SUBSCRIPTION AGREEMENT COMMON STOCK SUBSCRIPTION AGREEMENT, dated as of April 30, 1997 between L-3 Communications Holdings, Inc., a Delaware corporation (the "Company"), and Frank C. Lanza (the "Purchaser"). WHEREAS, the Company was recently incorporated for the purpose of consummating the transactions (the "Transactions") contemplated by the Transaction Agreement (as defined below); and WHEREAS, the Purchaser desires to subscribe for and acquire from the Company, and the Company desires to issue and sell to the Purchaser, the number of shares of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), of the Company set forth on Schedule I, as hereinafter set forth. NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions "Active Trading Market" shall mean, as to the Company's common stock, that the Company's common stock is listed or quoted on a national exchange or the NASDAQ National Market. "Affiliate", as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise. "Board of Directors" shall mean the Board of Directors of the Company. "Cause" shall have the meaning given such term in the Employment Agreement. "Change of Control" shall mean an acquisition of all or substantially all of the direct and indirect assets of the Company and its subsidiaries (by merger, consolidation, stock or asset sale or otherwise), unless immediately following any such transaction Lehman and LBHI and Lockheed Martin and their Affiliates own 50% or more of the combined voting power of the then outstanding voting securities entitled to vote generally of the Company or the acquiror of such assets, as the case may be. 2 "Class A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Company. "Class B Common Stock" shall have the meaning set forth in the recitals of this Agreement. "Class C Common Stock" shall mean the Class C Common Stock, par value $.01 per share, of the Company. "Common Stock" shall mean the Class A Common Stock, Class B Common Stock and Class C Common Stock. "Cost of the Common Stock" shall mean as at any date $5.00 per share, as appropriately adjusted for stock splits, subdivisions, combinations and similar transactions; provided that in the event any of the Shares Subject to Forfeiture are forfeited, the Cost of the Common Stock shall be an amount per share equal to $15,000,000 divided by the total number of shares of Class B Common Stock purchased hereunder minus the number of Shares Subject to Forfeiture that have been forfeited. "Disability" shall have the meaning given such term in the Employment Agreement. "Employment Agreement" shall mean the Employment Agreement dated the date hereof between the Purchaser and the Company. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exercise Price" shall have the meaning given such term in the Option Agreement. "Forfeiture Event" shall have the meaning set forth in Section 5.1. "FMV per Share" shall mean (i) if determined upon a Public Offering, the offering price per share of common stock; (ii) if determined upon a Change of Control, the value of the equity of the Company divided by the total number of outstanding shares of common stock of the Company; and (iii) otherwise, the fair market value of the equity of the Company, as determined by the Board of Directors in good faith (based on the opinion of an independent nationally-recognized investment banking firm), divided by the total number of outstanding shares of common stock of the Company; provided, however, that in the case of clause (iii) above if there is an Active Trading Market for the shares of any class of the Common Stock at the time of the determination of the FMV per Share, FMV per Share shall be the average of the closing prices of such Shares for the 20 trading days immediately preceding such determination date. 3 "Initial Public Offering" shall mean the initial Public Offering (other than pursuant to a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Company). "Good Reason" shall have the meaning given such term in the Employment Agreement. "Initial Holders of Class B Common Stock" shall mean the Purchaser and LaPenta. "LaPenta" shall mean Robert V. LaPenta. "LBHI" shall mean Lehman Brothers Holdings Inc., a Delaware corporation and the general partner of Lehman. "Lehman" shall mean Lehman Brothers Capital Partners III, L.P., a Delaware limited partnership. "Lockheed Martin" shall mean Lockheed Martin Corporation, a Maryland corporation. "Options" shall mean the options to purchase Class A Common Stock granted to the Purchaser pursuant to the Nonqualified Stock Option Agreement dated as of the date hereof. "Option Shares" shall mean the shares of Class A Common Stock received by the Purchaser upon the exercise of any Options. "Permitted Transferee" shall mean as to the Purchaser and his Permitted Transferees, his or her spouse or any of his or her lineal descendants or legatees or a testamentary trust for such legatees, or a trust or individual retirement account, the beneficiaries of which or a corporation or partnership the stockholders or partners of which include only the Purchaser, his or her spouse and his or her lineal descendants or a corporation or partnership wholly owned by them. "Person" shall mean an individual, partnership, corporation, business trust, joint stock company, limited liability company, unincorporated association, joint venture or other entity of whatever nature. "Public Offering" shall mean the sale of shares of any class of the Company's common stock to the public pursuant to an effective registration statement (other than a registration statement on Form S-4 or S-8 or any similar or successor form) filed under the Securities Act which results in an Active Trading Market of 25% or more of the outstanding shares of the Company's common stock. "Purchaser's Group" shall have the meaning given such term in Section 4.1. 4 "Put/Call Percentage" shall mean, initially, 75%, and such Put/Call Percentage shall be reduced by 15 percentage points on each anniversary (including the first) of the Closing Date. "Restriction Lapse" shall have the meaning set forth in Section 5.2. "Retirement" shall mean normal retirement under the terms of any tax-qualified retirement plan of the Company, which retirement occurs more than three years after the Closing Date. Any purported retirement by the Purchaser prior to the third anniversary of the Closing Date shall be treated, for purposes of this Agreement, the same as a termination without Good Reason. "Securities Act" shall mean the Securities Act of 1933, as amended. "SEC" shall mean the Securities and Exchange Commission. "Shares Subject to Forfeiture" shall mean 300,000 (as such number may be subsequently adjusted pursuant to Section 6.1) shares of the Class B Common Stock purchased pursuant hereto. "Stockholder" shall mean each of Lockheed Martin, Lehman, LBHI, the Purchaser and Lanza and any other person who becomes party to the Stockholders Agreement pursuant to the terms thereof. "Stockholders Agreement" shall mean the Stockholders Agreement dated as of the date hereof among the Company, Lehman, LBHI, Lockheed Martin, the Purchaser and LaPenta. "Termination of Employment" shall mean a termination of the Purchaser's employment with the Company (regardless of the reason therefor). "Transaction Agreement" shall mean the Transaction Agreement dated as of March 28, 1997, as amended, by and among the Company, Lehman, Lockheed Martin, the Purchaser and LaPenta. "Transactions" shall have the meaning set forth in the recitals of this Agreement. 2. Subscription for and Purchase of Common Stock. 2.1 Purchase of Common Stock. Pursuant to the terms and subject to the conditions set forth in this Agreement, the Purchaser hereby subscribes for and agrees to purchase, and the Company hereby agrees to issue and sell to the Purchaser, on the Closing Date (as defined in Section 2.2), the number of shares of Class B Common Stock at a price per share as set forth on Schedule I, for the aggregate amount (the "Purchase Price") set forth on Schedule I. 5 2.2 The Closing. The closing (the "Closing") of the purchase of the Common Stock shall take place simultaneously with and at the same location as the consummation of the Transactions (the "Closing Date"). The Closing shall occur at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, or at such other place as the parties may mutually agree. At the Closing, the Company will deliver to the Purchaser one or more duly executed stock certificates, registered in the Purchaser's name and representing the shares of Class B Common Stock purchased pursuant to Section 2.1, against payment of the Purchase Price therefor by delivery to the Company of immediately available funds in the amount of the Purchase Price representing payment in full for such Class B Common Stock. 2.3 Conditions to the Obligations of the Parties Hereunder. The obligations of the parties hereto shall be subject to the condition that, substantially simultaneously with the sale to the Purchaser of the Class B Common Stock, the Company shall have received the proceeds of the additional equity and debt financing contemplated by, and necessary to consummate, the Transactions and the Transactions shall have been consummated concurrently therewith. 2.4 Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows: (a) The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and this Agreement has been duly authorized, executed and delivered by the Company and is valid, binding and enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (b) The Class B Common Stock to be issued to the Purchaser pursuant to this Agreement has been duly authorized, and when issued and delivered in accordance with the terms hereof, will be duly and validly issued and, upon receipt by the Company of the funds equal to the Purchase Price, will be fully paid and nonassessable; and (c) None of the execution, delivery or performance of this Agreement by the Company will conflict with the Company's certificate of incorporation or by-laws or result in any breach of any terms or provisions of, or constitute a default under, any contract, agreement or instrument to which the Company is a party or by which the Company is bound. 6 3. Investment Representations and Covenants of the Purchaser. 3.1 Investment Intention; No Resales. The Purchaser hereby represents and warrants that the Purchaser is acquiring the Class B Common Stock and will be acquiring the Option Shares for investment solely for its own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof. The Purchaser agrees and acknowledges that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares of the Class B Common Stock or Option Shares, or solicit any offers to purchase any shares of the Class B Common Stock or Option Shares, unless such transfer, sale, assignment, pledge, hypothecation or other disposition (a) is pursuant to an effective registration statement under the Securities Act and has been registered under all applicable state securities or "blue sky" laws or is pursuant to an available exemption from registration and (b) complies with the provisions of this Agreement and the Stockholders Agreement. 3.2 Transfers. The foregoing notwithstanding, the Company acknowledges and agrees that the Purchaser may make any transfer to any transferee in accordance with the provisions of the Stockholders Agreement and Section 6.2 hereof, and that such transfers to a transferee shall be deemed to be in compliance with this Agreement; provided that except as otherwise provided in the Stockholders Agreement, none of the shares of Class B Common Stock or Option Shares may be transferred prior to the fifth anniversary of the Closing Date. 3.3 Accredited Investor. The Purchaser hereby represents and warrants to the Company that it is an "accredited investor" as that term is defined in Rule 501 of Regulation D under the Securities Act. 3.4 Legend. (a) Each certificate representing shares of Common Stock and Option Shares shall bear substantially the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS AGREEMENT AND COMMON STOCK SUBSCRIPTION AGREEMENT, EACH DATED AS OF APRIL 30, 1997, COPIES OF WHICH MAY BE OBTAINED FROM L-3 COMMUNICATIONS HOLDINGS, INC. (THE "COMPANY"). NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENTS. 7 3.5 Common Stock Unregistered. The Purchaser acknowledges and represents that he has been advised by the Company that (a) the offer and sale of the Class B Common Stock and the Option Shares have not been registered under the Securities Act; (b) the Class B Common Stock and the Option Shares must be held indefinitely and the Purchaser must continue to bear the economic risk of the investment in the Class B Common Stock unless the offer and sale of such Class B Common Stock or Option Shares is subsequently registered under the Securities Act and all applicable state securities laws or an exemption from such registration is available; (c) there is no established market for the Class B Common Stock or Option Shares and it is not anticipated that there will be any public market for the Class B Common Stock or Option Shares in the foreseeable future; (d) Rule 144 promulgated under the Securities Act is not presently available with respect to the sale of any securities of the Company, and, except as set forth in Section 3.6, the Company has made no covenant to make such Rule available; (e) when and if shares of the Class B Common Stock or Option Shares may be disposed of without registration under the Securities Act in reliance on Rule 144, such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule; (f) if the Rule 144 exemption is not available, public offer or sale without registration will require compliance with Regulation A or the availability of an exemption under the Securities Act; (g) a restrictive legend in the form heretofore set forth shall be placed on the certificates representing the Class B Common Stock or Option Shares; and (h) a notation shall be made in the appropriate records of the Company indicating that the Class B Common Stock and the Option Shares are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Class B Common Stock and the Option Shares. 3.6 Rule 144. If the Company shall have filed a registration statement with respect to the Class B Common Stock or the Option Shares pursuant to the requirements of Section 12 of the Exchange Act or a registration statement with respect to the Class B Common Stock or the Option Shares pursuant to the requirements of the Securities Act (or a registration statement shall have been filed, in either case, with respect to the Class A Common Stock or Class C Common Stock if any shares of the Class B Common Stock have been converted into such other class of Common Stock), the Company will file the reports required to be filed by it under the Securities Act and the Exchange Act to the extent required from time to time to enable the Purchaser to sell shares of Class B Common Stock or the Option Shares, as the case may be (or Class C Common Stock or Class A Common Stock if any shares of the Class B Common Stock have been converted into such other class of Common Stock), without registration under the Securities Act within the limitation of the exemptions provided 8 by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If any shares of Class B Common Stock or Option Shares (or Class A Common Stock or Class C Common Stock if any shares of the Class B Common Stock have been converted into such other class of Common Stock) are to be disposed of in accordance with Rule 144 under the Securities Act or otherwise, the Purchaser shall promptly notify the Company of such intended disposition and deliver to the Company at or prior to the time of such disposition such documentation as the Company may reasonably request in connection with such sale and, in the case of a disposition in accordance with Rule 144, an executed copy of Form 144 required to be filed with the SEC (if required by Rule 144). Anything to the contrary contained in this Section 3.6 notwithstanding, the Company may deregister any of its securities under the Exchange Act if it is then permitted to do so pursuant to the Exchange Act. 3.7 Additional Investment Representations. The Purchaser further represents and warrants that (a) in making his decision to purchase the Common Stock hereby subscribed for or exercise his options to purchase the Option Shares, the Purchaser has relied upon independent investigations made by him and, to the extent believed by the Purchaser to be appropriate, his representatives, including his own professional, financial, tax and other advisors; and (b) the Purchaser has been given the opportunity to examine all documents and to ask questions of, and to receive answers from, the Company and its representatives concerning the terms and conditions of the purchase of the Class B Common Stock and to obtain any additional information which the Purchaser deems necessary. 3.8 Other Agreements. On the date hereof, the Stockholders Agreement, in the form previously delivered to the Purchaser, will be entered into by the Company, the Purchaser and other parties thereto. 4. Puts and Calls 4.1 Company's Right to Purchase. (a) In the event of any Termination of Employment (i) by the Company without Cause, (ii) due to resignation by the Purchaser with Good Reason or (iii) due to the Purchaser's Retirement, the Company shall have the right to purchase, and the Purchaser and his Transferees (hereinafter referred to as the "Purchaser's Group") shall be required upon exercise of such right to sell to the Company (or its designee), a number of shares of the Class B Common Stock or Class C Common Stock, as the case may be, and the Option Shares equal to the total number of shares of the Class B Common Stock and the Option Shares held by the Purchaser's Group times the Put/Call Percentage in effect as of the date of Termination of Employment at a per share price equal to the FMV per Share as of the date of such Termination of Employment. 9 (b) In the event of any Termination of Employment due to death of the Purchaser or Disability of the Purchaser, the Company shall have the right to purchase, and the Purchaser's Group shall be required upon exercise by the Company of such right to sell to the Company (or its designee) all of the Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares held by the Purchaser Group at a per share price equal to the FMV per Share as of the date of such Termination of Employment; provided that in the event of the death of the Purchaser, the Purchaser's executors, administrators, testamentary trustees, legatees or beneficiaries may elect to retain 20% of the Class B Common Stock. (c) In the event of any Termination of Employment for Cause or resignation by the Purchaser without Good Reason, the Company shall have the right and option to purchase, and the Purchaser's Group shall be required upon exercise by the Company of such right to sell to the Company, all of the Class B Common Stock or Class C Common Stock, as the case may be, and the Option Shares held by the Purchaser's Group at a per share price equal to the lesser of (i) in the case of the Class B Common Stock, the Cost of the Common Stock plus interest thereon accrued from the Closing Date at a rate equal to the appropriate applicable federal rate as determined under Section 1274(d) of the Internal Revenue Code of 1986, as amended, or, in the case of Option Shares, the price paid upon exercise of the Option with respect to such Option Shares and (ii) the FMV per Share as of the date of such Termination of Employment. (d) If the Company desires to exercise its right to purchase all of the Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares following any Termination of Employment, the Company shall not later than 75 days after the date of such Termination of Employment send written notice to the Purchaser and each member of the Purchaser's Group of its intention to purchase such Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares. If the Company decides not to exercise such right, the Company shall not later than 75 days after the date of such Termination of Employment send written notice to the Purchaser and each member of the Purchaser's Group of its intention not to exercise such right. The closing of such purchase shall take place at the principal office of the Company within 30 days after the giving of such written notice by the Company. The Company's rights to purchase under this Section 4.1 may not be exercised in part. 4.2 Purchaser's Right to Put. (a) In the event of any Termination of Employment (i) by the Company without Cause, (ii) due to resignation by the Purchaser with Good Reason or (iii) the Purchaser's Retirement, the Purchaser's Group shall have the right to put to the Company, and the Company shall be required upon exercise of such right to purchase (or cause its designee to purchase) a number of shares of Class B Common Stock or Class C Common Stock, as the case may be, and the shares equal to the 10 total number of shares of Class B Common Stock or Class C Common Stock, as the case may be, and the Option Shares held by the Purchaser's Group times the Put/Call Percentage in effect as of the date of Termination of Employment at a per share price equal to the FMV per Share as of the date of such Termination of Employment. (b) In the event of any Termination of Employment due to Disability of the Purchaser or death of the Purchaser, the Purchaser's Group shall have the right to put to the Company, and the Company shall be required upon exercise of such right to purchase (or cause its designee to purchase) all of the Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares held by the Purchaser's Group at a per share price equal to the FMV per Share as of the date of such Termination of Employment. (c) The rights of the Purchaser's Group under Section 4.2(a) and (b) may only be exercised by holders of not less than a majority of the total shares of Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares held by the Purchaser's Group and the decision to exercise such rights will be binding upon each member of the Purchaser's Group. If the Purchaser's Group desires to exercise its rights pursuant to this Section 4.2 following any Termination of Employment, the Purchaser's Group shall give written notice of such intent to the Company no later than the earlier of (i) 90 days after the Company gives notice that it will not exercise its rights under Section 4.1 and (ii) 15 days after the expiration of the Company's rights under Section 4.1. The closing of such purchase shall take place at the principal office of the Company within 30 days after the giving of such written notice to the Company. The Purchaser's Group's rights to put under this Section 4.2 may not be exercised in part. 4.3 Payment of Purchase Price by the Company. Notwithstanding the foregoing, the Company shall not be required to purchase for cash any shares of Common Stock pursuant to Section 4.1 or 4.2 if (a) such purchase would be or would result in a violation by the Company or any of its subsidiaries of (i) the terms of any debt agreements or other documents related thereto to which the Company or any of its subsidiaries is a party or (ii) applicable law or (b) the Board of Directors (excluding Messrs. Lanza and LaPenta or their respective nominees) unanimously determines that such purchase would be reasonably likely to materially impact the Company's available cash, require unsuitable additional debt to be incurred or otherwise have a material adverse effect on the financial condition of the Company. If the Company is precluded from paying for all or any portion of the shares of Common Stock in cash pursuant to the preceding sentence, the Company shall issue a subordinated note to the Purchaser in respect of the shares not purchased for cash or a member of the Purchaser's Group which note shall be repaid in cash (i) from the proceeds obtained by 11 the Company from the sale of Common Stock in an Initial Public Offering and (ii) at such time that the Board of Directors determines that the conditions described in the preceding sentence no longer exist; provided, that such note shall (A) bear pay-in-kind interest at a rate per annum which, in the opinion of an independent, mutually acceptable nationally-recognized investment banking firm, will result in such note having a fair market value on the date of issuance equal to the aggregate principal amount thereof, (B) be payable in full on April 30, 2007 except as otherwise provided herein, (C) be subordinated to the Company's obligations under any guarantee of any bank credit obligations of its subsidiaries and (D) contain such other covenants, events of default and other terms and conditions customary for notes of that kind. If in connection with the exercise of rights pursuant to Section 4.1 or 4.2, the Company is required to issue a subordinated note, at the request of the Purchaser (or the holders of not less than a majority of the total number of shares of Class B Common Stock, Class C Common Stock and Option Shares held by the Purchaser's Group), the Company (by action of the Board of Directors) will in good faith endeavor to cause L-3 Communications Corporation ("L-3") to purchase the shares to be purchased pursuant to Section 4.1 or 4.2 in exchange for the issuance of a subordinated note so long as such purchase is permitted by the terms of any debt agreements or other documents related thereto to which L-3 or any of its subsidiaries is a party; provided that in no event shall the Company (or the Board) be required to cause L-3 to purchase such shares unless in its judgment such purchase on the terms set forth herein would not have a material adverse impact on L-3's ability to raise debt financing on commercially reasonable terms. Any subordinated note issued by L-3 pursuant to the foregoing shall contain such covenants, events of default and other terms and conditions customary for notes of that kind, including terms described in (A)-(C) above, except that (i) interest on such note shall be payable in cash and (ii) such note shall be payable in full on August 15, 2007 except as otherwise provided herein and shall be subordinated to L-3's obligations under any bank credit obligations or senior subordinated debt. In the event that the Company is precluded from paying for all or any portion of the shares of Common Stock in cash because such purchase would be or would result in a violation by the Company or any of its subsidiaries of the terms of any debt agreements or other documents related thereto to which the Company or any of the subsidiaries is a party, the Company shall use its reasonable best efforts to obtain, or cause any such subsidiary to obtain, a waiver under such debt agreements or other agreements of such term or terms to allow the Company to pay for all or any portion of the shares of Common Stock in cash. 4.4 Termination of Put/Call Rights. The rights and obligations set forth in this Section 4 shall lapse upon a Public Offering. 12 5. Shares Subject to Forfeiture 5.1 Forfeiture Events. If prior to the third anniversary of the Closing Date, there is a Termination of Employment of the Purchaser for Cause or the Purchaser resigns without Good Reason or retires, then all of the Shares Subject to Forfeiture shall be forfeited (whether or not then held by Purchaser) (each such event, a "Forfeiture Event"). 5.2 Lapse of Forfeiture Restrictions. (a) The Shares Subject to Forfeiture shall no longer be subject to forfeiture upon the earliest to occur of the following events (each such event, a "Restriction Lapse"): (i) the date of death of the Purchaser; (ii) the date of Disability of the Purchaser; (iii) the date that the Purchaser resigns for Good Reason or is terminated without Cause; (iv) the date that the Company consummates a Public Offering at a FMV per Share of at least $6.47; (v) the date of the closing of a transaction resulting in a Change of Control or any other transaction involving the acquisition by a Person other than an Affiliate of Lehman of shares of Class A Common Stock representing 10% or more of the Class A Common Stock held by Lehman and LBHI (and their Permitted Transferees, as such term is defined in the Stockholders Agreement) on the Closing Date), in each case yielding a price per share in such transaction of at least $6.47; (vi) the first date following a Public Offering that the FMV per Share based on the average of the closing sales prices for the 20 trading days prior to such date equals or exceeds $6.47; or (vii) the date of consummation of a transaction referred to in Section 5.1(ii)(c). Shares Subject to Forfeiture shall be deemed no longer subject to forfeiture immediately prior to the occurrence of the Restriction Lapse referred to in clause (iv) or (v) of this Section 5.2. (b) Notwithstanding the foregoing, the Shares Subject to Forfeiture shall no longer be subject to forfeiture on the date that is nine years after the Closing Date (but only to the extent that the Shares Subject to Forfeiture have not previously been forfeited). Any such lapse of the restrictions on the Shares Subject to Forfeiture pursuant to this Section 5.2(b) shall be a "Restriction Lapse". 5.3 Conversion. (a) Upon the later to occur of (i) the consummation of the Initial Public Offering and (ii) such time as there shall have occured a Forfeiture Event or Restriction Lapse as to both of the Initial Holders of Class B Common Stock, all of the Class B Common Stock held by the Purchaser's Group shall be converted to shares of Class A Common Stock in accordance with the terms of the Certificate of Incorporation of the Company. (b) Upon the occurrence of a Forfeiture Event or Restriction Lapse with respect to the Purchaser that occurs prior to both the consummation of the Initial Public Offering and the occurrence of a Forfeiture Event or Restriction Lapse with 13 respect to the other Initial Holder of Class B Common Stock, all of the Class B Common Stock held by the Purchaser's Group shall be converted to shares of Class C Common Stock in accordance with the terms of the Certificate of Incorporation of the Company. 6. Miscellaneous. 6.1 Recapitalization, Exchanges, Etc., Affecting Common Stock. The provisions of this Agreement shall apply, to the full extent set forth herein, to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect or upon conversion of, in exchange for, or in substitution of the Class B Common Stock purchased pursuant hereto (or the Class A Common Stock or Class C Common Stock to which such Class B Common Stock has been converted, as the case may be) and the Option Shares, by reason of any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise. In the event that any of the foregoing events shall occur, then and in each such case, the number of shares and price per share of Class B Common Stock purchased pursuant to this Agreement (or the Class A Common Stock or Class C Common Stock to which such Class B Common Stock has been converted, as the case may be) and any terms of this Agreement referring to such number of shares or price per share and the number of Option Shares received by the Purchaser upon the exercise of any Options shall, in each such case, be equitably and appropriately adjusted. 6.2 Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under Section 3.2 hereof, such transferee shall be deemed to be the Purchaser hereunder; provided, however, that no transferee (including, without limitation, transferees referred to in Section 3.2 hereof) shall derive any rights under this Agreement unless and until such transferee has delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement. 6.3 Amendment. This Agreement may be amended only by a written instrument signed by the Company and holders of a majority of the Class B Common Stock purchased pursuant hereto and the Option Shares, and any such amendment shall be effective against the Company and all holders of the Class B Common Stock and Option Shares. 6.4 Applicable Law. The laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Agreement. 14 6.5 Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered by hand (whether by overnight courier or otherwise) or sent by registered or certified mail, return receipt requested, postage prepaid, to the party to whom it is directed: (a) If to the Company, to it at the following address: L-3 Communications Holdings, Inc. 600 Third Avenue New York, New York 10016 Attn: General Counsel With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attn: David Chapnick (b) if to the Purchaser, to it at the following address: Frank C. Lanza L-3 Communications Holdings, Inc. 600 Third Avenue New York, New York 10016 With a copy to: Fried, Frank, Harris, Shriver and Jacobson One New York Plaza New York, New York 10004 Attn: Robert C. Schwenkel or at such other address as either party shall have specified by notice in writing to the other. 6.6 Integration. This Agreement and the documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and in the Stockholders Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to this subject matter other than such agreements and understandings set forth in the Stockholders Agreement. 15 6.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and of which together shall constitute one and the same instrument. 6.8 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto will waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties hereto, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement. 16 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. L-3 COMMUNICATIONS HOLDINGS, INC. By: ___________________________ Name: Title: FRANK C. LANZA _________________________________ SCHEDULE I Number of Shares of Class B Common Purchase Price Stock Per Share Aggregate Amount - ----------------- -------------- ---------------- 1,500,000 $5.00 $7,500,000 EXHIBIT B Option Agreement Form - Please see Exhibit 10.9 to the Registration Statement. EXHIBIT C Stockholders' Agreement Form - Please see Exhibit 10.3 to the Registration Statement. EX-10.51 6 EMPLOYMENT AGREEMENT EXHIBIT 10.51 EMPLOYMENT AGREEMENT AGREEMENT, made April 30, 1997 by and between L-3 Communications Holdings, Inc., a Delaware corporation (the "Company") and Robert V. LaPenta (the "Executive"). RECITALS In order to induce Executive to serve as the President and Chief Financial Officer of the Company, the Company desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement. Executive is willing to accept such employment and perform services for the Company, on the terms and conditions hereinafter set forth. It is therefore hereby agreed by and between the parties as follows: 1. Employment. 1.1 Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term hereof as its President and Chief Financial Officer. In his capacity as the President and Chief Financial Executive Officer of the Company, Executive shall report to the Chief Executive Officer (the "CEO") and shall have the customary powers, responsibilities and authorities of presidents and chief financial officers of corporations of the size, type and nature of the Company, as it exists from time to time, and as are assigned by the CEO. 1.2 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the President and Chief Financial Officer of the Company commencing as of the date hereof (the "Commencement Date") and agrees to devote his full business time and efforts to the 1 performance of services, duties and responsibilities in connection therewith, subject at all times to review and control of the CEO. In addition, during the Initial Term and any Renewal Term, (i) the Company agrees to nominate Executive for election to the Board of Directors of the Company (the "Board") and use its best efforts to cause his election to the Board and Executive agrees to serve on the Board of the Company and (ii) during the Term of Employment, Executive also agrees to serve, if elected, as an officer and/or director of any Subsidiary of the Company, without the payment of any additional compensation therefor. Upon the termination of Executive's employment for any reason, Executive shall resign as a member of the Board of the Company or any Subsidiary of the Company. 1.3 Nothing in this Agreement shall preclude Executive from engaging in charitable work and community affairs, from managing any investment made by him with respect to which Executive is not substantially involved with the management or operation of the entity in which Executive has invested (provided that no such investment in publicly traded equity securities or other property may exceed 5% of the equity of any entity, without the prior approval of the Board) or from serving, subject to the prior approval of the Board, as a member of boards of directors or as a trustee of any other corporation, association or entity, to the extent that any of the above activities do not materially interfere with the performance of his duties hereunder. For purposes of the preceding sentence, any approval by the Board required therein shall not be unreasonably withheld. 2. Term of Employment. Executive's term of employment under this Agreement (the "Term of Employment") shall commence on the Commencement Date and, subject to the terms hereof, shall terminate on the earlier of (i) the fifth anniversary of the Commencement Date "Initial Term") or (ii) termination of Executive's employment pursuant to this Agreement. Notwithstanding the foregoing, subsequent to the Initial Term, Executive's 2 Term of Employment under this Agreement shall automatically renew annually for one year renewal terms (the "Renewal Term") unless either party shall deliver to the other written notice, at least 90 days prior to the expiration of the Initial Term or any Renewal Term, that the Term of Employment shall not be extended. In such event, the Term of Employment will end at its then scheduled expiration date and shall not be further extended except by written agreement of the Company and Executive. 3. Compensation. 3.1 Salary. During the Initial Term of Executive's employment under the terms of this Agreement, the Company shall pay Executive a base salary ("Base Salary") at an initial rate of $500,000 per annum. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. During the Term of Employment, the Board shall, in good faith, review, at least annually, the Executive's Base Salary in accordance with the Company's customary procedures and practices regarding the salaries of senior executives and may, if determined by the Board to be appropriate, increase Executive's Base Salary following such review. Increases in the rate of salary, once granted, shall not be subject to revocation or decrease thereafter, and "Base Salary" for all purposes herein shall be deemed to be a reference to such higher amount. 4. Employee Benefits. 4.1 Equity and Stock Options. Simultaneously with the execution of this Agreement, the Company and Executive are entering into the Subscription Agreement, the Option Agreement and the Stockholders' Agreement in the forms attached hereto as Exhibits A, B and C, respectively (the "Ancillary Documents"). Executive shall not be eligible to receive any stock option or other equity incentive other than as set forth in the Ancillary Documents. 3 4.2 Employee Benefit Programs, Plans and Practices. The Company shall provide Executive while employed hereunder with coverage under such employee benefits (commensurate with his position in the Company and to the extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company makes available to its senior executives. 4.3 Vacation. Executive shall be entitled to twenty (20) business days paid vacation each calendar year, which shall be taken at such times as are consistent with Executive's responsibilities hereunder. Any vacation days not taken during the calendar year in which they are accrued may be carried over into the next subsequent year. 5. Expenses. Subject to prevailing Company policy or such guidelines as may be established by the Board, the Company will reimburse Executive for all reasonable expenses incurred by Executive in carrying out his duties. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) The Company or Executive may terminate Executive's Term of Employment at any time for any reason by written notice at least thirty (30) days in advance. If Executive's employment is terminated (i) by the Company other than for Cause (as defined in Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii) by Executive for Good Reason (as defined in Section 6.1(b) hereof) prior to the end of the Initial Term or any Renewal Term, the Company shall continue to pay Executive's Base Salary through the end of the Initial Term or the Renewal Term (the "Continuation Period"), as the case may be, with such payments to be made in accordance with the terms of Section 3.1. (the "Severance Payments"). In addition, the Company shall continue to provide Executive during the Continuation Period with life insurance, medical and hospitalization benefits (collectively, the "Continuation Benefits") comparable to those provided to other senior executives; provided, however, 4 that any such coverage shall terminate to the extent that Executive is offered or obtains comparable life insurance, medical or hospitalization benefits coverage from any other employer during the Continuation Period. Notwithstanding the foregoing, if Executive breaches any provision of Section 11 hereof, the remaining balance of the Severance Payments and any Continuation Benefits shall be forfeited. Executive shall be entitled to receive the benefits, if any, provided under the employee benefit programs, plans and practices referred to in Section 4.2, in accordance with their terms. (b) For purposes of this Agreement, "Good Reason" shall mean any of the following (without Executive's express prior written consent): (i) A reduction by the Company in Executive's Base Salary (in which event Severance Payments shall be made based upon Executive's Base Salary in effect prior to any such reduction); or (ii) Any material diminution or material adverse change in Executive's titles, duties or responsibilities, unless due to a promotion or increased responsibility of Executive. (c) Termination by Executive for Good Reason shall be made by delivery to the Company by Executive of written notice, given at least 45 days prior to such termination, which sets forth the conduct believed to constitute Good Reason; provided, however, that the Company shall have the opportunity to cure the Good Reason during the first 30 days of such notice period and if the Good Reason is cured within such 30-day period, Executive's notice of termination shall be deemed withdrawn. If no notice is given within 90 days of the event giving rise to Good Reason, the Good Reason shall be deemed waived. 6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In the event that Executive's employment is terminated (i) by the Company for Cause, as hereinafter defined or (ii) by Executive other than for Good Reason, Disability or death, Executive shall only be entitled to receive (A) any Base Salary accrued but unpaid prior to such termination and (B) any 5 benefits provided under the employee benefit programs, plans and practices referred to in Section 4.2 hereof, in accordance with their terms. After the termination of Executive's employment under this Section 6.2, the obligations of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall thereupon cease and terminate. (b) As used herein, the term "Cause" shall be limited to (i) gross neglect of or willful and continuing refusal by Executive to substantially perform Executive's duties hereunder (other than due to death or Disability, as such term is defined in Section 6.3 hereof), (ii) any breach of the provisions of Section 11 of this Agreement by Executive, (iii) willfully engaging in conduct that is demonstrably injurious to the Company or the Company's subsidiaries or affiliates by Executive or (iv) conviction of, or plea of nolo contendere, by Executive to (a) any felony or (b) a misdemeanor involving moral turpitude. Termination of Executive pursuant to this Section 6.2 shall be made by delivery to Executive of written notice, given at least 30 days prior to such Termination, from the Board specifying the particulars of the conduct by Executive set forth in any of clauses (i) through (iv) above. Termination shall be effected by a majority vote of the Board at a meeting at which Executive shall have had the opportunity (along with counsel) to be heard unless within 30 days after receiving such notice, Executive shall have cured Cause to the reasonable satisfaction of the Board; provided, however, that no cure shall be possible if termination for Cause is made pursuant to this Section 6.2(b)(ii) or (iv). As long as Executive is on the Board, he shall reasonably cooperate to cause a valid Board meeting to occur. 6.3 Disability. In the event of the Disability (as defined below) of Executive during the Term of Employment, the Company may terminate Executive's Term of Employment upon written notice to Executive (or 6 Executive's personal representative, if applicable) effective upon the date of receipt thereof (the "Disability Commencement Date"). The obligation of the Company to make any further payments under this Agreement shall, except for earned but unpaid Base Salary, cease as of the Disability Commencement Date; provided, however, that Executive shall continue to receive payments equal to Executive's Base Salary otherwise payable under this Agreement for a period equal to the lesser of (i) six months after the date of the occurrence of the incapacity causing Executive's Disability and (ii) the number of months otherwise remaining in the Term of Employment, in either case, reduced by the amount of any disability payments otherwise payable to Executive under any insurance program of the Company. The term "Disability," for purposes of this Agreement, shall mean Executive's absence from the full-time performance of Executive's duties pursuant to a reasonable determination made in accordance with the Company's disability plan that Executive is disabled as a result of incapacity due to physical or mental illness that lasts, or is reasonably expected to last, for at least six months. 6.4 Death. In the event of Executive's death during his Term of Employment hereunder or at any time thereafter while payments are still owing to Executive under the terms of this Agreement, all obligations of the Company to make any further payments, other than the obligation to pay any accrued but unpaid Base Salary or remaining payments that were payable to Executive by reason of his termination of employment under Section 6.1 to which Executive was entitled at the time of his death, shall terminate upon Executive's death, and benefits shall become payable under the Company's life and accidental death insurance program in accordance with its terms. Benefits under all other employee benefit programs, plans and practices shall be paid in accordance with their terms. 6.5 No Further Notice or Compensation. Executive understands and agrees that he shall not be entitled to any further notice or compensation 7 upon Termination of Employment under this Agreement, other than amounts specified in this Section 6 and the Ancillary Documents. Executive shall not have any obligation to seek comparable employment following such termination or resignation, nor shall any compensation received from any subsequent employment reduce the Company's obligations hereunder. 6.6 Executive's Duty to Provide Materials. Upon the termination of the Term of Employment for any reason, Executive or his estate shall surrender to the Company all correspondence, letters, files, contracts, mailing lists, customer lists, advertising materials, ledgers, supplies, equipment, checks, and all other materials and records of any kind that are the property of the Company or any of its subsidiaries or affiliates, that may be in Executive's possession or under his control, including all copies of any of the foregoing; provided, however, Executive shall not be required to surrender his personal rolodex, telephone book, appointment book and personal materials acquired by Executive prior to the date hereof. 7. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: with a copy to: Alvin H. Brown, Esq. Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 To Executive: Robert V. LaPenta 749 Riversville Road Greenwich, CT 06831 with a copy to: Robert C. Schwenkel Fried, Frank, Harris, Shriver & Jacobson 1 New York Plaza New York, New York 10004 8 Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of sending shall constitute the time at which notice was given. 8. Separability. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. 9. Assignment. This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or, in the case of the Options, by trust for the benefit of Executive's spouse and/or children or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of the Company hereunder. 10. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 11. Nondisclosure of Confidential Information; Non-Competition. (a) While employed by the Company, and at any time thereafter, the Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except (i) while employed 9 by the Company, in the business of and for the benefit of the Company or (ii) when required to do so by applicable law, by a court, by any governmental agency, or by any administrative body or legislative body (including a committee thereof); provided, however, that Executive shall give reasonable notice under the circumstances to the Company that he has been notified that he will be required to so disclose as soon as possible after receipt of such notice in order to permit the Company to take whatever action it reasonably deems necessary to prevent such disclosure and Executive shall cooperate with the Company to the extent that it reasonably requests him to do so. For purposes of this Section 11(a), "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its affiliates or customers, that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof). (b) In consideration of the Company's obligations under this Agreement, Executive agrees that during the period of his employment hereunder and for a period of twelve (12) months thereafter, without the prior written consent of the Board, (A) he will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any entity which is in competition with the business of the Company or its subsidiaries and (B) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or offer employment to any person who is or has been employed by the Company or its subsidiaries at any time during the twelve (12) months immediately preceding such solicitation; provided, however, that if the Executive's employment terminates following the 10 expiration of the Initial Term, this subsection 11(b) shall only be effective during the period, if any, that the Company pays the Executive the Severance Payments. (c) For purposes of this Section 11, an entity shall be deemed to be in competition with the Company if it is principally involved in the purchase, sale or other dealing in any property or the rendering of any service purchased, sold, dealt in or rendered by the Company as a part of the business of the Company within the same geographic area in which the Company effects such sales or dealings or renders such services. Notwithstanding this subsection 11(c) or subsection 11(b), nothing herein shall (i) prohibit Executive from serving as an officer, employee or independent consultant of any business unit or subsidiary which would not otherwise be in competition with the Company or its subsidiaries, but which business unit is a part of, or which subsidiary is controlled by, or under common control with, an entity that would be in competition with the Company or its subsidiaries, so long as Executive does not engage in any activity which is in competition with any business of the Company or its subsidiaries or (ii) be construed so as to preclude Executive from investing in any publicly or privately held company, provided Executive's beneficial ownership of any class of such company's securities does not exceed 5% of the outstanding securities of such class. (d) Executive agrees that this covenant not to compete is reasonable under the circumstances and will not interfere with his ability to earn a living or to otherwise meet his financial obligations. Executive and the Company agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants contained in this Section 11 would 11 irreparably injure the Company. Accordingly, Executive agrees that, in the event the Company determines that Executive has breached the covenants contained in this Section 11, the Company may, in addition to pursuing any other remedies it may have in law or in equity, cease making any payments otherwise required by this Agreement and obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive. 12. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 13. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 13 are in addition to the survivorship provisions of any other section of this Agreement. 14. Dispute Resolution; Legal Fees. Any dispute or controversy arising under or in connection with this Agreement shall be resolved by the court with the appropriate jurisdiction in the State of New York. The prevailing party shall be entitled to be reimbursed for any reasonable legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 12 15. Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of New York, without reference to rules relating to conflicts of law. 16. Effect on Prior Agreements. This Agreement and the Ancillary Documents contain the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding, both written and oral, between the Company, any affiliate of the Company or any predecessor of the Company or affiliate of the Company and Executive. 17. Withholding. The Company shall be entitled to withhold from payment any amount of withholding required by law. 18. Survival. Notwithstanding the expiration of the term of this Agreement, the provisions of Section 11 hereunder shall remain in effect as long as is reasonably necessary to give effect thereto in accordance with the terms hereof. 19. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. L-3 Communications Holdings, Inc. By /s/ Michael T. Strianese Name: Michael T. Strianese Title: Vice President, Finance and Controller /s/ Robert V. LaPenta Robert V. LaPenta 13 EXHIBIT A COMMON STOCK SUBSCRIPTION AGREEMENT COMMON STOCK SUBSCRIPTION AGREEMENT, dated as of April 30, 1997 between L-3 Communications Holdings, Inc., a Delaware corporation (the "Company"), and Robert V. LaPenta (the "Purchaser"). WHEREAS, the Company was recently incorporated for the purpose of consummating the transactions (the "Transactions") contemplated by the Transaction Agreement (as defined below); and WHEREAS, the Purchaser desires to subscribe for and acquire from the Company, and the Company desires to issue and sell to the Purchaser, the number of shares of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), of the Company set forth on Schedule I, as hereinafter set forth. NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions "Active Trading Market" shall mean, as to the Company's common stock, that the Company's common stock is listed or quoted on a national exchange or the NASDAQ National Market. "Affiliate", as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise. "Board of Directors" shall mean the Board of Directors of the Company. "Cause" shall have the meaning given such term in the Employment Agreement. "Change of Control" shall mean an acquisition of all or substantially all of the direct and indirect assets of the Company and its subsidiaries (by merger, consolidation, stock or asset sale or otherwise), unless immediately following any such transaction Lehman and LBHI and Lockheed Martin and their Affiliates own 50% or more of the combined voting power of the then outstanding voting securities entitled to vote generally of the Company or the acquiror of such assets, as the case may be. 2 "Class A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Company. "Class B Common Stock" shall have the meaning set forth in the recitals of this Agreement. "Class C Common Stock" shall mean the Class C Common Stock, par value $.O1 per share, of the Company. "Common Stock" shall mean the Class A Common Stock, Class B Common Stock and Class C Common Stock. "Cost of the Common Stock" shall mean as at any date $5.00 per share, as appropriately adjusted for stock splits, subdivisions, combinations and similar transactions; provided that in the event any of the Shares Subject to Forfeiture are forfeited, the Cost of the Common Stock shall be an amount per share equal to $15,000,000 divided by the total number of shares of Class B Common Stock purchased hereunder minus the number of Shares Subject to Forfeiture that have been forfeited. "Disability" shall have the meaning given such term in the Employment Agreement. "Employment Agreement" shall mean the Employment Agreement dated the date hereof between the Purchaser and the Company. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exercise Price" shall have the meaning given such term in the Option Agreement. "Forfeiture Event" shall have the meaning set forth in Section 5.1. "FMV per Share" shall mean (i) if determined upon a Public Offering, the offering price per share of common stock; (ii) if determined upon a Change of Control, the value of the equity of the Company divided by the total number of outstanding shares of common stock of the Company; and (iii) otherwise, the fair market value of the equity of the Company, as determined by the Board of Directors in good faith (based on the opinion of an independent nationally-recognized investment banking firm), divided by the total number of outstanding shares of common stock of the Company; provided, however, that in the case of clause (iii) above if there is an Active Trading Market for the shares of any class of the Common Stock at the time of the determination of the FMV per Share, FMV per Share shall be the average of the closing prices of such Shares for the 20 trading days immediately preceding such determination date. 3 "Initial Public Offering" shall mean the initial Public Offering (other than pursuant to a registration statement on Form S-8 or otherwise relating to equity securities issuable under any employee benefit plan of the Company). "Good Reason" shall have the meaning given such term in the Employment Agreement. "Initial Holders of Class B Common Stock" shall mean the Purchaser and Lanza. "Lanza" shall mean Frank C. Lanza. "LBHI" shall mean Lehman Brothers Holdings Inc., a Delaware corporation and the general partner of Lehman. "Lehman" shall mean Lehman Brothers Capital Partners III, L.P., a Delaware limited partnership. "Lockheed Martin" shall mean Lockheed Martin Corporation, a Maryland corporation. "Options" shall mean the options to purchase Class A Common Stock granted to the Purchaser pursuant to the Non-qualified Stock Option Agreement dated as of the date hereof. "Option Shares" shall mean the shares of Class A Common Stock received by the Purchaser upon the exercise of any Options. "Permitted Transferee" shall mean as to the Purchaser and his Permitted Transferees, his or her spouse or any of his or her lineal descendants or legatees or a testamentary trust for such legatees, or a trust or individual retirement account, the beneficiaries of which or a corporation or partnership the stockholders or partners of which include only the Purchaser, his or her spouse and his or her lineal descendants or a corporation or partnership wholly owned by them. "Person" shall mean an individual, partnership, corporation, business trust, joint stock company, limited liability company, unincorporated association, joint venture or other entity of whatever nature. "Public Offering" shall mean the sale of shares of any class of the Company's common stock to the public pursuant to an effective registration statement (other than a registration statement on Form S-4 or S-8 or any similar or successor form) filed under the Securities Act which results in an Active Trading Market of 25% or more of the outstanding shares of the Company's common stock. "Purchaser's Group" shall have the meaning given such term in Section 4.1. 4 "Put/Call Percentage" shall mean, initially, 75%, and such Put/Call Percentage shall be reduced by 15 percentage points on each anniversary (including the first) of the Closing Date. "Restriction Lapse" shall have the meaning set forth in Section 5.2. "Retirement" shall mean normal retirement under the terms of any tax-qualified retirement plan of the Company, which retirement occurs more than three years after the Closing Date. Any purported retirement by the Purchaser prior to the third anniversary of the Closing Date shall be treated, for purposes of this Agreement, the same as a termination without Good Reason. "Securities Act" shall mean the Securities Act of 1933, as amended. "SEC" shall mean the Securities and Exchange Commission. "Shares Subject to Forfeiture" shall mean 300,000 (as such number may be subsequently adjusted pursuant to Section 6.1) shares of the Class B Common Stock purchased pursuant hereto. "Stockholder" shall mean each of Lockheed Martin, Lehman, LBHI, the Purchaser and Lanza and any other person who becomes party to the Stockholders Agreement pursuant to the terms thereof. "Stockholders Agreement" shall mean the Stockholders Agreement dated as of the date hereof among the Company, Lehman, LBHI, Lockheed Martin, the Purchaser and Lanza. "Termination of Employment" shall mean a termination of the Purchaser's employment with the Company (regardless of the reason therefor). "Transaction Agreement" shall mean the Transaction Agreement dated as of March 28, 1997, as amended, by and among the Company, Lehman, Lockheed Martin, the Purchaser and Lanza. "Transactions" shall have the meaning set forth in the recitals of this Agreement. 2. Subscription for and Purchase of Common Stock. 2.1 Purchase of Common Stock. Pursuant to the terms and subject to the conditions set forth in this Agreement, the Purchaser hereby subscribes for and agrees to purchase, and the Company hereby agrees to issue and sell to the Purchaser, on the Closing Date (as defined in Section 2.2), the number of shares of Class B Common Stock at a price per share as set forth on Schedule I, for the aggregate amount (the "Purchase Price") set forth on Schedule I. 5 2.2 The Closing. The closing (the "Closing") of the purchase of the Common Stock shall take place simultaneously with and at the same location as the consummation of the Transactions (the "Closing Date"). The Closing shall occur at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, or at such other place as the parties may mutually agree. At the Closing, the Company will deliver to the Purchaser one or more duly executed stock certificates, registered in the Purchaser's name and representing the shares of Class B Common Stock purchased pursuant to Section 2.1, against payment of the Purchase Price therefor by delivery to the Company of immediately available funds in the amount of the Purchase Price representing payment in full for such Class B Common Stock. 2.3 Conditions to the Obligations of the Parties Hereunder. The obligations of the parties hereto shall be subject to the condition that, substantially simultaneously with the sale to the Purchaser of the Class B Common Stock, the Company shall have received the proceeds of the additional equity and debt financing contemplated by, and necessary to consummate, the Transactions and the Transactions shall have been consummated concurrently therewith. 2.4 Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows: (a) The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and this Agreement has been duly authorized, executed and delivered by the Company and is valid, binding and enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity; (b) The Class B Common Stock to be issued to the Purchaser pursuant to this Agreement has been duly authorized, and when issued and delivered in accordance with the terms hereof, will be duly and validly issued and, upon receipt by the Company of the funds equal to the Purchase Price, will be fully paid and nonassessable; and (c) None of the execution, delivery or performance of this Agreement by the Company will conflict with the Company's certificate of incorporation or by-laws or result in any breach of any terms or provisions of, or constitute a default under, any contract, agreement or instrument to which the Company is a party or by which the Company is bound. 6 3. Investment Representations and Covenants of the Purchaser. 3.1 Investment Intention; No Resales. The Purchaser hereby represents and warrants that the Purchaser is acquiring the Class B Common Stock and will be acquiring the Option Shares for investment solely for its own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof. The Purchaser agrees and acknowledges that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares of the Class B Common Stock or Option Shares, or solicit any offers to purchase any shares of the Class B Common Stock or Option Shares, unless such transfer, sale, assignment, pledge, hypothecation or other disposition (a) is pursuant to an effective registration statement under the Securities Act and has been registered under all applicable state securities or "blue sky" laws or is pursuant to an available exemption from registration and (b) complies with the provisions of this Agreement and the Stockholders Agreement. 3.2 Transfers. The foregoing notwithstanding, the Company acknowledges and agrees that the Purchaser may make any transfer to any transferee in accordance with the provisions of the Stockholders Agreement and Section 6.2 hereof, and that such transfers to a transferee shall be deemed to be in compliance with this Agreement; provided that except as otherwise provided in the Stockholders Agreement, none of the shares of Class B Common Stock or Option Shares may be transferred prior to the fifth anniversary of the Closing Date. 3.3 Accredited Investor. The Purchaser hereby represents and warrants to the Company that it is an "accredited investor" as that term is defined in Rule 501 of Regulation D under the Securities Act. 3.4 Legend. (a) Each certificate representing shares of Common Stock and Option Shares shall bear substantially the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS AGREEMENT AND COMMON STOCK SUBSCRIPTION AGREEMENT, EACH DATED AS OF APRIL 30, 1997, COPIES OF WHICH MAY BE OBTAINED FROM L-3 COMMUNICATIONS HOLDINGS, INC. (THE "COMPANY"). NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENTS. 7 3.5 Common Stock Unregistered. The Purchaser acknowledges and represents that he has been advised by the Company that (a) the offer and sale of the Class B Common Stock and the Option Shares have not been registered under the Securities Act; (b) the Class B Common Stock and the Option Shares must be held indefinitely and the Purchaser must continue to bear the economic risk of the investment in the Class B Common Stock unless the offer and sale of such Class B Common Stock or Option Shares is subsequently registered under the Securities Act and all applicable state securities laws or an exemption from such registration is available; (c) there is no established market for the Class B Common Stock or Option Shares and it is not anticipated that there will be any public market for the Class B Common Stock or Option Shares in the foreseeable future; (d) Rule 144 promulgated under the Securities Act is not presently available with respect to the sale of any securities of the Company, and, except as set forth in Section 3.6, the Company has made no covenant to make such Rule available; (e) when and if shares of the Class B Common Stock or Option Shares may be disposed of without registration under the Securities Act in reliance on Rule 144, such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule; (f) if the Rule 144 exemption is not available, public offer or sale without registration will require compliance with Regulation A or the availability of an exemption under the Securities Act; (g) a restrictive legend in the form heretofore set forth shall be placed on the certificates representing the Class B Common Stock or Option Shares; and (h) a notation shall be made in the appropriate records of the Company indicating that the Class B Common Stock and the Option Shares are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Class B Common Stock and the Option Shares. 3.6 Rule 144. If the Company shall have filed a registration statement with respect to the Class B Common Stock or the Option Shares pursuant to the requirements of Section 12 of the Exchange Act or a registration statement with respect to the Class B Common Stock or the Option Shares pursuant to the requirements of the Securities Act (or a registration statement shall have been filed, in either case, with respect to the Class A Common Stock or Class C Common Stock if any shares of the Class B Common Stock have been converted into such other class of Common Stock), the Company will file the reports required to be filed by it under the Securities Act and the Exchange Act to the extent required from time to time to enable the Purchaser to sell shares of Class B Common Stock or the Option Shares, as the case may be (or Class C Common Stock or Class A Common Stock if any shares of the Class B Common Stock have been converted into such other class of Common Stock), without registration under the Securities Act within the limitation of the exemptions provided 8 by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If any shares of Class B Common Stock or Option Shares (or Class A Common Stock or Class C Common Stock if any shares of the Class B Common Stock have been converted into such other class of Common Stock) are to be disposed of in accordance with Rule 144 under the Securities Act or otherwise, the Purchaser shall promptly notify the Company of such intended disposition and deliver to the Company at or prior to the time of such disposition such documentation as the Company may reasonably request in connection with such sale and, in the case of a disposition in accordance with Rule 144, an executed copy of Form 144 required to be filed with the SEC (if required by Rule 144). Anything to the contrary contained in this Section 3.6 notwithstanding, the Company may deregister any of its securities under the Exchange Act if it is then permitted to do so pursuant to the Exchange Act. 3.7 Additional Investment Representations. The Purchaser further represents and warrants that (a) in making his decision to purchase the Common Stock hereby subscribed for or exercise his options to purchase the Option Shares, the Purchaser has relied upon independent investigations made by him and, to the extent believed by the Purchaser to be appropriate, his representatives, including his own professional, financial, tax and other advisors; and (b) the Purchaser has been given the opportunity to examine all documents and to ask questions of, and to receive answers from, the Company and its representatives concerning the terms and conditions of the purchase of the Class B Common Stock and to obtain any additional information which the Purchaser deems necessary. 3.8 Other Agreements. On the date hereof, the Stockholders Agreement, in the form previously delivered to the Purchaser, will be entered into by the Company, the Purchaser and other parties thereto. 4. Puts and Calls 4.1 Company's Right to Purchase. (a) In the event of any Termination of Employment (i) by the Company without Cause, (ii) due to resignation by the Purchaser with Good Reason or (iii) due to the Purchaser's Retirement, the Company shall have the right to purchase, and the Purchaser and his Transferees (hereinafter referred to as the "Purchaser's Group") shall be required upon exercise of such right to sell to the Company (or its designee), a number of shares of the Class B Common Stock or Class C Common Stock, as the case may be, and the Option Shares equal to the total number of shares of the Class B Common Stock and the Option Shares held by the Purchaser's Group times the Put/Call Percentage in effect as of the date of Termination of Employment at a per share price equal to the FMV per Share as of the date of such Termination of Employment. 9 (b) In the event of any Termination of Employment due to death of the Purchaser or Disability of the Purchaser, the Company shall have the right to purchase, and the Purchaser's Group shall be required upon exercise by the Company of such right to sell to the Company (or its designee) all of the Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares held by the Purchaser Group at a per share price equal to the FMV per Share as of the date of such Termination of Employment; provided that in the event of the death of the Purchaser, the Purchaser's executors, administrators, testamentary trustees, legatees or beneficiaries may elect to retain 20% of the Class B Common Stock. (c) In the event of any Termination of Employment for Cause or resignation by the Purchaser without Good Reason, the Company shall have the right and option to purchase, and the Purchaser's Group shall be required upon exercise by the Company of such right to sell to the Company, all of the Class B Common Stock or Class C Common Stock, as the case may be, and the Option Shares held by the Purchaser's Group at a per share price equal to the lesser of (i) in the case of the Class B Common Stock, the Cost of the Common Stock plus interest thereon accrued from the Closing Date at a rate equal to the appropriate applicable federal rate as determined under Section 1274(d) of the Internal Revenue Code of 1986, as amended, or, in the case of Option Shares, the price paid upon exercise of the Option with respect to such Option Shares and (ii) the FMV per Share as of the date of such Termination of Employment. (d) If the Company desires to exercise its right to purchase all of the Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares following any Termination of Employment, the Company shall not later than 75 days after the date of such Termination of Employment send written notice to the Purchaser and each member of the Purchaser's Group of its intention to purchase such Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares. If the Company decides not to exercise such right, the Company shall not later than 75 days after the date of such Termination of Employment send written notice to the Purchaser and each member of the Purchaser's Group of its intention not to exercise such right. The closing of such purchase shall take place at the principal office of the Company within 30 days after the giving of such written notice by the Company. The Company's rights to purchase under this Section 4.1 may not be exercised in part. 4.2 Purchaser's Right to Put. (a) In the event of any Termination of Employment (i) by the Company without Cause, (ii) due to resignation by the Purchaser with Good Reason or (iii) the Purchaser's Retirement, the Purchaser's Group shall have the right to put to the Company, and the Company shall be required upon exercise of such right to purchase (or cause its designee to purchase) a number of shares of Class B Common Stock or Class C Common Stock, as the case may be, and the shares equal to the 10 total number of shares of Class B Common Stock or Class C Common Stock, as the case may be, and the Option Shares held by the Purchaser's Group times the Put/Call Percentage in effect as of the date of Termination of Employment at a per share price equal to the FMV per Share as of the date of such Termination of Employment. (b) In the event of any Termination of Employment due to Disability of the Purchaser or death of the Purchaser, the Purchaser's Group shall have the right to put to the Company, and the Company shall be required upon exercise of such right to purchase (or cause its designee to purchase) all of the Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares held by the Purchaser's Group at a per share price equal to the FMV per Share as of the date of such Termination of Employment. (c) The rights of the Purchaser's Group under Section 4.2(a) and (b) may only be exercised by holders of not less than a majority of the total shares of Class B Common Stock or Class C Common Stock, as the case may be, and Option Shares held by the Purchaser's Group and the decision to exercise such rights will be binding upon each member of the Purchaser's Group. If the Purchaser's Group desires to exercise its rights pursuant to this Section 4.2 following any Termination of Employment, the Purchaser's Group shall give written notice of such intent to the Company no later than the earlier of (i) 90 days after the Company gives notice that it will not exercise its rights under Section 4.1 and (ii) 15 days after the expiration of the Company's rights under Section 4.1. The closing of such purchase shall take place at the principal office of the Company within 30 days after the giving of such written notice to the Company. The Purchaser's Group's rights to put under this Section 4.2 may not be exercised in part. 4.3 Payment of Purchase Price by the Company. Notwithstanding the foregoing, the Company shall not be required to purchase for cash any shares of Common Stock pursuant to Section 4.1 or 4.2 if (a) such purchase would be or would result in a violation by the Company or any of its subsidiaries of (i) the terms of any debt agreements or other documents related thereto to which the Company or any of its subsidiaries is a party or (ii) applicable law or (b) the Board of Directors (excluding Messrs. Lanza and LaPenta or their respective nominees) unanimously determines that such purchase would be reasonably likely to materially impact the Company's available cash, require unsuitable additional debt to be incurred or otherwise have a material adverse effect on the financial condition of the Company. If the Company is precluded from paying for all or any portion of the shares of Common Stock in cash pursuant to the preceding sentence, the Company shall issue a subordinated note to the Purchaser in respect of the shares not purchased for cash or a member of the Purchaser's Group which note shall be repaid in cash (i) from the proceeds obtained by 11 the Company from the sale of Common Stock in an Initial Public Offering and (ii) at such time that the Board of Directors determines that the conditions described in the preceding sentence no longer exist; provided, that such note shall (A) bear pay-in-kind interest at a rate per annum which, in the opinion of an independent, mutually acceptable nationally-recognized investment banking firm, will result in such note having a fair market value on the date of issuance equal to the aggregate principal amount thereof, (B) be payable in full on April 30, 2007 except as otherwise provided herein, (C) be subordinated to the Company's obligations under any guarantee of any bank credit obligations of its subsidiaries and (D) contain such other covenants, events of default and other terms and conditions customary for notes of that kind. If in connection with the exercise of rights pursuant to Section 4.1 or 4.2, the Company is required to issue a subordinated note, at the request of the Purchaser (or the holders of not less than a majority of the total number of shares of Class B Common Stock, Class C Common Stock and Option Shares held by the Purchaser's Group), the Company (by action of the Board of Directors) will in good faith endeavor to cause L-3 Communications Corporation ("L-3") to purchase the shares to be purchased pursuant to Section 4.1 or 4.2 in exchange for the issuance of a subordinated note so long as such purchase is permitted by the terms of any debt agreements or other documents related thereto to which L-3 or any of its subsidiaries is a party; provided that in no event shall the Company (or the Board) be required to cause L-3 to purchase such shares unless in its judgment such purchase on the terms set forth herein would not have a material adverse impact on L-3's ability to raise debt financing on commercially reasonable terms. Any subordinated note issued by L-3 pursuant to the foregoing shall contain such covenants, events of default and other terms and conditions customary for notes of that kind, including terms described in (A) - (C) above, except that (i) interest on such note shall be payable in cash and (ii) such note shall be payable in full on August 15, 2007 except as otherwise provided herein and shall be subordinated to L-3's obligations under any bank credit obligations or senior subordinated debt. In the event that the Company is precluded from paying for all or any portion of the shares of Common Stock in cash because such purchase would be or would result in a violation by the Company or any of its subsidiaries of the terms of any debt agreements or other documents related thereto to which the Company or any of the subsidiaries is a party, the Company shall use its reasonable best efforts to obtain, or cause any such subsidiary to obtain, a waiver under such debt agreements or other agreements of such term or terms to allow the Company to pay for all or any portion of the shares of Common Stock in cash. 4.4 Termination of Put/Call Rights. The rights and obligations set forth in this Section 4 shall lapse upon a Public Offering. 12 5. Shares Subject to Forfeiture 5.1 Forfeiture Events. If prior to the third anniversary of the Closing Date, there is a Termination of Employment of the Purchaser for Cause or the Purchaser resigns without Good Reason or retires, then all of the Shares Subject to Forfeiture shall be forfeited (whether or not then held by Purchaser) (each such event, a "Forfeiture Event"). 5.2 Lapse of Forfeiture Restrictions. (a) The Shares Subject to Forfeiture shall no longer be subject to forfeiture upon the earliest to occur of the following events (each such event, a "Restriction Lapse"): (i) the date of death of the Purchaser; (ii) the date of Disability of the Purchaser; (iii) the date that the Purchaser resigns for Good Reason or is terminated without Cause; (iv) the date that the Company consummates a Public Offering at a FMV per Share of at least $6.47; (v) the date of the closing of a transaction resulting in a Change of Control or any other transaction involving the acquisition by a Person other than an Affiliate of Lehman of shares of Class A Common Stock representing 10% or more of the Class A Common Stock held by Lehman and LBHI (and their Permitted Transferees, as such term is defined in the Stockholders Agreement) on the Closing Date), in each case yielding a price per share in such transaction of at least $6.47; (vi) the first date following a Public Offering that the FMV per Share based on the average of the closing sales prices for the 20 trading days prior to such date equals or exceeds $6.47; or (vii) the date of consummation of a transaction referred to in Section 5.1(ii) (c). Shares Subject to Forfeiture shall be deemed no longer subject to forfeiture immediately prior to the occurrence of the Restriction Lapse referred to in clause (iv) or (v) of this Section 5.2. (b) Notwithstanding the foregoing, the Shares Subject to Forfeiture shall no longer be subject to forfeiture on the date that is nine years after the Closing Date (but only to the extent that the Shares Subject to Forfeiture have not previously been forfeited). Any such lapse of the restrictions on the Shares Subject to Forfeiture pursuant to this Section 5.2(b) shall be a "Restriction Lapse". 5.3 Conversion. (a) Upon the later to occur of (i) the consummation of the Initial Public Offering and (ii) such time as there shall have occured a Forfeiture Event or Restriction Lapse as to both of the Initial Holders of Class B Common Stock, all of the Class B Common Stock held by the Purchaser's Group shall be converted to shares of Class A Common Stock in accordance with the terms of the Certificate of Incorporation of the Company. (b) Upon the occurrence of a Forfeiture Event or Restriction Lapse with respect to the Purchaser that occurs prior to both the consummation of the Initial Public Offering and the occurrence of a Forfeiture Event or Restriction Lapse with 13 respect to the other Initial Holder of Class B Common Stock, all of the Class B Common Stock held by the Purchaser's Group shall be converted to shares of Class C Common Stock in accordance with the terms of the Certificate of Incorporation of the Company. 6. Miscellaneous. 6.1 Recapitalization, Exchanges, Etc., Affecting Common Stock. The provisions of this Agreement shall apply, to the full extent set forth herein, to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect or upon conversion of, in exchange for, or in substitution of the Class B Common Stock purchased pursuant hereto (or the Class A Common Stock or Class C Common Stock to which such Class B Common Stock has been converted, as the case may be) and the Option Shares, by reason of any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise. In the event that any of the foregoing events shall occur, then and in each such case, the number of shares and price per share of Class B Common Stock purchased pursuant to this Agreement (or the Class A Common Stock or Class C Common Stock to which such Class B Common Stock has been converted, as the case may be) and any terms of this Agreement referring to such number of shares or price per share and the number of Option Shares received by the Purchaser upon the exercise of any Options shall, in each such case, be equitably and appropriately adjusted. 6.2 Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under Section 3.2 hereof, such transferee shall be deemed to be the Purchaser hereunder; provided, however, that no transferee (including, without limitation, transferees referred to in Section 3.2 hereof) shall derive any rights under this Agreement unless and until such transferee has delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement. 6.3 Amendment. This Agreement may be amended only by a written instrument signed by the Company and holders of a majority of the Class B Common Stock purchased pursuant hereto and the Option Shares, and any such amendment shall be effective against the Company and all holders of the Class B Common Stock and Option Shares. 6.4 Applicable Law. The laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Agreement. 14 6.5 Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered by hand (whether by overnight courier or otherwise) or sent by registered or certified mail, return receipt requested, postage prepaid, to the party to whom it is directed: (a) If to the Company, to it at the following address: L-3 Communications Holdings, Inc. 600 Third Avenue New York, New York 10016 Attn: General Counsel With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attn: David Chapnick (b) if to the Purchaser, to it at the following address: Robert V. LaPenta L-3 Communications Holdings, Inc. 600 Third Avenue New York, New York 10016 With a copy to: Fried, Frank, Harris, Shriver and Jacobson One New York Plaza New York, New York 10004 Attn: Robert C. Schwenkel or at such other address as either party shall have specified by notice in writing to the other. 6.6 Integration. This Agreement and the documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and in the Stockholders Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to this subject matter other than such agreements and understandings set forth in the Stockholders Agreement. 15 6.7 Counterparts. This Agreement may be executed in two or more of which together shall constitute one counterparts, each of which shall be deemed an original and and the same instrument. 6.8 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto will waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties hereto, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement. 16 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. L-3 COMMUNICATIONS HOLDINGS, INC. By: ----------------------------- Name: Title: ROBERT V. LAPENTA --------------------------- SCHEDULE I Number of Shares of Class B Common Purchase Price Stock Per Share Aggregate Amount - ----------------- --------------- ---------------- 1,500,000 $5.00 $7,500,000 EXHIBIT B Option Agreement Form - Please see Exhibit 10.9 to the Registration Statement. EXHIBIT C Stockholders' Agreement Form - Please see Exhibit 10.3 to the Registration Statement. EX-10.61 7 LEASE DATED AS OF APRIL 29, 1997 AMONG LOCKHEED MARTIN TACTICAL SYSTEMS, INC., L-3 COMMUNICATIONS CORPORATION AND UNISYS CORPORATION EXHIBIT 10.61 ASSIGNMENT AND ASSUMPTION OF LEASE THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this "Assignment") is dated as of April 29, 1997 among LOCKHEED MARTIN TACTICAL SYSTEMS, INC., a New York corporation (the "Assignor"), L-3 COMMUNICATIONS CORPORATION, a Delaware corporation (the "Assignee"), and UNISYS CORPORATION, a Delaware corporation (the "Landlord"), with reference to the following: RECITALS A. The Landlord, as landlord, and the Assignor, as tenant, executed a Lease Agreement dated May 5, 1995 (which, together with all modifications, amendments and supplements thereof, is hereinafter referred to collectively as the "Lease"), a copy of which is attached hereto and incorporated by reference as Exhibit A, pursuant to which Landlord leased to the Assignor and the Assignor leased from Landlord property and improvements described therein located at 322 North 2200 West, Salt Lake City, Utah (Buildings D, D Annex and Z) (the "Premises"). B. The Assignee is acquiring certain assets and assuming certain liabilities from the Assignor including the Assignor's rights, leasehold interest and obligations under the Lease. C. In connection with such acquisition, the Assignor desires to assign the Lease to the Assignee, and the Assignee desires to accept the assignment of the Lease from the Assignor. D. The Landlord has agreed to enter into this Assignment to, among other things, evidence its consent to such assignment of the Lease. NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Assignor, the Assignee and the Landlord hereby covenant and agree as follows: 1. Assignment. The Assignor grants, assigns and transfers to the Assignee, its successors and assigns, all of the Assignor's right, title and 1 interest in, to and under the Lease (including, without limitation, any options under the Lease and any rights to extend or renew the Lease) and the Assignee accepts from the Assignor all of the Assignor's right, title and interest in, to and under the Lease. 2. Assumption of Lease Obligation. Assignee assumes and agrees to perform and fulfill all terms, covenants, conditions and obligations required to be performed and fulfilled by the Assignor under the Lease, including, without limitation, the obligation to make all payments due or payable on behalf of the Assignor under the Lease as they become due and payable. 3. Representations of Assignor and Landlord. The Assignor and the Landlord represent to the Assignee as follows: (a) The Lease attached hereto as Exhibit A is a true, correct and complete copy of the Lease (including all modifications, amendments and supplements thereof) and the same are the only agreements between Landlord and the Assignor with respect to the subject matter thereof. (b) The Lease is in full force and effect and, except for the modifications, amendments and supplements included in Exhibit A, the Lease has not been modified, amended or supplemented. (c) Except as set forth on Exhibit B, no default by the Assignor or the Landlord has occurred and is continuing under the Lease, and no event has occurred and is continuing which with the giving of notice or the lapse of time or both would constitute a default thereunder. (d) No minimum or base rent or other rental has been paid in advance (except for the current month). (e) The monthly amount of base rent due under the Lease as of May 1, 1997, is $64,417, and the minimum or base rent and all other rentals and other payments due, owing and accruing under the Lease have been paid through April 30, 1997. 2 (f) The term of the Lease commenced on May 5, 1995, and the current term of the Lease expires on December 31, 2001. 4. Landlord's Consent. The Landlord hereby consents to the Assignor's assignment of the Lease to the Assignee and the Assignee's assumption of the Lease. Landlord's consent to the Assignor's assignment of the Lease to the Assignee shall not be deemed to release the Assignor from any of its obligations under the Lease or to alter any provision of the Lease and/or the primary liability of the Assignor for the payment of minimum or base rent or any additional rent due under the Lease or for the performance of any other obligations to be performed by the Assignor under the Lease. 5. Successors and Assigns. This Assignment shall be binding on and inure to the benefit of the parties hereto, and their respective heirs, personal representatives, successors and assigns, provided that this Section 5 shall not be construed to permit any future assignments of the Lease or subletting of the Premises except as permitted by the Lease. 6. Counterparts. This Assignment may be signed in counterpart and, as so executed, shall constitute a binding agreement. 7. Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the state in which the Premises are located. IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the date first above written. WITNESS/ATTEST: ASSIGNOR: LOCKHEED MARTIN TACTICAL SYSTEMS, INC. ___________________________ By:_______________________(SEAL) Name: Title: 3 ASSIGNEE: L-3 COMMUNICATIONS CORPORATION _____________________________ By:_______________________(SEAL) Name: Title: 4 WITNESS/ATTEST LANDLORD: UNISYS CORPORATION _____________________________ By:_______________________(SEAL) Name: Title: 5 STATE OF NEW YORK, COUNTY OF QUEENS, TO WIT: On this the 23 day of May 1997, before me a notary public of said State, Michael T. Shianese, the undersigned officer, personally appeared Michael T. Shianese, who acknowledge himself to be an office of L-3 Communication, a Delaware corporation, and that he, as such Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signed the name of the corporation by himself as a Vice President. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ------------------------ Notary Public My Commission Expires: STATE OF Maryland, COUNTY OF Montgomery, TO WIT: On this the 30th day of April 1997, before me a notary public of said State, Stephen M. Piper, the undersigned officer, personally appeared before me, who acknowledge himself to be a Vice President & Asst. Secretary of Lockheed Martin Tactical Systems, Inc., a New York corporation, and that he, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signed the name of the corporation by himself as a Vice President & Asst. Secretary. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ------------------------ Notary Public My Commission Expires: Dec. 1, 2000 6 -------------------------- Notary Public My Commission Expires: Dec. 1, 2000 STATE OF PENNSYLVANIA, COUNTY OF MONTGOMERY, TO WIT: On this the 29th day of April 1997, before me a notary public of said State, Pennsylvania, the undersigned officer, personally appeared Gregory T. Fisher, who acknowledged himself to be a Vice President of Unisys Corporation, a Delaware corporation, and that he, as such Vice President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as a Vice President. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ------------------------ Notary Public My Commission Expires: 7 EXHIBIT A THE LEASE 8 LEASE Between UNISYS CORPORATION, as Lessor and LORAL CORPORATION, as Lessee 13 TABLE OF CONTENTS Article Page 1. Demised Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5. Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 6. Alterations; Demising Costs; Signage . . . . . . . . . . . . . . . . 18 7. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . 19 8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 9. Assignment, Subletting and Encumbrances . . . . . . . . . . . . . . . 20 10. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 11. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 24 13. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . 25 14. Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . . 26 15. Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 16. Damage and Destruction . . . . . . . . . . . . . . . . . . . . . . . 27 17. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 28 18. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . 28 19. Release of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . 28 20. Surrender of Demised Premises . . . . . . . . . . . . . . . . . . . 28 21. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 22. Lessor's Inability to Perform . . . . . . . . . . . . . . . . . . . 29 23. Limitations or Liability . . . . . . . . . . . . . . . . . . . . . . 30 24. Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . 30 25. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 26. Rider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 14 LEASE LEASE, dated as of May 5, 1995, between UNISYS CORPORATION, a Delaware corporation having an office at Township Line and Union Meeting Roads, Blue Bell, Pennsylvania 19424 ("Lessor") and LORAL CORPORATION, a New York corporation having an office at 600 Third Avenue, New York, New York 10016 ("Lessee"). W I T N E S S E T H : WHEREAS, Lessor is the owner of the real property, including improvements thereon (collectively, the "Property") referenced on Schedule A hereto; and WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to hire from Lessor, certain premises at the Property upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants hereinafter provided, Lessor and Lessee hereby agree as follows: 1. Demised Premises. 1.1. Lessor hereby leases to Lessee, and Lessee hereby leases and hires from Lessor, the Demised Premises, as defined in Schedule B hereto, together with the non-exclusive right to use the common areas of the Property and such other rights as are necessary or desirable to provide Sublessee with substantially the same rights and benefits as have been generally afforded to and enjoyed by the Defense Systems unit of Unisys Corporation ("Defense Systems") prior to the date hereof (including, without limitation, rights of ingress and egress, parking consistent with past practice or otherwise as set forth in the Rider attached to this Sublease, and access to public and private utilities) for the lease term hereinafter stated and for the Base Rent and Additional Rent (both as hereinafter defined) set forth herein, upon and subject to all of the terms and provisions hereinafter provided or incorporated in this Lease by reference. 1.2. Lessee agrees to accept the Demised Premises on the Commencement Date (as hereinafter defined) in its "as is" condition and Lessor shall not be obligated to perform any work or furnish any materials in, to or about the Demised Premises in order to prepare the Demised Premises for occupancy by Lessee or otherwise. Lessee hereby releases Lessor from any and all liability resulting from (i) any latent or patent defects in the Demised Premises, (ii) the failure of the Demised Premises to comply with any legal requirements applicable thereto or (iii) the status of the title to the Demised Premises, provided that the foregoing release of liability is not intended to limit or otherwise affect any liability that Lessor or any affiliate of Lessor may have to Lessee or any affiliate of Lessee which arises under any of the other terms and conditions of this Lease or under the terms and conditions of any other agreement. Lessee acknowledges that, except as expressly set forth herein or as expressly set forth in any separate document, Lessor has made no statements, representations, covenants or warranties with respect to (x) the condition or manner of construction of the Property or any improvements constructed in the Demised Premises, (y) the uses or purposes for which the Demised Premises may be lawfully occupied or (z) any encumbrances, covenants, restrictions or agreements affecting title 15 to the Property or the Demised Premises. Lessee also agrees that, in executing this Lease, it has not relied upon or been induced by any statements, representations, covenants or warranties of any person other than those, if any, set forth expressly in this Lease or in any other separate agreements by or between Lessor and/or Lessee or any of their respective affiliates. 2. Term. 2.1. (a) The term of this Lease shall commence on the date hereof (the "Commencement Date") and, unless earlier terminated or extended as herein provided, shall expire on the Expiration Date. As used in this Lease, (i) "Term" shall mean the term of this Lease, and (ii) "Expiration Date" shall mean the Scheduled Expiration Date, as defined in Schedule C hereto; provided that in the event of a termination of this Lease pursuant to the terms hereof prior to the Scheduled Expiration Date, the "Expiration Date" shall mean such date of termination of this Lease. (b) References in this Lease to the "termination" of this Lease include the stated expiration of the Term and any earlier termination thereof pursuant to the provisions of this Lease, or by law. Except as otherwise expressly provided in this Lease with respect to those obligations of Lessee which by their nature or under the circumstances can only be, or under the provisions of this Lease may be, performed after the termination of this Lease, the Term and estate granted hereby shall end at noon on the date of termination of this Lease as if such date were the Expiration Date, and neither party shall have any further obligation or liability to the other after such termination. Notwithstanding the foregoing, any liability of Lessor or Lessee to make any payment under this Lease, including, without limitation, amounts payable by Lessee as Base Rent or Additional Rent hereunder (both as hereinafter defined), which shall have accrued prior to the termination of this Lease shall survive the termination of this Lease. 3. Rent. 3.1. The rent ("Rent") payable during the Term under this Lease shall consist of the following: (a) the Base Rent, as defined in Schedule C hereto. (b) additional rent ("Additional Rent") in an amount equal to any and all other sums payable by Lessee to Lessor under this Lease. 3.2. Except as otherwise specifically provided in this Lease (a) all payments of Base Rent shall be in equal monthly installments and shall be made in advance on the first (1st) day of each month during the Term, without notice (provided that if the amount of Base Rent is required to be calculated by Lessor in accordance with Schedule C hereof, then Lessor shall give Lessee prior written notice of such calculation, which notice shall include an explanation of the basis for such calculation and reasonable backup documentation relating thereto), and (b) all payments of Additional Rent shall be made within 30 days after written notice from Lessor, in each case by check payable to the order of "UNISYS CORPORATION" and addressed to Unisys Corporation, P.O. Box 500, Blue Bell, Pennsylvania 19424-0003, Attention: Disbursement & Control Dept., or to such other person or at such other place as Lessor may from time to time designate in writing. 16 3.3. Lessee shall pay all Rent when due, in lawful money of the United States which shall be legal tender for the payment of all debts, public and private, at the time of payment. All sums due and payable by Lessor or Lessee pursuant to the terms of this Lease that are not paid within five (5) days of the due date therefor shall from and after the due date bear interest at an annual percentage rate of ten percent (10%). All interest accrued and payable by Lessee under this subsection as hereinabove provided shall be deemed to be Additional Rent payable hereunder and due at such time or times as the rent with respect to which such interest shall have accrued shall be payable under this Lease. 3.4. Lessee agrees to pay, an Additional Rent, any revenue tax or charge, occupancy tax, business privilege tax, business use tax or any other tax that may be levied against the Demised Premises or Lessee's use or occupancy thereof during the Term; provided, however, that in no event shall Lessee be obligated to pay any income tax that is imposed upon and/or payable by Lessor, and provided further that payments made by Lessee pursuant to this Section 3.4 shall not be duplicative of amounts paid by Lessee pursuant to any other provision of this Lease. 3.5. In the event that Lessee shall dispute any calculation of Rent charged to Lessee by Lessor, then Lessee shall send to Lessor a written notice, within 30 days of receipt by Lessee of such charge, setting forth the basis for Lessee's dispute. Lessor and Lessee shall thereupon use reasonable and good faith efforts to resolve such dispute. If the parties are unable to resolve such dispute within 30 days after submission by Lessee of its dispute notice, then the parties shall designate an independent certified public accountant mutually acceptable to both parties (the "Independent Accountant") to resolve such dispute and the fees and charges of the Independent Accountant shall be shared equally by the parties. Both parties shall provide the Independent Accountant with all information reasonably requested by the Independent Accountant in connection with its review of such dispute, and both parties shall request that the Independent Accountant complete its work expeditiously and issue a written report to both parties setting forth its determination. The written determination of the Independent Accountant shall be final and shall be binding upon both Lessor and Lessee. All disputes to be resolved pursuant to this Section 3.5 shall be so resolved in accordance with the principles and standards set forth in Section 3.6 below. 3.6. All calculations by Lessor of Base Rent, Additional Rent and any other amounts that are payable by Lessee hereunder shall be made in accordance with Lessor's past practices during calendar year 1994 with respect to Defense Systems, and all charges and allocations relating to the Demised Premises and all accounting practices utilized by Lessor with respect to amounts charged to Lessee under this Lease (including the capitalization, amortization and expensing of costs incurred and funds expended) shall also be made in such manner. 4. Use. 4.1. Lessee shall occupy and use the Demised Premises solely for manufacturing, light assembly, engineering, research and development, office and warehouse and such other uses as may be approved by Lessor (which approval shall not be unreasonably withheld, delayed or conditioned), provided that any such use shall be subject in all respects to the other terms and provisions of this Lease, and subject to any and all 17 laws, statutes, ordinances, orders, regulations and requirements of all federal, state and local governmental, public or quasi-public authorities, whether now or hereafter in effect, which may be applicable to or in any way affect the Demised Premises or any part thereof and all requirements, obligations and conditions of all instruments of record on the date of this Lease affecting the Demised Premises (collectively, "Legal Requirements"). 5. Services. 5.1. It is the intent of the parties that Lessor shall continue to provide to Lessee all services generally and customarily provided by Unisys Corporation to the occupants of the Demised Premises prior to the Commencement Date, together with any other services that may be appropriate under the circumstances from time to time (such services being hereinafter referred to collectively as the "Services"). In connection with the foregoing, such Services shall include, without limitation, each of the services set forth on Schedule D hereto, and such Services shall not include any of those items set forth on Schedule D-1 hereto. Lessee shall pay to Lessor, in consideration for the Services and as Additional Rent, an amount equal to Lessor's actual costs in, to or for the benefit of the Demised Premises or Lessee which shall be determined in accordance with the principles set forth in Section 3.6 above ("Actual Costs"). On a quarterly basis, Lessor shall provide to Lessee a written statement, in reasonable detail, setting forth such Actual Costs for Services. In the event that Lessee disputes Lessor's statement of Actual Costs, such dispute shall be resolved in accordance with Section 3.5 hereof. 5.2. It is the intent of the parties that Lessee shall continue to provide to Lessor, during the Term hereof, all reasonable services generally and customarily provided by Defense Systems, prior to the Commencement Date, to any other portions of the Property. Lessee shall perform such services, and Lessor shall pay to Lessee a proportionate share of Lessee's actual costs incurred in performing such services. On a quarterly basis, Lessee shall provide to Lessor a written statement, in reasonable detail, setting forth such costs. In the event of a dispute with respect to such costs, such dispute shall be resolved in accordance with Section 3.5 hereof. 5.3. In the event that telephone switching equipment or other telecommunications equipment utilized by Lessor or Lessee is located within the premises occupied by the other party, then the party occupying such premises shall grant the other party reasonable access to such telephone switching equipment or other telecommunications equipment and other areas reasonably required for such telecommunications use, subject in each case to reasonable security requirements of the party granting such access. 5.4. The provisions of this Section shall survive the expiration or earlier termination of this Lease. 6. Alterations; Demising Costs; Signage. 6.1. As used herein, the term "Alterations" shall mean, collectively, any alterations, modifications installations, additions or improvements to the Demised Premises. Without the prior written consent of Lessor in each instance, which consent shall not be unreasonably withheld conditioned or delayed, Lessee shall not make any (a) structural Alterations or (b) non-structural Alterations having a design and construction cost in 18 excess of $50,000 on a per project basis. Any Alterations consented to by Lessor, or otherwise permitted under this Lease, shall be performed by Lessee, at its sole cost and expense, in a good and workmanlike manner. Lessor shall have the right to post notices of non-responsibility and similar notices, as Lessor shall reasonably deem appropriate, on the Demised Premises while Alterations are occurring. 6.2. Lessor and Lessee shall use reasonable and good faith efforts to reach a mutual agreement as to whether any Alterations are necessary and appropriate in order to separate the Demised Premises from the premises in the Property occupied by Lessor. In the event that the parties reach such a mutual agreement, then Lessor shall perform such agreed upon Alterations, and Lessee shall, within 30 days after written demand by Lessor, reimburse Lessor for one-half of the costs and expenses relating to such Alterations. Lessor may request payment of Lessee's share of such costs, and (if requested) Lessee shall pay its share of such costs, as such costs are incurred by Lessor during the course of design and construction of such Alterations. Lessor shall require that (a) any contractors or subcontractors performing any such work maintain reasonable and appropriate liability insurance and (b) any such insurance policies shall name Lessor and Lessee as additional insureds. 6.3. Lessee shall have the right to install reasonable and appropriate signage, both at the entrance to the Demised Premises and in the common areas of the Property, indicating Lessee's occupancy of the Demised Premises, provided that the location, size and design of any such signage shall be subject to the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed. 6.4. In the event that the Demised Premises are measured or re-measured pursuant to the terms of this Lease (inclusive of the Rider, if any, and Schedule's attached hereto), Lessor and Lessee shall each pay one-half (1/2) of the costs and expenses relating to such measurement or remeasurement. 7. Maintenance and Repair. 7.1. Except as provided to the contrary in Schedule D and Schedule D-1 attached hereto, Lessor shall, at its sole cost and expense, maintain the Premises in reasonably satisfactory repair and condition, except for ordinary wear and tear, and will make all structural and nonstructural repairs which may be required by law or required to keep the Premises in reasonably satisfactory repair and condition, except for ordinary wear and tear, and Lessor's Actual Costs for providing such maintenance and repair Services shall be charged to Lessee as Additional Rent in accordance with Section 5.1 hereof. 8. Insurance. 8.1. Lessee, at Lessee's sole expense, shall maintain for the benefit of Lessor such policies of insurance (and in such form) with respect to the Demised Premises which shall be reasonably satisfactory to Lessor as to coverage and insurer (who shall be licensed to do business in the State in which the Demised Premises are located) provided that such insurance shall at a minimum include comprehensive general liability insurance protecting and indemnifying Lessor and Lessee against any and all claims and liabilities for injury or damage to persons or property occurring 19 upon, in or about the Demised Premises, and the public portions of the Property, caused by or resulting from or in connection with any act or omission of Lessee or Lessee's employees, agents or invitees. Lessor shall be named as an additional insured under any such policies of insurance obtained by Lessee, and no such policy shall be subject to termination or modification unless at least thirty (30) days' prior written notice (or ten (10) days' prior written notice, if such termination results from Lessee's failure to pay the premiums for such insurance) shall have been given by the applicable insurance company to Lessor. Upon execution of this Lease by Lessee and at least thirty (30) days prior to the expiration date of such policies, Lessee shall furnish to Lessor a certificate or certificates of insurance confirming that the required insurance is in full force and effect with all premiums paid current. Nothing contained herein shall limit, or prohibit, Lessee from providing such coverage through "blanket" policies of insurance and/or self-insuring therefor in a manner that is consistent with the general corporate practices of Lessee. 8.2. Nothing contained in this Lease shall relieve Lessee from any liability as a result of damage from fire or other casualty, but each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting from fire or other casualty. To the extent that such insurance is in force and collectible and to the extent permitted by law, Lessor and Lessee each hereby releases and waives all right to recovery against the other or anyone claiming through or under the other by way of subrogation or otherwise. The foregoing release and waiver shall be in force only if the insurance policies of Lessor and Lessee provide that such release or waiver does not invalidate the insurance; each party agrees to use reasonable efforts to include such a provision in its applicable insurance policies. If the inclusion of said provision would involve an additional expense, either party, at its sole expense, may require such provision to be inserted in the other's policy. 9. Assignment, Subletting and Encumbrances. 9.1. Lessee shall not sublease or mortgage, pledge or otherwise encumber all or any part of the Demised Premises, assign or mortgage this Lease (by operation of law or otherwise) or permit the Demised Premises to be used or occupied by anyone other than Lessee, Lessee's divisions and other Affiliates and Lessee's licensees, invitees, customers and vendors, without the prior written consent of Lessor in each instance, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that Lessee, upon at least 30 days' prior written notice to Lessor, may assign this Lease or sublet all or part of the Demised Premises to (A) an Affiliate of Lessee, (B) an entity into which Lessee is merged or consolidated, and (C) an entity which acquires all or substantially all of the business or operations of Lessee. Any consent by Lessor as hereinabove required shall not excuse Lessee from its obligation to obtain the express written consent of Lessor to any further action or matter with respect to which the consent of Lessor is hereinabove required and Lessee shall not be released from any of its obligations hereunder. The term "Affiliate", as used in this Section 9.1, shall have the same meaning as is set forth in the Asset Purchase Agreement. 10. Liens. 10.1. Lessee shall not suffer or permit any mechanic's, materialman's, vendor's, supplier's, laborer's or other similar liens 20 (collectively, "mechanic's liens") to be filed against the Demised Premises, or any part thereof, nor against Lessee's interest therein, by reason of work, labor, services or materials supplied or claimed to have been supplied to Lessee (except for mechanic's liens for payments that are not yet delinquent or for payments that Lessee is contesting in good faith and in a diligent manner). If any mechanic's lien described in the preceding sentence shall at any time be filed against the Demised Premises, or any part thereof, or Lessee's interest therein, Lessee shall, within forty-five (45) days after notice of the filing thereof, cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise, or provide Lessor with reasonable assurances as to Lessee's ability to satisfy such lien. If Lessee shall fail to cause such lien to be discharged within such forty-five (45) day period, then, in addition to any other right or remedy of Lessor, Lessor may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event Lessor shall be entitled to reimbursement from Lessee for any reasonable costs expended by Lessor. 11. Default. 11.1. (a) Each of the following shall constitute an Event of Default hereunder: (i) if Lessee shall fail to pay when due any Rent or any other amount Lessee may be required to pay hereunder, and Lessee shall fail to remedy such default within seven (7) business days after written notice thereof has been given to Lessee by Lessor, provided that an Event of Default shall not be deemed to have occurred hereunder if Sublessee shall have timely disputed in good faith its obligation to pay such Rent or the amount thereof; or (ii) if Lessee shall default in the observance or performance of any term, covenant or condition of this Lease on Lessee's part to be observed, performed or complied with (other than the payment of Base Rent and Additional Rent and other amounts payable hereunder) and Lessee shall fail to remedy such default within thirty (30) days after written notice to cure, or, if such default is of such a nature that for reasons beyond Lessee's control it cannot be completely remedied within said period of thirty (30) days, then if Lessee (A) shall not promptly institute and thereafter diligently prosecute to completion all steps necessary to remedy the same and (B) shall not remedy the same within a reasonable time after the date of default; or (iii) if any event shall occur or any contingency shall arise whereby this Lease or the estate hereby granted or the unexpired balance of the Term would, except as expressly permitted herein, by operation of law or otherwise, devolve upon or pass to any person or entity other than Lessee, and Lessee shall fail to remedy such default within sixty (60) days after written notice thereof has been given to Lessee by Lessor; (b) Upon the occurrence of any such Event of Default, Lessor may, in addition to exercising any other available rights or remedies available to Lessor under law, give to Lessee notice of its intention to end the Term at the expiration of three (3) days from the date of the giving of such notice, and, in the event such notice is given, this Lease and the Term and estate hereby granted (whether or not the Term shall have commenced) 21 shall terminate upon the expiration of said three (3) days with the same force and effect as if that day were the Expiration Date, provided, however, that Lessor and Lessee shall remain liable for the performance of their respective obligations hereunder which survive the termination of this Lease and for damages as provided in this Lease. 11.2. Notwithstanding anything to the contrary set forth herein, this Lease shall immediately terminate if any of the following events shall occur with respect to Lessee: (a) if Lessee shall (i) have applied for or consented to the appointment of a receiver, trustee or liquidator, or other custodian of Lessee, or any of its properties or assets, (ii) have made a general assignment for the benefit of creditors, (iii) have commenced a voluntary case for relief as a debtor under the United States Bankruptcy Code, or any other applicable federal or state laws, or filed a petition to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (iv) be adjudicated a bankrupt or insolvent; or (b) if without the acquiescence or consent of Lessee, an order, judgment or decree shall have been entered by any court of competent jurisdiction approving as properly filed a petition seeking relief under the United States Bankruptcy Code, or any other applicable federal or state laws, or any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute with respect to Lessee, or all or a substantial part of their respective properties or assets, and such order, judgment or decree shall have continued unstayed and in effect for any period of not less than ninety (90) days. Neither Lessee, nor any person claiming through or under Lessee or by reason of any statute or order of court shall, after such termination, be entitled to possession of the Demised Premises but shall forthwith quit and surrender the Demised Premises. Without limiting any of the foregoing provisions of this Section 10.2, if pursuant to the United States Bankruptcy Code, or any other applicable federal or state laws, Lessee is permitted to assign this Lease, Lessee agrees that adequate assurance of future performance by an assignee expressly permitted under such law shall be deemed to mean evidence in the form of financial statements prepared and certified by a certified public accountant that the assignee will have a net worth, after excluding the value of the leasehold, sufficient to meet the remaining obligations under this Lease. 11.3. In the event of any breach by Lessee or any persons claiming through or under Lessee of any of the terms, covenants or conditions contained in this Lease, Lessor, after the giving of any notice required by the terms of this Lease and the expiration of any notice and cure periods hereunder, (a) shall be entitled to enjoin such breach and (b) shall have the right to invoke any right and remedy available at law or in equity or by statute or otherwise. The provisions of this Section 11.3 shall survive the expiration or sooner termination of this Lease. 11.4. If this Lease and the Term shall terminate as provided in Section 11.1 or in Section 11.2 above, or by or under any summary proceeding or any other action or proceeding or if Lessor shall re-enter the Demised Premises as hereinabove provided or by or under any summary proceeding or any other action or proceeding, then in any of said events: (a) Lessee shall pay to Lessor all Base Rent, Additional Rent and other amount payable by Lessee hereunder to the date upon which this 22 Lease and the Term shall have terminated or to the date of re-entry upon the Demised Premises by Lessor, as the case may be; (b) Lessor shall be entitled to retain all monies, if any, paid by Lessee to Lessor, whether as advance Rent, security or otherwise, but such monies shall be credited by Lessor against any Rent due at the time of such termination or re-entry or, at Lessor's option, against any damages payable by Lessee; (c) Lessee shall be liable for and shall pay to Lessor, as damages, any deficiency between the Base Rent and Additional Rent payable hereunder for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Base Rent and Additional Rent to be at the same rate as was payable for the year immediately preceding such termination or re-entry less any Additional Rent for such one-year period payable to Lessor by Lessee pursuant to Section 5.1 above) and the net amount, if any, of rents ("Net Rent") collected under any reletting effected by Lessor for any part of such period (after first deducting from the rents collected under any such reletting all of Lessor's reasonable expenses in connection with the termination of this Lease or Lessor's re-entry upon the Demised Premises and in connection with such reletting including all reasonable repossession costs, brokerage commissions, legal expenses, attorneys' fees, alteration or similar costs and other expenses of preparing the Demised Premises for such reletting); (d) In the event that Lessor shall not have collected any monthly deficiencies as aforesaid, Lessor shall be entitled to recover from Lessee, and Lessee shall pay to Lessor, on demand, as and for liquidated and agreed final damages, a sum equal to the amount by which the Base Rent and Additional Rent payable hereunder for the period which otherwise would have constituted the unexpired portion of the Term (conclusively presuming the Base Rent and Additional Rent to be at the same rate as was payable for the year immediately preceding such termination or re-entry less any Additional Rent for such one-year period payable to Sublessor by Sublessee pursuant to Section 5.1 above) exceeds the then fair and reasonable rental value of the Demised Premises for the same period, both discounted to present value at the rate of eight percent (8%) per annum. If before presentation of proof of such liquidated damages to any court, commission or tribunal, the Demised Premises, or any part thereof, shall have been relet by Lessor for the period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of rent upon such reletting shall be deemed, prima facie, to be the fair and reasonable rental value for the part or the whole of the Demised Premises so relet during the term of the reletting; and (e) In no event shall Lessee be entitled to receive any excess of Net Rent over the sums payable by Lessee to Lessor hereunder, and in no event shall Lessee be entitled in any suit for the collection of damages pursuant to this Article to a credit in respect of any Net Rent from a reletting except to the extent actually received by Lessor prior to the commencement of such suit. 11.5. If a default by Lessee shall have occurred and be continuing with respect to any obligations of Lessee under this Lease, Lessor may, at its option, upon reasonable prior notice to Lessee (unless Lessor reasonably believes there to be an emergency threatening Lessor's property outside the Demised Premises, or threatening substantial damage to Lessor's interest in the Demised Premises as Lessor, in which event no notice shall be 23 required and Lessor may act immediately), perform such obligations for the account of, and at the expense of, Lessee. The sums so paid or incurred by Lessor, in its sole discretion, together with interest at the rate specified in Section 3.3 hereof, costs and damages shall be due from and paid by Lessee, as Additional Rent, upon Lessee's receipt of written demand therefor from Lessor. 11.6. Nothing herein contained shall be construed as limiting or precluding the recovery by Lessor against Lessee of any sums or damages to which, in addition to the damages particularly provided above, Lessor may lawfully be entitled by reason of any default hereunder on the part of Lessee; provided, however, that in no event shall Lessor or Lessee be entitled to special or consequential damages with respect to any matter arising hereunder or relating hereto. 12. Indemnification. 12.1. Lessee shall indemnify and hold harmless Lessor and its employees and agents from and against any and all loss, cost, liability, claim, damage and expense, including, without limiting the generality of the foregoing, reasonable attorneys' fees and expenses and court costs, penalties and fines incurred in connection with or arising from any injury to Lessee or for any damage to, or loss (by theft or otherwise) of, any of the property of Lessee, irrespective of the cause of such injury, damage or loss and whether occurring in or about the Demised Premises or the Property. 12.2. Lessee shall indemnify and hold harmless Lessor and its officers, directors, shareholders and employees from and against any and all loss, cost, liability, claims, damage and expenses, including, without limiting the generality of the foregoing, reasonable attorneys' fees and expenses and court costs, penalties and fines, whether or not due to third party claims, suits or proceedings, incurred in connection with or arising from (a) any default by Lessee in the observance or performance of, or compliance with, any of the terms, covenants or conditions of this Lease on Lessee's part to be observed, performed or complied with, (b) the use or occupancy or manner of use or occupancy of the Demised Premises by Lessee or any of its agents, employees or contractors, or the exercise by Lessee or any of its agents, employees or contractors, of any rights granted to Lessee hereunder, (c) any acts, omissions or negligence of Lessee or any of its agents, employees or contractors, in or about the Demised Premises or the Property either prior to, during, or after the termination of this Lease or (d) the condition of the Demised Premises, but only to the extent that Lessee fails to perform any of its obligations hereunder with respect to the condition of the Demised Premises. If any action or proceeding shall be brought against Lessor by reason of any such claim, Lessee shall be given prompt notice thereof and, upon notice from Lessor, shall resist and defend such action or proceeding at Lessee's sole expense and employ counsel therefor reasonably satisfactory to Lessor. Lessee shall pay to Lessor on demand all sums which may be owing to Lessor by reason of the provisions of this subsection. Lessee's obligations under this subsection shall survive the Expiration Date or earlier termination of this Lease. 12.3. Lessor shall indemnify and hold harmless Lessee and Lessee's officers, directors, shareholders and employees from and against any and all loss, cost, liability, claims, damage and expenses, including, without limiting the generality of the foregoing, reasonable attorneys' fees and expenses and court costs, penalty and fines, whether or not due to third 24 party claims, suits or proceedings, incurred in connection with or arising from (a) any default by Lessor in the observance or performance of, or compliance with, any of the terms, covenants or conditions of this Lease on Lessor's part to be observed, performed or complied with, or (b) the gross negligence or wilful misconduct of Lessor (in its capacity as lessor hereunder) or any of its agents, employees or contractors (retained by Lessor in its capacity as lessor hereunder), in or about the Demised Premises or the Property either prior to, during, or after the termination of this Lease. If any action or proceeding shall be brought against Lessee by reason of any such claim, Lessor shall be given prompt notice thereof and, upon notice from Lessee, shall resist and defend such action or proceeding at Lessor's sole expense and employ counsel therefor reasonably satisfactory to Lessee. Lessor shall pay to Lessee on demand all sums which may be owed to Lessee by reason of the provisions of this subsection. Lessor's obligations under this subsection shall survive the Expiration Date or earlier termination of this Lease. 12.4. Lessor shall not be liable for any loss or damage to property of Lessee or any of its employees, guests, invitees or licensees by reason of theft or otherwise. Lessor shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Demised Premises or from the pipes, appliances or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature, unless such injury or damage has been shown to have been due solely to the gross negligence or willful act or omission of Lessor, its affiliates, or the officers, directors, employees or agents of Lessor or its affiliates in the course of their employment. Subject to the foregoing, all property of Lessee or others kept or stored on the Demised Premises shall be so kept or stored at the risk of Lessee only. 12.5. Notwithstanding anything in this Section 12 to the contrary, neither party shall be required to indemnify the other party (an "indemnitee") against the indemnitee's own negligence or wilful misconduct. 13. Hazardous Materials. 13.1. Lessee shall not cause or permit any Hazardous Material (as hereinafter defined) to be brought upon, kept or used in or about the Demised Premises by the agents, principals, employees, assigns, sublessees, contractors, subcontractors, consultants or invitees of Lessee, except in full compliance with applicable Legal Requirements. If Lessee breaches the obligations stated in the preceding sentence, or if the introduction or release of a Hazardous Material on the Demised Premises caused or permitted by Lessee (or the aforesaid others) results in contamination of the Demised Premises or any surrounding area(s), or if contamination of the Demised Premises or any surrounding area(s) by Hazardous Material otherwise occurs for which Lessee is legally, actually or factually liable or responsible (other than liability which arises solely as a result of the tenancy created hereby or solely as a result of Lessor's mere occupancy of the Demised Premises), then Lessee shall fully and completely indemnify, defend and hold harmless Lessor (or any party claiming by, through or under Lessor) from any and all claims, judgments, damages, penalties, fines, costs, liabilities, expenses or losses, including, without limitation: (i) diminution in the value of the Demised Premises; (ii) any asserted damage to the Property or to neighboring properties or the occupants of the Property or neighboring properties, and (iii) any sums paid in settlement of claims, 25 reasonable attorneys' fees, consultants fees and expert fees which arise or arose before, during or after the term of this Lease as a consequence of such contamination. This indemnification includes, without limitation, costs incurred in connection with any investigation or site conditions or any clean-up, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of Hazardous Materials present in the soil or ground water on or under the Demised Premises for which Lessee is responsible pursuant to the terms of this Lease. Without limiting the foregoing, if the introduction or release of any Hazardous Materials on, under or about the Demised Premises or any other surrounding area(s) caused or permitted by Lessee (or the aforesaid others) results in any contamination of the Demised Premises, Lessee shall immediately take all actions at its sole expense as are necessary or appropriate to return the Demised Premises to the condition existing prior to the introduction by Lessee of any such Hazardous Materials thereto; provided that the prior written approval (which approval shall not be unreasonable withheld, conditioned or delayed) of such actions by Lessor shall be first obtained. The foregoing obligations and responsibilities shall survive the expiration or earlier termination of this Lease. 13.2. As used herein, the term "Hazardous Materials" means any hazardous or toxic substance, material or waste, including, but not limited to, those substances, materials, and wastes listed in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reorganization Act of 1986 (42 U.S.C. Section 9601 et seq., as amended), the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act, the Federal Toxic Substances Control Act, the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 301 and amendments thereto), and all substances, materials and wastes that are defined as "toxic", "hazardous" or "extremely hazardous" or are otherwise regulated under any applicable local, state or federal law. In furtherance of, and not in limitation of the foregoing, the term "Hazardous Materials" shall include asbestos, asbestos-containing materials and petroleum. 13.3. Lessor and Lessee acknowledge and agree that the Asset Purchase Agreement shall govern all matters relating to the presence of Hazardous Materials in, on, under and about the Demised Premises prior to the execution and delivery hereof. 14. Right to Inspect. 14.1. Lessor and the authorized representatives of Lessor shall have the right to enter upon the Demised Premises upon reasonable advance notice to Lessee at all reasonable times during usual business hours (and at any time without notice in the case of an emergency) for the purpose of inspecting the same, conducting an environmental review of Lessee's business operations or exhibiting the same to prospective purchasers, tenants or mortgagees. 15. Eminent Domain. 15.1. If all of the Demised Premises are taken by exercise of the power of eminent domain (or conveyed by Lessor in lieu of such exercise) this Lease will terminate on a date (the "termination date") which 26 is the earlier of the date upon which the condemning authority takes possession of the Demised Premises or the date on which title to the Demised Premises is vested in the condemning authority. If more than 25% of the rentable area of the Demised Premises is so taken, or if Lessee's rights of access to the Demised Premises or Lessee's use of parking facilities at the Property are materially impaired as a result of such a taking, then Lessee will have the right to cancel this Lease by written notice to Lessor given within 20 days after the termination date. If less than 25% of the rentable area of the Demised Premises is so taken, or if the Lessee does not cancel this Lease according to the preceding sentence, the Base Rent will be abated in the proportion of the rentable area of the Demised Premises so taken to the rentable area of the Demised Premises immediately before such taking, and Lessee's Share will be appropriately recalculated. If 25% or more of the Property is so taken, Lessor may cancel this Lease by written notice to Lessee given within 30 days after the termination date. In the event of any such taking, the entire award will be paid to Lessor and Lessee will have no right or claim to any part of such award; however, Lessee will have the right to assert a claim against the condemning authority in a separate action, so long as Lessor's award is not otherwise reduced, for Lessee's moving expenses and leasehold improvements owned by Lessee. 16. Damage and Destruction. 16.1. If the Demised Premises or the Property are damaged by fire or other insured casualty, Lessor will give Lessee written notice of the time which will be needed to repair such damage, as determined by Lessor in its reasonable judgment, and the election (if any) which Lessor has made according to this Section 16. Such notice will be given before the 30th day (the "notice date") after the fire or other insured casualty. 16.2. If the Demised Premises or the building are damaged by fire or other insured casualty to an extent which may be repaired within 120 days after the notice date, as reasonably determined by Lessor, Lessor will promptly begin to repair the damage after the notice date and will diligently pursue the completion of such repair. In that event this Lease will continue in full force and effect except that Base Rent and (as appropriate) Additional Rent will be abated on a pro rata basis from the date of the damage until the date of the completion of such repairs (the "repair period") based on the proportion of the rentable area of the Demised Premises that Lessee is unable to use during the repair period. 16.3. If the Demised Premises or the Property are damaged by fire or other insured casualty to an extent that may not be repaired within 120 days after the notice date, as reasonably determined by Lessor, then (a) Lessor may cancel this Lease as of the date of such damage by written notice given to Lessee on or before the notice date or (b) Lessee may cancel this Lease as of the date of such damage by written notice given to Lessor within 10 business days after Lessor's delivery of a written notice that the repairs cannot be made within such 120-day period. If neither Lessor nor Lessee so elects to cancel this Lease, Lessor will diligently proceed to repair the Property and the Demised Premises, and Base Rent and (as appropriate) Additional Rent will be abated on a pro rata basis during the repair period based on the proportion of the rentable area of the Demised Premises that Lessee is unable to use during the repair period. 16.4. Notwithstanding the provisions of this Section 16, if a material portion of the Demised Premises or the Property is damaged by an 27 uninsured casualty, or if the proceeds of insurance are insufficient to pay for the repair of any material damage to the Demised Premises or the Property, Lessor will have the option to repair such damage or cancel this Lease as of the date of such casualty by written notice to Lessee on or before the notice date, provided, however, that such termination shall not be effective if Lessee, within 10 days after its receipt of such notice, delivers to Lessor the written agreement of Lessee (in form and substance reasonably satisfactory to Lessor) to pay or reimburse Lessor for the uninsured portion of the cost of such repairs. 16.5. If any such damage by fire or other casualty is the result of the negligence or wilful misconduct of Lessee, its agents, contractors, employees, or invitees, there will be no abatement of Base Rent or Additional Rent as otherwise provided for in this Section 16. Lessee will have no rights to terminate this Lease on account of any damage to the Demised Premises or the Property except as set forth in this Lease. 17. Remedies Cumulative. 17.1. Each right and remedy of Lessor under this Lease shall be cumulative and be in addition to every other right and remedy of Lessor under this Lease and now or hereafter existing at law or in equity, by statute or otherwise. 18. Quiet Enjoyment. 18.1. Lessor covenants that, as long as Lessee shall pay the Base Rent and Additional Rent and all other amounts Lessee shall be required to pay hereunder and shall duly observe, perform and comply with all of the terms, covenants and conditions of this Lease on its part to be observed, performed or complied with, Lessee shall, subject to all of the terms of this Lease, peaceably have, hold and enjoy the Demised Premises during the Term without molestation or hindrance by Lessor. 19. Release of Lessor. 19.1. The term "Lessor", as used in this Lease so far as covenants or obligations on the part of Lessor are concerned, shall be limited to mean and include only the owner or owners at the time in question of the Property, and in the event of any transfer or transfers of the fee interest in the Property, Lessor herein named shall be automatically freed and relieved from and after the date of such transfer of all liability with respect to the performance of any covenants or obligations on the part of Lessor contained in this Lease thereafter to be performed; provided, however, that no Lessor shall be freed or relieved from any of its obligations or liabilities hereunder which first arise or accrue prior to the transfer of such Lessor's interest in the Property. 20. Surrender of Demised Premises. 20.1. Lessee shall, no later than the termination of this Lease and in accordance with all of the terms of this Lease, vacate and surrender to Lessor the Demised Premises, together with all Alterations, in similar order, condition and repair as the same were in as of the Commencement Date, and broom clean, reasonable wear and tear, damages resulting from a casualty for which Lessee is not responsible, and other items the repair or remediation of which is the responsibility of Lessor 28 excepted. Tenant's obligation to observe or perform this covenant shall survive the termination of this Lease. 20.2. Notwithstanding any provision of law or any judicial decision to the contrary, no notice shall be required to terminate the Term on the Expiration Date, and the Term shall expire on the Expiration Date without notice being required from either party. In the event that Lessee remains beyond the Expiration Date, it is the intention of the parties and it is hereby agreed that a tenancy at sufferance shall arise at a monthly rent equal to 150% of the monthly Base Rent in effect at the expiration of the Term. It is further agreed that Lessee shall indemnify and hold harmless Lessor from and against any and all liability, claims, demands, expenses, damages and judgments (other than consequential or special damages) incurred by Lessor as a result of Lessee's retaining possession, which indemnification obligation shall survive the Expiration Date. 21. Notices. 21.1. All notices, consents, approvals or other communications (collectively, a "Notice") required to be given under this Lease or pursuant to law shall be in writing and, unless otherwise required by law, shall be delivered personally or by overnight courier service or given by registered or certified mail, return receipt requested, postage prepaid, to the parties at the following addresses (unless such address shall be changed by Notice from one party to the other): To Lessor: Unisys Corporation P.O. Box 500 Blue Bell, PA 19424 Attention: Real Estate Administration To Lessee: Loral Corporation 600 Third Avenue New York, NY 10016 Attention: Vice President/General Counsel Any Notice given pursuant hereto shall be deemed to have been given and shall be effective when received, or when delivered and refused. 22. Lessor's Inability to Perform. 22.1. This Lease and the obligation of Lessee to pay Rent hereunder and perform all of the other covenants and agreements hereunder on the part of Lessee to be performed shall in no way be affected, impaired or excused because Lessor is unable to fulfill any of its obligations under this Lease expressly or impliedly to be performed by Lessor or because Lessor is unable to make, or is delayed in making, any repairs, additions, alterations, improvements or decorations or is unable to supply or is delayed in supplying any equipment or fixtures, if Lessor is prevented or delayed from so doing by reason of strikes or labor trouble or by accident, adjustment of insurance or by any cause whatsoever reasonably beyond Lessor's control, including but not limited to, laws, governmental preemption in connection with a national emergency or by reason of any rule, order or regulation or any federal, 29 state, county or municipal authority or any department or subdivision thereof or any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. 23. Limitations or Liability. 23.1. It is specifically understood and agreed that there shall be absolutely no personal liability on the part of Lessor in respect of any of the terms, covenants and conditions of this Lease, and Lessee shall look solely to the interest of Lessor in the Demised Premises for the satisfaction of each and every remedy of Lessee in the event of any breach or default by Lessor, or by any successor in interest to Lessor, of any of the terms, covenants and conditions of this Lease to be performed by Lessor. 23.2. Nothing in this Section is intended to limit or affect any obligations of Lessor or any affiliate of Lessor which are contained in any separate agreement. 24. Asset Purchase Agreement. 24.1. Notwithstanding anything to the contrary contained herein, in the event of a conflict between the terms of this Lease and the terms of the Asset Purchase Agreement, the terms of the Asset Purchase Agreement shall govern. 24.2. As used herein, (a) the term "Asset Purchase Agreement" shall mean the Asset Purchase Agreement, dated as of March 20, 1995, between Unisys Corporation and Loral Corporation, as amended from time to time, and (b) the term "Transaction Documents" shall mean all agreements between Lessor and Lessee executed pursuant to, or in connection with, the Asset Purchase Agreement. 25. Miscellaneous. 25.1. This Lease shall be governed by and construed in accordance with the internal laws of the State in which the Demised Premises are located, without regard to the conflicts of law principles thereof. 25.2. The section headings in this Lease and the table of contents are inserted only as a matter of convenience for reference and are not to be given any effect in construing this Lease. 25.3. If any of the provisions of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provision or provisions to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. 25.4. All of the terms and provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and, subject to the provisions of Article 9 hereof, their respective successors and assigns. 25.5. Lessor has made no representations, warranties or covenants to or with Lessee with respect to the subject matter of this Lease 30 except as expressly provided herein or in the Transaction Documents and all prior negotiations and agreements relating thereto are merged into this Lease. This Lease may not be amended or terminated, in whole or in part, nor may any of the provisions be waived, except by a written instrument executed by the party against whom enforcement of such amendment, termination or waiver is sought. 26. Rider. A Rider to this Lease is attached hereto and incorporated herein by reference. [Remainder of page intentionally left blank] 31 IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the day and year first above written. UNISYS CORPORATION, as Lessor By:___________________________ Name: Harold S. Barron Title: Senior Vice President LORAL CORPORATION, as Lessee By:____________________________ Name: Eric J. Zahler Title: Vice President 32 Salt Lake City, UT (Owned) RIDER 1. This Rider is a part of this Lease. In the event of any contradiction or inconsistency between the provisions of this Rider and the provisions of the other portions of this Lease, the provisions of this Rider shall govern and prevail, and the contradicting and inconsistent provisions of the other portions of this Lease shall be deemed amended accordingly. 2. Lessee (together with its employees, licensees, and invitees) shall have the non-exclusive right to use the 280 parking spaces at the Property designated on Schedule B to this Lease. 3. Lessee hereby agrees to provide the services described on Schedule D-1 attached hereto, which services were previously provided by Lessor's non-Defense Systems personnel, to the Demised Premises during the Term hereof. In connection therewith, Lessor and Lessee shall share supplies and equipment located at the Property for performance of their respective service obligations with respect to the Property until the exhaustion of such supplies and equipment. Thereafter, Lessor and Lessee shall separately purchase and use such supplies and equipment as each may determine it requires for performance of its respective service obligations. 4. With respect to contracts entered into by Lessor prior to the date of this Lease relating in whole or in part to the provision of services to the Demised Premises, which services Lessee has assumed the obligation to provide as of the date of this Lease and which services were previously provided by Lessor's non-Defense Systems personnel, (a) Lessor shall endeavor to terminate such contracts at the earliest possible time, provided Lessor shall not be obligated to breach such contracts and (b) Lessee shall be obligated to pay all sums due under such contracts for the provision of goods and services to the Demised Premises. 5. From the date hereof until the earlier of (a) the Expiration Date and (b) the service of written notice by Lessor of its election to terminate receipt of such services, Lessee shall continue to provide security services to the portions of the Property not part of the Demised Premises, of the type generally and customarily provided by Lessor's Defense Systems unit to the Property prior to the date hereof. 33 SCHEDULE A PROPERTY As used in this Lease, the "Property" shall mean Buildings D, D Annex and Z at 322 North 2200 West, Salt Lake City, Utah. 34 SCHEDULE B DEMISED PREMISES As used in this Lease, the "Demised Premises" shall mean 133,888 rentable square feet, minus the usable square footage of the cafeteria located in Building D, measured in accordance with BOMA standards, located in Buildings D, D Annex and Z at 322 North 2200 West, Salt Lake City, Utah, which premises are identified on the plans attached hereto. 35 SCHEDULE C SCHEDULED EXPIRATION DATE/BASE RENT As used in this Lease, "Scheduled Expiration Date" means December 31, 2001. As used in this Lease, "Base Rent" shall mean, with respect to any calendar month, all actual costs and expenses relating to the Property (including common areas and facilities) that are allocated by Lessor to the Demised Premises for such month, provided that Lessor's method of allocation shall be consistent with the method of allocation used by Unisys Corporation to allocate costs to the Unisys Defense Systems unit with respect to the occupancy of the Demised Premises by the Unisys Defense Systems unit during calendar year 1994. Such costs and expenses shall include cash items and non-cash items, such as depreciation. In the event that Base Rent for any calendar quarter (as calculated above) shall not be determinable by Lessor until after the end of such calendar quarter, then Base Rent shall be payable during such calendar quarter based upon Lessor's reasonable estimate of costs and expenses to be allocated to the Demised Premises. Lessor shall, as soon as practicable after the end of such calendar quarter, provide Lessee with a written statement of the Base Rent amount for such calendar quarter and, subject to Section 3.5 of the Lease, the parties shall promptly thereafter make any necessary reconciliation payments. 36 SCHEDULE D SERVICES TO BE PROVIDED BY LESSOR With respect to Buildings D and D-Annex: 1. Repair and maintenance of building structure, including building shell, windows, exterior doors and roof. 2. Repair and maintenance of all common mechanical and electrical equipment and equipment exterior to the building, including boilers, major air conditioning equipment, air compressor, major electrical panels, main fire water systems and risers, main water supplies and building sewer systems. 3. Repair and maintenance of all building grounds including parking lots, landscaping and snow removal. With respect to Building Z: 1. Repair and maintenance of all building grounds, including parking lots, landscaping and snow removal. 2. Repair and maintenance of all utilities up to the termination point with the building. 3. Repair and maintenance of main fire water systems and risers. 37 SCHEDULE D-1 SERVICES NOT TO BE PROVIDED BY LESSOR With respect to the Demised Premises in Buildings D, D-Annex and Z: 1. Interior maintenance, repairs and janitorial services. 2. Alterations (as permitted by this Lease), moving and rearranging services. 3. Fire protection services and monitoring. 38 FIRST AMENDMENT TO LEASE LORAL CORPORATION/UNISYS CORPORATION Buildings D, D Annex and Z 322 North 2200 West Salt Lake City, UT In consideration of the mutual covenants contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree to amend the Lease dated May 5, 1995 between Loral Corporation, as Lessor, and Unisys Corporation, as Lessee, for the Demised Premises located in Buildings D, D Annex and Z at 322 North 2200 West, Salt Lake City, Utah as follows: 1. Effective December 1, 1995 through December 31, 2001, Schedule B (the "Demised Premises") as used in the Lease shall be increased by 37,034 rentable square feet which additional spaces are identified on Exhibit A attached hereto. 2. Effective December 1, 1995 the rental shall be increased to reflect said additional space utilizing the method described on Schedule C of the Lease. 3. Effective December 1, 1995 the parking site plan shown on Exhibit B of the Lease shall be replaced with the attached Exhibit B. Lessee will have exclusive use of the Building D Annex dock area, however Lessee must continue to provide the U.S. Postal Service access as provided in their Lease. 4. Except as modified herein and amended herein, all other terms and conditions of the Sublease shall remain unchanged and in full force and effect. LESSEE: LESSOR: UNISYS CORPORATION LORAL CORPORATION a Delaware Corporation a New York Corporation By:______________________ By:_________________________ Richard J. L'Ecuyer W. B. Booker Corporate Director Vice and Controller Real Estate Operations Loral Communication Systems By:___________________________ Stephen L. Jackson, Vice President LORAL CORPORATION 12 SECOND AMENDMENT TO LEASE LORAL Corporation/UNISYS CORPORATION Buildings D, D Annex and Z 322 North 2200 West Salt Lake City, UT In consideration of the mutual covenants contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree to amend the Lease dated May 5, 1995 as amended by First Amendment between Loral Corporation, as Lessor, and Unisys Corporation, as Lessee, for the Demised Premises located in Buildings D, D Annex and Z at 322 North 2200 West, Salt Lake City, Utah as follows: 1. Effective December 1, 1995 through December 31, 2001, Schedule B (the "Demised Premises") as used in the Lease shall be increased by 20,000 rentable square feet which additional space is identified on Exhibit A attached hereto. 2. Effective December 1, 1995 the rental shall be increased to reflect said additional space utilizing the method described on Schedule C of the Lease. 3. Except as modified herein and amended herein, all other terms and conditions of the Sublease shall remain unchanged and in full force and effect LESSEE: LESSOR: UNISYS CORPORATION LORAL CORPORATION a Delaware Corporation a New York Corporation By:______________________ By:_________________________ Richard J. L'Ecuyer W. B. Booker Corporate Director Vice President and Controller Real Estate Operations Loral Communication Systems By:___________________________ Stephen L. Jackson, Vice President LORAL CORPORATION 11 THIRD AMENDMENT TO LEASE LORAL CORPORATION/UNISYS CORPORATION Buildings D, D Annex and Z 322 North 2200 West Salt Lake City, UT In consideration of the mutual covenants contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree to amend the Lease dated May 5, 1995 as amended by First, and _______ Second Amendments between Loral Corporation, as Lessor, and Unisys Corporation, as Lessee, for the Demised Premises located in Buildings D, D Annex and Z at 322 North 2200 West, Salt Lake City, Utah as follows: 1. Effective January 15, 1996 through December 31, 2001, Schedule B (the "Demised Premises") as used in the Lease shall be increased by 4,584 rentable square feet which additional space is identified on Exhibit A attached hereto. 2. Effective January 15, 1996 the rental shall be increased to reflect said additional space utilizing the method described on Schedule C of the Lease. 3. Except as modified herein and amended herein, all other terms and conditions of the Sublease shall remain unchanged and in full force and effect. LESSEE: LESSOR: UNISYS CORPORATION LORAL CORPORATION a Delaware Corporation a New York Corporation By: _____________________ By:___________________________ Richard J. L'Ecuyer W. B. Booker Corporate Director Vice President and Controller Real Estate Operations Loral Communication Systems By:___________________________ Stephen L. Jackson, Vice President Loral Corporation 10 EXHIBIT B DEFAULTS NONE 9 EX-10.7 8 LIMITED NONCOMPETITION AGREEMENT EXHIBIT 10.7 LIMITED NONCOMPETITION AGREEMENT This Limited Noncompetition Agreement between Lockheed Martin Corporation ("Lockheed Martin") and L-3 Communications Corporation ("L-3") is dated as of April 30, 1997 with reference to the following: Recitals WHEREAS, Lockheed Martin, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza, Robert V. LaPenta and L-3 Communications Holdings, Inc. ("Holdings") have entered into a Transaction Agreement dated as of March 28, 1997 (as amended by Amendment No. 1 to Transaction Agreement dated as of April 11, 1997, and as it may be further amended from time to time, the "Transaction Agreement"); and WHEREAS, the Transaction Agreement contemplates that the business and assets of certain business elements of Lockheed Martin, the Business Units, will be sold upon the terms and subject to the conditions of the Transaction Agreement to Holdings; and WHEREAS, Section 12.01 of the Transact on Agreement provides that the obligations of Lockheed Martin, Holdings and the Purchasers to consummate the Closing are subject to the satisfaction (or waiver) of certain enumerated conditions one of which (contained with Section 12.01(e)) is that Lockheed Martin and Holdings shall have executed and delivered the noncompetition agreement contemplated by Section 9.09 of the Transaction Agreement; and WHEREAS, Holdings will conduct the businesses sold to it under the Transaction Agreement through L-3, a wholly-owned subsidiary of Holdings. NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties contained herein, Lockheed Martin and L-3 agree as follows: 1. Capitalized terms used but not defined in this Limited Noncompetition Agreement shall have the meanings ascribed to them in the Transaction Agreement. 2. Subject to the provisions of Paragraph 3, Paragraph 4, Paragraph 5 and Paragraph 6 hereof, the Lockheed Martin Companies shall not sell products anywhere in the world in competition with products of L-3 listed on "Attachment A" hereto, or being supplied as of the Closing Date by the Business in connection with its Performance of the specific programs listed on "Attachment A" hereto (collectively, the "competing businesses"), in each instance for the applications listed opposite the product or program listed on Attachment A and for a period of three years commencing as of the Closing Date. 3. The provisions of Paragraph 2 shall prohibit the acquisition by Lockheed Martin or any of its Affiliates of all or any part of a business or Person (whether through the acquisition of assets, securities or other ownership interest, the effecting of a merger, business combination, reorganization, exchange or recapitalization or other similar transaction) 1 (the "Acquired Business") with any Person where a primary purpose of the acquisition is the avoidance of the prohibitions of Paragraph 2. For purposes of the foregoing, in the case of any such acquisition by Lockheed Martin or any of its Affiliates where the competing business conducted by the Acquired Business represents greater than 35% of the revenues of the Acquired Business for its most recently completed fiscal year, a primary purpose of the transaction shall be deemed to be the avoidance of the prohibitions of Paragraph 2. Notwithstanding the provisions of the preceding sentence, the provisions of Paragraph 2 shall not prohibit the acquisition by Lockheed Martin or any of its Affiliates of an Acquired Business where the competing business conducted by the Acquired Business represents greater than 35% of the revenues of the Acquired Business (a "Disqualifying Acquisition," and the portion of the Acquired Business that is a competing business being the "Disqualified Business"), provided that Lockheed Martin or any of its Affiliates offers to sell and assign the Disqualified Business (and associated liabilities) obtained and assumed in the Disqualifying Acquisition for cash to L-3 within 90 days of the consummation of the Disqualifying Acquisition at the fair market value of such Disqualified Business (and associated liabilities) with the benefit of substantially similar representations, warranties and indemnification periods from the fair market value of such Disqualified Business (and associated liabilities), L-3 and such Lockheed Martin or their representatives shall meet within 15 days of the date such offer is made and attempt mutually to determine in good faith such fair market value. If L-3 and Lockheed Martin are unable to determine a mutually acceptable fair market value within 20 days after their initial meeting, L-3 and Lockheed Martin shall mutually engage (and share equally in the fees and expenses of) an investment banking firm to determine within 20 days of such firm's engagement the fair market value of the Disqualified Business (and associated liabilities), which determination shall be binding upon L-3 and Lockheed Martin for purposes of Lockheed Martin's offer to L-3 as contemplated herein. Lockheed Martin shall not be obligated to keep its offer to L-3 open for more than 20 days after final determination of the fair market value of the Disqualified Business and its assumption of the associated liabilities within 75 days of such acceptance, otherwise Lockheed Martin and its Affiliates shall be permitted to keep and operate, or divest, such Disqualified Business (and associated liabilities) in Lockheed Martin's sole discretion. 4. The prohibitions of Paragraph 2 shall not apply to: (a) businesses operated and managed by Lockheed Martin or its Affiliates on behalf of the U.S. Government; or (b) Acquired Businesses where the acquisition is permitted under Paragraph 3; provided that in the case of any such acquisition (i) the competing business was being conducted by the Acquired Business as of the closing of the acquisition of the Acquired Business or (ii) Lockheed Martin or the Acquired Business can affirmatively demonstrate that the Acquired Business was considering entering the competing business as of the closing of the acquisition of the Acquired Business, or (iii) the competing business is reasonably related to the businesses referenced in either or both of the preceding clauses (i) or (ii); or (c) the acquisition by Lockheed Martin or any of its Affiliates of not greater than twenty percent of the voting securities of any Person engaged in a competing business; or 2 (d) the acquisition by Lockheed Martin or any of its Affiliates of any non-voting securities of any Person engaged in a competing business. 5. Notwithstanding the provisions of Paragraph 2, nothing in this Limited Noncompetition Agreement shall prevent Lockheed Martin or any of its Affiliates from: (a) continuing to engage without impediment in any business, including but not limited to the unrestricted sale of products related to that business, conducted by Lockheed Martin or any of its Affiliates as of Closing (other than businesses conducted by Lockheed Martin solely through the Business Units), any such business being hereinafter referred to as an "Existing Business"; or (b) entering into any business and thereafter engaging without impediment in such business, including but not limited to the unrestricted sale of products related to that business where Lockheed Martin can affirmatively demonstrate that, as of the Closing, Lockheed Martin or any of its Affiliates or any business element thereof (excluding the Business Units) was considering entering such business, any such business being hereinafter referred to as a "Planned Business"; or (c) entering into any business and thereafter engaging without impediment in such business, including but not limited to the unrestricted sale of products related to that business, where such business is reasonably related to either or both an Existing Business or a Planned Business. 6. For the purposes of Paragraph 2, the sale by Lockheed Martin or its Affiliates (including, without limitation, any Acquired Business) of systems manufactured, assembled, fabricated or integrated by Lockheed Martin or its Affiliates (which systems may themselves be subsystems or components of larger systems) where the system manufactured, assembled, fabricated or integrated by Lockheed Martin or its Affiliates (A) includes as one or more subsystems, components, subcomponents or other parts of the system products sold by (i) L-3 or (ii) third-party sources other than L-3 or (B) where such system includes as one or more subsystems, components, subcomponents or other parts of the system products manufactured, assembled, fabricated or integrated by Lockheed Martin or its Affiliates shall be deemed not to be a sale in competition with products sold by L-3 and, therefore, is permitted under Paragraph 2; provided, however, that, if sale of the product manufactured, assembled, fabricated or integrated is not permitted by any of the exceptions to Paragraph 2 other than by clause (B) of this Paragraph 6, then prior to manufacturing the subsystem, component, subcomponent or other part of the system Lockheed Martin shall in its good faith business judgment (which may include, but is not limited to, consideration of the optimum combination of performance, schedule, quality, cost, customer preference, ability to provide a total solution and/or turnkey system and other factors considered relevant to the decision by the Lockheed Martin company making the make/buy decision) consider procuring the item from L-3 and provided further that items manufactured by Lockheed Martin or any of its Affiliates in reliance on the exception provided by clause (B) of this Paragraph 6 may only be sold during the term of this Limited Noncompetition Agreement as part of a system qualifying for the exception provided by clause (B) of this Paragraph 6. 7. Lockheed Martin acknowledges that in the event of its or its Subsidiaries' breach of the covenants contained in this Limited 3 Noncompetition Agreement, money damages would be an inadequate remedy. Accordingly, without prejudice to the rights of L-3 also to seek such damages or other remedies available to it, L-3 may seek, and Lockheed Martin shall not contest the appropriateness of injunctive or other equitable relief in any proceeding that L-3 may bring to enforce the covenants contained in this Limited Noncompetition Agreement. No waiver of any breach of the covenants contained in this Limited Noncompetition Agreement shall be implied from forbearance or failure of L-3 to take action in respect thereof. 8. Lockheed Martin and L-3 agree that, if any provision of this Limited Noncompetition Agreement should be adjudicated to be invalid or unenforceable, such provision shall be deemed deleted herefrom with respect, and only with respect, to the operation of such provision in the particular jurisdiction in which such adjudication was made. To the extent any such provisions may be valid and enforceable in such jurisdiction by limitations on the scope of the activities, geographical area or time period covered, L-3 and Lockheed Martin agree that such provision instead shall be deemed limited to the extent, and only to the extent, necessary to make such provision enforceable to the fullest extent permissible under the laws and public policies in such jurisdiction. 9. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given, if to Lockheed Martin: Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Marcus C. Bennett Telecopy: (301) 897-6083 with a copy to: Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Frank H. Menaker, Jr. Telecopy: (301) 897-6791 and Miles & Stockbridge, a Professional Corporation 10 Light Street Baltimore, Maryland 21202 Attention: Glenn C. Campbell Telecopy: (410) 385-3700 4 If to L-3: L-3 Communications Corporation 600 Third Avenue New York, New York 10016 Attention: General Counsel Telecopy: (212) 805-5494 with copies to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: David B. Chapnick Telecopy: (212) 455-2502 and Lehman Brothers Capital Partners III, L.P. 3 World Financial Center New York, New York 10285 Attention: Steven Berkenfeld Telecopy: (212) 526-2198 and Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Frank H. Menaker, Jr. Telecopy: (301) 897-6791 or to such other address or telecopy number and with such other copies, as such party may hereafter specify for the purpose by notice to the other parties. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Paragraph 9 and evidence of receipt is received or (ii) if given by any other means, upon delivery or refusal of delivery at the address specified in this Paragraph 9. 10. Any provision of this Limited Noncompetition Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Lockheed Martin and L-3, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege under this Limited Noncompetition Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 11. The provisions of this Limited Noncompetition Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its right or obligations under this Agreement without the consent of Lockheed Martin, in the case of L-3, and L-3 in the case of Lockheed Martin. Notwithstanding the foregoing, the provisions of 5 this Limited Noncompetition Agreement shall not apply to any of the Lockheed Martin Companies to the extent that such companies no longer are Subsidiaries of Lockheed Martin. 12. As used in this Limited Noncompetition Agreement, any reference to the plural shall include the singular, and the singular shall include the plural. With regard to each and every term and condition of this Limited Noncompetition Agreement, the parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which party actually prepared, drafted or requested any term or condition of this Limited Noncompetition Agreement. 13. This Limited Noncompetition Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof, supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter thereof, and satisfies all obligations, covenants and agreements of Lockheed Martin under Section 9.09 of the Transaction Agreement. 14. This Limited Noncompetition Agreement shall be construed in accordance with and governed by the law of the State of New York. 15. This Limited Noncompetition Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Limited Noncompetition Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Limited Noncompetition Agreement as of the date first set forth above. LOCKHEED MARTIN CORPORATION By: /s/ Stephen M. Piper Stephen M. Piper Assistant Secretary L-3 COMMUNICATIONS CORPORATION By: /s/ Michael T. Strianese Michael T. Strianese Vice President, Finance and Controller 6 ATTACHMENT A LOCKHEED MARTIN TACTICAL COMMUNICATION SYSTEMS 640 NORTH 2200 WEST SALT LAKE CITY, UTAH 84116 PRODUCT PROFILES SURVEILLANCE PROGRAMS o SENIOR YEAR SUPPORT. This a service contract that provides worldwide technical, logistical and operational support to Senior Year fielded equipment. It also includes support to specified Army/agency-related equipment. Fielded equipment support includes spares, field support representatives, contract field representatives, manuals, modifications and upgrades, repairs, software, GFE/GFP management and sustaining engineering support. The program continues the development and support of core intelligence wideband communication systems. o GUARDRAIL. Guardrail is a dual data link airborne system for air-to-air networking for Army airborne signal intelligence collection. The system is capable of providing tactical commanders with near-real-time targeting, information. Using common data link based equipment on the RC-12 aircraft, the data link provides secure high-rate data to an interactive processing facility interface. o DIRECT AIR-SATELLITE RELAY (DASR). DASR extends the range of the signal intelligence (SIGINT) and electromagnetic intelligence (ELINT) collection system on the Army's Guardrail Common Sensor program through a satellite relay. It provides tactical/strategic mobility with flexible architecture and an improved intelligence product. DASR provides quick-reaction capability for low-intensity conflicts while creating a low-profile antenna satellite relay system that can be used by all services. UNMANNED AERIAL VEHICLES (UAV) PROGRAMS o TIER II PREDATOR. The Predator Ku-band airborne data link is a high-rate inter-operable link for remotely controlled UAVs through a satellite commercial relay. The Predator link has multi-payload capability along with a wideband satellite link which serves worldwide reconnaissance and surveillance missions. o TIER II PLUS. Tactical Communication Systems provides the integrated communication system for the Global Hawk high-altitude endurance UAV (Tier II Plus) and associated ground stations to provide near-real-time surveillance information to the warfighter. The Tier II Plus communication system integrates various links, including satellite relay links, line-of- sight links and UHF Command-and-control data links. In addition to the integrated airborne communication system, the company provides a suite of ground communication equipment. NAVY/AIRBORNE INFORMATION TRANSMISSION PROGRAMS o COMMON HIGH-BANDWIDTH DATA LINK SURFACE TERMINAL (CHBDL-ST). This provides a wideband shipboard terminal to Navy ES-3A, F/A-18R, UAV and ship-to-ship communication requirements. CHBDL-ST provides the ability to acquire multi- service data link signals from surveillance and reconnaissance aircraft. It also provides communications between the airborne platforms BGPHES and JSIPS(N) for shipboard workstations. CHBLD-ST is inter-operable with several Air Force reconnaissance platforms, as well as future UAV deployments. o BATTLE GROUP PASSIVE HORIZON EXTENSION SYSTEM (BGPHES). BGPHES provides the data link for the airborne component (ES-3A) of a SIGINT collection system for carrier battle group protection. BGPHES is inter-operable with the USAF CDL surface terminals supporting U-2, RS-6B, RAS-1 and RAS-1A sensors. o AIRBORNE INFORMATION TRANSMISSION (ABIT). Provides DoD with a 1,000nm, near- real-time, high-data-rate relay capability. ABIT provides automatic air-to- air acquisition and reacquisition, common data link inter-operability, low probability of detection/anti-jam, variable data rates, common module usage, and multi-sensor interfaces for multiple users. GROUND SATCOM PROGRAMS o TRIBAND SATCOM SUBSYSTEMS (TSS). The TSS system is a multi-use Army Tactical Satellite Ground Terminal which provides a single SATCOM terminal configuration. TSS employs a highpowered, tactical earth terminal with a single point feed that can provide C and Ku, as well as X bands - with no feed changeouts or re-focusing. it is operational with either US commercial, military or international satellites. o TRANSPORTABLE MEDIUM EARTH TERMINAL (TMET). The first medium earth terminal (11.3 meter dish) transportable on two C-130 aircraft. The TMET operates in C, X, or Ku bands and is reconfigurable for tri-band operations. The terminal is fully DISA- and INTELSAT-certified. SYSTEMS DEVELOPMENT/ADVANCED PROJECT PROGRAMS o THE ARMY COMBINED ARMS WEAPONS SYSTEM (TACAWS). On TACAWS, a Horizontal Technology Initiative (HTI) program for developing future missile technology, the company's role is developing the data link to provide forward missile commands and return target images to the launch platform. The data link technology will be directly applicable to the TOW and Hellfire missile replacements. COMMERCIAL PROGRAMS o Fixed Wireless Loop (FWL). The FWL system is an extremely flexible and scaleable method of providing telephony and data services to homes and businesses without having to extend copper wire to each subscriber. LOCKHEED MARTIN COMMUNICATIONS SYSTEMS 1 FEDERAL STREET CAMDEN, NEW JERSEY 08102 PRODUCT PROFILES SPACE AND SATELLITE COMMUNICATIONS SYSTEMS - ------------------------------------------ o SPACE STATION COMMUNICATIONS & TRACKING SYSTEM. Communications Systems is designing and testing three communication subsystems for the International Space Station (ISS). These systems will control all the Station's radio frequency (RF) communications and external video activities. One RF subsystem operates at S-band for narrowband communications, including telemetry, tracking and commands. The second SF subsystem operates at Ku-band for wideband communications, including video and payload/experiment data. The external video subsystem includes four camera groups, video switching and baseband signal processing for wideband communications. These space-qualified subsystems use advanced hardware and software technologies including the first large-scale application of fiber optics in space. Communications Systems is currently pursuing application of these technologies to ISS experiments and to the Japanese Experiment Module. o SPACE RECORDING SYSTEMS. Communications Systems provides solid-state product and buffer solutions for data capture, storage, transfer and retrieval for space applications. o SHF PORTABLE TERMINAL SYSTEM (PTS). Communications Systems has developed a PTS for SHF satellite communications for U.S. and NATO forces. The lightweight, manportable terminal, communicating through DSCS, NATO or SKYNET satellites, bring unprecedented connectivity to small military tactical units and mobile command posts. The system includes the portable terminal, a network control applique and associated network control software. An innovative Demand Assignment Multiple Access (DAMA) protocol minimizes user waiting times and the network control processor automatically adapts frequency data rate and transmission time to maximize throughput, all transparent to the operator. Communications Systems recently delivered 14 terminals for use by NATO in Bosnia. Advanced technology efforts are currently aimed at further miniaturization, enhancing system performance and reducing costs for the United States and NATO. 29 NAVY COMMUNICATIONS SYSTEMS - --------------------------- o SYSTEM INTEGRATED PRODUCTS. Communications Systems has off-the-shelf products, based on communications industry standards, that serve as core technologies for small-to-large networks. These products include radio baseband switches, integrated services digital network (ISDN) switches, packet switches, voice/data terminals and network management software. Applications include systems requiring seamless, multimedia access to interior and exterior communication services. The advantages of these products include significant reduction of equipment and installation costs, avoidance of development costs and risks, embedded information security, automated capability and low-cost technology upgrades. Communications Systems applies many years of integration experience to these products to provide solutions to meet customer requirements. o INTEGRATED VOICE COMMUNICATIONS SYSTEMS (IVCS). The AN/STC-2(v) IVCS is the only fully militarized tactical communications switching system in the U.S. Navy fleet. It integrates the intercom, tactical net and administrative network into one reliable system accessing various types of communication terminals throughout the ship. o INTEGRATED RADIO ROOM (IRR). Communications Systems produced the IRR, the automated exterior communications suite for the SSBN-726 Trident-class submarines. IRR is the first computer-controlled communications center on a submarine. It provides reliable exterior communications between the Trident submarine and satellite, aircraft, shore facilities and other ships. The system's 23 racks of equipment are monitorized and controlled from a single console. This type of system also may be used on other types of ocean going vessels. o MARCOM 2000 SWITCHING SYSTEM. The MarCom 2000 Secure Digital Switch provides an integrated approach to the specialized voice and data communications needs of a shipboard environment for internal and external communications, command and control and air traffic control. The MarCom 2000 time-division switch provides voice and data communications via telephone or other communications terminals and provides interfaces to radios, existing switches, cryptos, etc. A compact, modular design allows the MarCom 2000 to serve small-to-large platforms. By using industry standard telecommunications components, MarCom 2000 lowers costs and greatly simplifies logistical support. COMMUNICATIONS/INFORMATION SECURITY SYSTEMS - ------------------------------------------- o INFORMATION SECURITY (INFOSEC). Communications Systems continues to be a leader in the field of communications and information security, providing critical technologies and systems to the U.S. government and its contractors for secure communications and computer systems, equipment and services. Communications 30 Systems is a major participant in the Electronic Key Management Systems initiative and is extending this participation to include benign fill and multilevel secure networks. This support has spanned broad roles in system concepts, equipment design, hardware and software development and state-of-the-art custom secure very large scale integration (VLSI) and application-specific integrated circuit (ASIC) designs. Communications Systems is leading the development of next-generation, programmable INFOSEC modules to embed in end-user equipment and for use on PCMCIA cards for securing a wide range of voice, data, facsimile and video products. Communications Systems information security experience encompasses full military specification requirements as well as best commercial practices for office environments. o SECURE TERMINAL EQUIPMENT (STE). After producing more than 100,000 STU III secure telephone units, Communications Systems has begun working on the next-generation digital, ISDN-compatible product. The STE consists of a host terminal and a security core. The host provides the application hardware and software for the terminal. The security core, called a CrytoCard, is a small, portable, cryptographic module mounted on a PCMCIA card holding the algorithms, keys and personalized credentials a user needs for secure communications. The terminal supports secure multimedia communications including data, voice and video. The security functions are independent of the host, enabling mobility for use at the office, on travel or in the field. STE will use commercial network technologies such as ISDN and asynchronous transfer mode (ATM) to extend high-quality secure and nonsecure digital services to the user. The STE is being developed for use in commercial and military networks and environments. o LOCAL MANAGEMENT DEVICE/KEY PROCESSOR (LMD/KP). Communications Systems' LMD/KP is the workstation component of the U.S. government's Electronic Key Management System (EKMS), the next generation of information security systems. The LMD/KP provides EKMS services that include requesting keys and other electronic key materials. It also satisfies EKMS security requirements for access control and privilege management, confidentiality, authentication and status integrity and logging security-critical events. The LMD provides such EKMS management functions as accounting for electronic and physical material, registration and system management and audit support. The LMD has been hosted on 486-based personal computers and on the compartmented mode workstation. The KP performs cryptographic functions and electronically transfers keys from the KP to end-user equipment. o Network Security. Information is increasingly becoming the critical competitive advantage in both military and industrial operations. As we become more reliant on the systems that gather and deliver information, we also must become better able to defend these assets against attack. The terms "hacker" and "virus" are relatively recent additions to computer jargon; "information warfare" is a relatively new focus of the DoD. Communications Systems is staying on the cutting edge through numerous research and development efforts, such as: (1) intelligent agents required to analyze a computer network for vulnearability problems and to report the problems to a central controller; (2) a high performance, scaleable platform-independent INFOSEC kernel and 31 applications for networks; (3) an "Intranet Firewall" to provide secure subnets within a corporate intranet and a "Net Extender" to allow two separate entities to use the internet as a virtual private network; and (4) installing a prototype multilevel secure network and a secure e-mail net server between classified and non-classified areas. SIGNALS INTELLIGENCE SYSTEMS - ---------------------------- o SIGNALS INTELLIGENCE (SIGINT). Communications Systems develops specialized strategic and tactical SIGINT systems to detect, acquire, collect, identify, locate, process, analyze and disseminate information derived from electronic sources. This capability encompasses the total system development process using commercial off-the-shelf (COTS) or customized solutions including system studies, requirements definition, system design, software and hardware development, systems engineering, design and development of digital signal processing systems, integration and test, production, site installation and test, training and integrated logistics support. Communications Systems has developed more than three million lines of Ada code to support these products. Communications Systems has special expertise in channel processing, conventional signals analysis, HF-DF systems and integrating collection and processing systems. UNATTENDED GROUND SENSOR SYSTEMS - ------------------------------- o IMPROVED REMOTELY MONITORED BATTLEFIELD SENSOR SYSTEM (IREMBASS). An unattended ground sensor system, IREMBASS uses sensors placed along likely avenues of approach or intrusion to respond to seismic and acoustic disturbances, infrared energy and magnetic field changes, and thus detect enemy activities. Using sensor data fusion, the intruder is classified. This information is incorporated into short, digital messages and communicated by radio burst transmission. The sensors communicate with the IREMBASS monitor-programmer, either directly or through repeaters. Messages at the monitoring set, or an enhanced display capability through a portable computer, are demodulated, decoded, displayed and recorded to provide a time-phased record of intrusive activities. o Intrusion Detection Early Warning System (IDEWS). In order to address the need for a lightweight, low-cost intrusion detection system, Communications Systems has developed IDEWS, a sensor system designed for platoon-level physical security applications. Weighing less than two pounds, this sensor is ideal for covert perimeter intrusion detection, border protection and airfield or military installation security. It operates on a 9-volt battery and incorporates field-proven detection and classification algorithms. MEDICAL ARCHIVE SYSTEMS - ----------------------- o GEMNET(TRADEMARK). Communications Systems and GE Medical Systems have jointly developed GEMnet(Trademark), a cardiac image management and archive system. GEMnet(Trademark) eliminates the use of cinefilm in a cardiac catheterization 32 platoon-level physical security applications. Weighing less than two pounds, this sensor is ideal for covert perimeter intrusion detection, border protection and airfield or military installation security. It operates on a 9-volt battery and incorporates field-proven detection and classification algorithms. MEDICAL ARCHIVE SYSTEMS - ----------------------- o GEMNET(TRADEMARK). Communications Systems and GE Medical Systems have jointly developed GEMnet(Trademark), a cardiac image management and archive system. GEMnet(Trademark) eliminates the use of cinefilm in a cardiac catheterization laboratory by providing a direct digital connection to the laboratory. The system provides for acquisition, display, analysis and short-and long-term archive of cardiac patient studies, providing significant cost savings and process improvements to the hospital. GEMnet(Trademark) is a high-performance system that employs advanced storage, wide asynchronous transfer mode (ATM) bandwidth, networks and hierarchical file management strategies and technologies. GEMnet(Trademark) is a scaleable, open architecture system conforming to medical (DICOM), computer and communications standards, such as ATM. The initial beta site at the Mayo Clinic, Rochester, MN, has been acquiring cardiac images since March 1994. Production shipments began in mid-1996. Communications Systems is working to expand the GEMnet(Trademark) technology for use in related radiology market applications. o ECHONET(TRADEMARK). EchoNet(Trademark) is a digital archive management and review system specifically designed for the echocardiology profession. The system accepts digital echo studies from a variety of currently available ultrasound systems, manages the studies, making them available on a network, and allows the physicians and technicians to become more productive. The system offers users the benefits of network accessibility, digital technology and massive archiving to a profession that has had to rely, for years, on making critical diagnoses from analog video tape. The system has been in use for more than one year at Duke University Medical Center and has dramatically improved both productivity and quality of care. The system uses commercially available hardware and software components. The EchoNet(Trademark) system is currently being marketed through Communications Systems and distributors. o DICOMVIEW(TRADEMARK). DICOMView(Trademark) is a multimodal, low-cost viewing station based on standard Macintosh and Pentium PC platforms. It makes full motion, full fidelity diagnostic images accessible for the cardiologist, surgeon and referring physician. Single frames or loops can be saved in standard formats. DICOMView(Trademark) frees digital angiography from closed, proprietary, high-cost systems. It is compatible with all DICOM compliant data sources, implementing the DICOM standards for angiographic image exchange on both CD-ROM disks and over computer networks. The networked system capability allows studies to be reviewed anywhere in the institution. Images can also be reviewed simultaneously in different locations. 33 LOCKHEED MARTIN PRODUCTS GROUP 9020 BALBOA AVENUE SAN DIEGO, CA 92106 PRODUCT PROFILES DISPLAY SYSTEMS - --------------- O E-2C HAWKEYE ENHANCED MAIN DISPLAY UNIT (EMDU). A ruggedized, full-color beam index CRT cockpit display for the E-2C Hawkeye aircraft. O F-14 PROGRAMMABLE TACTICAL INFORMATION DISPLAY (PTID). A ruggedized 8" x 8" monochrome CRT cockpit display for the U.S. Navy's F-14. O V-22 COCKPIT MULTIFUNCTION DISPLAYS/DISPLAY PROCESSORS. A ruggedized, full-color beam index CRT display for the V-22 tiltrotor aircraft. O E-2C Q-70 ADVANCED DISPLAY SYSTEM. A ruggedized, full-color active matrix LCD workstation providing a 10" x 12.5" viewable area and commercial off-the-shelf (COTS) open architecture. O ACTIVIEW ACTIVE MATRIX (AMLCD) FLAT PANEL DISPLAYS. For avionics applications, the company's Actiview line provides practical solutions to meet various systems architectures and aircraft installation requirements. In addition to offering screen sizes up to 16.1" diagonal, the largest currently available, each may be acquired as a stand-alone monitor or as integrated "Smart" display. Features include embedded graphics generation, sensor video processing, multiple line rate video inputs and a full complement of interfaces. Development of a 20" diagonal AMLCD is underway, and will be available for military applications in the near term. ADVANCED RECORDERS - ------------------ O GOVERNMENT PROGRAMS. Solid-State Flight Data Recorders (SSFDR) and Solid-State Cockpit Voice Recorders (SSCVR) are offered as standard equipment on the Lockheed Martin C-130J. For the Royal Australian Air Force (RAAF), Advanced Recorders was selected to retofit all RAAF non-combat aircraft with SSCVRs and some SSFDRs. Use or disclosure of this data is subject to the restrictions noted on the title page. 19 O COMMERCIAL RECORDER PRODUCTS. MODEL F1000 SSFDR. Federal Aviation Administration (FAA)-certified 1990. More than 4,000 in service MODEL A100S SSCVR. FAA-certified 1992. Thirty-minute recording MODEL A200S SSCVR. FAA-certified 1995. World's first fully certified by both FAA and various international agencies. Up to two hours of recording. Next generation combined Cockpit Voice and Flight Data Recorder Code named "Scimitar." CONIC - ----- O SPACE PRODUCTS. High reliability telemetry, tracking and command STDN and SGLStransponders, which feature high data rate QPSK and BPSK transmitters, PM transmitters and NSA encryption/decryption modules. O RANGE INSTRUMENTATION. 135-950 MHz transceivers, transmitters, receivers and PAs that provide low cost, miniaturized, energy-efficient data links for mobile and low power instrumentation packages. Range encryption products include a standard encryption module for the REM program. Products also include digital network communications subsystems (DCNS) and CRI series transceivers. O TRANSMITTERS/AMPLIFIERS. These products feature single frequency or synthesized telemetry, video and command transmitters and amplifiers used for the following applications: missile performance evaluation and failure analysis, pulse and video data from surface exploration vehicles, manned aircraft evaluation data, RPV command and video transmission, computer data terminal transmission (air link) and ocean buoy surface-to-satellite transmission. O RECEIVERS. Receivers/decoders, airborne command receivers/decoders, airborne telemetry & video receivers, all used for flight termination. O ENCODERS/VIDEO COMPRESSION/ENCRYPTION. Data acquisition products including PAM and PCM encoders (PCM-600), PCM decoders, video compression (VCS-600), flight termination controllers, embedded encryption and signal distribution. O MICROWAVE PRODUCTS. Transportable, tunable, microwave radios that feature rugged, modularized systems capable of data rates up to 45 Mb/s. Frequencies are tunable in RF bands from 1.7 gHz to 19.7 gHz with simple plug-in RFheads. Optional plug-in baseband modules easily convert mission traffic to video with subcarriers or FDM operation. The radios are encased in portable, all-weather outdoor housing for use in restoration and temporary service and military tactical communications. The company provides high capacity microwave radio systems. Use or disclosure of this data is subject to the restrictions noted on the title page. 20 capable of mission traffic of up to 155 Mb/s SDH/SONET data rates. These radios are also tunable, portable and available in various RF frequency bands provided in an all-weather outdoor housing for temporary and restoration service. Optional modems provide a wide variety of interface capability including fiber optic interface at 155 MB STM-1. HF COMMUNICATIONS. The AN/PRC-130(PC) 2-30 MHz HFmanpack transceiver radio system features optional frequency hopping, voice encryption or ALE modules. Accessories include a 125 watt power amplifier used for vehicular or base station configuration, numerous antenna, battery and mounting options. The AN/PRC-132 1.6-50 MHz HF/VHF Special Operations Forces (SOF) radio transceiver system is capable of 50 watts output power in a very small, submersible package. It is available with a wide variety of antenna, battery and mounting options. The SC160 1.6-30 MHz HFmanpack transceiver radio system with digital signal processing features built-in voice encryption, frequency hopping and ALE options. A liquid crystal display (LCD) readout with alphanumeric keypad offers enhanced operational capability with improved performance. The AN/PRC-132 utilizes standard battery, antenna and mounting accessories. MICROCOM - -------- O TRANSMITTERS AND POWER AMPLIFIERS feature general applications for 100 mw to 20 w VHF, UHL "L," "S" and "C" bands, fixed or agile applications with FM, PM, FSK or BPSK modulation. Ballistic and tactical applications 100 mw to 5w, 1,435 to 1,540 MHz, 2,200 to 2,400 MHz with also featuring FM and PM modulation. Digital products include PCM encoders with IRIG-based formats with 15 Mb/s capability, PC programmable, signal conditioning inventory. Analog products include frequency division multiplexers, time division multiplexers, custom signal conditioners and filters. Microcom is known for expertise in airborne telemetry and video design with full integration from sensor to antenna. Its specialties also include system/link analysis, transducer selection, signal conditioning, data video compression, power supply and multiplexing design, battery sizing and packaging. O DATA ACQUISITION --The Microdas-1000 products feature a distributed data acquisition system, which is a completely integrated system from transducer inputs to PCM out. It contains fully programmable GUI-based set-up software, digital signal processing (DSP), 10 Mb/s throughput with extensive library of signal conditioning and data bus monitors. O SECURE PRODUCTS --Classified encryption support packages compatible with KG-66, KGV compatible decryptors, secure video compression systems and video ground stations. Use or disclosure of this data is subject to the restrictions noted on the title page. 21 O RANGE INSTRUMENTATION -- Transponders/data links for T&E and training ranges providing position location and data transmission for praticipants: ships, helicopters, aircraft and targets. TELEMETRY & INSTRUMENTATION - --------------------------- O SYSTEM 500. Designed for a full range of high-performance data acquisition applications, the System 500 is a distributed system with complete capabilities for real-time data acquisition, processing, distribution, control, display, analysis and archival. More than 500 systems have been fielded worldwide to support such key telemetry programs as PAC-3 missile test and development and McDonnell Douglas F/A-18 CD Hornet flight test. A powerful avionics system, the System 500, was recently selected by Northrop Grumman as the avionics instrumentation system for its next-generation electronic warfare system. The System 500 is also a leading telemetry tracking and control system with equipment used at the National Test Facility for satellite commanding and monitoring and at the Johnson Space Center for shuttle communications. Upon completion of the International Space Station, the 500 will also be deployed as part of a payload data services system at Marshall Space Flight Center to process experiment data from the station and distribute it to scientists on the ground. O O/S90. With major installations at Hill and Edwards Air Force Bases, the Open System 90 (O/S90) is a high-performance real-time data acquisition system widely fielded for the military test range community. Under a major contract with Lockheed Martin Aeronautical Systems, Telemetry & Instrumentation will deliver six O/S90 systems to support F-22 flight test activities from development through the F-22's first flight, slated for spring 1997 at Edwards Air Force Base. The O/S90 is also an integral part of ground support equipment for Titan 4 launches at both eastern and western ranges. O VISUAL TEST SYSTEM(TRADEMARK) (VTS). VTS is a multi-stream Windows-based data acquisition system that supports simultaneous real-time data acquisition, processing, display, analysis and archiving in a true network-based environment. Ten networked VTS systems have been installed at the Andoya Rocket Range near the Arctic Circle to receive and process telemetry data from science probes launched into the Northern Lights. The networked VTS systems allow multiple scientists to analyze real-time data remotely. O UNIVERSAL SIGNAL CONDITIONING AMPLIFIER. In partnership with NASA and the Florida Technological Research and Development Authority, Telemetry & Instrumentation has developed a universal signal conditioning amplifier (USCA) that for the first time allows test engineers to reset shuttle sensor parameters from a single master station without having to manually reset thousands of parameters. This capability is expected to save NASA 20,000 man-hours per year. Heralded as a breakthrough in signal conditioning technology, Telemetry & Use or disclosure of this data is subject to the restrictions noted on the title page. 22 Instrumentation is marketing the USCA commercially for such application areas as launch system checkout and test, wind tunnels, engine test stands, oil well logging and other areas where real-time data acquisition is critical. RANDTRON - -------- O TOTAL RADIATION APERTURE CONTROL-ANTENNA (TRAC-A). This airborne antenna consists of a 24-foot rotating aerodynamic oblate spheroid radome containing a UHF surveillance radar antenna, IFF antenna and forward and aft auxiliary antennas. The TRAC-A provides extremely low sidelobes to reduce clutter and jammer threats. This antenna began production in the early 1980s; production is planned beyond 2000 for the E-2C, P-3 and C-130 AEW aircraft. O ADAPTIVE DETECTION SYSTEMS (ADS). This next-generation AEW antenna is in development with an early version located at the Pacific Missile Range facility. The capabilities of the ADS antenna include ultra low sidelobes, jammer nulling, electronic and mechanical scanning. O STEALTH ANTENNAS. Technology evolved during development of leading-edge antennas for the A-12 program, after which Randtron won B-2 interferometer arrays. The company is a leader in antenna stealth technology and is currently applying this technology to other programs. O ANTENNAS. Randtron supplies antennas for the E/J band radar warning system, the C/D direction finding and omni for the ALR-69 and ALR-74 threat analyzer. Randtron has delivered approximately 2,000 aircraft sets of antennas with backlog through 1999. O PRECISION DIRECTION FINDING INTERFEROMETERS. In addition to stealth-related interferometers, Randtron is currently developing arrays for the F/A-18 Targeting Avionics System (TAS) pylon, Raytheon's submarine mast head program and F-15 Suppression of Enemy Air Defenses program. O SINUOUS ANTENNAS. Randtron has developed a common aperture element that is capable of simultaneously receiving or transmitting signals of any two orthogonal polarizations. Currently in production for Canadian C-130s, German Tornado aircraft and Israeli F-15 aircraft, the sinuous antenna is a potential replacement for existing spirals on various aircraft, including the F-4, F-15 and F-16. O COOPERATIVE ENGAGEMENT CAPABILITY. Randtron is currently developing a very low-profile 54-inch-diameter end-fire array. This array will be used on the E-2C, AWACS and P-3 aircraft. Use or disclosure of this data is subject to the restrictions noted on the title page. 23 MICROWAVE-NARDA EAST - -------------------- o WIRELESS COMPONENTS, NETWORKS AND INSTRUMENTS. Exclusive Narda products are meeting the wireless industry's needs with key products for cellular, ESMR, SMR, PCS and paging applications. These products include communication antenna test sets (CATS) that provide the complete solution to cell site antenna monitoring and power measurement; CellGuard(Trademark) Power/VSWR Monitors - precise in-line instruments for monitoring transmitter antennas; and state-of-the-art dual receiver multicouplers and hybrid Tx combiners and combining networks. o STANDARD CATALOG PRODUCTS. The majority of Narda products are standard, stocked, catalog units. The company maintains a high-technology, total quality environment in its 150,000 square foot state-of-the-art manufacturing plant that supports the large volume production and off-the-shelf availability customers require. Publisher of the world's most comprehensive microwave component catalog, Narda products are resident on every major military microwave system. They are supplied to customers throughout the world in fifteen product categories: wireless products, electromechanical switches, power dividers and hybrids, couplers/detectors, attenuators, terminations and phase shifters, isolators and circulators, adapters, control products, sources, mixers, waveguide components, radio frequency (RF) safety products, power meters/monitors and custom passive products. The current 368 page, full-line catalog provides technical overviews and product specifications. o ELECTROMECHANICAL SWITCHES. Narda has brought its most popular custom switches into the mainstream by making them standard, stocked catalog products that are available off-the-shelf. With more than thirty distinct models from SP2T to SP6T and transfer, Narda SEM switches address application in ATE, satellite communications, wireless communications, avionics, military and commercial test equipment. Custom switches (from SP2T to SP6T and transfer) in four activation modes, matrix switches and custom assemblies complete the product line. The current 108-page catalog covers all specifications and capabilities. o RF RADIATION SAFETY PRODUCTS. Ninety-five percent of the patents relating to the detection of RF radiation are held by Narda non-ionizing radiation safety equipment. A recognized industry leader, Narda offers seminars and in-house training programs to enable companies to evaluate potential sources of non-ionizing radiation and set up safety programs. Narda RF safety products are designed to comply with government and industry standards. They include revolutionary microprocessor survey meters (models 8712 and 8718), Nardalert(Registered Trademark) Personal Monitors, SMARTS(Trademark) Area Monitors, induced and contact current products and microwave oven survey systems. The company's 100-page catalog covers the complete Narda RFsafety product line. Use or disclosure of this data is subject to the restrictions noted on the title page 24 MICROWAVE-NARDA WEST - -------------------- o FILTER PRODUCTS. This product line consists of bandpass, band reject, high pass and low pass discrete and multiplexed filter designs. These filters utilize combline, cavity, interdigital, suspended substrate, dielectric resonator and waveguide manufacturing technologies to meet the performance requirements. The applications for these products include receiver pre-selection and transmitter bandpass filtering for telemetry, communication, surveillance, countermeasure, instrumentation, wireless and radar equipment that is used in ground, sea and air platform environments. o FERRITE PRODUCTS. Narda West manufactures a complete line of isolators and circulators that are offered in coaxial and drop-in package designs with frequencies ranging from 400 mHz - 26.5 GHz for military, cellular, space and commercial applications. These devices are designed to have low insertion loss and high isolation. They are ideal for system VSWR matching and reflected power protection, as well as a variety of other applications. Traditionally a major supplier to the military marketplace, Narda West has recently focused on the cellular market with much success in AMPS, NAMPS, GSM (North American and European), CDMA, TDMA and PCS. A wide range of commercial and cellular ferrite products are available as catalog items. o INTEGRATED SUBASSEMBLIES. This product line includes microwave integrated assemblies opearating from 500 MHz to 18 GHz, coupled filters, dual channel pre-amplifier filters, switch filter assemblies, multichannel pre-selectors, integrated down converters, band pass/low pass filter assemblies, quadraplexer filter assemblies, equalized diplexers and filter adapter assemblies. o VSAT PRODUCTS. The Narda West VSAT 8000 Series transceiver products are specifically designed for high linearity single-carrier and multi-carrier VSAT applications where maximum performance and reliability are mandatory. 25 HYCOR - ----- o MK 214 & MK 216 SEA GNAT RF DECOY. The MK 214 & MK 216 Sea Gnat Decoys are the seduction and distraction decoys used by the U.S. Navy and NATO for ship-defense against radar-guided threats. The MK 214 is mortar-launched, while the MK 216 is rocket-launched, from the MK 36 Decoy Launch System (DLS). Current production contracts call for the procurement, fabrication and assembly of more than 20,000 countermeasure cartridges. Total production to date has exceeded 120,000 countermeasure cartridges for the MK 36 DLS. o LAUNCH OF EXPENDABLE ACOUSTIC DEVICES (LEADS). LEADS, a joint U.S./U.K.-sponsored program, is intended to provide surface fleets with urgently needed defense capability against acoustic torpedoes, while operating in littoral areas in support of regional conflicts and forward presence missions. This engineering and manufacturing development program is addressing the adaptation of the MK 36 launchers to allow deployment of mortar -and rocket-dispensed acoustic decoys for torpedo defense. o AUTOMATIC LAUNCH OF EXPENDABLES (ALEX). ALEX is a completely automated ship-defense launch system developed by Lockheed Martin Hycor and sold throughout the world. ALEX includes a central processor that takes threat information from the ship's warning system and speed, direction and wind conditions from the ship's navigation system and initiates the optimum countermeasure response and/or maneuver based on the decoy load-out inventory. A broad family of proprietary countermeasures tailored specifically to the customers threat requirements are produced to support the ALEX system. Tactics development software, training and maintenance support are also provided. 26 EX-10.8 9 ASSET PURCHASE AGREEMENT Exhibit 10.8 ASSET PURCHASE AGREEMENT ________________________________________________________________________________ Between L-3 COMMUNICATIONS CORPORATION and CALIFORNIA MICROWAVE, INC. ________________________________________________________________________________ Dated as of December 19, 1997 TABLE OF CONTENTS
Page ARTICLE I SALE AND PURCHASE OF THE ASSETS . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.3 Books and Records; Intellectual Property . . . . . . . . . . . . . . 4 ARTICLE II THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.1 Place and Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . 5 2.4 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . 5 2.5 Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 6 2.6 Consent of Third Parties . . . . . . . . . . . . . . . . . . . . . . 8 2.7 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . 8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . 11 3.1 Authorization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.2 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.3 No Conflicts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 12 3.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . 12 3.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.7 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3.9 Compliance with Laws; Governmental Approvals and Consents; Governmental Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.11 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.12 Territorial Restrictions . . . . . . . . . . . . . . . . . . . . . . 18 3.13 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.14 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.15 Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . 18 3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 20 3.20 Employees, Labor Matters, etc. . . . . . . . . . . . . . . . . . . . 20 3.21 Employee Benefit Plans and Related Matter . . . . . . . . . . . . . . 21
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Page ---- 3.22 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . 21 3.23 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . 22 3.24 Order Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.26 Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . 23 4.1 Corporate Status; Authorization, etc. . . . . . . . . . . . . . . . . 23 4.2 No Conflicts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.4 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . 24 4.5 Adequate Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.1 Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.2 Covenants of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 29 ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 6.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . 31 6.2 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . 32 6.3 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . 35 ARTICLE VII EMPLOYEES AND EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . 35 7.1 Employment of Seller's Employees . . . . . . . . . . . . . . . . . . 35 7.2 Welfare and Fringe Benefit Plans . . . . . . . . . . . . . . . . . . 36 ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.1 By Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.2 By Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.3 Adjustments to Indemnification Payments. . . . . . . . . . . . . . . 39
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Page ---- 9.4 Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . 39 9.5 Expiration of Representations and Warranties, etc. . . . . . . . . 40 9.6 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARTICLE X DEFINITIONS, MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 41 10.1 Definition of Certain Terms . . . . . . . . . . . . . . . . . . . . . 41 10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 10.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 10.5 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 10.6 Arbitration Procedure. . . . . . . . . . . . . . . . . . . . . . . . 51 10.7 Attorneys Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 10.8 Liability for Transfer Taxes . . . . . . . . . . . . . . . . . . . . 53
-iii- EXHIBITS EXHIBIT A Form of Cross-License Agreement EXHIBIT B Form of Technology License Agreement EXHIBIT C Form of Trademark License Agreement EXHIBIT D Form of Supply Agreement SCHEDULES SCHEDULE 1.2 Excluded Assets SCHEDULE 2.4(a) Retention Incentive Agreements SCHEDULE 3.2(b) Qualification to Do Business; Good Standing SCHEDULE 3.3 Conflicts SCHEDULE 3.4 September Balance Sheet SCHEDULE 3.5 Undisclosed Liabilities SCHEDULE 3.6(a) Contested Taxes SCHEDULE 3.7 Absence of Changes SCHEDULE 3.8 Litigation SCHEDULE 3.9(a) Compliance with Laws SCHEDULE 3.9(b) Governmental Approvals and other Consents SCHEDULE 3.9(c) Government Contracts SCHEDULE 3.10 Asset Exceptions SCHEDULE 3.11(a) Contracts SCHEDULE 3.11(c) Defaults and Consents under Contracts SCHEDULE 3.13 Inventory Exceptions SCHEDULE 3.15 Product Warranties SCHEDULE 3.16(a) Owned Intellectual Property SCHEDULE 3.16(b) Intellectual Property Licensing Arrangements SCHEDULE 3.16(c) Infringement by Third Parties SCHEDULE 3.16(d) Claims by Third Parties SCHEDULE 3.17 Insurance SCHEDULE 3.18(a) Owned Real Property SCHEDULE 3.18(b) Leases SCHEDULE 3.19(a) Environmental Matters SCHEDULE 3.21(a) Employee Benefit Plans SCHEDULE 3.23 Suppliers and Customers SCHEDULE 3.24 Backlog SCHEDULE 4.2 Governmental Approvals and other Consents SCHEDULE 5.2(e) Letters of Credit; Performance and Surety Bonds SCHEDULE 5.2(f) Severance Agreements SCHEDULE 6.2(c) Consents -iv- ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT dated as of December 19, 1997, between L-3 Communications Corporation, a Delaware corporation (the "Buyer"), and California Microwave, Inc., a Delaware corporation (the "Seller"). R E C I T A L S: A. Seller is in the business of designing, integrating and installing satellite communications systems (with a principal focus on the telephony, video broadcasting, multimedia, trunk and VSAT hub niches) in the United States and certain other countries through an unincorporated division (the "STS Division"). B. Buyer wishes to purchase or acquire from Seller, and Seller wishes to sell, assign and transfer to Buyer, substantially all of the assets of the STS Division, and Buyer has agreed to assume certain of the liabilities of such Division, all for the purchase price and upon the terms and subject to the conditions hereinafter set forth. C. Capitalized terms used herein without separate definition have the meanings given to such terms in Section 10.1. NOW THEREFORE, in consideration of the mutual covenants, representations and warranties made herein, and of the mutual benefits to be derived hereby, the parties hereto agree as follows: ARTICLE I SALE AND PURCHASE OF THE ASSETS 1.1 Assets. Subject to and upon the terms and conditions set forth in this Agreement, at the Closing, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all right, title and interest of Seller in and to the properties, assets and rights of every nature, kind and description, tangible and intangible (including goodwill), whether real, personal or mixed, whether accrued, contingent or otherwise and whether now existing or hereinafter acquired (other than the Excluded Assets) that primarily relate to and are used in the Business as the same may exist on the Closing Date (collectively, the "Assets"), including, without limitation, -1- (a) the Owned Real Property described on Schedule 3.18(a) and the property leased at 125 Kennedy Drive, Hauppauge, New York, described on Schedule 3.18(b) (the "Kennedy Facility"); (b) all machinery, equipment, furniture, furnishings, vehicles, tools, dies, molds and other tangible personal property; (c) all inventories of raw materials, work in process, finished products, goods, spare parts, replacement and component parts, and office and other supplies (whether on hand, in-transit or on order) (collectively, the "Inventories"); (d) all rights in Intellectual Property owned by Seller and used primarily in the Business; (e) the GMACS and Universal System Controller; (f) all rights under all Contracts; (g) all credits, prepaid expenses, deferred charges, advance payments, security deposits and prepaid items; (h) all notes and accounts receivable held by Seller (including intercompany and interdivisional accounts receivable) and all notes, bonds and other evidences of indebtedness of and rights to receive payments from any Person (in all cases, whether or not billed) and the benefit of security therefor; (i) all Books and Records; (j) to the extent their transfer is permitted by law, all Governmental Approvals, including all applications therefor; (k) all rights to causes of action, lawsuits, claims and demands of any nature available to or being pursued by Seller with respect to the Assets or the Assumed Liabilities (subject to Section 1.2(e)); (l) all guarantees, warranties, indemnities and similar rights in favor of Seller with respect to the Assets; (m) all computer hardware and software used exclusively in the Business, including all rights under licenses and other instruments or agreements relating thereto; -2- (n) all assets reflected on the Final Closing Statement of Net Assets; (o) the Names and Logos "Satellite Transmission Systems" alone or in any combination of words, or any combination, variation or derivation of any such name or mark; and (p) the cash and the cash equivalents in the non-U.S. bank accounts as provided in Section 2.7(b). Subject to the terms and conditions hereof, at the Closing, the Assets shall be transferred or otherwise conveyed to Buyer free and clear of all Liens excepting only those Liens listed in the first and fourth paragraphs of Schedule 3.10 and Permitted Liens. 1.2 Excluded Assets. Seller shall retain and not transfer, and Buyer shall not purchase or acquire, the following assets (collectively, the "Excluded Assets"): (a) the assets listed on Schedule 1.2; (b) the name and mark "California Microwave" and any name or mark derived from or including the foregoing; (c) all cash and cash equivalents and similar type investments, such as certificates of deposit, treasury bills and other marketable securities other than non-U.S. bank accounts as provided in Section 2.7(b); (d) all Books and Records relating to or used in the business of Seller and not primarily relating to or used in the Business; (e) all insurance policies and all rights to causes of action, lawsuits, claims and demands, rights of recovery and set-off, and proceeds, under or with respect to insurance policies except to the extent provided for in Section 5.1(e); (f) all rights to causes of action, lawsuits, claims and demands of any nature available to or being pursued by Seller with respect to the Excluded Assets or the Excluded Liabilities; (g) all Intellectual Property not used primarily in the Business; -3- (h) all right, title and interest of the Seller in and to prepaid Taxes of the Business (except to the extent reflected on the Final Closing Statement of Net Assets), and any claims for any refund, rebate or abatement with respect to Taxes of the Business (except to the extent reflected on the Final Closing Statement of Net Assets) for any period or portion thereof through the Closing Date and any interest payable with respect thereto; and (i) the lease of the warehouse located at 65 Commerce Drive, Hauppauge, New York. 1.3 Books and Records; Intellectual Property. (a) From and after the Closing and until the sixth anniversary thereof, (i) Seller agrees to grant to Buyer, upon reasonable notice and during normal business hours, reasonable access to any Books and Records that pertain to the operations of the Business but that are not Books and Records that primarily relate to the Business, and (ii) Buyer agrees to grant to Seller, upon reasonable notice and during normal business hours, reasonable access to any Books and Records included in the Assets that pertain to the operation of the Business on or prior to the Closing Date, for any reasonable business purpose of Seller. (b) At the Closing, Seller shall grant to Buyer a fully-paid, nonexclusive license to use intellectual property of Seller used in the operation of the Business but not constituting Intellectual Property that primarily relates to the Business. Such license shall be substantially in the form of the Cross-License Agreement between Buyer and Seller attached as Exhibit A hereto (the "Cross- License Agreement"). (c) At the Closing, Buyer shall grant to Seller a fully-paid, non-exclusive license to use the GMACS, Universal System Controller and the patent pending referenced in Schedule 3.16(a). Such license shall be substantially in the form of the Technology License Agreement between Buyer and Seller attached as Exhibit B hereto (the "Technology License Agreement"). (d) At the Closing, Buyer shall grant to Seller a fully-paid, non-exclusive license to use the trademarks, service marks, tradenames and service names associated with the GMACS and the Universal System Controller. Such agreement shall be substantially in the form of the Trademark License Agreement between Buyer and Seller attached as Exhibit C hereto (the "Trademark License Agreement"). -4- ARTICLE II THE CLOSING 2.1 Place and Date. The closing of the sale and purchase of the Assets (the "Closing") and the assumption of the Assumed Liabilities shall take place at 10:00 A.M. local time on the 26th day of January, 1998 at the offices of Whitman Breed Abbott & Morgan LLP, 200 Park Avenue, New York, NY 10166, or such other time and place upon which the parties may agree. The day on which the Closing actually occurs is herein sometimes referred to as the "Closing Date." 2.2 Purchase Price. On the terms and subject to the conditions set forth in this Agreement, Buyer agrees to pay to Seller at the Closing an aggregate of U.S. $27 million, subject to adjustment as provided for in Section 2.7 (the "Purchase Price"), and to assume the Assumed Liabilities as provided in Section 2.4. The Purchase Price shall be paid by the wire transfer of immediately available funds to such bank account or accounts as are specified by Seller in written instructions given to Buyer at least three days prior to the Closing. 2.3 Allocation of Purchase Price. The parties agree to allocate the aggregate of the Purchase Price and the Assumed Liabilities (collectively, the "Aggregate Purchase Price") among the Assets, including solely for this purpose the agreements contained in Section 5.1(f), in accordance with Section 1060 of the Code as mutually agreed to by the parties within 180 days following the Closing. All such mutually agreed to allocations shall be (a) at the election and expense of Buyer, based upon appraisal(s) prepared by independent firm(s) selected by Buyer and approved by Seller (such approval not to be unreasonably withheld or delayed), and (b) used by each party in preparing any filings required pursuant to Section 1060 of the Code or any similar provisions of state or local law and all relevant income and franchise tax returns, subject to adjustment to reflect the adjustment to the Purchase Price provided for in Section 2.7. Neither Buyer nor Seller will take any position before any taxing authority or in any judicial proceeding that is inconsistent with such mutually agreed to allocations without the prior consent of the other party. The parties shall in good faith exercise reasonable efforts to support such reported allocations in any audit proceedings initiated by any taxing authority. 2.4 Assumption of Liabilities. Subject to the terms and conditions set forth herein, at the Closing, Buyer shall assume and agree to pay, honor and discharge when due only the following liabilities and obligations relating to the Assets or the Business: (a) all payment obligations of Seller under all retention incentive agreements as set forth in Schedule -5- 2.4(a), but only to the extent that such payment obligations relate to the failure of Buyer to hire employees of the STS Division or the involuntary termination by Buyer without cause of the employment of any Transferred Employee after the Closing; (b) all product warranty obligations of the Business; (c) all liabilities and obligations of Seller to be performed from and after the Closing Date under or relating to Contracts and Governmental Approvals included in the Assets; (d) all liabilities and obligations of Seller relating to or arising out of the operation of the Business and reflected on the June Balance Sheet and/or the September Balance Sheet or disclosed in the notes thereto other than those relating to income taxes; and (e) to the extent reflected on the Final Closing Statement of Net Assets, all trade and other accounts payable and other liabilities (other than those relating to income taxes) arising out of or in respect of the ordinary course of business of the Business (including intercompany and interdivisional trade accounts payable) consistent with past practice since September 30, 1997 (collectively, the "Assumed Liabilities"). 2.5 Excluded Liabilities. Other than for the Assumed Liabilities, Buyer shall not be responsible for any other debts, claims, commitments, liabilities or obligations of Seller or the Business (collectively, the "Excluded Liabilities"), including without limitation any and all liabilities, obligations or commitments of Seller (except those that constitute Assumed Liabilities) relating to and arising out of any of the following: (a) any liability, obligation or commitment that, in accordance with GAAP, was required to have been shown as a liability in the Financial Statements or in the notes thereto and was not so shown, unless reflected on the Final Closing Statement of Net Assets; (b) except as expressly assumed by Buyer pursuant to Article VII hereof or as accrued or otherwise reflected on the Final Closing Statement of Net Assets, (i) the sponsorship, administration, contribution obligation of any entity under any Employee Benefit Plan or termination of any Employee Benefit Plan on or prior to the Closing Date, or (ii) the termination of employment of any employee of the Business by Seller; (c) any cause of action or judicial or administrative action, suit, proceeding or investigation, pending or threatened on the Closing Date, relating to periods prior to the Closing Date, that is not disclosed on Schedule 3.8 hereto; (d) any failure or alleged failure to comply with, or any violation or alleged violation of, (i) any law, rule, regulation, statute, ordinance, permit, judgment, injunction, order, decree, license or other Governmental Approval applicable to the Business or the Assets or (ii) any -6- Contract, in each case which failure or violation occurred or was alleged to have occurred prior to the Closing Date; (e) any infringement or alleged infringement of the rights of any other person or entity arising out of the use of any Intellectual Property in connection with the Business prior to the Closing Date; (f) any rights of any other Person relating to the Intellectual Property pursuant to any license, sublicense or agreement required to be disclosed and not so disclosed; (g) any obligations against Seller with respect to any notes, bonds, accounts receivable or other evidences of indebtedness of or rights to receive payment from any Person that have been transferred to a third person by Seller; (h) any liability for any Taxes imposed on Seller arising from the operation of the Business on or before the Closing Date; (i) the Excluded Assets; (j) all Environmental Liabilities and Costs arising from, relating to, in respect of, or incurred in connection with (i) any real property, business entities or assets, whether domestic or foreign, formerly owned, occupied or operated by or in connection with the Business and not owned, occupied or operated by or in connection with the Business as of the Closing Date, (ii) the transportation or disposal of any Hazardous Substances to or at any offsite facility or location by or in connection with the Business occurring prior to the Closing Date and (iii) conditions existing or events occurring on or prior to the Closing Date on any real property owned, occupied or operated by or in connection with the Business as of the Closing Date; (k) all obligations of Seller under all retention agreements, severance agreements (subject to the provisions of Section 5.2(f)), change of control agreements and similar arrangements not listed on Schedule 2.4(a); (l) all obligations of Seller under all retention incentive agreements listed on Schedule 2.4(a) (including any payments due thereunder upon and by reason of the sale of the STS Division), other than those payment obligations of Seller referred to in Section 2.4(a); (m) any claim, litigation, action or proceeding, whether or not now pending or threatened, relating to the Business or the Assets to the -7- extent based on or arising out of or based upon product liability with respect to products shipped or sold prior to the Closing; or (n) all intercompany obligations and liabilities owed by the Business to Seller other than intercompany or interdivisional trade accounts payable reflected on the Final Closing Statement of Net Assets. 2.6 Consent of Third Parties. Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute an agreement to assign or transfer any Governmental Approval, instrument, contract, lease, permit or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom if an assignment or transfer or an attempt to make such an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or affect adversely the rights of Buyer or Seller thereunder; and any transfer or assignment to Buyer by Seller of any interest under any such Governmental Approval, instrument, contract, lease, permit or other agreement or arrangement that requires the consent of a third party shall be made subject to such consent or approval being obtained. In the event any such consent or approval is not obtained on or prior to the Closing Date, Seller shall (i) continue to use all reasonable efforts to obtain any such approval or consent after the Closing Date until such time as such consent or approval has been obtained without any third party cost to Buyer, (ii) hold such Governmental Approval, instrument, contract, lease, permit or other agreement or arrangement on behalf of Buyer, (iii) cooperate with Buyer in any lawful arrangement to provide that Buyer shall receive the benefits under any such Governmental Approval, instrument, contract, lease or permit or other agreement or arrangement, including performance by Seller, as agent, and (iv) enforce and perform for the account of Buyer any rights of Seller arising from such Government Approval, instrument, contract, lease, permit or other agreement or arrangement, provided that Buyer shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent Buyer would have been responsible therefor if such consent or approval had been obtained. Nothing in this Section 2.6 shall be deemed a waiver by Buyer of its right to receive an effective assignment of all of the Assets. 2.7 Adjustment of Purchase Price. (a) Calculation of Adjustment. The Purchase Price shall be (i) increased by the amount that the Closing Date Net Assets (as hereinafter defined), are greater than $25,099,080 (which amount is the book value of the net assets as shown on the adjusted September Balance Sheet (the "Target Net Assets"); or (ii) decreased by the amount that the Closing Date Net Assets are less than the Target Net Assets. The term "Closing Date Net Assets" as used herein shall mean the book value of the Assets set forth on the Final Closing -8- Statement of Net Assets (as hereinafter defined) in excess of the amount of the Assumed Liabilities set forth on the Final Closing Statement of Net Assets, determined in accordance with the procedures set forth below. The amount of any decrease or increase to the Purchase Price pursuant to this Section 2.7(a) plus interest from and including the Closing Date to but excluding the date of payment at the Prime Rate (as hereinafter defined) shall be paid by Seller or Buyer, as the case may be, by wire transfer in immediately available funds within five (5) business days after the Final Closing Statement of Net Assets is agreed to by Seller and Buyer or is determined by the Neutral Auditor (as hereinafter defined). For purposes of this Agreement, "Prime Rate" means the prime rate of interest in effect on the Closing Date as stated in the "Money Rates" section of the Wall Street Journal. (b) Preparation of Closing Statement of Net Assets. As soon as practicable, and in any event within sixty (60) days after the Closing Date, Seller shall cause Ernst & Young LLP ("E&Y") to prepare an audited statement of net assets for the Business consisting of the Assets and the Assumed Liabilities, as of the close of business on the Closing Date determined on a pro forma basis as if the parties hereto had not consummated the transactions contemplated by this Agreement (the "Closing Statement of Net Assets"), to be prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a basis consistent with the September 30, 1997 Financial Statements (including the September Balance Sheet) through full application of the policies and procedures used in preparing the September 30, 1997 Financial Statements (including the September Balance Sheet) and taking into account the type of adjustments included in the September Balance Sheet set forth in Schedule 3.4, and with changes in contract estimates at completion ("EAC's") and estimates to complete ("ETC's") determined on a basis consistent with the method used for the determination of the September 30, 1997 Financial Statements (including the September Balance Sheet); provided that, for purposes of the Closing Statement of Net Assets, the cash and cash equivalents held in non-US bank accounts for the benefit of the STS Division shall be transferred to Buyer and shall be reflected as assets of the STS Division and shall be included in the calculation of any Purchase Price adjustment required by this Section. The Closing Statement of Net Assets shall be accompanied by the report of E&Y thereon and by a certificate of Seller's Chief Financial Officer, each of which shall state that the Closing Statement of Net Assets presents fairly, in all material respects, the Assets and Assumed Liabilities presented on such statement as provided for in this Agreement at the Closing Date in conformity with GAAP consistently applied with the September 30, 1997 Financial Statements, except that it does not contain all the notes required by GAAP. Buyer shall provide Seller, E&Y and the Neutral Auditor such access to the Books and Records as may reasonably be required for the preparation and/or review of the Closing -9- Statement of Net Assets. All fees and expenses of E&Y relating to the preparation of the Closing Statement of Net Assets shall be borne equally by Seller and Buyer. (c) Review of Closing Statement of Net Assets. After receipt of the Closing Statement of Net Assets, Buyer shall have thirty (30) days to review it. Buyer and its authorized representatives shall have full access to all Books and Records and appropriate employees of the Seller and its accountants to the extent required to complete their review of the Closing Statement of Net Assets including work papers used in preparation thereof. Unless the Buyer delivers written notice to Seller on or prior to the 30th day after receipt of the Closing Statement of Net Assets specifying in reasonable detail all disputed items and the basis therefor, the parties shall be deemed to have accepted and agreed to the Closing Statement of Net Assets. If Buyer so notifies the Seller of an objection to the Closing Statement of Net Assets, the parties shall, within thirty (30) days following the date of such notice (the "Resolution Period") attempt to resolve their differences and any resolution by them as to any disputed amount shall be final, binding, conclusive and nonappealable for all purposes under this Agreement. (d) Resolution. If at the conclusion of the Resolution Period the parties have not reached an agreement on the objections, then all amounts remaining in dispute may, at the election of either party, be submitted to Price Waterhouse or another large international accounting firm not otherwise engaged by either party (the "Neutral Auditor"). Each party agrees to execute, if requested by the Neutral Auditor, a reasonable engagement letter. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditor shall be borne equally by Seller and Buyer, unless the Neutral Auditor finds one party acted in bad faith in which case that party pays all. Except as provided in the preceding sentence, all other costs and expenses incurred by the parties in connection with resolving any dispute hereunder before the Neutral Auditor shall be borne by the party incurring such cost and expense. The Neutral Auditor shall act as an arbitrator to determine, based solely on the presentations by Seller and Buyer, and not by independent review, only those issues still in dispute. The Neutral Auditor's determination shall be made within thirty (30) days of its engagement (which engagement shall be made no later than five (5) business days after the election by either party to submit the objections to the Neutral Auditor) or as soon thereafter as possible, shall be set forth in a written statement delivered to Seller and Buyer and shall be final, binding, conclusive and nonappealable for all purposes hereunder. The term "Final Closing Statement of Net Assets," as hereinafter used, shall mean the definitive Closing Statement of Net Assets agreed to by Seller and Buyer in accordance with Section 2.7(c) or the definitive Closing Statement of Net Assets resulting -10- from the determination made by the Neutral Auditor in accordance with this Section 2.7(d) (in addition to those items theretofore agreed to by Seller and Buyer). ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Authorization, etc. Seller has the corporate power and authority to execute and deliver this Agreement, to perform fully its obligations thereunder, and to consummate the transactions contemplated hereby. The execution and delivery by Seller of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by all requisite corporate action of Seller. Seller has duly executed and delivered this Agreement. This Agreement is a legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws affecting creditor's rights generally and by general equitable principles. 3.2 Corporate Status. (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to carry on the Business and to own or lease and to operate the properties of the Business as and in the places where the Business is conducted and such properties are owned, leased or operated. (b) Seller is duly qualified or licensed to do business and is in good standing in each of the jurisdictions in which the operation of the Business or the character of the properties owned, leased or operated by it in connection with the Business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not have a Material Adverse Effect. Such jurisdictions are listed on Schedule 3.2(b). (c) Seller has delivered to Buyer complete and correct copies of its certificate of incorporation and by-laws in each case, as amended and in effect on the date hereof and on the Closing Date. Seller is not in violation of any of the provisions of its certificate of incorporation or by-laws or other organizational documents. -11- 3.3 No Conflicts, etc. The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in a violation of or a default under (with or without the giving of notice or the lapse of time or both), or result in the acceleration of or give rise to any party the right to terminate, modify or cancel under, or result in the loss of any rights, privileges, options or alternatives under, or result in the creation of any Lien on any assets of Seller (including the Assets) under (i) any Applicable Law applicable to Seller or any of the Assets, (ii) the certificate of incorporation or by-laws of Seller or (iii) except as set forth in Schedule 3.3, any Contract or other agreement or instrument to which Seller is a party or by which Seller or the Assets is bound. Except as specified in Schedule 3.3 and as may be required under the HSR Act, no Governmental Approval or other Consent is required to be obtained or made by Seller in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 3.4 Financial Statements. Seller has delivered to Buyer (a) the audited balance sheet (the "June Balance Sheet") and the related statements of operations and cash flows of the Business as at and for the fiscal year ended June 30, 1997 and (b) the unaudited balance sheet and the unaudited adjusted balance sheet, a copy of which is attached hereto as Schedule 3.4 (the "September Balance Sheet") and the related statement of income of the Business as at and for the three-month period ended September 30, 1997 (collectively, the "Financial Statements"). The September 30, 1997 Financial Statements have been prepared on a basis consistent with the June 30, 1997 Financial Statements. The Financial Statements are in accordance with the books and records of the STS Division, have been prepared in accordance with GAAP and fairly present the financial condition and results of operations of the Business as at and for the periods specified, except that the September 30, 1997 Financial Statements do not contain notes required by GAAP. 3.5 Absence of Undisclosed Liabilities. Seller has no debts, claims, liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, asserted or unasserted, arising out of or relating to the Business, except (a) as set forth in Schedule 3.5, (b) as and to the extent disclosed or reserved against in the September Balance Sheet, and (c) liabilities and obligations that were incurred after September 30, 1997 in the ordinary course of business consistent with prior practice. 3.6 Taxes. Seller has (or by the Closing will have) duly and timely filed all Tax Returns relating to the Business with respect to Taxes required to be filed on or before the Closing Date. Except for Taxes set forth -12- on Schedule 3.6(a), which are being contested in good faith and by appropriate proceedings, the following Taxes have (or by the Closing Date will have) been duly and timely paid: (i) all Taxes shown to be due on the Tax Returns, (ii) all deficiencies and assessments of Taxes of which notice has (or by the Closing Date will have) been received by Seller that are or may become payable by Buyer or chargeable as a lien upon the Business, and (iii) all other Taxes in respect of periods prior to the Closing. 3.7 Absence of Changes. Except as set forth in Schedule 3.7 (which Schedule includes, as Schedule 3.7(a), certain STS Division summary financial data showing the actual results of the STS Division for the quarter ended September 30, 1997 and the STS Division's forecasted results, by quarter, for the fiscal year ending June 30, 1998) and for the results shown and changes forecast in Schedule 3.7(a), since September 30, 1997, Seller has not in connection with or relating to the Business or the Assets: (a) suffered any material adverse change in the financial condition, results of operation or Assets of the Business, other than changes in the STS Division's intercompany account with CMI corporate, which changes represent (i) the results of operations of the STS Division, (ii) the cash advanced to the STS Division by CMI corporate or repaid by the STS Division to CMI corporate, and (iii) certain allocations between CMI corporate and the STS Division, which allocations were made in the ordinary course of business consistent in type and amount with past practice; (b) incurred, assumed, guaranteed or discharged any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, or any indebtedness for borrowed money, except current liabilities for trade or business obligations incurred in connection with the purchase of goods or services in the ordinary course of business consistent with prior practice; (c) mortgaged, pledged or subjected to Lien, any property, business or assets, tangible or intangible; (d) sold, transferred, leased to others or otherwise disposed of any of the Assets, except for inventory sold in the ordinary course of business, or cancelled or compromised any debt or claim, or waived or released any right of substantial value; (e) received any notice of termination of any material contract, lease or other agreement; -13- (f) suffered any damage, destruction or loss (whether or not covered by insurance), in any case or in the aggregate, in excess of $150,000; (g) transferred or granted any rights under, or entered into any settlement regarding the breach or infringement of, any Intellectual Property, or modified any existing rights with respect thereto; (h) made any change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable, or paid or agreed or orally promised to pay, conditionally or otherwise, any bonus, incentive, retention or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any employee, distributor or agent of the Business, other than increases in the ordinary course of business consistent with past practice in the compensation payable to those employees of the Business earning less than $50,000 per annum each; (i) encountered any labor union organizing activity, had any actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or had any material change in its relations with its employees, distributors, agents, customers or suppliers; (j) entered into any transaction, contract or commitment other than in the ordinary course of business or paid or agreed to pay any legal, accounting, brokerage, finder's fee, Taxes or other expenses in connection with, or incurred any severance pay obligations by reason of, this Agreement or the transactions contemplated hereby; (k) made any grant of credit to any customer or distributor on terms or in amounts materially more favorable than had been extended to that customer or distributor in the past; or (l) taken any action or omitted to take any action that would result in the occurrence of any of the foregoing. Seller makes no representation or warranty as to the realization of any results forecast in Schedule 3.7(a). 3.8 Litigation. Except as set forth on Schedule 3.8, there is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation, civil, criminal, regulatory or otherwise, in law or in equity, pending or, to the knowledge of Seller, threatened against or relating to Seller in connection with the Assets or the Business seeking unspecified damages, damages in excess of $50,000 or any -14- injunctive or other equitable relief or against or relating to the transactions contemplated by this Agreement. 3.9 Compliance with Laws; Governmental Approvals and Consents; Governmental Contracts. (a) Except as disclosed in Schedule 3.9(a), Seller has complied in all respects with all Applicable Laws applicable to the Business or the Assets, except for any non-compliance that has not had or would not result in, individually or in the aggregate, a Material Adverse Effect. (b) Schedule 3.9(b) sets forth all Governmental Approvals and other Consents necessary for, or otherwise material to, the conduct of the Business as conducted by Seller. Except as set forth in Schedule 3.9(b), all such Governmental Approvals and Consents have been duly obtained and are in full force and effect, and Seller is in compliance in all material respects with each of such Governmental Approvals and Consents held by it with respect to the Assets and the Business. (c) Schedule 3.9(c) sets forth all Contracts with any Governmental Authority. 3.10 Assets. (a) Except for those Liens listed on Schedule 3.10, on the date hereof, Seller has good and valid title to all the Assets free and clear of any and all Liens other than Permitted Liens. Except for those Liens listed as Items 1 and 4 on Schedule 3.10, on the Closing Date, Seller will have good and valid title to all the Assets free and clear of any and all Liens other than Permitted Liens. The Assets include all material assets required for the continued conduct of the Business by Buyer as now being conducted or material to the financial condition or results of operations of the Business, except for the Excluded Assets. The Assets do not include stock or equity interests in any Person. (b) All material property and assets owned or utilized by the Business are in good operating condition and repair (except for ordinary wear and tear), free from any defects (except such minor defects as do not interfere with the use thereof in the conduct of the normal operations), and are sufficient to carry on the Business as presently conducted. All buildings, plants and other structures utilized by the Business are in good condition and repair (except for ordinary wear and tear). -15- 3.11 Contracts. (a) Schedule 3.11(a) contains a complete and correct list of all agreements, contracts, commitments, orders, licenses, leases, and other instruments and arrangements (whether written or oral) of the types described below to which Seller is a party or by which it or any of its assets is bound in connection with the Business, the Assets or the Assumed Liabilities (the "Contracts"): (i) leases, licenses, permits, franchises, insurance policies, Governmental Approvals and other contracts concerning or relating to the Real Property; (ii) employment, consulting, agency, collective bargaining or other similar contracts, agreements, and other instruments and arrangements relating to or for the benefit of employees, sales representatives, distributors, dealers, agents, or (if material) independent contractors; (iii) loan agreements, indentures, letters of credit, mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, and other agreements and instruments relating to the borrowing of money or obtaining of or extension of credit; (iv) licenses, licensing arrangements and other contracts providing in whole or in part for the use of, or limiting the use of, any Intellectual Property; (v) brokerage or finder's agreements; (vi) joint venture, partnership and similar contracts involving a sharing of profits or expenses (including but not limited to joint research and development and joint marketing contracts); (vii) asset purchase agreements and other acquisition or divestiture agreements, including but not limited to any agreements relating to the sale, lease or disposal of any Assets (other than sales of inventory in the ordinary course of business) or involving continuing indemnity or other obligations; (viii) any contract with respect to which the aggregate amount that could reasonably be expected to be paid or received thereunder in the future exceeds $100,000 per annum; -16- (ix) sales agency, manufacturer's representative, marketing or distributorship agreements; (x) contracts, agreements or arrangements with respect to the representation of the Business in foreign countries; (xi) purchase commitments for inventory items or supplies that, together with amounts on hand, constitute in excess of six months normal usage; (xii) any agreement, understanding, contract or commitment (written or oral) with (x) any employee, agent, consultant, distributor, dealer or franchisee other than those involving in the aggregate consideration or other expenditure of less than $100,000, or (y) any Affiliate; (xiii) any collective bargaining agreements with any unions, guilds, shop committees or other collective bargaining groups; (xiv) any guarantee of the payment or performance of any Person agreement to indemnify any Person, or act as a surety, or other agreement to be contingently or secondarily liable for the obligations of any Person other than (x) the endorsement of checks in the ordinary course of business and (y) guarantees or agreements which in the aggregate do not exceed $100,000; (xv) any outstanding bid or proposal or any outstanding customer option relating to Contracts in the Backlog in excess of $100,000; and (xvi) any other contracts, agreements or commitments that are material to the Business. (b) Seller has furnished Buyer with access to all written Contracts, together with all amendments thereto, set forth in Schedule 3.11(a). Seller has furnished Buyer with a complete and accurate summary of all oral contracts listed on Schedule 3.11(a). (c) There does not exist under any Contract any event of default or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder on the part of Seller or, to the knowledge of Seller, any other party thereto except as set forth in Schedule 3.11(c) and except for such events or conditions that, individually and in the aggregate, (i) have not had or resulted in a Material Adverse Effect and (ii) have not materially impaired the ability of Seller to -17- perform its obligations under the Agreement. Except as set forth in Schedule 3.11(c), each Contract is a legal, valid, binding and enforceable obligation of Seller and, to the knowledge of Seller, the other parties thereto. Except as set forth in Schedule 3.11(c), no consent of any third party is required under any Contract as a result of or in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 3.12 Territorial Restrictions. Seller is not restricted by any agreement or understanding with any other Person from carrying on the Business anywhere in the world. 3.13 Inventories. Except as set forth on Schedule 3.13 and net of reserves as reflected in the September Balance Sheet or to be reflected in the Final Closing Statement of Net Assets, (a) Inventories are of such quality as to meet the quality control standards of Seller and any applicable governmental quality control standard and are usable in the ordinary course of business in amounts consistent with past practice, and (b) Inventories that are finished goods are saleable in the ordinary course of business. 3.14 Receivables. Seller's receivables (including accounts receivable, loans receivable and advances) which have arisen in connection with the Business and which are reflected in the September Balance Sheet or will be reflected in the Final Closing Statement of Net Assets, and all such receivables which will have arisen since the date of the Financial Statements, have arisen only from bona fide transactions in the ordinary course of business. Seller has no knowledge of any facts or circumstances generally (other than general economic conditions) which would result in any material increase in the uncollectability of such receivables as a class in excess of the reserves therefor set forth on the Financial Statements. To Seller's knowledge, there has not been any material adverse change in the collectability of such receivables since September 30, 1997. 3.15 Product Warranties. Except as set forth in Schedule 3.15 and for warranties under Applicable Law, (a) there are no warranties express or implied, written or oral, with respect to the products of the Business and (b) except as reflected in the Financial Statements or as incurred in the ordinary course of business thereafter there are no pending or threatened claims with respect to any such warranty. Seller is not aware of any facts that indicate that the reserves for product warranties reflected in the September Balance Sheet are materially understated. Schedule 3.15 sets forth a list of all pending or, to the knowledge of Seller, threatened product warranty claims in excess of $50,000. -18- 3.16 Intellectual Property. Schedule 3.16(a) sets forth a complete and correct list of all material Intellectual Property that is owned by Seller and used in connection with the Business (the "Owned Intellectual Property"). Schedule 3.16(b) sets forth a complete and correct list of all material written or oral licenses and arrangements, (i) pursuant to which the use by any Person of Intellectual Property is permitted by Seller and (ii) pursuant to which the use by Seller of Owned Intellectual Property is permitted by any Person (collectively, the "Intellectual Property Licenses"). The Owned Intellectual Property and the Intellectual Property Licenses (including the GMACS and Universal System Controller) constitute all Intellectual Property necessary to operate the Business consistent with past practice. On the date hereof and at the Closing, all Intellectual Property Licenses are or will be in full force and effect in accordance with their terms, and are free and clear of any Liens (other than Permitted Liens). To the knowledge of Seller, the conduct of the Business does not infringe the rights of any third party in respect of any Intellectual Property, except as set forth on Schedule 3.16(c). To the knowledge of Seller, none of the Intellectual Property is being infringed by third parties. Except as set forth on Schedule 3.16(d), there is no claim or demand of any Person pertaining to, or any proceeding which is pending or, to the knowledge of Seller, threatened, that challenges the rights of Seller in respect of any Intellectual Property, or claims that any default exists under any Intellectual Property License. 3.17 Insurance. Schedule 3.17 contains a list of all insurance policies maintained by Seller for the benefit of or in connection with the Assets or the Business and no notice of cancellation, termination, or reduction of coverage, and no notice of intention to cancel, terminate or reduce coverage, has been received. Seller has given Buyer access to complete and correct copies of all such policies together with all riders and amendments thereto. Such policies are in full force and effect, and all premiums due thereon have been paid. 3.18 Real Property. (a) Owned Real Property. Schedule 3.18(a) contains a complete and correct list of all Owned Real Property setting forth the address and owner of each parcel of Owned Real Property and generally describing all improvements thereon including, without limitation, the properties reflected as being so owned on the Financial Statements and not disposed of after the date of the Financial Statements in the ordinary course of Business. Seller has, or on the Closing Date will have, good and marketable fee simple title to the Owned Real Property indicated on Schedule 3.18(a) as being owned by it, free and clear of all Liens other than Permitted Liens. There are no outstanding options or rights of first refusal to purchase the Owned Real Property, or any -19- portion thereof or interest therein. Notwithstanding the foregoing provisions, for the purposes of this Section 3.18, Section 3.10, and the last sentence of Section 1.1, Permitted Liens shall not include, with the exception of the mortgage liens and easements of record described on Schedule 3.18(c), any mortgage lien encumbering the Owned Real Property or the Kennedy Facility or any easement of record. (b) Leases. Schedule 3.18(b) contains a complete and correct list of all Leases setting forth the address, landlord and tenant for each Lease. Seller has delivered to Buyer correct and complete copies of the Leases. Each Lease is legal, valid, binding and enforceable, and in full force and effect, except as may be limited by bankruptcy, insolvency, reorganization and similar Applicable Laws affecting creditors generally and by the availability of equitable remedies. Seller is not in default, violation or breach in any respect under any Lease, and no event or condition has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach in any respect under any Lease. No renewal or extension options have been granted to tenants. Schedule 3.18(c) sets forth all easements, covenants, mortgages and restrictions of record encumbering the Owned Real Property and the Leased Real Property subject to the lease from the Suffolk County Industrial Development Agency. 3.19 Environmental Matters. (a) Compliance with Environmental Law. To the knowledge of Seller, Seller is and has been in compliance in all material respects with all applicable Environmental Laws pertaining to any of the properties and assets of the Business and the use by Seller thereof. Except as disclosed on Schedule 3.19(a) hereto, Seller has obtained all material permits, licenses and other authorizations that are required under Environmental Law necessary to operate the Business and the same are listed on Schedule 3.19(a) hereto. No violation by Seller is being alleged of any applicable Environmental Law relating to any of the Assets. (b) Other Environmental Matters. To the knowledge of Seller, Seller has not caused or taken any action that resulted in, and Seller is not subject to, any material liability or obligation on the part of Seller, relating to (x) the environmental conditions on, under, or about the Real Property or other properties or assets owned, leased, operated or used by Seller in the Business including without limitation, the air, soil and groundwater conditions at such properties or (y) the use, management, handling, transport, treatment, generation, storage, disposal or Release of any Hazardous Materials by Seller. -20- 3.20 Employees, Labor Matters, etc. Seller is not a party to or bound by any collective bargaining agreement and there are no labor unions or other organizations representing, purporting to represent or attempting to represent any employees employed in the operation of the Business. Since August 31, 1994, there has not occurred or, to the knowledge of Seller, been threatened any material strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any employees employed in the operation of the Business. There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending or, to the knowledge of Seller, threatened with respect to any employee employed in the operation of the Business. 3.21 Employee Benefit Plans and Related Matters. (a) Schedule 3.21(a) lists each pension, retirement, profit-sharing, deferred compensation, bonus or other incentive plan, or other employee benefit program, arrangement, agreement or understanding, or medical, vision, dental or other health plan, or life insurance or disability plan, or any other employee benefit plan, including, without limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA, to which Seller contributes or is a party or is bound and under which it may have liability and under which employees or former employees of the Business (or their beneficiaries) are eligible to participate or derive a benefit ("Employee Benefit Plans"). Seller has delivered to Buyer true, correct and complete copies of all Employee Benefit Plans. The Assets are not subject to any Lien in favor of, or enforceable by, the Pension Benefit Guaranty Corporation. (b) Compliance; Liability. (i) No liability has been or is expected to be incurred by Seller under or pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and several liability provisions of the Code or ERISA relating to employee benefit plans and, to the knowledge of the Seller, no event, transaction or condition has occurred or exists that could result in any such liability to the Business or, following the Closing, Buyer or any such Employee Benefit Plan. (ii) No Employee Benefit Plan is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, a "multiple employer plan" within the meaning of Section 413(c) of the Code, or a defined benefit plan within the meaning of Section B(35) of ERISA. -21- 3.22 Brokers, Finders, etc. With the exception of fees and expenses payable to J.P. Morgan & Co. Incorporated and certain employees of Seller and its Affiliates which shall be paid by Seller, all negotiations relating to this Agreement, and the transactions contemplated hereby, have been carried on without the participation of any Person acting on behalf of Seller or its Affiliates in such manner as to give rise to any valid claim against Buyer for any brokerage or finder's commission, fee or similar compensation, or for any bonus payable to any officer, director, employee, agent or sales representative of or consultant to Seller or its Affiliates upon consummation of the transactions contemplated hereby or thereby. 3.23 Suppliers and Customers. Schedule 3.23 attached hereto sets forth the twenty (20) largest suppliers and all sole source suppliers and the twenty (20) largest customers of the Business for the period July 1, 1996 through the date hereof. During the period July 1, 1996 through the date hereof, (a) none of the 20 largest customers referred to in the next preceding sentence has cancelled in whole or in part its agreement or commitment with Seller or the Business to purchase products or services (or threatened in writing to do any of the foregoing). During the period July 1, 1996 through the date hereof, none of the sole source suppliers referred to in the first sentence of this Section has cancelled in whole or in part its agreement or commitment to supply services or supplies to Seller or the Business (or threatened in writing to do any of the foregoing). To Seller's knowledge, the relationship of Seller with each of its suppliers and each of its customers is a good commercial working relationship. Seller does not have knowledge that any such supplier or customer intends to cancel or otherwise substantially modify its relationship with Seller or the Business or limit its services, supplies or materials to Seller or the Business, or its usage or purchase of the services and products of the Business either as a result of the transactions contemplated hereby or otherwise. 3.24 Order Backlog. A true and complete list of (a) all firm product and service purchase orders and contracts for the sale of goods or the delivery of services by Seller in connection with the Business to Persons other than Governmental Authorities, and (b) all firm funded product and service purchase orders and contracts for the sale of goods or the delivery of services by Seller in connection with the Business to Governmental Authorities (collectively, the "Backlog") pending as of the latest practical date prior to the date of this Agreement is set forth in Schedule 3.24 attached hereto. 3.25 Disclosure. No representation or warranty of Seller in this Agreement and the Schedules or certificates attached hereto or delivered by Seller in accordance with the terms hereof contains any untrue statement of a material fact or omits any statement of a material fact necessary in order to -22- make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. 3.26 Mortgages. If any parcel of Owned Real Property is encumbered by one or more existing mortgages (each, an "Existing Mortgage"), no written notice has been received from the mortgagee(s) asserting that a default or breach exists thereunder or under any note or other obligation secured thereby which remains uncured. Seller knows of no default, or event which with notice or the passage of time will constitute a default, under the Existing Mortgage(s) or under any note or other obligation secured thereby which has occurred and is continuing. Seller has delivered to Buyer complete copies of the documents constituting the Existing Mortgage(s) and the note(s) secured thereby. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Corporate Status; Authorization, etc. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with full corporate power and authority to execute and deliver the Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Buyer of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by all requisite corporate action of Buyer. Buyer has duly executed and delivered this Agreement. This Agreement is a valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms. 4.2 No Conflicts, etc. The execution, delivery and performance by Buyer of the Agreement, and the consummation of the transactions contemplated hereby, do not and shall not conflict with or result in a violation of or under (with or without the giving of notice or the lapse of time, or both) (i) the certificate of incorporation or by-laws or other organizational documents of Buyer, (ii) any Applicable Law applicable to Buyer or any of its properties or assets or (iii) any contract, agreement or other instrument applicable to Buyer or any of its properties or assets, except, in the case of clause (iii), as set forth in Schedule 4.2 and for violations and defaults that, individually and in the aggregate, have not and shall not materially impair the ability of Buyer to perform its obligations under the Agreement. Except as specified in Schedule 4.2 and except as required under the HSR Act, no Governmental Approval or other Consent is required to be obtained or made by Buyer in -23- connection with the execution and delivery of the Agreement or the consummation of the transactions contemplated hereby. 4.3 Litigation. There is no action, claim, suit or proceeding pending, or to Buyer's knowledge threatened, by or against or affecting Buyer in connection with or relating to the transactions contemplated by this Agreement or of any action taken or to be taken in connection herewith or the consummation of the transactions contemplated hereby. 4.4 Brokers, Finders, etc. All negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the participation of any Person acting on behalf of Buyer in such manner as to give rise to any valid claim against Seller for any brokerage or finder's commission, fee or similar compensation. 4.5 Adequate Funds. Buyer has all funds necessary to enable it to perform this Agreement in accordance with its terms. ARTICLE V COVENANTS 5.1 Covenants of Seller. (a) Public Announcements. Except as required by Applicable Law (in which case the nature of the announcement shall be described to Buyer prior to dissemination to the public), Seller shall not make any public announcement in respect of this Agreement or the transactions contemplated hereby without the prior written consent of Buyer. (b) Conduct of Business. From the date hereof to the Closing Date, except as permitted or required by this Agreement or as otherwise consented to by Buyer in writing, Seller shall: (i) carry on the Business in the ordinary course, in substantially the same manner as heretofore conducted, and use all reasonable best efforts to maintain the Business in good operating condition and repair, and preserve its relationships with customers, suppliers and others having business dealings with the Business; (ii) not grant (or commit to grant) any increase in the compensation (including incentive or bonus compensation) of any employee employed in the operation of the Business other than increases in the ordinary course of business consistent with past practice in the -24- compensation payable to those employees of the Business earning less than $50,000 per annum each; or institute, adopt or amend (or commit to institute, adopt or amend) any compensation or benefit plan, policy, program or arrangement or collective bargaining agreement applicable to any such employee. (iii) not sell, assign, voluntarily encumber, grant a Lien on or license with respect to, or dispose of, any of the Assets having a fair market value of at least $50,000 individually or $100,000 in the aggregate, or incur any liabilities or obligations (including, without limitation, liabilities with respect to capital leases or guarantees thereof) in excess of $100,000 individually or in the aggregate, except for sales and dispositions made or liabilities incurred, including the creation of purchase money security interests, in the ordinary course of business consistent with past practice; (iv) take any action inconsistent with, the representations and warranties of Seller hereunder or that would cause any of the representations and warranties of Seller hereunder to become untrue in any material respect; and (v) not make, give or grant any bid or proposal, or any customer option relating to contracts in the Backlog, involving an amount in excess of $250,000 (or amend, supplement or terminate any existing bid or proposal, or any existing customer option relating to contracts in the Backlog, involving an amount in excess of $250,000), in each case without the prior approval of Buyer (which approval shall not be unreasonably withheld or delayed). (c) Access and Information. (i) Prior to and after the Closing, Seller shall (and shall cause its accountants, counsel, consultants, employees and agents to) give Buyer and its respective accountants, counsel, consultants, employees and agents, reasonable access during normal business hours to, and furnish them with all documents, records, work papers and information with respect to, all properties, assets, books, contracts, commitments, reports and records relating to the Business, as Buyer shall from time to time reasonably request. In addition, Seller shall permit Buyer, and its accountants, counsel, consultants, employees and agents, reasonable access to such personnel of Seller during normal business hours as may be necessary to Buyer in its review of the properties, assets and business affairs of the Business and the above-mentioned documents, records and information. Buyer and Buyer's agents shall have the right, upon giving reasonable advance notice to enter upon and inspect the Real Property, including physical inspection of the surface and sub-surface land and all improvements and the major components thereof, including heating, plumbing, air conditioning, -25- electrical equipment and wiring and roof. Buyer shall indemnify and hold Seller harmless from and against any and all costs and liabilities resulting from the negligence or willful misconduct of any third party engaged by Buyer to perform such inspections, and Buyer shall return the Real Property to substantially the same condition as before such inspections. Inspections shall be conducted during times reasonably convenient to Seller and the Business. (ii) Buyer shall remain bound by the terms of its existing Confidentiality Agreement with Seller, dated August 6, 1997 (the "Confidentiality Agreement"), except that from and after the Closing: (A) the terms "Evaluation Material" and "Notes" as defined and used in the Confidentiality Agreement, shall no longer include information concerning the Business and properties of the STS Division; (B) clause (d) of the second paragraph of the Confidentiality Agreement shall cease to have any further force and effect insofar as the provisions thereof relate to the STS Division or the Business; and (C) the seventh and eighth paragraphs of the Confidentiality Agreement shall cease to have any further force and effect insofar as the provisions thereof relate to the STS Division or the Business. (d) Further Actions. (i) Seller agrees to use commercially reasonable efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated hereby by the Closing Date. (ii) Seller, as promptly as practicable, shall file or supply, or cause to be filed or supplied, all applications, notifications and information required to be filed or supplied by Seller pursuant to Applicable Law in connection with the Agreement, the sale and transfer of the Assets pursuant to the Agreement and the consummation of the other transactions contemplated hereby, including but not limited to filings pursuant to the HSR Act. (iii) Seller, as promptly as practicable, shall use all reasonable efforts to obtain, or cause to be obtained, all Consents (including, without limitation, all Governmental Approvals and any Consents required under any Contract) necessary to be obtained by it in order to consummate the sale and transfer of the Assets pursuant to the Agreement and the consummation of the other transactions contemplated hereby. (iv) Seller shall coordinate and cooperate with Buyer in exchanging such information and supplying such assistance as may be reasonably requested by Buyer in connection with the filings and other actions contemplated by Section 5.2. -26- (e) Further Assurances. Following the Closing, Seller shall from time to time, execute and deliver such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by Buyer, to confirm and assure the rights and obligations provided for in this Agreement and render effective the consummation of the transactions contemplated hereby. Seller until the Closing shall maintain in force in respect of the Business the existing insurance covering the Business, subject to normal variations required by ordinary operations of the Business. Seller shall cooperate with Buyer in order to afford Buyer the benefit of all insurance policies covering the Business for periods prior to the Closing to the extent that the claims thereunder relate to any of the Assets or the Assumed Liabilities. (f) Noncompete. Seller will not and will cause its Subsidiaries and operating units and Affiliates not to (collectively, the "Restricted Parties and individually, a "Restricted Party"), for a period of three years following the Closing (the "Non- Competition Period"), manufacture, sell or provide products or services which are competitive to the Primary Activities, except that this provision shall not preclude (i) EFData Corp. from manufacturing, selling or providing products which it currently manufactures, sells or provides; (ii) EFData Corp. from providing services under those contracts where the EFData Corp. manufactured product content (consisting of products of the type currently manufactured by EFData Corp.) exceeds 50% of the contract value; (iii) the GCS unit of CMI from providing products and services to U.S. Government entities which it currently provides to such U.S. Government customers; or (iv) the bona fide sale, whether by a merger or otherwise, of all or substantially all of the properties and assets of Seller (in one transaction or a series of related transactions) to a Person that is not an Affiliate of Seller that manufactures or sells products or services competitive to the Primary Activities or restrict the activities of any such acquiring Person after such sale (other than any such sale in which the stockholders of Seller immediately before the transaction or series of related transactions possess immediately thereafter 50% or more of the voting power of Seller or the acquiring Person or any parent entity of either). "Primary Activities" shall mean the manufacture and global sale of portable L- Band satellite communications terminals for use in the Inmarsat-B system, the manufacture and global sale of single-channel digital video exciters and receivers, using MPEG-2 or equivalent digital compression algorithms, for satellite-based applications, the manufacture and global sale of X-Band frequency converters for satellite applications, and the bidding and executing of satellite communications projects and/or contracts with commercial customers or foreign governmental authorities in which the primary added-value is system design, integration, installation and/or program management. -27- Seller will not use or permit the use of any of the intellectual property licensed to it pursuant to the Technology License Agreement or the Trademark License Agreement in a manner that would cause a violation of this Section 5.1(f). During the Non-Competition Period, Seller will not, and will cause its Affiliates not to, (i) directly or indirectly, induce or solicit, or aid or assist any Person to induce or solicit, any employees, salespersons, agents, consultants, distributors, representatives, advisors, customers or suppliers of the Business to terminate, curtail or otherwise limit their employment by or business relationship with the Business, or (ii) license, assign or otherwise grant any interest in the Name or Logo "California Microwave" (alone or in any combination of words, or any combination, variation or derivation of such Name or Logo), for use by any Person in connection with the manufacturing, marketing, sale or provision of any products or services which are competitive to the Primary Activities. (g) No Solicitation. From the date hereof to the Closing Date, Seller shall cause its employees, directors, agents and Affiliates to immediately suspend any existing negotiations or discussions relating to any sale, joint venture or other transfer of actual or beneficial ownership of the STS Division, its operations or any of its assets associated therewith (other than inventory in the ordinary course of business) (collectively a "Transaction") and Seller shall not, and shall cause its employees, directors, agents and Affiliates to not, (a) solicit any proposals or offers relating to a Transaction, or (b) negotiate or discuss with any third party concerning any proposal or offer for a Transaction. (h) Post-Closing Confidentiality. From and after the Closing, Seller will, and will cause its Affiliates to, hold in strict confidence, and will not use to the detriment of Buyer or any of its Affiliates, all information with respect to the Business. Notwithstanding the foregoing, Seller may disclose such information (i) if compelled to disclose the same by judicial or administrative process or by other requirements of law, (ii) if the same hereafter is in the public domain through no fault of Seller, or (iii) if the same is later acquired by Seller from another source and Seller is not aware that such source is under an obligation to another Person to keep such information confidential. (i) Mail; Payments. Seller authorizes and empowers Buyer from and after the Closing Date to receive and open all mail and other communications received by Buyer and to act with respect to such communications in such manner as Buyer may elect if such communications relate to the Business other than the Excluded Assets or Excluded Liabilities, -28- or, if such communications do not relate to the Business or relate to the Excluded Assets or Excluded Liabilities, to forward the same promptly to Seller. Seller and Buyer shall promptly deliver to the other any cash, checks or other instruments of payment to which the other is entitled and shall hold the same in trust for the other until such delivery. (j) Performance of Contracts. With respect to each Contract, Governmental Approval, Lease and Intellectual Property License, Seller shall duly perform and comply with all agreements and conditions required thereby to be performed or complied with by it prior to or on the Closing Date. 5.2 Covenants of Buyer. (a) Public Announcements. Except as required by Applicable Law (in which case the nature of the announcement shall be described to the Seller prior to dissemination to the public), Buyer shall not, and shall not permit its Affiliates to, make any public announcement in respect of this Agreement or the transactions contemplated hereby without the prior written consent of Seller. (b) Further Actions. (i) Buyer agrees to use commercially reasonable efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated hereby by the Closing Date. (ii) Buyer shall, as promptly as practicable, file or supply, or cause to be filed or supplied, all applications, notifications and information required to be filed or supplied by Buyer pursuant to Applicable Law in connection with this Agreement, Buyer's acquisition of the Assets pursuant to this Agreement and the consummation of the other transactions contemplated thereby, including but not limited to filings pursuant to the HSR Act. (iii) Buyer shall coordinate and cooperate with Seller in exchanging such information and supplying such reasonable assistance as may be reasonably requested by Seller in connection with the filings and other actions contemplated by Section 5.1. (c) Further Assurances. Following the Closing, Buyer shall, from time to time, execute and deliver such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by Seller, to confirm and assure -29- the rights and obligations provided for in this Agreement and render effective the consummation of the transactions contemplated hereby. (d) Use of Business Names by Buyer. (i) Buyer acknowledges that Seller has the absolute and exclusive proprietary right to all names, marks, trade names, trademarks, service names and service marks (collectively, "Names") incorporating "California Microwave" or any similar Name and to all corporate symbols or logos (collectively, "Logos") incorporating California Microwave or any similar Name. All rights of Seller and its respective affiliates to which and the goodwill represented thereby and pertaining thereto are being retained by Seller. Buyer agrees that it will not, and will cause the Business not to, use the Name California Microwave or any similar Name or any Logo incorporating such Name or any similar Name in any manner, including in connection with the sale of any products or services or otherwise in the conduct of its business, except as expressly permitted by clause (ii) of this Section 5.2(d). (ii) For a period of six months from the Closing Date (the "Window Period"), Seller shall and hereby irrevocably grants, effective as of the Closing Date, on a fully-paid, royalty-free basis, the Buyer the right to use the California Microwave Logo and the California Microwave Name in connection with the operation of the Business as currently conducted including, during the Window Period, to (A) use any molds or castings included in the equipment or machinery included in the Assets despite the appearance thereon and on the products manufactured therewith of the Name California Microwave or the California Microwave Logo, (B) market and sell all such products produced by the Business and (C) use any other assets on hand included in the Assets, including, without limitation, any catalogs, invoices, packaging material or stationery, bearing the California Microwave Name or California Microwave Logo. Immediately upon the expiration of the Window Period, Buyer shall cease to use in any manner the Name California Microwave or the California Microwave Logo incorporating such Name and remove or obliterate such Name or the California Microwave Logo from any molds, castings, products or other assets and clearly and prominently mark the new name of the Business thereon. At all times following the Closing, Buyer shall indicate that neither Buyer nor the Business are affiliated with Seller or any of its affiliates. (e) Substitute Letters of Credit and Bonds. Buyer shall use commercially reasonable efforts to furnish as of the Closing or as soon as practicable thereafter, its own letters of credit or performance or surety bonds in substitution for the letters of credit and bonds referred to in Schedule 5.2(e) -30- attached hereto and agrees to reimburse Seller for any out-of-pocket bank fees or charges incurred by Seller by reason of any of the same remaining outstanding from and after 30 days after the Closing Date. (f) Reimbursement of Certain Severance Obligations. Schedule 5.2(f) lists three severance agreements heretofore entered into between Seller and each of Messrs. Maloney, Strean and Pinto (each an "Executive"), respectively (each a "Severance Agreement"). If (i) an Executive becomes employed by Buyer as of the Closing Date as a Transferred Employee, (ii) there shall occur thereafter a termination by such Executive of his employment with Buyer for Good Reason (as defined below) within one year after the Closing Date, and (iii) as a result of the termination of employment of the type described in clause (ii) above, Seller shall be obligated to make any cash payment to such Executive pursuant to the provisions of the Severance Agreement with such Executive, then Buyer shall reimburse Seller for any such cash payment it so makes to such Executive, such reimbursement to occur promptly upon receipt by Buyer of evidence of the making of such payment; provided, however, that the reimbursement obligation of Buyer to Seller under this Section 5.2(f) with respect to any Executive shall not in any event exceed the amount that would have been payable to such Executive under his retention incentive agreement that is listed on Schedule 2.4(a) in the event of an involuntary termination by Buyer without cause of the employment of such Executive after the Closing; provided further, however, Buyer shall have no reimbursement obligation to Seller under this Section 5.2(f) if Buyer otherwise is obligated to make a payment to the Executive under his retention incentive agreement pursuant to Section 2.4(a). As used herein, "Good Reason" means the occurrence of any of the following: (x) the assignment to the Executive in question of duties inconsistent with, or a substantial alteration in the nature or status of, such Executive's responsibilities with respect to the Business at the STS Division immediately before the Closing; (y) a reduction in the Employee's base salary or in the benefits that Buyer is required to provide such Executive pursuant to Section 7.2; or (z) such Executive's relocation to a work site requiring an increase in one-way commute from such Executive's residence of more than 35 miles. ARTICLE VI CONDITIONS PRECEDENT 6.1 Conditions to Obligations of Each Party. The obligations of the parties to consummate the transactions contemplated hereby shall be subject to the fulfillment on or prior to the Closing Date of the following conditions: -31- (a) HSR Act Notification. In respect of the notifications of Buyer and Seller pursuant to the HSR Act, the applicable waiting period and any extensions thereof shall have expired or been terminated without the receipt of any objection from any Governmental Authority. (b) No Injunction, etc. Consummation of the transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any Applicable Law, including any order, injunction, decree or judgment of any court or other Governmental Authority. No court or other Governmental Authority shall have determined that any Applicable Law makes illegal the consummation of the transactions contemplated hereby, and no proceeding with respect to the application of any such Applicable Law to such effect shall be pending. (c) Supply and License Agreements. Buyer and Seller shall have entered into the Cross-License Agreement (substantially in the form of Exhibit A), the Technology License Agreement (substantially in the form of Exhibit B), the Trademark License Agreement (substantially in the form of Exhibit C) and the Supply Agreement (substantially in the form of Exhibit D). 6.2 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by Buyer) on or prior to the Closing Date of the following additional conditions: (a) Representations, Performance. Each of the representations and warranties of Seller contained in this Agreement that is qualified as to materiality shall be true and correct and each such representation and warranty that is not so qualified shall be true and correct in all material respects in each case on the date hereof and at and as of the Closing Date as though made on and as of the Closing Date. Seller shall have duly performed and complied in all material respects with all agreements and conditions required by the Agreement to be performed or complied with by it prior to or on the Closing Date. Seller shall have delivered to Buyer a certificate, dated the Closing Date and signed by its duly authorized officer, to the foregoing effect. (b) No Material Adverse Change. Since the date hereof, (i) there shall not have occurred any material adverse change in the financial condition, results of operations or Assets of the Business, except for the results shown and changes forecast in Schedule 3.7(a), and other than changes in the STS Division's intercompany account with CMI corporate, which changes represent (x) the results of operations of the STS Division, (y) the cash advanced to the STS Division by CMI corporate or repaid by the STS Division -32- to CMI corporate, and (z) certain allocations between CMI corporate and the STS Division, which allocations shall have been made in the ordinary course of business consistent in type and amount with past practice, and (ii) there shall not have occurred, in the aggregate, any change in the ETC's and EAC's of the Business' Contracts such as to cause a material adverse change in its financial quarterly contribution. (c) Consents. Seller shall have obtained and shall have delivered to Buyer copies of (i) all Governmental Approvals required to be obtained by Seller in connection with the execution and delivery of the Agreement and the consummation of the transactions contemplated hereby or thereby and (ii) all Consents (including, without limitation, all Consents required under any Contract) necessary to be obtained in order to consummate the sale and transfer of the Assets pursuant to this Agreement and the consummation of the other transactions contemplated hereby and listed on Schedule 6.2(c). Buyer shall have obtained the Consents listed on Schedule 4.2. (d) Corporate Proceedings. All corporate and other proceedings of Seller in connection with this Agreement and the transactions contemplated hereby, and all documents and instruments incident thereto, shall be reasonably satisfactory in substance and form to Buyer and its counsel, and Buyer and its counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested. (e) Transfer Documents. Seller shall have delivered to Buyer at the Closing all documents, certificates and agreements necessary to transfer to Buyer title to the Assets, free and clear of any and all Liens thereon, other than Permitted Liens, including without limitation: (i) a bill of sale, assignment and general conveyance, in form and substance reasonably satisfactory to Buyer, dated the Closing Date, with respect to the Assets (other than any Asset to be transferred pursuant to any of the instruments referred to in any other clause of this Section 6.2); (ii) assignments of all Contracts, Intellectual Property and any other agreements and instruments constituting Assets, dated the Closing Date, assigning to Buyer all of Seller's right, title and interest therein and thereto; (iii) a bargain and sale deed with covenants against grantor's acts, dated as of the Closing Date, with respect to each parcel of Owned Real Property; -33- (iv) an assignment of lease, dated as of the Closing Date, with respect to each Lease; (v) certificates of title to all motor vehicles included in the Assets to be transferred to Buyer hereunder, duly endorsed for transfer to Buyer as of the Closing Date; and (vi) an assignment of lease, assignment of sale agreement, and consent by the Suffolk County Industrial Development Agency and other necessary parties to assignment of lease and sale agreement, and any other documents, consents or approvals necessary to convey all of Seller's interest in the property leased from the Suffolk County Industrial Development Agency. (f) Title Policies. Buyer shall have received from a nationally recognized title insurance company at its expense (the "Title Company") a title insurance policy issued to Buyer in form and substance reasonably satisfactory to it with respect to the Owned Real Property, insuring Buyer and issued as of the Closing Date by the Title Company, showing Buyer to have a fee simple title to the Owned Real Property, subject only to Permitted Liens and the mortgage liens and easements of record described on Schedule 3.18(c). In conjunction with the receipt of the foregoing title policy, Seller shall deliver to Buyer a Certificate of Occupancy for each of the Owned Real Property and the Kennedy Facility issued by the municipal authority having the jurisdiction allowing the property to be used as a commercial or industrial building in the manner presently used. (g) FIRPTA Certificate. Buyer shall have received a certificate of Seller, dated the Closing Date and sworn to under penalty of perjury, setting forth the name, address and federal tax identification number of Seller and stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Code, such certificate to be in the form set forth in the Treasury Regulations thereunder. (h) Environmental Reports. Buyer at its own expense shall have received from an environmental consulting firm of its choice, an environmental site assessment report and analytical report covering the Real Property (including analyses of samples, soil and groundwater taken from all areas of the Real Property as may be deemed appropriate by such consulting firm), which reports shall be in form, scope and substance satisfactory to Buyer in all respects. In addition, Buyer shall be reasonably satisfied with the results of its due diligence investigation of environmental matters in respect of the Real Property. -34- 6.3 Conditions to Obligations of Seller. The obligation of Seller to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by Seller), on or prior to the Closing Date, of the following additional conditions: (a) Representations, Performance, etc. Each of the representations and warranties of Buyer contained in this Agreement that is qualified as to materiality shall be true and correct and each such representation and warranty that is not so qualified shall be true and correct in all material respects in each case on the date hereof and at and as of the Closing Date as though made on and as of the Closing Date. Buyer shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. Buyer shall have delivered to Seller a certificate, dated the Closing Date and signed by its duly authorized officer, to the foregoing effect. (b) Assumption Agreement. Seller shall have received from Buyer an Assumption Agreement, in substance and form satisfactory to Seller, under which Buyer shall have assumed the Assumed Liabilities. (c) Corporate Proceedings. All corporate proceedings of Buyer in connection with this Agreement and the transactions contemplated hereby, and all documents and instruments incident thereto, shall be reasonably satisfactory in substance and form to Seller, and its counsel, and Seller and its counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested. (d) Consents and Approvals. Seller shall have obtained all Governmental Approvals necessary to consummate the transactions contemplated hereby. ARTICLE VII EMPLOYEES AND EMPLOYEE BENEFIT PLANS 7.1 Employment of Seller's Employees. Buyer intends to offer employment, effective as of the Closing Date, to all employees who are employed by Seller in the STS Division primarily in the operation of the Business at then current wage or salary levels. Those employees who accept such offers of employment and become employees of Buyer shall be referred to herein as the "Transferred Employees". Effective as of the Closing Date, Buyer shall assume the liability of Seller in respect of the Transferred Employees for accrued but unpaid salaries, wages, vacation and sick pay and 1998 cash -35- incentive compensation, but only to the extent such liability is accrued or otherwise reflected on the Final Closing Statement of Net Assets. Buyer shall not have any liability with respect to any employee of Seller or Employee Benefit Plan or any claim thereof or related thereto except to the extent expressly provided in this Article VII with respect to Transferred Employees and except as provided in Section 2.4(a). 7.2 Welfare and Fringe Benefit Plans. Following the Closing Date and through December 31, 1998, Buyer shall provide Transferred Employees with life insurance, medical coverage, and other employee welfare benefit plans, programs, policies or arrangements, other than stock-based plans relating to equity securities (or their equivalent, such as phantom stock plans or SARs) or (except as provided in the next sentence) any incentive bonus programs based on the achievement of financial targets, on a basis comparable in the aggregate to those provided Transferred Employees prior to the Closing Date. Buyer will provide or establish a cash incentive bonus program(s) based on the achievement of financial targets to those Transferred Employees who currently are eligible for cash incentive bonus program(s) of Seller based on the achievement of financial targets, which cash incentive program(s) of Buyer shall be comparable in the aggregate to such cash incentive bonus program(s) of Seller. ARTICLE VIII TERMINATION 8.1 Termination. This Agreement may be terminated at any time prior to the Closing Date: (a) by the written agreement of Buyer and Seller; (b) by either Seller or Buyer by written notice to the other party if the transactions contemplated hereby shall not have been consummated pursuant hereto by 5:00 p.m. California time on February 15, 1998, unless such date shall be extended by the mutual written consent of Seller and Buyer; (c) by Buyer by written notice to Seller if (i) the representations and warranties of Seller shall not have been true and correct in all material respects as of the date when made or (ii) if any of the conditions set forth in Section 6.1 or 6.2 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m. California time on February 15, 1998, unless such failure shall be due to the failure of Buyer to -36- perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or (d) by Seller by written notice to Buyer if (i) the representations and warranties of Buyer shall not have been true and correct in all material respects as of the date when made or (ii) if any of the conditions set forth in Section 6.1 or 6.3 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m. California time on February 15, 1998, unless such failure shall be due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing. 8.2 Effect of Termination. In the event of the termination of this Agreement pursuant to the provisions of Section 8.1, this Agreement shall become void and have no effect, without any liability to any Person in respect hereof or of the transactions contemplated hereby on the part of any party hereto, or any of its directors, officers, employees, agents, consultants, representatives, advisers, stockholders or Affiliates, except as specified in Section 10.2 and except for any liability resulting from such party's breach of this Agreement. ARTICLE IX INDEMNIFICATION 9.1 By Seller. Subject to the terms and conditions of this Article IX, Seller covenants and agrees to defend, indemnify and hold harmless Buyer, its officers, directors, employees, agents, advisers, representatives and Affiliates (collectively, the "Buyer Indemnitees") from and against, and pay or reimburse Buyer Indemnitees for, any and all claims, liabilities, obligations, losses, fines, costs, proceedings, deficiencies or damages (whether absolute, accrued, conditional or otherwise and whether or not resulting from third party claims), including out-of-pocket expenses and reasonable attorneys' fees incurred in the investigation or defense of any of the same or in asserting any of their respective rights hereunder (collectively, "Losses"), resulting from or arising out of: (i) Any misrepresentation or breach of any warranty of Seller contained in this Agreement; provided that any claim for indemnification by Buyer under this clause (i) may be made no later than 18 months from and after the Closing Date, excepting only that any claim for misrepresentation or breach of warranty under Sections 3.6, 3.10(a), 3.18(a), 3.19 and 3.21 may be made no later than a date thirty days from and after the expiration of the period of the applicable statute of limitations; -37- (ii) any failure of Seller to perform any covenant or agreement made or contained in this Agreement or fulfill any obligation in respect thereof; (iii) any Excluded Liabilities; (iv) any and all Benefit Liabilities in respect of Employees except, with respect to Transferred Employees, to the extent assumed by Buyer pursuant to Article VII; and (v) any product liability claim with respect to products manufactured by Seller and sold prior to the Closing. Seller shall not be required to indemnify Buyer Indemnitees with respect to any claim for indemnification resulting from or arising out of matters described in clauses (i) and (v) above pursuant to this Section unless and until the aggregate amount of all claims against Seller exceeds $270,000 and then only to the extent such aggregate amount exceeds $270,000. Claims thereafter may be asserted regardless of amount. Seller's maximum liability to Buyer Indemnitees under clauses (i) and (v) of this Section shall not exceed $13,750,000. 9.2 By Buyer. Subject to the terms and condition of this Article IX, Buyer covenants and agrees to defend, indemnify and hold harmless Seller and its officers, directors, employees, agents, advisers, representatives and Affiliates (collectively, the "Seller Indemnitees") from and against any and all Losses resulting from or arising out of: (i) any misrepresentation or breach of warranty of Buyer contained in this Agreement or in any Schedule of Buyer; provided that any claim for indemnification by Seller under this paragraph (i) may be made no later than 18 months from and after the Closing Date; (ii) any failure of Buyer to perform any covenant or agreement made or contained in the Agreement or fulfill any other obligation in respect thereof; (iii) the Assumed Liabilities; (iv) claims made on or drawings under any of the letters of credit or performance or surety bonds referred to in Schedule 5.2(e) attached hereto; -38- (v) the use by Buyer of any Seller tradenames or trademarks after the Closing Date other than as permitted or contemplated by Section 5.2(d); and (vi) the operation of the Business by Buyer or Buyer's ownership, operation or use of the Assets following the Closing Date except to the extent that such Loss is the result of any action of Seller prior to the Closing. Buyer shall not be required to indemnify Seller Indemnitees with respect to any claim for indemnification resulting from or arising out of matters described in clause (i) above pursuant to this Section unless and until the aggregate amount of all claims against Buyer exceeds $270,000 and then only to the extent such aggregate amount exceeds $270,000. Buyer's maximum liability to Seller Indemnitees under clause (i) of this Section shall not exceed $13,750,000. 9.3 Adjustments to Indemnification Payments. Any payment made by Seller to Buyer Indemnitees, on the one hand, or by Buyer to Seller Indemnitees, on the other hand, pursuant to this Article IX in respect of any claim shall be net of any insurance proceeds realized by and paid to the Indemnified Party in respect of such claim. The Indemnified Party shall use its reasonable efforts to make insurance claims relating to any claim for which it is seeking indemnification pursuant to this Article IX; provided that the Indemnified Party shall not be obligated to make such an insurance claim if the Indemnified Party in its reasonable judgment believes that the cost of pursuing such an insurance claim together with any corresponding increase in insurance premiums or other chargebacks to the Indemnified Party, as the case may be, would exceed the value of the claim for which the Indemnified Party is seeking indemnification. 9.4 Indemnification Procedures. In the case of any claim asserted by a third party against a party entitled to indemnification under this Agreement (the "Indemnified Party"), notice shall be given by the Indemnified Party to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any third party claim or any litigation with a third party resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party may participate in such defense at such Indemnified Party's expense, and (iii) the omission by any Indemnified Party to give notice as provided herein shall not relieve the -39- Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is materially damaged as a result of such failure to give notice. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any claim subject to indemnification hereunder or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the Indemnified Party's Tax liability or the ability of Buyer to conduct its business, or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand and shall be entitled to settle or agree to pay in full such claim or demand. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the defense of any claim or litigation subject to this Article IX and the records of each shall be available to the other with respect to such defense. 9.5 Expiration of Representations and Warranties, etc. All representations and warranties contained in this Agreement shall survive the Closing for a period of 18 months; provided that the representations and warranties stated in Sections 3.6, 3.10(a), 3.18(a), 3.19 and 3.21 shall survive the Closing for the applicable statute of limitations. 9.6 Exclusive Remedy. The indemnifications provided for in this Article IX shall be the sole and exclusive post-Closing remedies available to either party against the other party for any claims under or based upon this Agreement. -40- ARTICLE X DEFINITIONS, MISCELLANEOUS 10.1 Definition of Certain Terms. The terms defined in this Section 10.1, whenever used in this Agreement (including in the Schedules), shall have the respective meanings indicated below for all purposes of this Agreement. All references herein to a Section, Article or Schedule are to a Section, Article or Schedule of or to this Agreement, unless otherwise indicated. Affiliate: of a Person means a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Person. "Control" (including the terms "Controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise. Aggregate Purchase Price: has the meaning set forth in Section 2.3. Agreement: means this Asset Purchase Agreement (including the Exhibits and the Schedules), as the same from time to time may be amended, supplemented or waived. Applicable Law: all applicable provisions of all (i) constitutions, treaties, statutes, laws (including the common law), rules, regulations, ordinances, codes or orders of any Governmental Authority, (ii) Governmental Approvals and (iii) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any Governmental Authority. Assets: has the meaning set forth in Section 1.1. Assumed Liabilities: has the meaning set forth in Section 2.4. Backlog: has the meaning set forth in Section 3.24. Books and Records: all books and records, including manuals, price lists, mailing lists, lists of customers, production data, sales and promotional materials, purchasing materials, personnel records, manufacturing and quality control records and procedures, research and development files, accounting records, tax records and litigation files (regardless of the media in which stored), in each case relating to or used in the Business. -41- Business: the business currently conducted by Buyer through its STS Division, as described in Recital A at the head of this Agreement. Buyer: has the meaning set forth in the first paragraph of this Agreement. Buyer Indemnitees: has the meaning set forth in Section 9.1. Buyer's Arbitrator: has the meaning set forth in Section 10.6(c). Closing: has the meaning set forth in Section 2.1. Closing Date: has the meaning set forth in Section 2.1. Closing Statement of Net Assets: has the meaning set forth in Section 2.7(b). Code: the Internal Revenue Code of 1986, as amended. Consent: any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including but not limited to any Governmental Authority. Cross-License Agreement: has the meaning set forth in Section 1.3(b). Disputes: has the meaning set forth in Section 10.6(a). Disputing Person: has the meaning set forth in Section 10.6(b). $ or dollars: lawful money of the United States. E&Y: has the meaning set forth in Section 2.7(b). EAC's: has the meaning set forth in Section 2.7(b). Employee Benefit Plans: has the meaning set forth in Section 3.21(a). Environmental Laws: all Applicable Laws relating to the protection of the environment, to human health and safety, or to any emission, discharge, generation, processing, storage, holding, abatement, -42- existence, Release, threatened Release, arranging for the disposal or transportation of any Hazardous Substances. Environmental Liabilities and Costs: all Losses imposed by, under or pursuant to Environmental Laws, including all fees, disbursements and expenses of counsel based on, arising out of or otherwise in respect of: (i) the ownership or operation of the Business or Real Property, by Seller, and (ii) the environmental conditions existing on the Closing Date on, under, above, or about any Real Property owned, leased or operated by Seller. ERISA: the Employee Retirement Income Security Act of 1974, as amended. ETC's: has the meaning set forth in Section 2.7(b). Excluded Assets: has the meaning set forth in Section 1.2. Excluded Liabilities: has the meaning set forth in Section 2.5. Executive: has the meaning set forth in Section 5.2(f). Existing Mortgage: has the meaning set forth in Section 3.6. Final Closing Statement of Net Assets: has the meaning set forth in Section 2.7(d). Final Determination: has the meaning set forth in Section 10.6(e). Financial Statements: has the meaning set forth in Section 3.4. GAAP: generally accepted accounting principles as in effect in the United States. Good Reason: has the meaning set forth in Section 5.2(f). Governmental Approval: any Consent of, with or to any Governmental Authority. Governmental Authority: any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any government authority, agency, department, board, commission or instrumentality of the United States, any State of the -43- United States or any political subdivision thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any self- regulatory organization. Hazardous Substances: any substance that: (i) requires investigation, removal or remediation under any Environmental Law, or is defined, listed or identified as a "hazardous waste" or "hazardous substance" thereunder, or (ii) is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by any Governmental Authority or Environmental Law. HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "include" and "including" shall be construed as if followed by the phrase "without being limited to". Indemnified Party: has the meaning set forth in Section 9.4. Indemnifying Party: has the meaning set forth in Section 9.4. Intellectual Property: any and all United States and foreign: (a) patents (including design patents, industrial designs and utility models) and patent applications (including docketed patent disclosures awaiting filing, reissues, divisions, continuations-in-part and extensions), patent disclosures awaiting filing determination, inventions and improvements thereto; (b) trademarks, service marks, trade names, trade dress, logos, business and product names, slogans, and registrations and applications for registration thereof but excluding the name "California Microwave;" (c) copyrights (including software) and registrations thereof; (d) inventions, processes, designs, formulae, trade secrets, know-how, industrial models, confidential and technical information, manufacturing, engineering and technical drawings, product specifications and confidential business information; (e) mask work and other semiconductor chip rights and registrations thereof; (f) intellectual property rights similar to any of the foregoing; and (g) copies and tangible embodiments thereof (in whatever form or medium, including electronic media). Intellectual Property Licenses: has the meaning set forth in Section 3.16. Inventories: has the meaning set forth in Section 1.1(c). IRS: the Internal Revenue Service. -44- Kennedy Facility: has the meaning set forth in Section 1.1(a). June Balance Sheet: has the meaning set forth in Section 3.4. Leased Real Property: means all space leased pursuant to the Leases. Leases: means the real property leases, subleases, use agreements, licenses and occupancy agreements pursuant to which Seller is the lessee, sublessee, user, licensee or occupant related to the Business, other than real property leases, subleases, licenses and occupancy agreements included in Excluded Assets. Lien: any mortgage, pledge, hypothecation, right of others, claim, security interest, encumbrance, lease, sublease, license, occupancy agreement, adverse claim or interest, easement, covenant, encroachment, burden, title defect, title retention agreement, voting trust agreement, interest, equity, option, lien, right of first refusal, charge or other restrictions or limitations. Logos: has the meaning set forth in Section 5.2(d). Losses: has the meaning set forth in Section 9.1. Material Adverse Effect: any event, occurrence, fact, condition, change or effect that is materially adverse to the business, operations, results of operations, financial condition, properties, assets or liabilities of the Business. Names: has the meaning set forth in Section 5.2(d). Neutral Auditor: has the meaning set forth in Section 2.7(d). Non-Competition Period: has the meaning set forth in Section 5.1(f). Notice of Arbitration: has the meaning set forth in Section 10.6(b). Owned Intellectual Property: has the meaning set forth in Section 3.16. Owned Real Property: the real property owned by Seller and used primarily in the Business, together with all other structures, facilities, -45- improvements, fixtures, systems, equipment and items of property presently or hereafter located thereon attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing. Permitted Liens: (i) Liens reserved against in the September Balance Sheet, to the extent so reserved, (ii) Liens for Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on Seller's books in accordance with GAAP, (iii) contract rights of third parties to Contracts, or (iv) Liens that, individually and in the aggregate, do not and would not materially detract from the value of any of the property or assets of the Business or materially interfere with the use thereof as currently used or contemplated to be used or otherwise. Person: any natural person, firm, partnership, association, corporation, company, limited liability company, trust, business trust, Governmental Authority or other entity. Prime Rate: has the meaning set forth in Section 2.7(a). Purchase Price: has the meaning set forth in Section 2.2. Real Property: the Owned Real Property and the Leased Real Property. Release: any releasing, disposing, discharging, injecting, spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal, migration, transporting, placing and the like, including without limitation, the moving of any materials through, into or upon, any land, soil, surface water, ground water or air, or otherwise entering into the environment. Resolution Period: has the meaning set forth in Section 2.7(c). Seller: has the meaning set forth in the first paragraph of this Agreement. Seller Indemnitees: has the meaning set forth in Section 9.2. Seller's Arbitrator: has the meaning set forth in Section 10.2(c). September Balance Sheet: has the meaning set forth in Section 3.4. -46- Severance Agreement: has the meaning set forth in Section 5.2(f). STS Division: has the meaning set forth in Recital A at the head of this Agreement. Subsidiaries: each corporation or other Person in which a Person owns or controls, directly or indirectly, capital stock or other equity interests representing at least 50% of the outstanding voting stock or other equity interests. Target Net Assets: has the meaning set forth in Section 2.7(a). Tax: any federal, state, provincial, local or foreign income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, sales, use, goods and services, excise, customs duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental (including taxes under Section 59A of the Code), real property, personal property, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, workers' compensation, payroll, health care, withholding, estimated or other similar tax, duty or other governmental charge or assessment or deficiencies thereof, and including any interest, penalties or additions to tax attributable to the foregoing. Tax Return: any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. Technology License Agreement: has the meaning set forth in Section 1.3(c). Title Company: has the meaning set forth in Section 6.2(f). Trademark Consent Agreement: has the meaning set forth in Section 1.3(d). Transaction: has the meaning set forth in Section 5.1(g). Transaction Expenses: has the meaning set forth in Section 10.2. Transfer Taxes: has the meaning set forth in Section 10.8. -47- Transferred Employee: has the meaning set forth in Section 7.1. Treasury Regulations: the regulations prescribed pursuant to the Code. Window Period: has the meaning set forth in Section 5.2(d). 10.2 Expenses. Except to the extent otherwise provided hereby, Seller, on the one hand, and Buyer, on the other hand, shall bear their respective expenses, costs and fees (including filing fees (if any) required in connection with the HSR Act and attorneys', auditors' and financing commitment fees) in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith (the "Transaction Expenses"), whether or not the transactions contemplated hereby shall be consummated. 10.3 Severability. If any provision of this Agreement, including any phrase, sentence, clause, Section or subsection is inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. 10.4 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or delivery or (d) sent by facsimile transmission or telegram. (i) if to Buyer, to L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Facsimile: 212/805-5494 Attention: Christopher C. Cambria, Esq. -48- with a copy to: Whitman Breed Abbott & Morgan LLP 200 Park Avenue New York, NY 10166 Facsimile: 212/351-3131 Attention: James P. Gerkis, Esq. (ii) if to Seller, to California Microwave, Inc. 555 Twin Dolphin Drive Redwood City, California 94065 Attn: George L. Spillane Facsimile: 650/596-6600 with a copy to: Richard W. Canady, Esq. Howard, Rice, Nemerovski, Canady, Falk & Rabkin A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111 Facsimile: 415/399-3041 or, in each case, at such other address as may be specified in writing to the other parties hereto. All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by facsimile or telegram, on the next day following the day on which such facsimile or telegram was sent, provided that a copy is also sent by certified or registered mail. 10.5 Miscellaneous. (a) Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement. -49- (b) Entire Agreement. This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (c) Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. (d) Governing Law, etc. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of New York without giving effect to the conflict of laws rules thereof. Buyer and Seller hereby irrevocably submit to the jurisdiction of the courts of the State of New York, and the Federal courts of the United States of America located in the Southern District of New York solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any of such document may not be enforced in or by said courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a New York State or Federal court. Buyer and Seller hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 10.4, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. (e) Bulk Sales. Buyer and Seller hereby waive compliance by the other with the provisions of the bulk sales laws of any jurisdiction. (f) Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. (g) Assignment. This Agreement shall not be assignable or otherwise transferable by any party hereto without the prior written consent of the other party hereto; provided that from and after the Closing Buyer shall have the right to assign its rights (but not its obligations) hereunder. -50- (h) No Third Party Beneficiaries. Except as provided in Section 8.2 with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective heirs, successors and permitted assigns. (i) Amendment; Waivers, etc. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. 10.6 Arbitration Procedure. (a) Buyer and Seller agree that the arbitration procedure set forth below shall be the sole and exclusive method for resolving and remedying any and all disputes regarding claims for money damages based upon, arising out of or in any way connected with this Agreement or the transactions contemplated herein (the "Disputes"). Nothing in this Section 10.6 shall prohibit a party hereto from instituting litigation to enforce any Final Determination (as defined below). The parties hereby agree and acknowledge that, except as otherwise provided in this Section 10.6 or in the Commercial Arbitration Rules of the American Arbitration Association as in effect from time to time, the arbitration procedures and any Final Determination hereunder shall be governed by and shall be enforced pursuant to the Uniform Arbitration Act as in effect in the State of New York. (b) In the event that any party asserts that there exists a Dispute, such party shall deliver a written notice to each other party involved therein specifying the nature of the asserted Dispute and requesting a meeting to attempt to resolve the same. If no such resolution is reached within 45 days after such delivery of such notice, the party delivering such notice of Dispute (the "Disputing Person") may, within 75 days after delivery of such notice, commence arbitration hereunder by delivering to each other party involved therein a notice of arbitration (a "Notice of Arbitration") and by filing a copy of such Notice of Arbitration with the New York City office of the American -51- Arbitration Association. Such Notice of Arbitration shall specify the matters as to which arbitration is sought, the nature of any Dispute, the claims of each party to the arbitration and the amount and nature of damages or other relief sought to be recovered as a result of any alleged claim and any other matters required by the Commercial Arbitration Rules of the American Arbitration Association as in effect from time to time to be included therein. (c) Buyer and Seller each shall select one arbitrator expert in the subject matter of the Dispute (the arbitrators so selected shall be referred to herein as "Buyer's Arbitrator" and "Seller's Arbitrator," respectively). In the event that either party fails to select an arbitrator as set forth herein within 30 days after the delivery of a Notice of Arbitration, then the matter shall be resolved by the arbitrator selected by the other party. Seller's Arbitrator and Buyer's Arbitrator shall select a third independent, neutral arbitrator expert in the subject matter of the Dispute, and the three arbitrators so selected shall resolve the Dispute according to the procedures set forth in this Section 10.6. If Seller's Arbitrator and Buyer's Arbitrator are unable to agree on a third arbitrator within 20 days after their selection, Seller's Arbitrator and Buyer's Arbitrator shall each prepare a list of three independent arbitrators. Seller's Arbitrator and Buyer's Arbitrator shall each have the opportunity to designate as objectionable and eliminate one arbitrator from the other arbitrator's list within ten days after submission thereof, and the third arbitrator shall then be selected by lot from the arbitrators remaining on the lists submitted by Seller's Arbitrator and Buyer's Arbitrator. (d) The arbitrators selected pursuant to Section 10.6(c) shall determine the allocation of the costs and expenses of arbitration. (e) The arbitration shall be conducted in New York City, under the Commercial Arbitration Rules of the American Arbitration Association as in effect from time to time, except as otherwise set forth herein or as modified by the agreement of Buyer and Seller. The arbitrators shall conduct the arbitration such that a final result, determination, finding, judgment and/or award (the "Final Determination") is made or rendered as soon as practicable, but in no event later than 120 days after the delivery of the Notice of Arbitration nor later than ten days following completion of the arbitration. The Final Determination shall be made in writing, shall state the basis for such determination and shall be agreed upon and signed by the sole arbitrator or by at least two of the three arbitrators (as the case may be). The Final Determination shall be final and binding on all parties, and there shall be no appeal from or reexamination of the Final Determination, except for fraud, perjury, evident partiality or misconduct by an arbitrator prejudicing the rights of any party and to correct manifest clerical errors. -52- (f) Buyer and Seller may enforce any Final Determination in any state or federal court having jurisdiction over the Dispute. For the purpose of any action or proceeding instituted with respect to any Final Determination, each party hereto hereby irrevocably submits to the jurisdiction of such courts, irrevocably consents to the service of process by registered mail or personal service and hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter have as to personal jurisdiction, the laying of the venue of any such action or jurisdiction, the laying of the venue of any such action or proceeding brought in any such court and any claim that any such action or proceeding brought in any court has been brought in an inconvenient form. 10.7 Attorneys Fees. In the event any party hereto initiates any legal action arising out of or in connection with this Agreement, the prevailing party shall be entitled to recover from the other party all reasonable attorneys' fees, expert witness fees and expenses incurred by the prevailing party in connection therewith. 10.8 Liability for Transfer Taxes. Buyer and Seller shall each be responsible for and pay in a timely manner 50% of all sales (including, without limitation, bulk sales), use, value added, documentary, stamp, gross receipts, registration, transfer, conveyance, excise, recording, license and other similar Taxes and fees ("Transfer Taxes"), arising out of or in connection with or attributable to the transactions effected pursuant to this Agreement. Each party hereto shall prepare and timely file all Tax Returns required to be filed in respect of Transfer Taxes (including, without limitation, all notices required to be given with respect to bulk sales taxes) that are the primary responsibility of such party under applicable law; provided, however, that such party's -53- preparation of any such Tax Returns shall be subject to the other party's approval, which approval shall not be withheld or delayed unreasonably. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. L-3 COMMUNICATIONS CORPORATION By:_____________________________________ Name: Robert Mehmel Title: Vice President CALIFORNIA MICROWAVE, INC. By:_____________________________________ Name: George L. Spillane Title: Vice President and Secretary -54- EXHIBIT A CROSS-LICENSE AGREEMENT CROSS-LICENSE AGREEMENT dated as of _________________, 1998 (this "Agreement"), between L-3 Communications Corporation, a Delaware corporation ("L-3"), and California Microwave, Inc., a Delaware corporation ("CMI"). RECITALS WHEREAS, L-3 and CMI have entered into that certain Asset Purchase Agreement dated as of December 19, 1997 (the "Purchase Agreement"), in connection with the sale and purchase of the Assets (as defined below) of the Satellite Transmission System Division of CMI (the "STS Division"), which sale and purchase has closed or is closing effective as of the date hereof (the "Closing Date") simultaneously with the execution and delivery of this Agreement; and WHEREAS, effective as of the Closing Date the parties hereto and their respective Subsidiaries currently own or have licenses to use various intellectual property rights heretofore used primarily (in some circumstances) and not primarily (in other circumstances) in connection with the Business (as defined below) of the STS Division; and WHEREAS, the parties hereto have determined that this Agreement is appropriate in order to effectuate the purposes of the Purchase Agreement as described therein, and in order to promote a clear understanding of their respective intellectual property rights subsequent to the Closing Date; NOW, THEREFORE, in consideration of the mutual agreements, undertakings and covenants herein and therein, the sufficiency and receipt of which hereby are acknowledged, the parties hereby agree as follows: ARTICLE I. DEFINITIONS. Section 1.01 General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" shall have the meaning set forth in the Purchase Agreement. "Agreement" shall have the meaning specified in the first paragraph hereof. "Assets" shall have the meaning set forth in the Purchase Agreement. "Business" shall have the meaning set forth in the Purchase Agreement. "Closing" shall have the meaning set forth in the Purchase Agreement. "Closing Date" shall have the meaning specified in the recitals to this Agreement. "CMI Intellectual Property" shall have the meaning specified in Section 2.02. "Intellectual Property" shall have the meaning set forth in the Purchase Agreement. Notwithstanding the foregoing and for the purposes of this Agreement only, Intellectual Property shall not include: (a) Intellectual Property relating to the GMACS software or to the Universal System Controller; (b) the U.S. patent application serial number No. 08/815,593 filed March 12, 1997 entitled "Wireless Communications Systems Having Fixed and Dynamically Assigned Links" and any right in or to the invention subject thereof throughout the world; or (c) any trademarks, service marks, trade names, trade dress, logos, business and product names, slogans, registrations and applications for registration in respect of any of the intellectual property referred to in either clause (a) or clause (b) above. "L-3 Intellectual Property" shall have the meaning specified in Section 2.01. "Notice" shall have the meaning specified in Section 10.03. "Purchase Agreement" shall have the meaning specified in the recitals to this Agreement. "STS Division" shall have the meaning specified in the recitals to this Agreement. "Subsidiary", shall have the meaning set forth in the Purchase Agreement. -2- "Term" shall have the meaning specified in Section 8.01. ARTICLE II. OWNERSHIP OF INTELLECTUAL PROPERTY ASSETS. Section 2.01. The parties agree that, as a result of the Closing under the Purchase Agreement, L-3 and its Subsidiaries will acquire and own all right, title and interest, including the right to sue and collect past and future damages, in any Intellectual Property which relates primarily to the Business (the "L-3 Intellectual Property"). Section 2.02. The parties agree that, as a result of the Closing under the Purchase Agreement CMI and its Subsidiaries own all right, title and interest, including the right to sue and collect past and future damages, in any Intellectual Property which is being used as of the Closing Date in the operation of the Business but does not constitute Intellectual Property that relates primarily to the Business (the "CMI Intellectual Property"). Section 2.03. The confirmation of ownership of the Intellectual Property rights provided for under Sections 2.01 and 2.02 is subject to all pre-existing third party rights, obligations and restrictions as of the Closing Date. ARTICLE III. INTELLECTUAL PROPERTY LICENSES. Section 3.01. L-3, on behalf of itself and its Subsidiaries, hereby grants as of the Closing Date to CMI and its Subsidiaries a non-assignable, worldwide, fully paid-up, non-exclusive license for the duration of the Term, including the right to grant sublicenses (but such sublicenses may be granted only to Subsidiaries, contractors for whom Licensee is acting as a subcontractor (who will also have the right to sub-license to end-user customers) and end-user customers of Licensee), under the L-3 Intellectual Property, to manufacture, have manufactured, use, offer to sell, and sell, lease, license or otherwise transfer any and all methods, apparatus, processes, compositions and products, and offer and provide any services, in each case in connection with all fields of activity other than the fields of activity of the Business of L-3. Any sublicense permitted hereunder shall not extend beyond the Term. Section 3.02. CMI, on behalf of itself and its Subsidiaries, hereby grants as of the Closing Date to L-3 and its Subsidiaries a non-assignable, worldwide, fully paid-up, non-exclusive license for the duration of the Term, including the right to grant sublicenses (but such -3- sublicenses may be granted only to Subsidiaries, contractors for whom Licensee is acting as a subcontractor (who will also have the right to sub-license to end-user customers) and end-user customers of Licensee), under the CMI Intellectual Property, to manufacture, have manufactured, use, offer to sell, and sell, lease, license or otherwise transfer any and all methods, apparatus, processes, compositions and products, and offer and provide any services, in each case in connection with all fields of activity other than the fields of activity of the business of CMI. Any sublicense permitted hereunder shall not extend beyond the Term. Section 3.03. The rights granted by the parties under Sections 3.01 and 3.02 are subject to all pre-existing third party rights, obligations and restrictions as of the Closing Date. Section 3.04. Each of the parties hereto understands and agrees that, except as otherwise expressly provided, no party hereto is in this Agreement making any representation or warranty whatsoever, including, without limitation, as to title, value or legal sufficiency. The foregoing provisions of this Section shall not, however, limit, modify or impact in any manner whatsoever any of the representations and warranties of CMI or L-3 in the Purchase Agreement, all of which shall remain unaffected hereby. Section 3.05. The rights granted by the parties under Sections 3.01 and 3.02 are limited to the Intellectual Property owned by the parties as of the Closing Date and do not include any intellectual property rights that are acquired or come into existence thereafter. Section 3.06. Except as may be specifically provided for in this Agreement or the Purchase Agreement, the parties agree that no party shall be obligated to provide any technical assistance, or to transfer any technical information or documentation associated therewith, to any other party. ARTICLE IV. UNDERTAKINGS. Section 4.01. To the extent that the grants of Intellectual Property rights and licenses under Article III herein would violate or be prohibited by any agreement with a third party, and such Intellectual Property actually is used by the grantee party, then the granting party undertakes to use reasonable efforts to obtain the necessary consent(s) from such third party so as to be permitted to make such grants. However, each party hereto understands and agrees that no party hereto is, in this Agreement -4- representing or warranting in any way that the obtaining of any consents or approvals, the execution and delivery of any amendatory agreements and the making of any filings or applications, possibly contemplated by this Agreement will satisfy the provisions of any and all applicable agreements or the requirements of any or all applicable laws or judgments. The foregoing provisions of this Section shall not, however limit, modify or impact in any manner whatsoever any of the representations and warranties of CMI or L-3 in the Purchase Agreement, all of which shall remain unaffected hereby. Section 4.02. To the extent a party or its Subsidiaries shall require technical assistance in connection with technology, technical information or software transferred or licensed from another party, then that technical assistance may be provided (but shall not be required to be provided), if at all, pursuant to a separate agreement entered into by the parties pursuant to terms and conditions agreed to by the parties. ARTICLE V. CONFIDENTIALITY. From and after the Closing Date, each party will, and will cause its Subsidiaries to, hold in strict confidence, and will not use to the detriment of the other party or any of such party's Subsidiaries, all information that is licensed pursuant to this Agreement; provided, however, that either party may disclose any of such information to third parties performing services on behalf of the disclosing party who have a need to know such information in order to perform such services and have agreed in writing to maintain the same confidential. Also, each party may disclose such information to contractors or end user customers of such party who have a need to know such information and have agreed in writing to maintain the confidentiality of the same or, in the case of any such disclosure to the U.S. government, if such party has taken all reasonable steps to maintain the confidentiality of the same. Notwithstanding the foregoing, either party may disclose such information (i) by judicial or administrative process or by other requirements of law, (ii) if the same hereafter is in the public domain through no fault of such party, or (iii) if the same is later acquired by such party from another source and the other party is not aware that such source is under an obligation to another Person to keep such information confidential. ARTICLE VI. INFRINGEMENT. Section 6.01. If L-3 determines that a person or entity is infringing on or unlawfully using CMI Intellectual -5- Property, L-3 shall notify CMI. CMI, in its sole discretion, may take all necessary action, including, without limitation, filing suit and enjoining the alleged infringement, at CMI's sole expense; and CMI, as a result thereof, shall retain all damages and other compensation received as a result of taking such actions against such infringement. L-3 shall not take any action in connection with such infringement or unlawful use (including without limitation any action to settle or compromise any such claim, action or proceeding). Section 6.02. If CMI determines that a person or entity is infringing on or unlawfully using L-3 Intellectual Property, CMI shall notify L-3. L-3, in its sole discretion, may take all necessary action, including, without limitation, filing suit and enjoining the alleged infringement, at L-3's sole expense; and L-3, as a result thereof, shall retain all damages and other compensation received as a result of taking such actions against such infringement. CMI shall not take any action in connection with such infringement or unlawful use (including without limitation any action to settle or compromise any such claim, action or proceeding). ARTICLE VII. INDEMNITY. Section 7.01. L-3 agrees to indemnify and hold CMI, its Affiliates and their respective officers, directors, employees and agents, harmless from and against any damages, liabilities, losses and expenses arising out of any claim by any third party, including, without limitation, reasonable attorneys' fees and amounts paid in settlement of any claim, of any kind or nature whatsoever, which may be sustained or suffered as a result of any use by L-3 of CMI Intellectual Property. Section 7.02. CMI agrees to indemnify and hold L-3, its Affiliates and their respective officers, directors, employees and agents, harmless from and against any damages, liabilities, losses and expenses arising out of any claim by any third party, including, without limitation, reasonable attorneys' fees and amounts paid in settlement of any claim, of any kind or nature whatsoever, which may be sustained or suffered as a result of any use by CMI of L-3 Intellectual Property. ARTICLE VIII. TERM AND TERMINATION. Section 8.01. This Agreement shall commence on the Closing Date and shall continue for a period of one year thereafter unless sooner terminated as provided herein (the "Term"). -6- Section 8.02. This Agreement may be terminated by any party with respect to the other party upon written notice to the other party if the other party fails to perform or otherwise breaches in any material respect an obligation under this Agreement; provided, however, that such party failing to perform or otherwise breaching shall have 30 days from the date notice of intention to terminate is received to cure the failure to perform or breach of an obligation. Section 8.03. This Agreement shall terminate automatically without action by either party if any party shall cease or threaten to cease paying its debts when due in the ordinary course or to carry on its business, become insolvent, propose a compromise or arrangement with its creditors or otherwise take advantage of any law for the relief of debtors, a receiver is appointed for any of the other party's assets or any step or proceeding is taken to have the other party declared bankrupt or be liquidated, dissolved, wound up or reorganized. Section 8.04. Termination under this Section 8 will be effected by notice given by the terminating party to the other party, except with respect to a situation described in Section 8.03 where no notice shall be required. Section 8.05. Any termination of this Agreement shall not affect any of the rights of either party hereto which shall have arisen prior to such termination. Section 8.06. Upon termination or expiration of this Agreement, (a) each party's rights with respect to use of the other party's Intellectual Property in any way shall be as if this Agreement had not been entered into, and (b) each party shall cease using the other party's Intellectual Property immediately in any way. ARTICLE IX. MISCELLANEOUS. Section 9.01. Entire Agreement. This Agreement, together with the Purchase Agreement, constitutes the entire agreement and understanding between and among the parties with respect to the subject matter hereof and shall supersede any prior agreements and understandings among the parties with respect to such subject matter. Section 9.02. Counterparts. This Agreement may be executed with counterpart signature pages or in one or more counterparts, all of which shall be one and the same Agreement, and shall become effective when one or more -7- counterparts have been signed by each of the parties and delivered to all the parties. Section 9.03. Notices. All notices, consents, requests, waivers or other communications required or permitted under this Agreement (each a "Notice") shall be in writing and shall be sufficiently given (a) if hand delivered or sent by telecopy, (b) if sent by nationally recognized overnight courier, or (c) if sent by registered or certified mail, postage prepaid, return receipt requested, and in each case addressed as follows: If to L-3: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Attention: Christopher C. Cambria, Esq. with a copy to: Whitman Breed Abbott & Morgan LLP 200 Park Avenue New York, NY 10166 Attention: James P. Gerkis, Esq. If to CMI: California Microwave, Inc. 555 Twin Dolphin Drive Redwood City, California 94065 Attn: George L. Spillane with a copy to: Richard W. Canady, Esq. Howard, Rice, Nemerovski, Canady, Falk & Rabkin A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111 or such other address as shall be furnished by any of the parties in a Notice. Any Notice shall be deemed given upon receipt. Section 9.04. Waivers. The failure of any party to require strict performance by any other party of any provision in this Agreement will not waive or diminish the other party's right to demand strict performance thereafter of that or any other provision hereof. -8- Section 9.05. Amendments. This Agreement may be amended, supplemented or waived only by a subsequent writing signed by each of the parties. Section 9.06. Assignment. This Agreement may not be assigned by any party without the consent of the other parties. Section 9.07. Successors and Assigns. All terms and conditions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and permitted assigns of the parties. Section 9.08. Subsidiaries. Each of the parties hereto shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such party or by any entity that becomes a Subsidiary of such party on and after the Closing Date. Section 9.09. Third Party Beneficiaries. Except with respect to indemnified parties referred to in Article VII, each party intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto. Section 9.10. Specific Performance. Each of the parties hereto acknowledges that there is no adequate remedy at law for failure by such parties to comply with the provisions of this Agreement and that such failure would cause immediate harm that would not be adequately compensable in damages, and therefore agree that in the event of a breach or threatened breach of any provision of this Agreement by either party, the other party, may, in addition to all other remedies, immediately obtain and enforce injunctive relief prohibiting the breach or compelling specific performance without the requirement of posting a bond or other security, in addition to all other remedies available to the parties hereto under this Agreement. Section 9.11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER. Section 9.12. Severability. If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to -9- which it has been held invalid or unenforceable, shall remain in full force and effect and in no way be affected, impaired or invalidated thereby. -10- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written. L-3 COMMUNICATIONS CORPORATION By: -------------------------------- Name: Title: CALIFORNIA MICROWAVE, INC. By: -------------------------------- Name: Title: -11- EXHIBIT B TECHNOLOGY LICENSE AGREEMENT TECHNOLOGY LICENSE AGREEMENT dated as of ___________, 1998 (this "Agreement"), between L-3 Communications Corporation, a Delaware corporation ("Licensor"), and California Microwave, Inc., a Delaware corporation ("Licensee"). RECITALS WHEREAS, Licensor and Licensee have entered into that certain Asset Purchase Agreement dated as of December 19, 1997 (the "Asset Purchase Agreement"), in connection with the sale and purchase of certain assets of the Satellite Transmission System Division of Licensee (the "STS Division"), which sale and purchase has closed or is closing as of the date hereof (the "Closing Date") simultaneously with the execution and delivery of this Agreement; and WHEREAS, Licensor wishes to grant to Licensee a license to the Software, the Patent Application and the USC (each as defined below), on the terms and conditions hereof; and WHEREAS, Licensee wishes to acquire a license from Licensor to the Software, the Patent Application and the USC on the terms and conditions hereof; NOW, THEREFORE, in consideration of the mutual agreements, undertakings and covenants herein and therein, the receipt and sufficiency of which hereby are acknowledged, the parties hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01. General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Field of Use" shall mean use in satellite earth stations contracted for by the United States Government. "Patent Application" shall mean U.S. patent application serial number No. 08/815,593 filed March 12, 1997 entitled "Wireless Communications System Having Fixed and Dynamically Assigned Links" and any United States patents issued pursuant to such patent application, including any additions, divisions, reissues, continuations or continuations in part, renewals and extensions thereof. "Person" shall mean any natural person, firm, partnership, association, corporation, company, trust, business trust, governmental authority or other entity. "Software" shall mean the current version of the GMACS software (GMACS 16) and related know-how, including source code, object code and associated documentation as distributed by Licensee to its customers on or prior to the Closing Date, and the current version of any software and related know-how, including source code, object code and associated documentation, incorporated in the USC as distributed by Licensee to its customers on or prior to the Closing Date. "Subsidiary" shall mean each corporation or other Person in which Licensee owns or controls, directly or indirectly, capital stock or other equity interests representing at least 50% of the outstanding voting stock or other equity interests. "USC" shall mean the Universal Systems Controller product as distributed by Licensee to its customers on or prior to the Closing Date, but excluding any and all software incorporated therein. ARTICLE II. LICENSE Section 2.01. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a non-exclusive, worldwide, perpetual, fully paid-up, nonterminable right and license under any and all patents, copyrights, trade secrets, know-how, and any and all other intellectual property and proprietary rights (i) to copy, support and use the Software within Licensee and its Subsidiaries only (as well as new versions thereof created pursuant to Article IV) in the Field of Use, as well as any documentation relating thereto, and (ii) except for the Software as incorporated in the USC, to make, have made, use, sell, license, lease or otherwise transfer the USC (as well as improvements thereto made under Article IV) in the Field of Use. In addition to the foregoing, and subject to the terms and conditions of this Agreement, Licensor hereby grants to licensee a non-exclusive, worldwide, perpetual, fully paid-up, nonterminable, right and license within the Field of Use under any and all patents, copyrights, trade secrets, know-how, and any and all other intellectual property and proprietary rights (x) to sublicense third parties to use object code versions of the Software and documentation concerning the use thereof, and (y) to sublicense the source code for the Software for internal use by sublicensee and to the extent necessary to enable Licensee or its sublicensee to fulfill its contractual obligations to the U.S. Government in accordance with ordinary and reasonable U.S. Government contracting practices, subject, inter alia, to the restrictions of Article III hereof. Any sublicensee must impose such terms and conditions as Licensor may reasonably specify for protecting its rights in and to the Software, the USC and the Patent Application and shall not be in conflict with this Agreement. Any such sublicense shall be personal to and non-transferable by, the sublicensee. Section 2.02. Pursuant to the license hereunder, and subject, inter alia, to Article III hereof, Licensee, as well as any third party working for or on behalf thereof or permitted sublicensee, may use the Software on any computers, at any location, by any number of users, and on any number of computers at any time. Section 2.03. Subject to the terms and conditions of this Agreement, (including but not limited to Section 2.05 hereof) Licensor hereby grants to Licensee a non-exclusive, perpetual, fully paid-up, non-terminable right and license under the Patent Application to make, have made, use, sell, license, lease or otherwise transfer products covered thereby. Section 2.04. Licensee shall make no use of the Software or the USC, except as expressly permitted by the licenses granted under this Agreement. Section 2.05. None of the rights and licenses granted hereunder to Licensee shall be used in contravention of or to avoid full compliance with the provisions of Section 5.1(f) of the Asset Purchase Agreement. Section 2.06. Licensor extends no right or license under any of its intellectual property or in or to any of its products, services or assets except to the extent as expressly set forth in (a) this Agreement, (b) the Cross-License Agreement of even date herewith between Licensor and Licensee, and (c) the Trademark License Agreement of even date herewith between Licensor and Licensee. Section 2.07. If Licensee determines that a person or entity is infringing or unlawfully using any intellectual property relating to the Software, the USC or the Patent Application, Licensee shall notify Licensor. Licensor, in its sole discretion, may take all necessary action, including, without limitation, filing suit and enjoining the alleged infringement, at Licensor's sole expense; and Licensor, as a result thereof, shall retain all -3- damages and other compensation received as a result of taking such actions against such infringement. Licensee shall not take any action in connection with such infringement or unlawful use (including without limitation any action to settle or compromise any such claim, action or proceeding). ARTICLE III. NONDISCLOSURE Licensee shall maintain the source code for the Software confidential, and shall not disclose such source code to any third party except (i) for third parties performing services on behalf of Licensee who have a need to know such source code in order to perform such services and have agreed in writing to maintain the same confidential, (ii) for contractors with respect to which Licensee is acting as subcontractor who have a need to know such source code in order to perform services for the U.S. Government and have agreed in writing to maintain the confidentiality of the same, (iii) for the U.S. Government, as may be required by U.S. government procurement regulations so long as Licensee takes all reasonable steps to maintain the confidentiality of the same or (iv) as may be required under software escrow arrangements required by such contractors or the U.S. Government so long as Licensee takes all reasonable steps to maintain the confidentiality of the same. ARTICLE IV. RIGHT TO MODIFY THE SOFTWARE AND USC Subject to the terms and conditions of this Agreement, Licensee shall have the right within the Field of Use, in its sole discretion, either by itself or by a third party, to make improvements to the USC, and to create new versions of the Software. Any such improvements to the USC and any such new versions of the Software made by Licensee after the execution of this Agreement shall be owned exclusively by Licensee, and Licensor shall have no right therein. ARTICLE V. REPRESENTATIONS AND WARRANTIES Neither party makes any representations or warranties under this Agreement, whether express or implied, except for those representations and warranties made in the Asset Purchase Agreement which are incorporated herein by reference in their entirety. ARTICLE VI. GMACS AND USC TRADEMARKS Licensee acknowledges that Licensor is the sole owner of the GMACS and USC trademarks throughout the world and shall make no use thereof or of any trademark, trade name, service mark or other designation confusingly similar -4- thereto anywhere in the world, except as expressly provided in the Trademark License Agreement entered into between Licensor and Licensee concurrently herewith. ARTICLE VII. INDEPENDENT CONTRACTORS The parties hereto are acting as independent contractors in connection with this Agreement and nothing herein shall be deemed to cause this Agreement to create an agency, partnership or joint venture between the parties. ARTICLE VIII. INDEMNIFICATION Licensee acknowledges that the Software, the USC and the invention that is the subject of the Patent Application were designed and developed by its STS Division prior to the Closing Date. Licensee agrees to indemnify and hold Licensor, its Affiliates and their respective officers, directors, employees and agents, harmless from and against any damages, liabilities, losses and expenses, (including, without limitation, reasonable attorneys' fees) and amounts paid in settlement of any claim, of any kind or nature whatsoever, which may be sustained or suffered as a result of any cause of action, claim, demand, suit or proceeding asserted by Licensee or any third party that relates to or arises from any manufacture, use, sale, lease, license or other transfer by Licensee, any Affiliate or sublicensee of Licensee or any transferee from Licensee, such Affiliate or such sublicensee, of the USC, the Software or any product or method relating to the Patent Application (including, without limitation, processing, packaging, distribution, or advertising of any thereof). ARTICLE IX. ENTIRE AGREEMENT This Agreement constitutes the entire agreement and understanding between and among the parties with respect to the subject matter hereof and shall supersede any prior agreements and understandings, whether written or oral, among the parties with respect to such subject matter. ARTICLE X. COUNTERPARTS This Agreement may be executed with counterpart signature pages or in one or more counterparts, all of which shall be one and the same Agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to all the parties. ARTICLE XI. NOTICES All notices, consents, requests, waivers or other communications required or permitted under this Agreement -5- (each a "Notice") shall be in writing and shall be sufficiently given (a) if hand delivered or sent by telecopy, (b) if sent by nationally recognized overnight courier, or (c) if sent by registered or certified mail, postage prepaid, return receipt requested, and in each case addressed as follows: If to Licensor: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Attention: Christopher C. Cambria, Esq. with a copy to: Whitman Breed Abbott & Morgan LLP 200 Park Avenue New York, NY 10166 Attention: James P. Gerkis, Esq. If to Licensee: California Microwave, Inc. 555 Twin Dolphin Drive Redwood City, California 94065 Attn: George L. Spillane with a copy to: Richard W. Canady, Esq. Howard, Rice, Nemerovski, Canady, Falk & Rabkin A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111 or such other address as shall be furnished by any of the parties in a Notice. Any Notice shall be deemed given upon receipt. ARTICLE XII. WAIVERS The failure of any party to require strict performance by any other party of any provision in this Agreement will not waive or diminish the first party's right to demand strict performance thereafter of that or any other provision hereof. ARTICLE XIII. AMENDMENTS -6- This Agreement may be amended, supplemented or waived only by a subsequent writing signed by each of the parties. ARTICLE XIV. HEADINGS Headings used in this Agreement are for reference purposes only and shall not be deemed a part of this Agreement. ARTICLE XV. SUCCESSORS AND ASSIGNS All terms and conditions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the parties. ARTICLE XVI. THIRD PARTY BENEFICIARIES Each party intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto. ARTICLE XVII. SPECIFIC PERFORMANCE Each of the parties hereto acknowledges that there is no adequate remedy at law for failure by such parties to comply with the provisions of this Agreement and that such failure would cause immediate harm that would not be adequately compensable in damages, and therefore agree that, in the event of a breach or threatened breach of any provision of this Agreement by either party, the other party, may, in addition to all other remedies, immediately obtain and enforce injunctive relief prohibiting the breach or compelling specific performance without the requirement of posting a bond or other security, in addition to all other remedies available to the parties hereto under this Agreement. ARTICLE XVIII. GOVERNING LAW THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER. ARTICLE XIX. SEVERABILITY If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held -7- invalid or unenforceable, shall remain in full force and effect and in no way be affected, impaired or invalidated thereby. ARTICLE XX. ASSIGNMENT Licensee may not assign this Agreement or any of the licenses granted hereby without the prior written consent of Licensor; provided, however, that, in case of any partial assignment of this Agreement relating solely to GMACS or the USC, such consent shall not be unreasonably withheld. Licensor may assign this Agreement to any person in Licensor's sole discretion. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the date first above written. L-3 COMMUNICATIONS CORPORATION By: -------------------------------- Name: Title: CALIFORNIA MICROWAVE, INC. By: -------------------------------- Name: Title: -8- EXHIBIT C TRADEMARK LICENSE AGREEMENT Trademark License Agreement dated as of _________, 1998 (this "Agreement"), between L-3 Communications Corporation, a Delaware corporation ("Licensor"), and California Microwave, Inc., a Delaware corporation ("Licensee"). RECITALS WHEREAS, Licensee and Licensor have entered into that certain Asset Purchase Agreement dated as of December 19, 1997 (the "Purchase Agreement"), in connection with the sale and purchase of certain assets of the Satellite Transmission System Division of Licensor (the "STS Division"), which sale and purchase has closed or is closing as of the date hereof (the "Closing Date") simultaneously with the execution and delivery of this Agreement; WHEREAS, the STS Division has for many years used the trademark GMACS in connection with the GMACS Product (as defined below); WHEREAS, the STS Division has for many years used the trademark USC in connection with the USC Product (as defined below); WHEREAS, the Government Electronics Division of Licensee has distributed the GMACS Product and the USC Product for use in satellite earth stations contracted for by the United States Government (the "CMI Market"); WHEREAS, Licensee wishes to use the mark GMACS within the CMI Market from and after the Closing Date for a reasonable period of time to permit a transition to a replacement mark which does not include the formative GMACS; and WHEREAS, Licensee wishes to use the mark USC within the CMI Market from and after the Closing Date for a reasonable period of time to permit a transition to a replacement mark which does not include the formative USC; NOW, THEREFORE, in consideration of the mutual agreements, undertakings and covenants herein and therein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01. General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" shall have the meaning set forth in the Purchase Agreement. "Agreement" shall have the meaning set forth in the first paragraph hereof. "Closing Date" shall have the meaning specified in the recitals to this Agreement. "CMI Market" shall have the meaning set forth in the recitals to this Agreement. "GMACS Product" shall mean the current version of GMACS (GMACS 16) software as distributed by Licensee to its customers on or before the Closing Date. "Notice" shall have the meaning specified in Section 10.03. "Purchase Agreement" shall have the meaning specified in the recitals to this Agreement. "STS Division" shall have the meaning specified in the recitals to this Agreement. "Trademarks" shall mean the GMACS and USC trademarks. "USC Product" shall mean the Universal Systems Controller product as distributed by Licensee to its customers on or before the Closing Date. ARTICLE II. LICENSE Section 2.01. Licensor hereby grants to Licensee, on the terms and conditions set forth herein, a non-exclusive, worldwide, fully-paid-up license (a) to use the trademark GMACS in connection with the promotion and distribution of the GMACS Product, and (b) to use the trademark USC in connection with the promotion and distribution of the USC Product. Section 2.02. Licensee and its Affiliates shall not use, and shall not permit the use of any Trademark outside the CMI Market. -2- Section 2.03. Licensee shall only use the Trademarks in connection with products adhering to Licensor's quality standards, which may be modified by Licensor from time to time in its sole discretion. Licensee shall only use the Trademarks in a manner as approved by Licensor, which may be modified by Licensor from time to time in its sole discretion. Licensee recognizes the high reputation of the GMACS Product and the USC Product and that it is essential to Licensor's interests that Licensor's quality standards be maintained at all times. Section 2.04. Licensee will use the Trademarks strictly in compliance with applicable legal requirements and will use such markings in connection therewith as may be required for such compliance. Section 2.05. Licensor may terminate this Agreement due to a material breach by Licensee. For purposes of this Agreement, "material breach" by Licensee shall include but shall not be limited to (a) any failure to observe Licensor's quality standards, and (b) any use of the Trademarks other than a use approved by Licensor. Section 2.06. (a) Within a reasonable period of time following the Closing Date (and in any event by thirty (30) days thereafter), Licensee will adopt a mark not including the formative GMACS or any word or symbol confusingly similar thereto to replace the GMACS mark. Notwithstanding the foregoing, neither Licensee nor any Affiliate thereof shall use or permit the use of the GMACS mark or of any trademark, service mark or trade name including the formative GMACS or any word or symbol confusingly similar thereto anywhere in the world after the date that is 180 days after the Closing Date. (b) Within a reasonable period of time following the Closing Date, (and in any event by thirty (30) days thereafter), Licensee will adopt a mark not including the formative USC or any word or symbol confusingly similar thereto to replace the USC mark. Notwithstanding the foregoing, neither Licensee nor any Affiliate thereof shall use or permit the use of the USC mark or of any trademark, service mark or trade name including the formative USC or any word or symbol confusingly similar thereto anywhere in the world after the date that is 180 days after the Closing Date. Section 2.07. The parties agree that, subject to the rights of Licensee hereunder, the GMACS and USC trademarks are and shall be owned exclusively by Licensor and Licensee will execute and deliver such instruments of title as Licensor may request to confirm such ownership by Licensor. Any and all use of the Trademarks by Licensee shall inure to the benefit of Licensor. -3- Section 2.08. None of the rights and licenses granted hereunder to Licensee shall be used in contravention of or to avoid full compliance with the provisions of Section 5.1(f) of the Purchase Agreement. Section 2.09. If Licensee determines that a person or entity is infringing or unlawfully using the GMACS mark, the USC mark or any trademark, service mark or trade name confusingly similar thereto, Licensee shall notify Licensor. Licensor, in its sole discretion, may take all necessary action, including, without limitation, filing suit and enjoining the alleged infringement, at Licensor's sole expense; and Licensor, as a result thereof, shall retain all damages and other compensation received as a result of taking such actions against such infringement. Licensee shall not take any action in connection with such infringement or unlawful use (including without limitation any action to settle or compromise any such claim, action or proceeding). Section 2.10. Neither party makes any representations or warranties under this Agreement (it being understood and agreed that any representations and warranties relating to the subject matter of this Agreement are made in the Purchase Agreement). ARTICLE III. INDEMNIFICATION Licensee acknowledges that the GMACS Product and the USC Product were designed and developed by its STS Division prior to the Closing Date. Licensee agrees to indemnify and hold Licensor, and its officers, directors, affiliates, employees and agents, harmless from and against any damages, liabilities, losses and expenses, (including, without limitation, reasonable attorneys' fees) and amounts paid in settlement of any claim, of any kind or nature whatsoever, which may be sustained or suffered as a result of any use by Licensee of the Trademarks (including, without limitation, whether by manufacturing, processing, packaging, distribution, sale or advertising) ARTICLE IV. MISCELLANEOUS Section 4.01. Entire Agreement. This Agreement, together with the Purchase Agreement, constitutes the entire agreement and understanding between and among the parties with respect to the subject matter hereof and shall supersede any prior agreements and understandings among the parties with respect to such subject matter. Section 4.02. Counterparts. This Agreement may be executed with counterpart signature pages or in one or more counterparts, all of which shall be one and the same Agreement, and shall become effective when one or more counterparts have -4- been signed by each of the parties and delivered to all the parties. Section 4.03. Notices. All notices, consents, requests, waivers or other communications required or permitted under this Agreement (each a "Notice") shall be in writing and shall be sufficiently given (a) if hand delivered or sent by telecopy, (b) if sent by nationally recognized overnight courier, or (c) if sent by registered or certified mail, postage prepaid, return receipt requested, and in each case addressed as follows: If to Licensor: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Attention: Christopher C. Cambria, Esq. with a copy to: Whitman Breed Abbott & Morgan LLP 200 Park Avenue New York, NY 10166 Attention: James P. Gerkis, Esq. If to Licensee: California Microwave, Inc. 555 Twin Dolphin Drive Redwood City, California 94065 Attn: George L. Spillane with a copy to: Richard W. Canady, Esq. Howard, Rice, Nemerovski, Canady, Falk & Rabkin A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111 or such other address as shall be furnished by any of the parties in a Notice. Any Notice shall be deemed given upon receipt. Section 4.04. Waivers. The failure of any party to require strict performance by any other party of any provision in this Agreement will not waive or diminish the other party's right to demand strict performance thereafter of that or any other provision hereof. Section 4.05. Amendments. This Agreement may be amended, supplemented or waived only by a subsequent writing signed by each of the parties. -5- Section 4.06. Successors and Assigns. All terms and conditions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and permitted assigns of the parties. Section 4.07. Subsidiaries. Each of the parties hereto shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such party or by any entity that becomes a Subsidiary of such party on and after the Closing Date. Section 4.08. Third Party Beneficiaries. Each party intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto. Section 4.09. Specific Performance. Each of the parties hereto acknowledges that there is no adequate remedy at law for failure by such parties to comply with the provisions of this Agreement and that such failure would cause immediate harm that would not be adequately compensable in damages, and therefore agree that in the event of a breach or threatened breach of any provision of this Agreement by either party, the other party, may, in addition to all other remedies, immediately obtain and enforce injunctive relief prohibiting the breach or compelling specific performance without the requirement of posting a bond or other security, in addition to all other remedies available to the parties hereto under this Agreement. Section 4.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER. Section 4.11. Severability. If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and in no way be affected, impaired or invalidated thereby. -6- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the date first above written. L-3 COMMUNICATIONS CORPORATION By: -------------------------------- Name: Title: CALIFORNIA MICROWAVE, INC. By: -------------------------------- Name: Title: -7- EXHIBIT D STS SUPPLY AGREEMENT THIS STS SUPPLY AGREEMENT (this "Agreement") is dated ____________ __, 1998 and is entered into between California Microwave, Inc., a Delaware corporation ("CMI"), and L-3 Communications Corporation, a Delaware corporation ("L-3"). RECITALS A. CMI and L-3 have entered into an asset purchase agreement dated as of December 19, 1997 (the "Purchase Agreement") with respect to the acquisition by L-3 from CMI of certain assets of the business of designing, integrating and installing satellite communications systems in the United States and certain other countries (such business is the "STS Division"). B. CMI and L-3 each desire to continue at favored customer prices certain supply arrangements currently in effect between the STS Division of CMI, on the one hand, and other subsidiaries and divisions of CMI, on the other hand, after the date of closing (the "Closing Date") of the purchase by L-3 of the assets of CMI contemplated by the Purchase Agreement. NOW THEREFORE, as a condition to the closing of the transactions contemplated by the Purchase Agreement, and in consideration of the mutual covenants, representations and warranties made herein, and of the mutual benefits to be derived hereby, the parties hereto agree as follows: 1. Supply of Products by CMI. Upon the terms and subject to the conditions hereof, for two years from the Closing Date, CMI shall, or shall cause its subsidiaries (including EF Data Corp. ("EF Data")) to, sell to L-3, and L-3 shall purchase from CMI and/or its subsidiaries the following products and subassemblies (the "STS Products") needed in operating the STS Division's business after the Closing Date that CMI or EF Data currently supplies to the STS Division: satellite communications modems, codecs, transceivers, converters, Verticom "brick" converter modules (the "Brick Modules"), the ICU-64 Channel Unit for LYNXX (the "LYNXX"), the PL/5617-1 Modulator card for PROGENY (the "Card") (the Brick Modules, the LYNXX and the Card are the "Source Products") and network products. Without limiting the obligation of L-3 to purchase STS Products under the preceding sentence, the quantities of STS Products to be purchased by L-3 pursuant to this Section shall be at the sole discretion of L-3 and no minimum quantities of STS Products are required to be purchased hereunder, Notwithstanding the preceding two sentences, if CMI provides written notice to L-3 specifying any STS Products subject to this Section that CMI intends to discontinue making or selling, CMI will be relieved of any obligation to sell to L-3 any such product as of one year from the date that CMI so notifies L-3. -1- 2. Provision of Services by L-3. For two years from the Closing Date, CMI shall exclusively engage L-3 to provide the following services (the "Services") to CMI for the benefit of CMI's customers that have requested CMI to arrange for the procurement of satellite communications system engineering and/or satellite communications systems integration services for commercial (ie, non-U.S. government) projects or for foreign governmental authorities projects: system design, integration, installation and/or program management. Without limiting the obligation of CMI to purchase the Services under the preceding sentence, the quantities of Services to be purchased by CMI pursuant to this Section shall be at the sole discretion of CMI and no minimum quantities of Services are required to be purchased hereunder. Notwithstanding the preceding two sentences, if L-3 provides written notice to CMI specifying any Services subject to this Section that L-3 intends to discontinue providing, L-3 will be relieved of any obligation to provide to CMI any such Services as of one year from the date that L-3 so notifies CMI. 3. SIVAM Project. (a) It is the understanding of the parties that in connection with the SIVAM project proposals, as currently proposed or as may otherwise be amended (the "SIVAM Proposals"), L-3 shall have exclusive access to and communication with Raytheon Corporation ("Raytheon"), whether oral or written, exclusive of CMI or any of its subsidiaries (including, without limitation, CMI's Microwave Networks division (the "MN Division"), CMI's Microwave Data Systems division ("Data Systems") and EF Data, with respect to or in connection with the SIVAM Project including, without limitation, any proposal, discussion, marketing, negotiation, pricing, settlement, procurement, arrangement or understanding with respect to the SIVAM Project. (b) From the Closing Date to December 31, 1998 (the "Supply Period"), CMI shall, and shall cause its subsidiaries (including EF Data) to, deliver to L-3 the products specified in the SIVAM Proposals (the "SIVAM Products") in accordance with the quantities, product specifications and time period proposed by such divisions in the SIVAM Proposals, and L-3 shall purchase, during such Supply Period, the SIVAM Products from such divisions or subsidiaries in accordance with the SIVAM Proposals, provided that: (i) CMI accepts the terms and conditions of and performs its duties under, as subcontractor to L-3, the contract or agreement awarded by Raytheon to L-3 for the SIVAM Project, including, without limitation, payments made under a vendor trust arrangement generally required by Raytheon; and (ii) the pricing for each SIVAM Product quoted by CMI (including EF Data, the MN Division and Data Systems) is competitive with, and in no event more than 5% above, any proposal made in good faith by a legitimate party which seeks to sell such SIVAM Product to L-3 and which agrees to perform the duties and obligations as a subcontractor to L-3 under -2- the SIVAM Project with respect to such Product. In the event that L-3 is permitted to purchase a SIVAM Product from a party other than CMI or EF Data pursuant to this clause (ii) because that product has not met the conditions set forth in this clause (ii), L-3 will remain obligated to purchase from CMI all of the other SIVAM Products so long as those products meet the conditions in this clause (ii) and clause (i) above and subject to the other terms and conditions hereof. As used herein, the term "Product" shall mean a STS Product or a SIVAM Product. 4. Prices. (a) Source Products. CMI shall sell (or cause its subsidiaries to sell) each Source Product to L-3 at the unit price (the "Unit Price") listed for such Source Products on Schedule 4(a) attached hereto. The prices set forth in Schedule 4(a) are not subject to increase during the first six months from the Closing Date. Thereafter, CMI, or its subsidiaries, may increase such prices, except that in no event shall (i) the Unit Price of any Source Product be less favorable than the unit price given to other customer for such Source Product in like quantities and (ii) any such increase in price increase the gross margin percentage of CMI or its subsidiaries with respect to such Source Product from its current gross margin percentage thereon. Upon L-3's written request, CMI will provide L-3 with reasonable access during normal business hours to the books and records of CMI and its subsidiaries for the sole purpose of verifying the gross margin percentages with respect to the Source Products. (b) STS Products. CMI shall sell (or cause its subsidiaries to sell) the STS Products, other than the Source Products, at prices no less favorable than the prices given to other customers of such products in like quantities. (c) Services. L-3 shall provide the Services to CMI at prices no less favorable than the prices given to other customers of such Services in like quantities. 5. Additional Terms and Conditions. (a) CMI Terms and Conditions. Any sale of the STS Products by CMI or any of its subsidiaries under this Agreement shall be subject to and governed by the then-current standard terms and conditions (including as to warranty) of CMI (or its subsidiaries), which terms and conditions shall be no less favorable that those given to other customers for the same or similar products. (b) L-3 Terms and Conditions. Any sale of the Services by L-3 under this Agreement shall be subject to and governed by the then-current standard terms and conditions (including as to warranty) of L-3, which terms -3- and conditions shall be no less favorable that those given to other customers for the same or similar services. 6. Specifications. CMI shall, or cause its subsidiaries to, manufacture and deliver the STS Products in accordance with the electrical, mechanical, physical, environmental and other specifications as in effect as of the Closing Date, or if the STS Product is a non-standard product, then according to the specifications agreed to in writing by L-3 and CMI from time to time. In the event an improvement or a technical change in the specifications of the STS Products is made by CMI, CMI shall be required to provide the STS Products which meet such improved or changed specifications; provided, however, that no such improvement or change in specifications shall be made to LYNXX without the prior written consent of L-3. CMI shall, or cause its subsidiaries to, manufacture and deliver the SIVAM Products to L-3 in accordance with the specifications therefor in the SIVAM Proposals. 7. Maintenance of Standards. If CMI fails to maintain the quality, delivery or performance standards currently applicable to the Products, or fails to achieve standards of quality or performance specified by CMI with respect to new variations of the standard Products, then L-3 shall have such remedies as may be provided in the then-current standard terms and conditions of CMI, and, if CMI fails to cure any such deficiency in any Product within 60 days after written notice thereof by L-3, L-3 shall no longer be obligated to purchase such Product pursuant to this Agreement. 8. Ordering. Each order by L-3 for STS Products (a "Purchase Order") will specify the STS Products, the quantity, the appropriate specifications corresponding to such STS Products (if necessary), and the date of delivery, provided that the number of days from the date of the Purchase Order through the date of delivery is at least 60 days. Notwithstanding the foregoing, the parties hereafter may agree in writing to use a blanket purchase agreement with specific agreed call out schedules in lieu of the foregoing ordering mechanism. Orders by L-3 for SIVAM Products shall be made in accordance with the SIVAM Proposals. 9. Delivery. (a) All STS Products will be delivered freight paid F.O.B. (CMI's (or its subsidiary's) plant). (b) L-3 reserves the right to inspect the STS Products and to confirm the quantity of the STS Products within 30 days from the date of delivery. Any claims for discrepant deliveries shall be reported by L-3 to CMI in writing within such 30-day period. If L-3 fails to make such a claim within the time specified, such order will be deemed accepted by L-3. Upon CMI receiving notice from L-3 of such discrepancy, L-3 will have such remedies as may be provided in the then-current standard terms and conditions of CMI. -4- (c) CMI undertakes to keep L-3 promptly and regularly informed of difficulties that CMI expects in meeting L-3's needs for delivery in accordance with lead time(s) stated in any Purchase Order. (d) CMI shall deliver the SIVAM Products in accordance with the SIVAM Proposal. 10. Raw and Packaging Materials. CMI will purchase and supply all raw materials and packaging materials necessary for the manufacture of the STS Products. CMI will be responsible for the sampling and testing of all such raw materials and packaging materials and for ensuring an adequate inventory of such raw materials and packaging materials to supply the STS Products. 11. Terms of Sale. With respect to any Products or Services sold hereunder, the selling party will invoice the other party at the time of delivery or provision. Each invoice will be itemized in reasonable detail. The non-selling party will pay to the selling party the amount of such invoice within 60 days of the date of such invoice. 12. Confidentiality. Each party will preserve the confidentiality of the other party's Confidential Information (defined below), will not use same except in connection with the performance of its obligations hereunder, and will return same upon request by the other party. This Section will survive expiration or earlier termination of this Agreement for a period of three years thereafter. "Confidential Information" means all proprietary information (including but not limited to formulas, compilations, data, know-how, specifications, techniques, inventions, devices, projections, drawings and plans, whether of a technical, operational, financial or other nature) which hereafter is, or in the past has been, disclosed in writing and marked as confidential by either party (the "Disclosing Party") to the other party (the "Receiving Party"), and which is of such a nature that its value would be impaired if disclosed to third parties, but shall not include any such information that: (i) becomes part of the public domain through no fault of the Receiving Party; (ii) at the time of receipt is known to the Receiving Party as shown by its written records; (iii) becomes known to the Receiving Party from another source and the Receiving Party is not aware that such source is under an obligation to another Person to keep such information confidential; or (iv) is required to be disclosed by the Receiving Party as a result of judicial or administrative process or by other requirements of law. 13. Indemnity. (a) With respect to any Products or Services sold hereunder, the selling party agrees to indemnify and hold the other party and its affiliates and their respective officers, directors, employees and agents, harmless from and against any damages, liabilities, losses, expenses, (including, without limitation, reasonable attorneys' fees) and amounts paid in settlement of any claim, of any kind or nature whatsoever, which may be sustained or suffered as a result of the infringement or alleged infringement of the copyrights or -5- U.S. patents of third parties or the breach by CMI of its represention in the fourth sentence of Section 3.16 of the Purchase Agreement, and to defend, at its expense, any actions, claims or suits against purchasing party based upon such infringement or alleged infringement. If the use of any products furnished hereunder is enjoined as a result of such a suit, the selling party at its option, and at no expense to the other party, shall obtain for the other party the right to use said products, substitute an equivalent product reasonably acceptable to selling party and extend this indemnity thereto, or accept the return of products and reimburse the other party the purchase price thereof, less a charge for reasonable wear and tear. This indemnity does not extend to any suit based upon any infringement or alleged infringement of any patent or copyright to the extent due to the combination of any products furnished by the selling party and other elements not supplied by or on behalf of the selling party nor does it extend to any products to the extent such products infringe as a result of the other party's design or formula. (b) The purchasing party agrees to notify the selling party in writing of any suit. At its request and at its expense the selling party shall have the right to control the defense of said suit. Except with the prior written consent of the purchasing party, no selling party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the purchasing party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such purchasing party of a release from all liability with respect to such claim or litigation. In the event that the purchasing party shall in good faith determine that the conduct of the defense of any claim subject to indemnification hereunder or any proposed settlement of any such claim by the selling party might be expected to affect adversely the purchasing party's tax liability or the ability of the purchasing party to conduct its business, or that the purchasing party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the selling party in respect of such claim or any litigation relating thereto, the purchasing party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the selling party, provided that if the purchasing party does so take over and assume control, the purchasing party shall not settle such claim or litigation without the written consent of the selling party, such consent not to be unreasonably withheld. In the event that the selling party does not accept the defense of any matter as above provided, the purchasing party shall have the full right to defend against any such claim or demand and shall be entitled to settle or agree to pay in full such claim or demand. In any event, the selling party and the purchasing party shall cooperate in the defense of any claim or litigation subject to this Section and the records of each shall be available to the other with respect to such defense. (c) The foregoing Sections 13(a) and (b) state the entire liability of the selling party for patent or copyright infringement. This Section will survive the expiration or earlier termination of this Agreement. -6- 14. Term. This Agreement shall commence on the date first set forth above and shall expire on the second anniversary of the Closing Date unless earlier terminated pursuant to Section 15. 15. Termination. (a) Either party may terminate this Agreement for any material breach of this Agreement by the other party if the party seeking to terminate has specified such breach in writing and such breach has not been cured by the breaching party within thirty (30) days after receipt of the written notice. (b) Termination under this Section will be effected by notice given by the terminating party to the other party. (c) Any termination of this Agreement will not affect any of the rights of either party hereto that arose prior to such termination or any liability resulting from either party's breach of this Agreement. 16. Consequences of Termination. Upon expiration or earlier termination of this Agreement, each party will promptly return to the other all documents, samples and other tangible items containing or representing Confidential Information and all copies thereof, and certify, if requested by the other party, that it has complied with the terms of this sentence. This Section will survive expiration or earlier termination of this Agreement. 17. Sales Convey No Right to Manufacture or Copy. The Products and Services offered for sale hereunder are offered for sale and are sold by each party subject in every case to the condition that such sale does not convey any license, expressly or by implication, to manufacture, duplicate or otherwise copy or reproduce any of the Products or Services, unless expressly provided in such sale. 18. Export Control Compliance. Each party agrees to comply fully with the United States Export Control Administration Regulations, the United States Department of State International Traffic in Arms Regulations and any other United States government regulations applicable to the export or disclosure of Products or Services provided hereunder or Confidential Information hereunder insofar as they may control or limit the sale or use of Products or Services. Each party also agrees to comply fully with the United States Foreign Corrupt Practices Act. 19. Force Majeure. Except for either party's payment obligations to the other party for Products or Services previously delivered or provided hereunder, failure of either party to perform its obligations under this Agreement (including but not limited to failure to make sales or deliveries of Products or Services) shall be excused to the extent that such failure is attributable to any cause beyond the reasonable control of the defaulting party, including, without limitation, acts of God, fires, earthquakes, wars, sabotage, accidents, embargo, riots, labor disputes, actions of any government or -7- governmental agency or failure of same to act where action is required, and the inability of such party to obtain material from its suppliers or to obtain equipment or transportation; and the time during which such party may perform will be extended to coincide with the time performance has been prevented, hindered or delayed as a result of the foregoing. Should either party wish to claim relief from its obligations hereunder by reason of this Section, such party shall give notice to the other party without delay of the occurrence of the event or circumstances in question. 20. Governing Law. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of New York, without giving effect to the conflict of laws rules thereof. The parties hereby agree that this Agreement shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods. 21. Assignment. The Agreement shall not be assignable or otherwise transferable by either party hereto without the prior written consent of the other party, which consent will not be unreasonably withheld. This Agreement will bind and inure to the benefit of the successors and permitted assigns of the parties hereto. References to a party herein also are deemed to be references to any successor or permitted assign of such party. 22. Notices. All notices, consents, approvals, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or delivery or (d) sent by facsimile transmission or telegram. if to L-3, to L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Facsimile: 212/805-5494 Attn: Christopher C. Cambria if to CMI, to California Microwave, Inc. 555 Twin Dolphin Drive Redwood City, California 94065 Facsimile:650/596-6682 Attn: George L. Spillane or, in each case, at such other address as may be specified in writing to the other parties hereto. -8- All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by facsimile or telegram, on the next day following the day on which such facsimile or telegram was sent, provided that a copy is also sent by certified or registered mail. 23. Certain Definitions. All capitalized terms used herein and not defined in this Section shall have the meanings assigned to them herein. When used herein, the following terms shall have the meaning specified below: "include" and "including" shall be construed as if followed by the phrase "without being limited to", "Person" means an individual, a corporation, a joint venture, a partnership, a firm, an association, a limited liability company, a business trust or any other legal entity or any governmental authority or instrumentality. 24. General. (a) It is agreed that each of parties hereto is acting as an independent contractor and nothing contained in this Agreement shall be construed to constitute either as a partner, agent or employee of the other. Neither party is authorized to act for or bind the other except as specifically provided herein. (b) The failure of a party at any time to require performance by the other party of any provision hereof shall in no way affect the right of the party thereafter to enforce same against the other party, nor shall waiver by either party of the breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or as a waiver of the provision itself or as a waiver of a breach of any other provision. (c) If any term or provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, such provisions will be narrowed (or deleted, if necessary) to the minimum extent necessary to make it and the rest of this Agreement enforceable, (d) This Agreement or any provision hereof may not be changed, waived, discharged or terminated orally, but only by a statement in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. (e) This Agreement and the Purchase Agreement constitute the entire agreement between the parties relating to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings of -9- the parties relating thereto. The terms of this Agreement may not be modified except by a writing signed by both of the parties. (f) This Agreement may be executed with counterpart signature pages or in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, (g) The agreements that comprise this Agreement, the Purchase Agreement and any terms and conditions of either party that apply to a sale of products or services hereunder shall have the following order of priority in the event of a conflict between any of them: (i) the Purchase Agreement, (ii) this Agreement and (iii) the terms and conditions of the selling party then in effect with respect to such sale, (h) The headings contained in this Agreement are inserted for reference only and shall not be used to aid in the construction hereof. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. L-3 Communications Corporation By: ---------------------------------- Name: Title: California Microwave, Inc. By: ---------------------------------- Name: Title: -10- SOURCE PRODUCTS PRICE LIST (Schedule 4a) Description STS/PN Quantity Pricing - ----------- ------ -------- ------- ICU 64 Channel Unit 01070-00714 Any $5,500.00 EF Data Modulator, Progeny, XP 01070-A71224-1 Any $5,500.00 EF DATA Not-to-exceed Ku-Band Modulator "Brick" 01070-A68551-1 1-9 (A) VERTICOM 10-24 25-49 50 C-Band U/C 70Mhz "Brick" 01070-A69532-1 1-9 (A) VERTICOM 10-24 25-49 50 (A) To be purchased by L-3 directly from Verticom with EF Data's consent and with EF Data agreeing to arrange with Verticom for L-3 to make such direct purchases. -11- STS-RELATED SCHEDULES TO ASSET PURCHASE AGREEMENT SCHEDULE 1.2 EXCLUDED ASSETS 1. All assets associated with foreign offices of Seller in Singapore and China, other than the bank accounts referred to in Section 2.7(b) of the Agreement. 2. California Microwave Foreign Sales Corporation. 3. Ku-Band and C-Band V90 and V901 converters, EQ 90 equalizer, ARC and Tiger redundancy switches, Verticom, and any intellectual property relating thereto (these products were transferred from the STS division to EFData Corp. several months ago and are included in this schedule for the sake of clarity). 4. Employment Agreement dated September 22, 1995 between Seller and Roger Parsons. 5. Severance Agreement dated April 3, 1997 between Seller and Brian Maloney. 6. Severance Agreement dated May 20, 1997 between Seller and Bruce Strean. 7. Severance Agreement dated May 20, 1997 between Seller and Michael Pinto. SCHEDULE 2.4(a) RETENTION INCENTIVE AGREEMENTS 1. Retention Incentive Agreement dated as of July 1, 1997 between Seller and Brian Maloney. 2. Retention Incentive Agreement dated as of July 1, 1997 between Seller and Bruce Strean. 3. Retention Incentive Agreement dated as of July 1, 1997 between Seller and Michael Pinto. 4. Seller has also entered into Retention Incentive Agreements with the following employees effective as of June 30, 1997: Gene Kelly; Al Nahal; Bill Kinsella; Tom Coyle; Marty Coughlan; Bob Snider; Frank Longo; William Callanan; Roy Shumacker; Alan Henderson; Nick Vidal; Jim Martinolich; Kevin Lawrence; Tim Duffy; William Laziza; Frank Paladino; -1- Gloria Clark-Anderson; Glenn Righter; Fred Hauck; Peter Mackey; Chris Koehler; Jim Feely; Robert Bernard; Steve Urda; Richard Badalament; and John Rusinak. SCHEDULE 3.2(b) OUALIFICATIONS TO DO BUSINESS, GOOD STANDING 1. Seller is a Delaware corporation in good standing under Delaware law. 2. Seller is qualified to do business in the following states: Arizona, California, Delaware, Georgia, Maryland, Massachusetts, New Jersey, New York, Texas and Virginia. SCHEDULE 3.3 CONFLICTS; APPROVALS 1. Violations of Organizational Documents None. 2. Violation of Contracts If the consent to assignment to Buyer of the contracts listed on Schedule 3.11(c) is not obtained before the Closing, then Seller will be in breach of the provisions in such contracts relating to the assignment thereof by Seller. 3. Government Approvals See attachment regarding FCC requirements. Hart-Scott-Rodino filing. -2- Attachment to Schedule 3.3 California Microwave. Inc. -- Satellite Transmission Systems division ("CMT-STS") authorizations (prior FCC approval required for transfer of Experimental and Fixed Satellite licenses): - -------------------------------------------------------------------------------- Call Sign/File No. Service Location Licensee - -------------------------------------------------------------------------------- E891037 Fixed Satellite Haupauge, NY CMI-STS - -------------------------------------------------------------------------------- E891136 Fixed Satellite Haupauge, NY CMI-STS - -------------------------------------------------------------------------------- KA2XMT Experimental Haupauge, NY CMI-STS - -------------------------------------------------------------------------------- KE2XFB Experimental Haupauge, NY CMI-STS - -------------------------------------------------------------------------------- KA-387 Fixed Satellite Melbourne, FL CMT-STS - -------------------------------------------------------------------------------- KA2XUA Experimental Haupauge, NY CMI-STS - -------------------------------------------------------------------------------- SCHEDULE 3.4 SEPTEMBER BALANCE SHEET See attached. -3- California Microwave Inc. -- Satellite Transmission Systems Division @ September 27, 1997
Adjusted September Balance Adjustments September Balance Cash (519,933.68) (519,933.68) 0.00 Accts rec - billed trade 15,033,644.34 15,033,644.34 Accts rec - unbilled trade 431,857.30 431,857.30 Accts rec trade - interco 102,207.88 102,207.88 Employee/other receivables 218,725.80 218,725.80 Allowance - bad debt (506,946.26) (506,946.26) -------------- ------------- -------------- Current receivables 19,189,489.07 0.00 19,189,489.07 Stockroom 3,371,200.88 3,371,200.88 Demo inventory 0.00 WIP/Products 11,259,225.49 11,259,225.49 Progress Payments (3,123,764.77) (3,123,764.77) 0.00 0.00 Finished goods 0.00 0.00 Inventory reserves (2,408,233.41) (2,408,233.41) -------------- ------------- -------------- Inventory 9,098,428.19 0.00 9,098,428.19 Deferred tax assets - current 0.00 Prepaid/other current assets 27,424.74 27,424.74 -------------- ------------- -------------- Total current assets 27,795,408.32 (519,933.68) 28,315,342.00 Property, plant & equipment 21,500,173.56 21,500,173.56 Less accum deprec (14,181,556.36) (14,181,556.36) -------------- ------------- -------------- Net property plant & equipment 7,318,617.20 0.00 7,318,617.20 Net interco corp current - STS 5,518,912.79 5,518,912.79 0.00 Net interco corp prior years - STS (25,675,014.53) (25,675,014.53) 0.00 Inter-division rec (pay) (12,567.82) (12,567.82) 0.00 Intangibles 0.00 0.00 Long term receivables 0.00 0.00 Deposits/other long term assets 19,221.30 19,221.30 -------------- ------------- -------------- Total assets 14,964,577.26 (20,688,603.24) 35,653,180.50
Page 1 of 2 Accounts payable (3,664,232.04) (3,664,232.04) A/P trade - interco (1,449,138.30) (1,449,138.30) Accrued payroll & payroll taxes: Accrued payroll 0.00 0.00 Accrued payroll taxes (283,675.69) (283,675.69) Vacation accrual (556,130.16) (556,130.16) MIP/EIP accrual 0.00 0.00 401k match (127,985.00) (127,985.00) Accrued profit sharing (45,000.00) (45,000.00) Other payroll related (88,189.40) (88,189.40) Other current accrued liabilities: Accrued interest (17,462.31) (17,462.31) Advance payments 0.00 0.00 Accrued restructuring expenses (55,226.53) (55,226.53) Other current accrued liabilities: (1,879,060.97) (1,879,060.97) Reserves: Warranty reserves (758,000.00) (758,000.00) Contract costs reserves 0.00 0.00 Other current reserves 0.00 0.00 Current port long term debt 0.00 0.00 -------------- ------------- -------------- Total current liabilities (8,924,100.40) 0.00 (8,924,100.40) Long term debt (1,630,000.00) (1,630,000.00) Other long term obligations 0.00 -------------- ------------- -------------- Total liabilities (10,554,100.40) 0.00 (10,554,100.40) Paid in capital @ par 0.00 0.00 Add'l paid in capital 0.00 0.00 Prior year retained earnings (6,023,558.38) (6,023,558.38) 0.00 Current yr earnings 1,613,081.52 1,613,081.52 0.00 -------------- ------------- -------------- Total liab & equity (14,964,577.26) (4,410,476.86) (10,554,100.40) -------------- ------------- -------------- -------------- -------------- NET ASSETS (Assets less Liabilities) ($0.00) $25,099,080.10 ============== ==============
Page 2 of 2 SCHEDULE 3.5 LIABILITIES 1. In connection with a sales agreement entered into between Seller and a classified U.S. government entity on September 8, 1988, Seller received a letter dated April 25, 1997 from the federal government making conflicting claims regarding an overpayment. The letter claims an overpayment of approximately $39,000 and an overpayment of $1,026,993. Seller believes that no overpayment was made and is currently presenting accounting records to the federal government to substantiate its position. 2. Patrick & Co. claimed, by letter dated September 18, 1997, that Seller pay it a commission of 2% (equalling approximately $290,000) on the total value of the Contract between the Government of the Islamic Republic of Pakistan and California Microwave-Satellite Transmission Systems dated March 17, 1996, concerning the supply of satellite earth station equipment. Patrick & Co. asserts that it arranged for the customer's financing of the transaction and in return is entitled to a commission promised by Seller. Seller believes that it did not promise a commission and that Patrick & Co. did not successfully arrange the customer financing. 3. Nu Vision Manufacturing claimed $143,702.37 against Seller by letter dated December 31, 1996. This claim arose with respect to Blanket Purchase Order No. 138326, dated January 11, 1995. Seller believes that the claim has no merit. In June 1997, Nu Vision lowered its demand to approximately $70,000, and Seller, at that time, offered to settle for $10,000 in order to clear the matter. Seller has not received any communications from Nu Vision Manufacturing or its counsel since the June, 1997 meeting. 4. In connection with Job Number 6367 in the Sudan, all work has been terminated effective December 3, 1997, due to an Executive Order of President Clinton imposing an embargo against Sudan. Seller has withdrawn all of its personel in the Sudan. Consequently, there is no further activity under the contract. $1,000,000 with respect to this contract was written off in October, 1997. 5. In connection with Job Number 6495 with Romsat, Romsat still has not obtained the necessary financing to purchase the remaining equipment under the relevant contract. If Romsat does not obtain such financing, Seller may have to write off $175,000 of accounts receivable and dispose of the remaining $1.2 million in inventory earmarked for the Romsat project. -4- SCHEDULE 3.6(a) TAXES 1. Income tax returns have not yet been filed in Malaysia for fiscal years 1996 and 1997 and in Singapore for fiscal years 1997. Seller obtained an extension of the due date for both filings in Malaysia to September 1997. Seller is working with its accountants, Ernst & Young, to bring the filings up to date. Seller does not believe that it owes any income tax in either jurisdiction. SCHEDULE 3.7 ABSENCE OF CHANGES 1. Schedule 3.7 In October, 1997, Seller decreased the opening backlog for fiscal year 1998 by $3,617,440. Most of the reduction in backlog is attributable to the following three accounts: The orders with respect to Alphastar (Job 1026) and TeeCom (Alphastar's parent company) (Job 6438) booked on March 21, 1997 and April 11, 1997, respectively, will be reduced by approximately $2.4 million and $341,000, respectively, due to the declaration of bankruptcy by those companies. The order with respect to Onatel (Job 6280) booked on May 12, 1993 will be reduced by approximately $240,000. The customer has stated it does not need the product and Seller is unwilling to risk its personnel in a country engaged in a civil war. 2. Schedule 3.7(a) See attachment. Attached financial data presented in thousands of dollars. -5- ATTACHMENT TO SCHEDULE 3.7(a) California Microwave, Inc. - Satellite Transmission Systems Division Forecast - FY98 as of Nov. 8, 1997 ------ -------- -------- -------- -------- Amounts are in Thousands FY98 FY98 FY98 FY98 FY98 Actual Forecast Forecast Forecast Forecast Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Total ------ -------- -------- -------- -------- ------ -------- -------- -------- -------- Bookings 10,363 25,500 21,900 27,237 85,000 ------ -------- -------- -------- -------- ------ -------- -------- -------- -------- Backlog 37,143 48,698 53,098 57,354 57,354 ------ -------- -------- -------- -------- Sales 10,574 13,945 17,500 22,981 65,000 Total Cost of Sales 9,298 13,702 14,475 19,006 56,481 ------ -------- -------- -------- -------- Gross Margin 1,276 243 3,025 3,975 8,519 ------ -------- -------- -------- -------- R&D 278 374 370 378 1,400 Marketing Dept 1,065 1,144 1,185 1,306 4,700 Administration 976 949 1,020 1,055 4,000 ------ -------- -------- -------- -------- Total Expenses 2,319 2,467 2,575 2,739 10,100 ------ -------- -------- -------- -------- ------ -------- -------- -------- -------- Contribution (1,043) (2,224) 450 1,236 (1,581) ------ -------- -------- -------- -------- SCHEDULE 3.8 LITIGATION 1. No suits instituted by or against CMI with respect to the Business or Assets. 2. Reference is made to the descriptions of the claims described in Schedule 3.5. -6- SCHEDULE 3.9(a) COMPLIANCE WITH LAWS 1. None. SCHEDULE 3.9(b) GOVERNMENTAL APPROVALS AND OTHER CONSENTS 1. Hart-Scott-Rodino filing 2. Reference is made to Schedule 3.3 for FCC licenses of Seller with respect to the Assets and Business. 3. U.S. government approvals to novate contracts referred to in Item 3 of Schedule 3.9(c). SCHEDULE 3.9(c) GOVERNMENT CONTRACTS 1. Contract dated March 17, 1996 between the Government of the Islamic Republic of Pakistan and California Microwave-Satellite Transmission Systems ("CM-STS"). 2. Contract dated July 29, 1993 between CMI-STS and La Empresa Estatald Telecomunicaciones Cuantia (Ecuador) 3. U.S. Government Contracts: a. Contract No.: DAABO7-97-C-A517 Program: GGCL (Government to Government Communications Link) Award Date: 9/30/97 b. Contract No.: (Basic Contract No. is classified) Program: CTF (Commercial Terminal Family) Award Date: 9/14/93 Indefinite Quantity/Indefinite Delivery Contract wth 5 option years c. Open Delivery Orders: No. Award Date 29 8/29/97 d. The following job numbers indicate additional U.S. Government contracts that are classified: 7202, 7226, 7229, 7231, 7233, 7234, 7236, 7237, 7238 and 7240. -7- 4. NATO Contract No: CO-6139-SAT Program: NATO Broadbanding Award Date: 12/21/93 SCHEDULE 3.10 ASSET EXCEPTIONS 1. The real property leased by Seller at 125 Kennedy Drive, Hauppauge, NY 11788 referenced in Schedule 3.18(b) and certain related personal property is subject to a lien and security interest in favor of The Bank of Tokyo Trust Company, as trustee, and the Bank of Tokyo-Mitsubishi, Ltd., San Francisco Branch, and Union Bank of California, N.A., as letter of credit bank, pursuant to an Indenture of Trust dated as of November 1, 1987 between the Trustee and the Suffolk County Industrial Development Agency, as issuer and a Mortgage and Security Agreement of even date therewith and related documents. 2. The assets of Seller are also subject to a lien in favor of BankAmerica Business Credit, Inc., as lender, under a Loan and Security Agreement dated June 30, 1997. 3. [deleted] 4. Certain copy machines, a postage meter and a truck used in the Business are leased by the Seller. SCHEDULE 3.11(a) CONTRACTS ORAL CONTRACTS: none. 1. CUSTOMER AGREEMENTS See attached list entitled "Open Jobs Listing as of December 15, 1997". 2. VENDOR PURCHASE ORDERS See attachment. 3. DISTRIBUTOR AGREEMENTS See attachment. -8- 4. REPRESENTATIVE/CONSULTANT AGREEMENTS See attachment. 5. NON-DISCLOSURE/CONFIDENTIALITY AGREEMENTS See attachment. 6. OEM AGREEMENT OEM Agreement dated April 27, 1995, by and between Satellite Transmissions Systems, Inc. and Harris Corporation. 7. VENDOR AGREEMENTS a. Original Equipment Manufacturers Agreement dated May 1, 1997 between Leitch Incorporated and California Microwave, Satellite Transmission Systems b. Original Manufacturing Purchase Agreement dated August 15, 1996 between Satellite Transmission Systems, Inc. and Sal-Ma Instrument Corporation c. New Volume End User Agreement No. AMJ88 dated May 25, 1997 between Hewlett-Packard and STS d. Purchase Agreement dated March 15, 1995 between Andrew Corporation and California Microwave, Inc. ("CMI") e. Value Added Reseller Agreement for Television Products Agreement dated June 3, 1996 between Tektronix, Inc. and Satellite Transmission Systems, Inc. f. Product Sales Agreement dated May 21, 1997 between California Microwave and Time Electronics g. Sales Distribution Agreement dated July 1, 1994 between Te1ecommunications Techniques Corporation and Satellite Transmission Systems, Inc. h. Product Sales Agreement dated February 28, 1997 between California Microwave and TTI Inc. i. Product Sales Agreement dated May 21, 1997 between California Microwave and TTI, Incorporated j. Total amounts due under purchase orders for any purchasers with respect to which STS currently owes more than $100,000. See Attachment A. -9- 8. LICENSE AGREEMENTS a. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI. b. Lynxx Software Royalty Agreement dated September 22, 1997 between CM-STS, SPACEHAB, Inc. and Crosslink, Inc., including a License Agreement dated September 22, 1997 from CM-STS to SPACEHAB, Inc. and a License Agreement dated September 22, 1997 from SPACEHAB, Inc. to CM-STS. c. Graphical Monitor and Control Software License Agreement (Seller has entered into this agreement with every customer in connection with the sale of satellite earth station networking monitoring and control devices). d. Licensing Agreement dated July 19, 1995 between International Mobile Satellite Organization and Mobile Satellite Products Corporation. 9. EMPLOYMENT-RELATED AGREEMENTS a. Employment Agreement dated September 22, 1995 between Seller and Roger Parsons. b. Severance Agreement dated July 1, 1997 between Seller and Brian Maloney. c. Severance Agreement dated May 20, 1997 between Seller and Bruce Strean. d. Severance Agreement dated May 20, 1997 between Seller and Michael Pinto. e. Retention Incentive Agreement dated as of July 1, 1997 between Seller and Brian Maloney. f. Retention Incentive Agreement dated as of July 1, 1997 between Seller and Bruce Strean. g. Retention Incentive Agreement dated as of July 1, 1997 between Seller and Michael Pinto. h. Seller has also entered into Retention Incentive Agreements with the following employees effective as of June 30, 1997: Gene Kelly; Al Nahal; Bill Kinsella; Tom Coyle; Marty Coughlan; Bob Snider; Frank Longo; William Callanian; Roy Shumacker; Alan Henderson; Nick Vidal; Jim Martinolich; Kevin Lawrence; Tim Duffy; William Laziza; Frank Paladino; Gloria Clark-Anderson; Glenn Righter; Fred Hauck; Peter -10- Mackey; Chris Koehler; Jim Feely; Robert Bernard; Steve Urda; Richard Badalament; and John Rusinak. i. Every employee of Seller whose work is related to the Business or the Assets has signed a Confidentiality agreement upon commencing employment with Seller. 10. OTHER AGREEMENTS a. Reference is made to the ABN AMRO Agreement, BankAmerica agreement and Bank of Tokyo Mortgage Agreement and related agreements identified in Schedule 3.10. b. Lease dated November 7, 1996 between SIMRAM Realty Corp. and Seller with respect to warehouse on 65 Commerce Street, Hauppage, NY 11788. c. Guarantee dated January 17, 1995 pursuant to which California Microwave, Inc. guaranteed the obligations of STS with respect to the Purchase Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and STS, as amended on November 19, 1995. d. Cooperation and Project Funding Agreement dated June 15, 1994 between the Israel-United States Binational Industrial Research and Development ("BIRD") Foundation, Binational Industrial Research and Development Foundation, Tadiran Ltd. Communications Systems Division and Satellite Transmissions Systems, Inc. -11- ATTACHMENT A TO SCHEDULE 3.11(a) OPEN PURCHASE ORDERS EXCEEDING $1OO,OOO See attachment. Open Commitments for Suppliers over $100,OOO - -------------------------------------------------------------------------------- SUPPLIER ESTIMATED - -------------------------------------------------------------------------------- OPEN COMMITMENTS - -------------------------------------------------------------------------------- 12/10/97 - -------------------------------------------------------------------------------- Andrew 226,382 - -------------------------------------------------------------------------------- CPI/Satcom 282,225 - -------------------------------------------------------------------------------- EF DATA 877,412 - -------------------------------------------------------------------------------- GE American 396,000 - -------------------------------------------------------------------------------- Hughes Networks 318,000 - -------------------------------------------------------------------------------- Microsource 605,000 - -------------------------------------------------------------------------------- Nera 1,644,998 - -------------------------------------------------------------------------------- Netrix 123,808 - -------------------------------------------------------------------------------- Sierra Com 266,400 - -------------------------------------------------------------------------------- Siemens 812,870 - -------------------------------------------------------------------------------- TOTAL 5,553,095 ================================================================================ Page 1
STS OPEN JOB LISTING AS OF DECEMBER 15, 1997 ==================================================================================================================================== * - ------------------------------------------------------------------------------------------------------------------------------------ CONTRACT CUSTOMER REQ * CONTR. - ------------------------------------------------------------------------------------------------------------------------------------ JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ SYSTEMS/DOMESTIC - ------------------------------------------------------------------------------------------------------------------------------------ 1034 GE SPACENET KU BAND DIGITAL VIDEO E/S $60,305 TC PB L.O.I. 10/16/97 12/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ 1061 MFS NETWORK TECH. 6.1M & 2 TRANSP. $1,701,458 TC CM LOI 10/15/96 - ------------------------------------------------------------------------------------------------------------------------------------ 1073 AMERICAN MOB SAT GMACS TRAINING $9,795 TC CM 9097-0 9/18/96 - ------------------------------------------------------------------------------------------------------------------------------------ 1074 RCN 3.7M EARTH STATION $190,771 TC CM RCN INTERNATIONAL 8/1/97 - ------------------------------------------------------------------------------------------------------------------------------------ 1079 HNS/FORD DOMESTIC-CANADIAN SPLIT $263,529 TC PB 541842 10/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ 1080 AT&T LENOX LNA SYSTEM W/INSTALLATION $98,780 TC PB WV-8-67479 10/31/97 - ------------------------------------------------------------------------------------------------------------------------------------ 1081 BT NORTH PROJECT PLANET $992,081 TC PB FAX SEPT 12 1997 5/29/97 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ SYSTEMS/DOMESTIC - SPARES - ------------------------------------------------------------------------------------------------------------------------------------ 1755 RAYTHEON MISC. SPARE PARTS $132,474 8770TL7537 3/12/98 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ R&D - ------------------------------------------------------------------------------------------------------------------------------------ SEE P/A FOR DETAILS ON AUTHORIZED PROGRAM/BUDGET 4000 VARIOUS JC MP REQUIREMENTS - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ SCAMP - ------------------------------------------------------------------------------------------------------------------------------------ SEE P/A FOR DETAILS ON AUTHORIZED PROGRAM/BUDGET 4500-4800 INVENTORY JC MP REQUIREMENTS - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ GCE INVENTORY (5200-5299) - ------------------------------------------------------------------------------------------------------------------------------------ SEE P/A FOR DETAILS ON AUTHORIZED PROGRAM/BUDGET 5200-5299 STS INVENTORY JC MP REQUIREMENTS - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ COMPANY CONFIDENTIAL - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ GCE - ------------------------------------------------------------------------------------------------------------------------------------ 54046 TELECOM INTL PROGENY UNITS $105,280 GCA MP VMT-180 9/1/97 - ------------------------------------------------------------------------------------------------------------------------------------ 54276 TELECOM MALAYSIA EQUALIZER $39,525 GCA MP 010245 11/18/97 - ------------------------------------------------------------------------------------------------------------------------------------ 54316 TSC ITELESAT CORP. PROGENY XP 63,083 GCA MP TSC-97/030 10/31/97 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ * - ------------------------------------------------------------------------------------------------------------------------------------ CONTRACT CUSTOMER REQ * CONTR. - ------------------------------------------------------------------------------------------------------------------------------------ JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 54476 HARRIS/TV RECORD PROGENY UNITS $150,335 GCA MP VPK7010504 12/6/97 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ X-SAT SYSTEMS (5900-5999) - ------------------------------------------------------------------------------------------------------------------------------------ 5997 STS (2) X-SATS $0 GCA CK N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ 5998 STS X-SAT INV. RELEASE $0 GCA CK N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ SYSTEMS/FOREIGN COUNTRY - ------------------------------------------------------------------------------------------------------------------------------------ 6300 MOROCCO ONPT 9M EUTELSAT E/S $2,156,733 TC RF 214-3-6-583 10/1/93 - ------------------------------------------------------------------------------------------------------------------------------------ 6302 ETISALAT/UAE INMARSAT EARTH STAT. $1,732,292 TC RF CD/178H/92/STS * * 3/94 - ------------------------------------------------------------------------------------------------------------------------------------ 6308 SINGAPORE TELEC V90s & MISC. EQUIPMENT $16,523,144 TC JG N35/450244424 * * SHIPPED - ------------------------------------------------------------------------------------------------------------------------------------ 6313 EMETEL/ECUADOR DOMSAT $13,447,526 TC CM TBD * SHIPPED - ------------------------------------------------------------------------------------------------------------------------------------ 6320 THORN/ENGLAND MADLEY UPGRADE (1,2,3) $2,069,745 JG 633245 1/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6327 EMETEL/ECUADOR DIGITALIZATION OF GALAPAGOS $949,004 TC CM LPA * SHIPPED E/S - ------------------------------------------------------------------------------------------------------------------------------------ 6338 AT&T ELSALVADOR GCE EQUIPMENT $1,370,817 TC CM LTR DTD 8/26/94 * 9/94 - ------------------------------------------------------------------------------------------------------------------------------------ 6347 SINGAPORE TELCOM HBO VIDEO UPGRADE $3,554,121 TC JG N35/45027895 * * SHIPPED - ------------------------------------------------------------------------------------------------------------------------------------ 6364 BRITISH TELECOM REMOTE M&C $148,059 PM PB 650603 * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6368 CAPE VERDE TELECOM SATELLITE E/S EQUIPMENT $1,251,920 TC JG CONTRACT 7/95 - ------------------------------------------------------------------------------------------------------------------------------------ 6369 TELEFONICA/SPAIN EARTH STATION $2,057,075 TC CM 38432195 8/95 - ------------------------------------------------------------------------------------------------------------------------------------ 6370 TELEFONICA/SPAIN TRANSPORTABLE $599,508 TC CM 40483/95 10/95 - ------------------------------------------------------------------------------------------------------------------------------------ 6371 EMBRATEL KU-BAND & REMOTES $5,995,892 TC CM DRT-018/97Y 6/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6399 IMPSAT/ARGENTINA IMPSAT ARGENTINA $866,029 TC CM 41440 * 6/95 - ------------------------------------------------------------------------------------------------------------------------------------ 6400 SAUDI TEP - 6 ENG/PUBS/D&D $29,476,551 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6401 SAUDI TEP - 6 RIYADH NO.1 $0 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6402 SAUDI TEP - 6 INTELSAT GCE $0 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6403 SAUDI TEP - 6 ADDITIONAL APPS $0 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6404 SAUDI TEP - 6 ARABSAT $0 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6405 SAUDI TEP - 6 INMARSAT $0 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6406 SAUDI TEP - 6 INMARSAT $0 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6407 SAUDI TEP - 6 INSTALL TEST O & M $6,244,528 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6408 SAUDI TEP - 6 DCME $11,250,000 TC RF CONTRACT 12/91 * * 9/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6411 IMPSAT/ECUADOR ECUADOR F3 STATION $237,288 TC CM 004-95 * TBD - ------------------------------------------------------------------------------------------------------------------------------------ 6422 POSTS & TELE DALIN- EQUIPMENT & SERVICES $549,830 JG LITC-HY961015 12/10/96 CHINA - ------------------------------------------------------------------------------------------------------------------------------------ 6423 POSTS & TELE EQUIPMENT & SERVICES $879,998 JG P96-8174 12/10/96 MONGOLIA - ------------------------------------------------------------------------------------------------------------------------------------ 6428 CSC-SHINAWATRA RF UPLINK & C BAND $3,095,452 JG CONTRACT DTD 12-96 * 4/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6429 SPACE COMM. CORP. DATA DIST. E/S $568,692 JG 10694 * 6/10/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6430 REUTERS SA GENEVA EARTH STATION $1,331,002 TC PB CHP1006(AMEND 2) * * 7/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6434 IMPSAT - COLUMBIA 7.2 KU-BAND $327,121 TC CM 019-97 4/1/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6436 IMPSAT - ARGENTINA UP/DOWN CONVERTERS $81,480 TC CM 50188 & 50152 6/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6437 SAMSUNG AMERICA MBC VIDEO NETWORK $847,021 TC JG CK70021 5/20/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6439 CNTPA - BEIJING, 20M, 7TH IDR, KUBAND $300,683 JG 97QFKE41B1703-5U * * 9/10/97 CHINA - ------------------------------------------------------------------------------------------------------------------------------------ 6452 OTE-GREECE F3 STATION $1,168,603 TC CM 7525 9/95 - ------------------------------------------------------------------------------------------------------------------------------------ 6463 TIME TEL/MALAYSIA EARTH STATIONS-9M $3,626,605 TC JG P95/8/164 SHIPPED - ------------------------------------------------------------------------------------------------------------------------------------ 6471 STAR TV/HONG KONG KU&C BAND EXT VIDEO $2,380,779 TC JG CONTRACT 4/96 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ * - ------------------------------------------------------------------------------------------------------------------------------------ CONTRACT CUSTOMER REQ * CONTR. - ------------------------------------------------------------------------------------------------------------------------------------ JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 6472 IMPSAT/ARGENTINA IMPSAT ARGENTINA $543,524 TC CM 41440 4/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6473 BEZEQ STANDARD A EARTH STA. $1,647,933 TC PB 07/93/060/0 * * 6/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6474 OTE GREECE STANDARD A EARTH STA. $2,247,212 TC CM 7560 8/30/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6475 ITS SDN BHD ITS/RETAKEL CONTRACTS $732,126 TC JG 10525 OPEN - ------------------------------------------------------------------------------------------------------------------------------------ 6481 TELEFONICA/SPAIN DBS U/C SUBSYSTEM $228,352 TC CM 78720/97 TBD - ------------------------------------------------------------------------------------------------------------------------------------ 6485 GOV'T OF PAKISTAN PHASE II SATCOM NETWORK $14,500,000 TC RF NLC-3841B 9/98 - ------------------------------------------------------------------------------------------------------------------------------------ 6486 IMPSAT HPA 600W $39,855 TC CM 42359 3/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6488 EMPRESA ESTATAL DE DOMSAT EXPANSION NET. $4,948,693 TC CM TBD 6/20/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6491 LOCKHEED MARTIN CHINA STAR-1 TT&C STA. $2,821,534 PM RF GGMS53502 4/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ 6495 ROMSAT/ROMANIA 11M E/S HUB AND REMOTES $3,136,343 TC JG CONTRACT 8/30/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6496 EMBRATEL SWITCH COMB. SYSTEM $498,716 TC CM 33530486/0001-29 10/25/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6498 O'CONNOR'S SINGAPORE BKT-6F & BKT-7F UPGRADE $622,983 JG 22S/70370 11/22/96 - ------------------------------------------------------------------------------------------------------------------------------------ 6499 CHAINA NAT.POSTAL & CHINA MPT-DOMSAT $5,296,943 JG 96QFKE/41D1904US 12/97 TELEC. - ------------------------------------------------------------------------------------------------------------------------------------ 7300 LINK COMMUNICATION REMOTE VSAT & HUB STA. $521,842 TC JG LC-P0970406REV06 9/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7302 TODAY'S TRADING UPLINK/DOWNLINK $191,450 TC JG 3825 AND 3826 11/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7303 TELEFONICA V901 U/C'S $62,317 TC CM 675054 1/15/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7304 HGS FORD PERFORMA SPARES $87,273 pb 540093 2/2/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7305 IMPSAT-ARGENTINA TIGER ASSEMBLY $168,598 CM 50480 2/28/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7306 SARAH VISION KU-BAND TV UPLINK E/S $1,486,651 TC RF SARA/PRS/7097 6/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7307 REUTERS LTD TLI GMACS UPGRADE $7,800 PB 5500105183 12/24/97 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ CONSIGNMENT - ------------------------------------------------------------------------------------------------------------------------------------ 8000 VARIOUS DEMOS, LEASES, ETC. ALL - N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ REPAIRS - ------------------------------------------------------------------------------------------------------------------------------------ 8200-8799 NON-WARRANTY REPAIRS N/A SU N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ 8800-8899 NON-WARRANTY REPAIRS N/A SU N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ 8900-8999 NON-WARRANTY FIELD SVC N/A SU N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ 9000-9899 WARRANTY REPAIRS N/A SU N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ 9900-9999 WARRANTY FIELD SERVICE N/A SU N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ INTERNATIONAL SPARES - ------------------------------------------------------------------------------------------------------------------------------------ 6532 ACUMEN DEQ-703 $4,950 TC PD SA040/97 4/14/98 - ------------------------------------------------------------------------------------------------------------------------------------ 65216 VSNL CRYSTAL OSCILLATORS $5,885 TC PD VSN/HQ/COM/IMP 12/1/97 - ------------------------------------------------------------------------------------------------------------------------------------ 65256 PHILCOMSAT OSCILLATOR $20,250 TC PD 26897 1/21/98 - ------------------------------------------------------------------------------------------------------------------------------------ 65266 ARMENIAN TEL. MISC. SPARE PARTS $25,983 TC PD USL 004 2/15/98 - ------------------------------------------------------------------------------------------------------------------------------------ 65276 TELESAT MISC. SPARE PARTS $191,948 TC PD TSE/97/038 2/16/98 - ------------------------------------------------------------------------------------------------------------------------------------ 65296 HARIFF CRYSTALS $24,419 TC PD 105/TELKOM/1X/97 1/22/98 - ------------------------------------------------------------------------------------------------------------------------------------ 65316 ACUMEN MISC. SPARE PARTS $15,843 TC PD SA039/97 3/14/98 - ------------------------------------------------------------------------------------------------------------------------------------ 6968 PAKISTAN SPARES/MAINT. $438,571 TC PD NLC-3841-A 8/1/97 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ GOVERNMENT USA - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ * - ------------------------------------------------------------------------------------------------------------------------------------ CONTRACT CUSTOMER REQ * CONTR. - ------------------------------------------------------------------------------------------------------------------------------------ JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 7121 BDM SPACE SEGMENT $1,774,172 RF 02S20015 10/31/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7147 NACISA BRD BNDING OF SATCOM $11,003,779 RF CO-6139-SAT 4/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7202 DOD ENGINEERING SERVICES $50,000 RF CLASSIFIED 9/30/96 - ------------------------------------------------------------------------------------------------------------------------------------ 7208 NATO BROADBANDING SPARE PTS $1,031,637 RF CO-6139-SAT 9/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7226 DOD REPAIR SERVICES $0 RF CLASSIFIED 1/7/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7229 DOD CT-9C CONVERSION KIT $9,526 RF CLASSIFIED 7/25/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7231 DOD CT-3K REDUNDANT SYSTEM $36,630 RF CLASSIFIED 9/11/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7233 DOD MISC. EQUIPMENT $80,027 RF MALONE1997-1700 7/18/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7234 DOD DEHYDRATORS $7,086 RF CLASSIFIED 10/4/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7238 DOD CT-7C TERMINALS $857,014 RF DO 29 12/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7239 DFAF COLUMBUS CTR GGCL TERMINAL $1,565,337 RF DAAB0797CA517GCL 2/28/98 - ------------------------------------------------------------------------------------------------------------------------------------ 7240 DOD ENGINEERING SERVICES $50,000 RF CLASSIFIED 9/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ GOVERNMENT SPARES - ------------------------------------------------------------------------------------------------------------------------------------ 7704 U.S. GOV'T CONTRACT OSCILLATOR 100 MHZ $4,360 PD MDA907-97-M-Q626 9/25/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7714 CMI/GCS MISC. SPARE PARTS $36,500 PD 7090 10/31/97 - ------------------------------------------------------------------------------------------------------------------------------------ 7715 CMI/GCS UNIVERSAL SYSTEMS CONTR. $16,000 PD 7117 12/17/97 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ MOBILESAT - ------------------------------------------------------------------------------------------------------------------------------------ 22228 O'GARA 10-32 VDC OPTION (DC-1) $112,150 GCA MP OSN238 6/20/97 - ------------------------------------------------------------------------------------------------------------------------------------ 22250 PT IDAH/INDONESIA LYNXX $27,600 GCA MP 024/VI/IBM/97 7/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ 22257 UNIMESA LYNXX CABLE ASSY $300 GCA MP 2466/1997 8/29/97 - ------------------------------------------------------------------------------------------------------------------------------------ 22275 REMOTE SAT. SYS. 10-32 VDC OPTION (DC01) $109,336 GCA MP P7060A 12/19/97 - ------------------------------------------------------------------------------------------------------------------------------------ 22278 73 COMM. TOKO VAST P DIPITAL $17,850 GCA MP PB26 11/21/97 - ------------------------------------------------------------------------------------------------------------------------------------ 22279 FROTRONICS LYNXX $20,700 GCA MP 97-447 10/17/97 - ------------------------------------------------------------------------------------------------------------------------------------ 22280 OMNES LYNXX & RAMK-50 $20,670 GCA MP 14204060PM 11/13/97 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Prepared by: A.Conte - ------------------------------------------------------------------------------------------------------------------------------------
CM-SATELITE TRANSMISSION SYSTEMS DIVISION SYSTEMS REPRESENTATIVE/CONSULTANT AGREEMENT
- ------------------------------------------------------------------------------------------------------------------------------------ Territory Name/Address Contact Name/Tel. # Eff. Exp. Status Exclusive(E) Compensation Date Date Nonexclusive(NE) - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Vigitec Alex Dekoninck 1/1/97 1/1/98 Complete. N/E Territory 5% of Sale Rue de la Gremouillette 2C T:32-2-240-9370 1130 Bruxelles F:32-2-216-0127 - ------------------------------------------------------------------------------------------------------------------------------------ Brazil LINKSAT Eldad Eitelberg 5/31/97 5/31/98 Complete. N/E Project 5% of Sale Sistemas de Comunicacao T: +55-11-886- Specific Ltda. 1577/78/79 Rua Coronel Oscar Porto F: +55-11-886- 813Conj 101-102 1589 Sao Paulo, Brazil 04003-002 - ------------------------------------------------------------------------------------------------------------------------------------ Bulgaria Racom, LTD Nedju Todorov 7/1/97 7/1/98 Complete. N/E Territory 5% of Sale Ljulio PO Box 87, T:011-359-2-270446 Sofia, 1336 Bulgaria - ------------------------------------------------------------------------------------------------------------------------------------ China DATACOM ENTERPRISES Tsui Yuk Kar 10/1/97 10/1/98 Complete. N/E Territory 7% of Sale 8/F On Lee Building T: +85-2-2384-3686 545 Nathan Road F: +85-2-2384-1102 Kowloon, Hong Kong - ------------------------------------------------------------------------------------------------------------------------------------ Colombia CONSULTORIA Y SERVICIOS Carlos A. Moreno 1/1/97 1/1/98 Complete. N/E Project 5% of Sale TECNICOS Gomez Specific Calle 122 No. 8A-18 Of.203 T: +571-620-3978 Bogota, Colombia F: +571-620-1760 - ------------------------------------------------------------------------------------------------------------------------------------ Costa WORLD COM Valentin R. 1/1/97 1/1/98 Complete. E Project 12% of Sale Rica La Sabana, Edif. No. 3 Hornvilleur Specific 2 do. piso T: +506-220-3024 San Jose, Costa Rica F: +506-220-3186 - ------------------------------------------------------------------------------------------------------------------------------------ Costa THE CHARLES GROUP, INC. Charles F. Scott 4/1/97 4/1/98 Complete. N/E Project 10% of Sale Rica USA F: 1-508-480-8798 Specific 218 Boston Road V: 1-508-485-6959 Southborough, MA 01772 - ------------------------------------------------------------------------------------------------------------------------------------
Page 1 12/9/97 * = Agreement has expired - needs to be reviewed. COMPANY CONFIDENTIAL CM-SATELLITE TRANSMISSION SYSTEMS DIVISION SYSTEMS REPRESENTATIVE/CONSULTANT AGREEMENT
- ----------------------------------------------------------------------------------------------------------------------- Territory Name/Address Contact Name/Tel. # Eff. Exp. Status Date Date - ----------------------------------------------------------------------------------------------------------------------- Ecuador DIGITEC CIA, LTDA Jaime Jaramillo 11/1/96 11/1/97 Sent out extension Calle El Heraldo T: +593-2-430-373/374 letter, awaiting fully 121 y El Dia F: +593-2-443-782 executed copy. Quito, Ecuador - ----------------------------------------------------------------------------------------------------------------------- Egypt ARAB ENGINEERING & DIST. Ihab Lebeta 1/1/97 1/1/98 Complete. 21 El Saray El Kobra Street T: 20-2-354-4028/356-0791 Garden City Cairo, Egypt F: 20-2-355-8120 - ----------------------------------------------------------------------------------------------------------------------- India GAURAV EXPORTS Gaurav Shawhney 4/11/97 4/11/98 Complete. 34 Link Rd T: +91-11-683-5536 Lajpat Nagar III F: +91-11-326-3278 New Delhi, 110024 India - ----------------------------------------------------------------------------------------------------------------------- Israel LINKCOM Elie Levy 1/1/95 Open* Sent agreement out 14 Hayetzira St. T: +972-3-752-1425 to be signed, 9/25. Ramat-Gan F: +972-3-575-4031 Israel 52521 - ----------------------------------------------------------------------------------------------------------------------- Jordan MAY ELECTRICAL ENG. Walid M. Yousef 12/13/95 12/13/97 Need to verify if we P.O. Box 815406 Haia Tal are renewing? Amman, Jordan T: +962-6-672-640 F: +962-6-686-026 - ----------------------------------------------------------------------------------------------------------------------- Korea SAMSUNG CORP. J.H. Lee 8/1/97 8/1/98 Complete. 250, Tae-Pyung-Ro, 2 Ga, Y.S. Ryu Chungku T: 82-2-751-3382 Seoul, Korea - ----------------------------------------------------------------------------------------------------------------------- Lebanon & TASSOCO S.A.R.L. T/F: +961-1-203531 11/1/97 11/1/98 Complete. Syria Transorient Bank Bldg. /203745/203572 5th Fl., President Sarkis Ave. Ashrafieh - Beirut, Lebanon - -----------------------------------------------------------------------------------------------------------------------
- --------------------------------------------- Territory Exclusive(E) Compensation Nonexclusive(NE) - --------------------------------------------- Ecuador E Territory 5% of Sale - --------------------------------------------- Egypt E Territory 5% of Sale - --------------------------------------------- India E Project Specific 7% of Sale - --------------------------------------------- Israel N/E Territiory 5% of Sale - --------------------------------------------- Jordan E Project Specific 5% of Sale - --------------------------------------------- Korea E-Territory/ 6% of Sale Lynxx/Progeny N/E- Korean Military - --------------------------------------------- Lebanon & N/E Territory 5% of Sale Syria - --------------------------------------------- Page 2 12/9/97 * = Agreement has expired - needs to be reviewed. COMPANY CONFIDENTIAL CM-SATELLITE TRANSMISSION SYSTEMS DIVISION SYSTEMS REPRESENTATIVE/CONSULTANT AGREEMENT
- ------------------------------------------------------------------------------------------------------------------------------------ Territory Name/Address Contact Name/Tel. # Eff. Exp. Status Exclusive(E) Date Date Nonexclusive(NE) - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia KRIS HEAVY ENGR. & CONST. T: +603-282-3950/3895 2/1/97 2/1/98 Complete. E Project Specific No. 24-3 Jalan l/82B F: +603-282-3902 Bangsar Utama 59000 Kuala Lumpur, Malaysia - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan TECHMAN INT'L CORP. Dr. M. Mahmud Awan 1/1/97 1/1/98 Complete. E Territory Techman Center Rt 20 T: +508-248-3211 Charlton City, Mass 01508-0727 F: +508-248-3113 - ------------------------------------------------------------------------------------------------------------------------------------ Romania TELESPEED OPS, INC. Eugene Pascal 10/1/96 10/1/97 Sent extension letter E Project Specific 61-32 165th Street T: 718-460-4403 to be Flushing. N.Y. 11365 F: 718-460-0697 signed.(10/1/97) - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia ABDULLAH BUGSHAN Abdullah Bugshan 7/17/94 7/17/98 Complete. E Project Specific Bugham Building T: +966-1-478-7711 Airport St. F: +966-1-477-4225 P.O. Box 80 - ------------------------------------------------------------------------------------------------------------------------------------ Sudan JABROKE ENG. LTD Dr. A Kaboash 7/6/97 7/1/98 Complete. E Project Specific 19 Great Newport St. T: +0171-499-8773 London, England WC2H7JE F: +0171-408-0749 - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan TRANSCONTINENT ENTERPRISE Jason Lee 4/1/96 4/1/97 Sent extension letter E Project Specific CO. T: +886-2-6279260 to be signed. F: +886-2-7996910 - ------------------------------------------------------------------------------------------------------------------------------------ Thailand TELESAT CORP. CO. T: +66-2-682-6111 1/15/97 1/15/98 Complete, Need to N/E Project Specific 900/9 SVOA Tower F: +66-2-682-6300 verify if we are RAMA III Rd. Bangpongpang, renewing? Yannawa, Bangkok 10120, Thailand - ------------------------------------------------------------------------------------------------------------------------------------ Turkey HABERLESME Onder Guven 10/1/96 10/1/97 Sent extension letter E Territory TELEKOMUNIKASYON T: +90-4-440-9647 to be signed. Rafet Canitez Caddesi F: +90-4-440-9749 Akin 1 Apt. 2/63 06450 Oran - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------- Territory Compensation - -------------------------- Malaysia 5% of Sale - -------------------------- Pakistan 10% of Sale - -------------------------- Romania 3% of Sale - -------------------------- Saudi Arabia - -------------------------- Sudan 5% of Sale - -------------------------- Taiwan 5% of Sale - -------------------------- Thailand 5% of Sale - -------------------------- Turkey 5% of Sale - -------------------------- Page 3 12/9/97 * = Agreement has expired - needs to be reviewed. COMPANY CONFIDENTIAL CM-SATELLITE TRANSMISSION SYSTEMS DIVISION PRODUCTS DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
- ------------------------------------------------------------------------------------------------------------------ Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Products Date Date (NE)Nonexclusive - ------------------------------------------------------------------------------------------------------------------ Argentina TECHNOLOGY GROUP Alejandro Russo 7/1/97 7/1/98 E- Progeny VSLXIB Gral Guido 2343 T: 54-1-747-6911 N/E- Lynxx (1643) BeccarBuanos Aires, F: Same Argentina - ------------------------------------------------------------------------------------------------------------------ Australia COMSYST (AUSTRALIA) Neville Lee 1/10/96 12/31/97 NE VSLXIB PTY LTD T: + 61-2-878-1188 10 Byfield Street F: + 61-2-878-5622 North Ryde NSW, Australia - ------------------------------------------------------------------------------------------------------------------ California COLLINS MARINE CORP. Essie Collins 7/1/94 Open N/E VSLXIB 1017 Grandview Drive Mike Johnson San Francisco, CA 94080 T: 1-415-588-9806 T: 1-415-588-9802 F: 1-4I5-588-9303 - ------------------------------------------------------------------------------------------------------------------ California REMOTE SATELLITE Rob Rosen 1/15/96 12/31/97 N/E VSLXIB USA SYSTEMS T: 1 + 415-256-8199 INTERNATIONAL F: 1 + 415-256-8198 1010 Lootens Place #17 San Rafael, CA 94901 - ------------------------------------------------------------------------------------------------------------------ Canada TD COMMUNICATIONS Bob Patterson 10/13/94 Open* N/E VSLXIB 1007H-5th Avenue, NE Victor Robins Calgary, Alberta Dean White Canada T2E 6W1 Larry Grieve T: 1+403-274-4663 F: 1+403-274-4666 - ------------------------------------------------------------------------------------------------------------------ France TD COM Patrick Gibassier 3/26/93 Open* N/E VSLXIB 3 Avenue des Erables Monique Faudrerre Zac De La Butte Gayen Pierre Bous 94440 Santeny, France T: 4044-5600 F: 4044-5603 1-403-735-6063 - ------------------------------------------------------------------------------------------------------------------ Germany ELNA GmbH Jan Evers Bernhard von 3/1/94 Open* N/E VSLXIB 2084 Rellingen bei Hamburg Dobro Wolski Siemenstrasse 35 Klaas Schlenkermann Germany Uwe Lamprecht T: +49-4101-301251 F: +49-4101-301214 - ------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------- Territory Status Compensation - ---------------------------------------------------- Argentina Complete Representative 10% Commission - ---------------------------------------------------- Australia Complete 20% Discount - ---------------------------------------------------- California Need to terminate 20% Discount (HOLD) Clear up balance. - ---------------------------------------------------- California Sent Application for 20% Discount USA Renewal 4/97, Sales Rep to verify status of application. On Hold. - ---------------------------------------------------- Canada Sent Application for 20% Discount Renewal 4/97. Sales Rep to verify status of application. - ---------------------------------------------------- France Sent Application for 20% Discount Renewal, 4/97, Sales Rep to verify status of application. - ---------------------------------------------------- Germany Sent Application for 20% Discount Renewal, 4/97. Sales Rep to verify status of application. - ---------------------------------------------------- VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and Accessories. * = Agreement has expired - needs to be reviewed. Page 1 12/9/97 COMPANY CONFIDENTIAL CM-SATELLITE TRANSMISSION SYSTEMS DIVISION PRODUCTS DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
- ------------------------------------------------------------------------------------------------------------------- Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Products Date Date (NE)Nonexclusive - ------------------------------------------------------------------------------------------------------------------- Houston, TX ABLE COMMUNICATIONS Ed Mallet 6/22/95 12/31/96 N/E VSLXIB USA CO. Mark Bujnock 6214 W. Broadway T: 1 + 713-435-9800 Pearland, TX 77581 F: 1 + 713.485-8230 - ------------------------------------------------------------------------------------------------------------------- Houston, TX FROTRONICS, INC. Jack Frost 3/26/93 Open N/E VSLXIB USA 6142 S. Loop E. Brian Patrick Houston, TX 77087 T: 1 + 713-644-6445 F: 1 + 713-644-2134 - ------------------------------------------------------------------------------------------------------------------- Hungary, AURIMPEX Theo Bash 8/10/95 12/31/96 N/E VSLXIB Romania, TECHNOLOGIES INC. T: +361-252-3444 Ukraine 1148 Budapest F: +361-252-0159 Fogarasi ut 14, Hungary - ------------------------------------------------------------------------------------------------------------------- Indonesia Pt. Indah Bangun Mandiri Yulianto Djunaidi 9/1/97 9/1/98 Complete. VSLXIB Jl. Duren Barat 4 No. 25 F- 62-21-568-7721 Tomang Barat - Jakarta 11470 - ------------------------------------------------------------------------------------------------------------------- Israel TELELINK J. Hertz 3/1/97 3/1/98 N/E VSLXIB Werkstraat 15 (T) 92-6-627-3474 B-2018 Antuerp (F) 972-6-627-3475 Belgium - ------------------------------------------------------------------------------------------------------------------- Japan KTI CO LTD.2-1-23, S. Higashi S. Katsuma 8/15/94 Open N/E VSLXIB NakameguroMeguro- T: + 81-3-3794-8285 KuTokyo 153 Japan F: + 81-3-3794-8293 - ------------------------------------------------------------------------------------------------------------------- Korea SAMSUNG CORP. J.H. Lee 8/1/97 8/1/98 E/Lynxx/Progeny E-Territory/ 250, Tae-Pyung-Ro, 2 Ga, Y.S. Ryu Lynxx/Proge Chungku T: 82-2-751-3382 ny N/E- Seoul, Korea Korean Military - -------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------- Territory Status Compensation - ---------------------------------------------------- Houston, TX Awaiting for agreement to 20% Discount USA be signed, 9/28. - ---------------------------------------------------- Houston, TX Awaiting for agreement to 20% Discount USA be signed, 9/28. - ---------------------------------------------------- Hungary, Sent Application for 20% Discount Romania, Renewal, 4/97. Sales Rep Ukraine to verify status of application. - ---------------------------------------------------- Indonesia N/E Lynxx 20% Discount - ---------------------------------------------------- Israel Complete 10% of Sale - ---------------------------------------------------- Japan Sent Application for 20% Discount Renewal, 4/97. Sales Rep to verify status of application. On Hold. - ---------------------------------------------------- Korea Complete. 6% of Sale - ---------------------------------------------------- VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and Accessories. * = Agreement has expired - needs to be reviewed. Page 2 12/9/97 COMPANY CONFIDENTIAL CM-SATELLITE TRANSMISSION SYSTEMS DIVISION PRODUCTS DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
- --------------------------------------------------------------------------------------------------------------- Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Date Date (NE)Nonexclusive - --------------------------------------------------------------------------------------------------------------- Malaysia, FEDERAL TELECOM SDN C Stan 4/20/95 12/31/96 N/E Bangladesh BHD Lot 2, Jalan T: + 603-7560255 222, Section 51A F: + 603-7568868 46100 Petaling Jaya Selangor Derul Ehsan Malaysia - --------------------------------------------------------------------------------------------------------------- New York & O'GARA SATELLITE Jack Lemmerman 11/10/95 12/31/96 N/E Ohio NETWORKS T: 516-586-5100 1 Brandywine Drive F: 516-586-5531 Deer Park, N.Y. 11729 - --------------------------------------------------------------------------------------------------------------- New Zealand RADIOLA CORP. LTD. Richard Thompson 9/6/95 12/31/96 N/E Wineera Drive T: + 64-4-237-0139 Private Bag 30911 F: + 64-4-237-1267 Porirua City, New Zealand - --------------------------------------------------------------------------------------------------------------- Peru LIMATEL Luis Felipe Yanes 11/1/96 11/1/97 N/E Conquistadores 396 Oficina T: + 441-1310/440-2745 #305 Lima 27 F: + 511-441-0230 Peru - --------------------------------------------------------------------------------------------------------------- Plano, TX AOS, INC. Sue Robinson 8/10/93 Open* N/E USA 2420 Westridge Howard Robinson Plano,TX 75075 T: 1 + 214-424-9227 F: 1 + 214-386-5712 - --------------------------------------------------------------------------------------------------------------- Saudi Arabia EEMCO Tarek Stouhy 12/13/93 Open* N/E P.O. Box 3750 Jamil Habib Jaffal Riyadh 11481 Saudi Arabia T: + 966-1-4771650 F: + 966-1-4785140 - ---------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ Territory Products Status Compensation - ------------------------------------------------------------------ Malaysia, VSLXIB Sent Application for 20% Discount Bangladesh Renewal, 4/97. Sales Rep to verify status of application. On Hold. - ------------------------------------------------------------------ New York& VSLXIB Sent Application for 20% Discount Ohio Renewal, 4/97. Sales Rep to verify status of application. On hold. - ------------------------------------------------------------------ New Zealand VSLXIB On Hold. 20% Discount - ------------------------------------------------------------------ Peru VSLXIB HG to verify if we are 10% of Sale renewing? - ------------------------------------------------------------------ Plano, TX VSLXIB Awaiting for agreement 20% Discount USA to be signed, 9/28. - ------------------------------------------------------------------ Saudi Arabia VSLXIB Sent Application for 20% Discount Renewal, 4/97. Sales Rep to verify status of application. - ------------------------------------------------------------------
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and Accessories * = Agreement has expired - needs to be reviewed COMPANY CONFIDENTIAL Page 3 12/9/97 CM-SATELLITE TRANSMISSION SYSTEMS DIVISION PRODUCTS DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
- --------------------------------------------------------------------------------------------------------------- Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Date Date (NE)Nonexclusive - --------------------------------------------------------------------------------------------------------------- South Africa NAVIGATION SCIENCE Fred Joubert 4/6/95 12/31/96 ETerritory CORP. T: 1 + 818-991-9794 31127 Via. Co1linas F: 1 + 818-991-9896 Suite 807 West Lake Village, CA - --------------------------------------------------------------------------------------------------------------- South Africa PERTEC (PTY) LTD. Peter How, 8/17/94 Open* N/E Zimbabwe P.0. Box 232, L. Hawkins Halway House Peter Bruce 1685 Johannesburg, T: + 27-11-805-1996 South Africa F: + 27-11-805-2632 - --------------------------------------------------------------------------------------------------------------- Thailand UNIMESA Preecha Jira 3/1/93 Open N/E 2540 Sukhumvit Road Uthai Mangtrisan Bangna, Bangkok 10260 T: +66-2-398-9489 Thailand F: +66-2-398-9488 - --------------------------------------------------------------------------------------------------------------- United RE UK LTD. Mike Faban 10/9/96 10/9/98 N/E Kingdom Alberto House T: +897-3-1119 Hogwood Lane, F: +897-3-1190 Finchamstead Berkshire RG4O 4RF - --------------------------------------------------------------------------------------------------------------- United 7E COMMUNICATIONS LTD. Peter Beardow 3/24/93 Open* N/E Kingdom Technology Transfer Ctr T: + 44-1-344-872737 Silwood Park Buckhurst F: + 44-1-344-872276 Road, Ascot Berks, SL5 7PW England - ---------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ Territory Products Status Compensation - ------------------------------------------------------------------ South Africa VSLXIB/ Awaiting for fully 10% of Sale Progeny executed copy, 7/20. Sales Rep to verify status? - ------------------------------------------------------------------ South Africa VSLXIB Sent Application for 20% Discount Zimbabwe Renewal, 4/97, Sales Rep to verify status of application. - ------------------------------------------------------------------ Thailand VSLXIB Sent Application for 20% Discount Renewal, 4/97. Sales Rep to verify status of application. On Hold. - ------------------------------------------------------------------ United Progeny Complete OEM/Reseller Kingdom Discount - ------------------------------------------------------------------ United VSLXIB Sent Application for 20% Discount Kingdom Renewal, 4/97. Sales Rep to verify status of application. On Hold. - ------------------------------------------------------------------
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and Accessories * = Agreement has expired - needs to be reviewed COMPANY CONFIDENTIAL Page 4 12/9/97 CM-SATELLITE TRANSMISSION SYSTEMS DIVISION SYSTEMS REPRESENTATIVE/CONSULTANT AGREEMENT
- --------------------------------------------------------------------------------------------------------------- Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Date Date (NE)Nonexclusive - --------------------------------------------------------------------------------------------------------------- Venezuela EPROTEL, S.A. Yolanda Anez de Pacs 10/15/96 10/15/97 N/E Av. Circunvalacion Del Sol T: + 985 51 44 Centro Professional Santa F: + 9860390 Paula Torre B, piso 4, Ofe. 407-412 Urb Santa Paula - ---------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ Territory Products Status Compensation - ------------------------------------------------------------------ Venezuela VSLXIB HG to verify if we are 20% - 35% renewing? Discount - ------------------------------------------------------------------
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and Accessories * = Agreement has expired - needs to be reviewed COMPANY CONFIDENTIAL Page 5 12/9/97 NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
- ----------------------------------------------------------------------------------------------------- CORPORATION ENTERED IN BRIEF DESCRIPTION OF AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD - ----------------------------------------------------------------------------------------------------- Academy of Broadcasting Science MUTUAL BUSINESS 10/97-10/2000 Ministry of Radio, Film & TV - ----------------------------------------------------------------------------------------------------- Advent Communciations DIGITAL NEWS GATHERING SYSTEM/ 3/95-3/98 TV SATELLITE LINKS - ----------------------------------------------------------------------------------------------------- Ansarom Servicill S.R.L. ETG DIST. OF DIGITAL COMPRESSED 7/96-7/99 TV - ----------------------------------------------------------------------------------------------------- Ark Telecommunciations, Inc. MARKETING STRATEGIES 7/94-12/94 - ----------------------------------------------------------------------------------------------------- Ark/Pacific Century/STS CORPORATE ACCESS 3/95-3/98 - ----------------------------------------------------------------------------------------------------- ASCOR Electronics, Inc. C, X, KU-BAND SATELLITE PRODUCTS 5/94-5/97 - ----------------------------------------------------------------------------------------------------- At&t Morristown NJ MARKETING PROGRAMS 10/92-10/95 - ----------------------------------------------------------------------------------------------------- At&t Basking Ridge, NJ TELECOMMUNICATIONS FOR 9/93-9/96 INTERNATIONAL TRAVELERS - ----------------------------------------------------------------------------------------------------- At&t New York City ECHO CANCELLING TECHNOLOGY 11/93-11/96 - ----------------------------------------------------------------------------------------------------- Binariang Satellite Sys. MEASAT KUALA LUMPUR 8/95-8/97 - ----------------------------------------------------------------------------------------------------- Booze, Allen & Hamilton GOV'T PROJECT 3/96-8/2000 - ----------------------------------------------------------------------------------------------------- "BT" British Telecom Plc. GMACS 16&32 RC&M SYSTEMS 9/97-9/99 - ----------------------------------------------------------------------------------------------------- Capitol broadcasting Co. Inc. KA-BAND COMUNNICATIONS 8/97-8/2002 - ----------------------------------------------------------------------------------------------------- Coherent Com. Sys. Corp. MARKETING STRATEGIES 10/95-/10/97 - ----------------------------------------------------------------------------------------------------- Columbia Communications Corporation TDRS-4 INTERNATIONAL SAT COMM 7/93-7/95 - ----------------------------------------------------------------------------------------------------- COMSAT Systems Divison RF TERMINALS & COMPONENTS FAASAT 10/92-10/97 - ----------------------------------------------------------------------------------------------------- Consultare Technology Group, Inc. POLSAT PROJECT 2/96-2/99 - ----------------------------------------------------------------------------------------------------- Crosslink, Inc. MARKETING STRATEGIES 8/96-8/99 - -----------------------------------------------------------------------------------------------------
Page 1 COMPANY CONFIDENTIAL 12/10/97 NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
- ----------------------------------------------------------------------------------------------------- CORPORATION ENTERED IN BRIEF DESCRIPTION OF AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD - ----------------------------------------------------------------------------------------------------- Curlerul National S.A. Broadcasting WORK ASSOCIATED WITH PROPOSAL 4/95-4/98 Dpt. NO. P95-7276 - ----------------------------------------------------------------------------------------------------- DAYTON /TRANSCO Inc. TRANSPORTABLE RADARSAT 3/94-3/97 TERMINAL - ----------------------------------------------------------------------------------------------------- Designsat DIGITAL VOICE SYSTEMS 7/93-7/96 TELECOMMUNICATIONS - ----------------------------------------------------------------------------------------------------- Tom Durston Consulting EVALUATION OF LYNXX 6/96-6/99 - ----------------------------------------------------------------------------------------------------- ECI Telecom Inc. TECHNICAL & SOFTWARE 8/93-8/95 INFORMATION - ----------------------------------------------------------------------------------------------------- Electric-Magnetic Processess, Inc. RFP SUPPORT 11/91-11/94 - ----------------------------------------------------------------------------------------------------- GE American Communciations, Inc. GLOBAL KA-BAND SATELLITE SYSTEM 2/97-2/2000 - ----------------------------------------------------------------------------------------------------- GE American Communciations, Inc. BROADCAST CENTER 5/97-5/99 - ----------------------------------------------------------------------------------------------------- GEC-Marconi MUTUAL BUSINESS OPPORTUNITIES 11/96-11/99 - ----------------------------------------------------------------------------------------------------- Gilat Satellite Networks, Ltd. (GSN) EVALUATING TECHNICAL CAPABILITIES 9/96-9/98 - ----------------------------------------------------------------------------------------------------- GLOBAL SAT NETWORK (GSN) INFRASTRUCTURE DEVELOPMENT 8/96-2001 PROJECT - ----------------------------------------------------------------------------------------------------- Glocom Inc. INMARSAT "B" CHANNEL UNITS 4/96-4/99 - ----------------------------------------------------------------------------------------------------- GTE Government Systems Corp. ENGINEERING & TECHNICAL INFO GTE 1/94-1/97 DIGITAL SWITCH - ----------------------------------------------------------------------------------------------------- GTE Government Systems Corp. TRI-BAND SATELLITE TERMINAL 10/95-10/98 OPPORTUNITIES - ----------------------------------------------------------------------------------------------------- Harris Corporation, Farinon Division DIGITAL TV EXCITER PRODUCT 11/93-11/96 - ----------------------------------------------------------------------------------------------------- HSC MUTUAL BUSINESS OPPORTUNITES 9/96-9/2001 - ----------------------------------------------------------------------------------------------------- Hughes Aircraft Company PHASE III OF ROYAL THAI AIR 4/93-5/93 DEFENSE SYSTEMS - ----------------------------------------------------------------------------------------------------- Hyundai POLSPACE PROJECT 9/96-9/99 - ----------------------------------------------------------------------------------------------------- IBM MOBILE SATELLITE SERVICES 10/91-10/93 - -----------------------------------------------------------------------------------------------------
Page 2 COMPANY CONFIDENTIAL 12/10/97 NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
- ----------------------------------------------------------------------------------------------------- CORPORATION ENTERED IN BRIEF DESCRIPTION OF AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD - ----------------------------------------------------------------------------------------------------- INET INC. CBRN-E PROJECT 8/91-8/94 - ----------------------------------------------------------------------------------------------------- INFONET Services Corporation GOVERNMENT PROCUREMENT 8/92-8/94 - ----------------------------------------------------------------------------------------------------- TITAL BROADBAND 10/96-10/98 ING (U.S.) Capital Corporation COMMUNICATIONS - ----------------------------------------------------------------------------------------------------- INMARSAT PACKET DATA SYSTEM (INMARSAT) SATELLITE BASE STATION PROGRAM 9/97-9/2002 - ----------------------------------------------------------------------------------------------------- PC DEMAND ASSIGNMENT MULTIPLE Innovative Communciations Tech, Inc. ACCESS (PC-DAMA) 3/93-3/96 - ----------------------------------------------------------------------------------------------------- TRANSPORTABLE RADARSAT IOTEK, Inc. TERMINAL 1/94-1/97 - ----------------------------------------------------------------------------------------------------- CELLULAR TELEPHONE NETWORK Katel, Tk Tel, Ltd. WITH INTERNATIONAL GATEWAY 7/93-7/96 - ----------------------------------------------------------------------------------------------------- Kokusa Telcom KTI'S USE OF LYNXX 2/97-2/2000 - ----------------------------------------------------------------------------------------------------- MOBIL COMMUNICATIONS SATELLITE Lockheed Martin PROJECT 6/96-6/99 - ----------------------------------------------------------------------------------------------------- Lockheed Martin ELLIPSO PROGRAM 9/97-9/98 - ----------------------------------------------------------------------------------------------------- UNIVERSAL MODEM & STAR-T AND Magnavox Electronic Sys. (MESC) LMST TERMINALS 6/94-6/96 - ----------------------------------------------------------------------------------------------------- MCI Telecommunciations Corp. MUTUAL BUSINESS 5/95-5/97 - ----------------------------------------------------------------------------------------------------- Motorola Inc. MUTUAL BUSINESS 11/97-11/2001 - ----------------------------------------------------------------------------------------------------- Netcom Solutions COMESAN NETWORK PROJECT 9/96-9/98 - ----------------------------------------------------------------------------------------------------- News Datacom BUSINESS OPPORTUNITIES 11/95-11/2000 - ----------------------------------------------------------------------------------------------------- NIAC VNPT TELSTRA PROJECT 1/95-1/98 - -----------------------------------------------------------------------------------------------------
Page 3 COMPANY CONFIDENTIAL 12/10/97 NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
- ----------------------------------------------------------------------------------------------------- CORPORATION ENTERED IN BRIEF DESCRIPTION OF AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD - ----------------------------------------------------------------------------------------------------- Nuera/PCSI MUTUAL BUSINESS INTERESTS 5/96-5/99 - ----------------------------------------------------------------------------------------------------- Omni Communications MUTUAL BUSINESS 1/96-1/99 - ----------------------------------------------------------------------------------------------------- Orion Atlantic L.P. V-SAT NETWORK PRODUCTS 6/94-6/99 - ----------------------------------------------------------------------------------------------------- Pacific Century Telecommunications TELECOM EQUIPMENT 2/95-2/00 - ----------------------------------------------------------------------------------------------------- VOICE FAX DATA COMPRESSION Pacific Communications Sciences MULTIPLEXING WIRELESS COMM 7/92-7/97 - ----------------------------------------------------------------------------------------------------- PCSI MUTUAL BUSINESS INTERESTS 5/96-5/99 - ----------------------------------------------------------------------------------------------------- Philips Broadcast Television Sys. Co. MUTUAL BUSINESS INTERESTS 8/97-8/98 - ----------------------------------------------------------------------------------------------------- Qualcomm MUTUAL BUSINESS 8/96-8/99 - ----------------------------------------------------------------------------------------------------- Qualcomm MUTUAL BUSINESS 9/97-9/2002 - ----------------------------------------------------------------------------------------------------- Raytheon Service Co. FAA SATELLITE TELECOM SYSTEMS 12/92-12/95 - ----------------------------------------------------------------------------------------------------- INMARSAT & MOBILE SATELLITE RDC/CARCOM/VIASAT PRODUCTS 4/94-4/97 - ----------------------------------------------------------------------------------------------------- Re America MUTUAL BUSINESS 12/96-12/98 - ----------------------------------------------------------------------------------------------------- RF Microsystems, Inc. C, X, KU-BAND PRODUCTS 5/94-5/97 - ----------------------------------------------------------------------------------------------------- SOURCES FOR FINANCING Robert G.Cusac AERONAUTICAL TELECOM NETWORK 4/94-4/97 - ----------------------------------------------------------------------------------------------------- Rockwell MSAT LAND EARTH STATION 8/94-8/95 - ----------------------------------------------------------------------------------------------------- Samsung POTENTIAL SOURCES FOR SATELLITE E/S 12/92-12/95 - ----------------------------------------------------------------------------------------------------- Satellite Technology Management Inc. VARIOUS SATELLITE INFO. 6/94-6/97 - ----------------------------------------------------------------------------------------------------- Satlantic, Inc. TRANSPORTABLE RADARSAT TERMINAL 1/94-1/97 - -----------------------------------------------------------------------------------------------------
Page 4 COMPANY CONFIDENTIAL 12/10/97 NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
- ----------------------------------------------------------------------------------------------------- CORPORATION ENTERED IN BRIEF DESCRIPTION OF AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD - ----------------------------------------------------------------------------------------------------- Scitex Corporation Ltd/Israel PRESS POINT SYSTEM 5/95-5/98 - ----------------------------------------------------------------------------------------------------- Scientific Atlanta, Inc./WestingHouse ELLIPSO PROGRAM 3/94-3/95 - ----------------------------------------------------------------------------------------------------- Siemens JOINT COMMAND PROJECT ECUADOREAN ARMED FORCES 3/94-3/97 - ----------------------------------------------------------------------------------------------------- PROCESSING OF SIGNALS PRIOR TO Snell & Wilcox Limited COMPRESSION 1/95-1/97 - ----------------------------------------------------------------------------------------------------- Stanford Telecommunications, Inc. IDAC PRODUCTS 12/92-12/95 - ----------------------------------------------------------------------------------------------------- ACM MODULE SEE MOA PARA 12 Storke Industries PROPRIETARY INFO. 7/94-7/96 - ----------------------------------------------------------------------------------------------------- Summa Four, Inc. MUTUAL OPPORTUNITIES 1/97-1/99 - ----------------------------------------------------------------------------------------------------- Sumitomo Corporation of America POTENTIAL SOURCES FOR E/S SUPPLY 7/92-7/95 - ----------------------------------------------------------------------------------------------------- SATELLITE & TERRESTRIAL CELLULAR Systar Telecommunications SYSTEM 6/92- 6/95 - ----------------------------------------------------------------------------------------------------- Tadiran DIGITAL TV SATELLITE LINKS 11/93-11/96 - ----------------------------------------------------------------------------------------------------- Tandberg Television AS DIGITAL TV VENTURES 2/95-2/98 - ----------------------------------------------------------------------------------------------------- Telecom New Zealand BUSINESS OPPORTUNITIES 7/95- 7/2000 - ----------------------------------------------------------------------------------------------------- The Software Group BUSINESS OPPORTUNITIES 7/96-7/99 - ----------------------------------------------------------------------------------------------------- The Trustforte Corporation PROSPECTIVE BUSINESS 6/94-6/99 - ----------------------------------------------------------------------------------------------------- Thomson-CSF ODYSSEY PROJECT 2/92-2002 - ----------------------------------------------------------------------------------------------------- Thomson-CSF MOBILE & TACTICAL STATIONS 12/91-12/96 - ----------------------------------------------------------------------------------------------------- TIERNAN COMMUNICATIONS, INC. GMACS PROGRAM 4/97-4/2002 - ----------------------------------------------------------------------------------------------------- Titan Capital Corporation UZBEKISTAN (R.LEVIN) 4/94-4/97 - ----------------------------------------------------------------------------------------------------- SATELLITE COMMUNICATIONS IN TK Tel Ltd. FORMER SOVIET UNION 7/94-7/97 - -----------------------------------------------------------------------------------------------------
Page 5 COMPANY CONFIDENTIAL 12/10/97 NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
- ----------------------------------------------------------------------------------------------------- CORPORATION ENTERED IN BRIEF DESCRIPTION OF AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD - ----------------------------------------------------------------------------------------------------- Confidentiality Agreement Meeting of TK Tel/STS 5/16/95 5/95-5/98 - ----------------------------------------------------------------------------------------------------- TRW TRW'S ODYSSEY PROGRAM 3/96-3/99 - ----------------------------------------------------------------------------------------------------- VertiCom KU BAND CONVERTER MODULES 4/95-4/98 - ----------------------------------------------------------------------------------------------------- VIASAT MUTUAL BUSINESS RELATIONS 9/93-9/98 - ----------------------------------------------------------------------------------------------------- VIASAT'S STARWIRE & DAME VIASAT SATELLITE NETWORK SYSTEMS 3/97-3/98 - ----------------------------------------------------------------------------------------------------- VIASAT SIVAN PROJECT 6/97-6/2000 - ----------------------------------------------------------------------------------------------------- Vitacom Corporation MUTUAL BUSINESS RELATIONS 11/93-11/95 - ----------------------------------------------------------------------------------------------------- MOBILE SATELLITE SERVICES Westinghouse Electric Corporation COMMUNICATIONS (MSS CGS) 12/91-12/92 - -----------------------------------------------------------------------------------------------------
Page 6 COMPANY CONFIDENTIAL 12/10/97 Reference: Article 3.11(XV) CUSTOMER OPTION IN CONNECTION WITH BACKLOG Additional Contract Customer Contract No. Contract Value Option Value -------- ------------ -------------- ------------------- 1. U.S. Army DAAB07-97-C-A517 $1,565,337 $275,856 SATELLITE TRANSMISSION SYSTEMS OUTSTANDING PROPOSALS >$100,000 As of 12/10/97 Proposal Prop Value Number Customer Country Prop Description ($MIL) ================================================================================ 8557 Sichuan China 4 IDR St. $1.50 8567 ONPT Africa 3 SNG's $1.50 (Proposal) 8570 Telgua Guatemala Std. B $1.20 (E&S list) 8603 MNG TV Turkey SNG Network $1.17 8578 Measat Malaysia STD F3 $1.00 (E&S List) 8419 Samsung Korea KBS Video Distribution $0.90 8620 AT&T USA IF AMPS for Coram $0.75 8519 Panchao TV Taiwan Progeny XP $0.74 8432 Hungarian TV Hungary Video Network $0.64 8490 Digicom Romania Printing Network $0.62 8447 Q.Tel Qatar MCPC Network $0.59 8618 Digicom Romania Digital Video Distribution 8178 Impsat Mexico Mexico 7.2 Meter Ku Station $0.53 8615 Loral Skynet USA Move 8M antenna equipment $0.50 8349 Emetel Ecuador IDR $0.50 8480 Rosnet Russia Internet Services $0.50 8594 Samsung Korea Internet Uplink $0.50 8533 St. Kitts Hotel St. Kitts Internet Connection $0.50 8589 Impsat Ecuador C-Sat E/S $0.46 COMPANY PRIVATE 1. SATELLITE TRANSMISSION SYSTEMS OUTSTANDING PROPOSALS > $100,000 As of 12/10/97
Proposal Prop Value Number Customer Country Prop Description ($MIL) ============================================================================================== 8483 EFRAT Israel Phones Upgrade $0.40 8542 Transcontent Enterprise Taiwan 3 Flyaway $0.40 8601 Impsat Colombia 6.1M CSAT $0.35 8388 Emetel Ecuador Two site additional 4 sites $0.35 8562 Samsung Korea TVRO $0.30 8448 Impsat Argentina 9 Meter C band $0.27 8387 PTT Netherlands Netherlands Std. F2 $0.26 8294 Impsat Mexico 6.1M C-Band CSAT $0.25 8572 Telefonica Spain Upconverter $0.25 8424 ACCR Santo Domingo Std. F1 $0.24 8537 Impsat Brazil Progeny XP $0.21 8616 TVD USA L Band/70 mkg down converters $0.20 8493 Impsat Argentina Ku Band Dual 1:8 Tiger cab w/GCE $0.17 8471 Ford USA UPS & Back up power $0.16 8325 Us-Net Costa Rica Network $0.15 8363 Reuters USA E/S Terminal $0.15 8364 Reuters USA E/S Terminal $0.15 8466 PTT Telecom Netherlands GMACS Upgrade $0.15 8407 HNS USA Site upgrade-Scamp system upgrade. $0.14
COMPANY PRIVATE 2. SATELLITE TRANSMISSION SYSTEMS OUTSTANDING PROPOSALS > $100,000
Proposal Prop Value Number Customer Country Prop Description ($MIL) ============================================================================================ 5804 Raytheon USA Sivam C-Band Network $25.00 (Proposal) 8497 Govt Pakistan Pakistan Mob Cellular $10.40 (Proposal) 8241 Belgium Army Belgium Flyaway hubs and Naval terminal $10.00 8507 Capitol Broadcasting USA CBC Ka Band Feederlinks $10.00 8408 Northrop Grumman USA Voice Data Network-Upside $9.80 7976 Raytheon Argentina SIVYCEA Network $8.00 8614 Northrop Grumman USA ATC Network (Equipment & Service List) $6.60 8310 Bezeq Israel Inmarsat $4.00 9035 TV Globo Brazil Progeny $3.50 8456 Guatel Guatemala Rural Telephony Network $3.20 (Proposal) 8420 BTC Bulgaria Std. A $3.00 8129 Mo PTT Saudi Multiple change proposals. $2.50 8210 Gruner & Jahr Germany SCPC Network $2.50 8453 O'Connors MOD Singapore DAMA Network $2.00 8441 Measat Singapore DTH $2.00 8440 HBO (Singtel) Singapore Digital TV $1.70 8392 AT&T USA ETAM E/S Antenna I upgrade. $1.60 8455 Saudi Gov't Saudi Saudi Network $1.60 8576 TeleAmazonas Ecuador 2 MCPC $1.50 (E&S list)
COMPANY PRIVATE 3. SATELLITE TRANSMISSION SYSTEMS OUTSTANDING PROPOSALS > $100,000 Proposal Prop Value Number Customer Country Prop Description ($MIL) ================================================================================ 8581 BTC Bulgaria Down Converter $0.13 8587 BEZEQ Israel Modem Rack $0.13 8598 OTE Greece Antenna $0.13 8554 Linkom Israel C-BAND Hub Station $0.13 7504 AT&T USA FAA Video Hub Upgrade $0.11 8509 Star TV Hong Kong Transportable Antenna Clearwater $0.10 8411 AT&T USA Roaring Creek GCE UAS Rack $0.10 8350 Emetel Ecuador Phones $0.10 ------- $129.00 COMPANY PRIVATE 4. SCHEDULE 3.11(c) DEFAULTS AND CONSENTS UNDER CONTRACTS 1. DEFAULTS: None. 2. ENFORCEABILITY: None. 3. CONSENTS: CMI must obtain consent of the other party to each of the contracts listed under items 3(i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) in this Schedule 3.11(c) prior to assignment thereof: (i) CUSTOMER AGREEMENTS: [The number in parentheses after each of the following contracts is the job number, which correlates to the job numbers in the customer contract chart in Schedule 3.11(a).] a. Purchase Order dated February 17, 1996, Hughes Network Systems for GMISCC GMARS Conversion upgrade (1022) b. Purchase Order (date illegible), Hughes Network Systems for Chrysler Addon (1023) c. Purchase Order dated January 22, 1997, for MCI Telecommunications Corp. (1024) d. Purchase Order dated October 10, 1997, for AT&T Corporation (1032). e. Subcontract Agreement dated February 26, 1996, by and between CMI-STS and MFS Network Technologies, Inc. (1061) f. Standard Contract Terms and Conditions dated December 2, 1996, between Red Corporativa Nacional de Telecomunicaciones RCN S.A. and CMI--STS (Columbia) (1074) g. Purchase Order dated August 13, 1997, Hughes Network Systems for UPC Upgrade- Ford Dearborn (1079) h. Purchase Order dated August 18, 1997, for AT&T Corporation (1080). i. Contract dated October 16, 1997 between BT North America and CM-STS (1081). j. Purchase Order dated [illegible) 15, 1996, O'Connor's Singapore PTE Ltd. for Drop and Insert Interface Cards for SDM-8000 Modem Upgrade (6308) -13- k. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE Ltd. for design, manufacture, supply, installation, testing & commissioning on a semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at Seletar Earth Station (6308) l. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE Ltd. for Recomm Maintenance Parts (6308) m. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE Ltd. for design, manufacture, supply, installation, testing & commissioning on a semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at Seletar Earth Station (6308) n. Amended Purchase Order dated May 17, 1994, Singapore Telecommunications PTE Ltd. for two Intelsat STD-A Antennas & their buildings at Seletar Earth Station (6308) o. Domsat Project Agreement dated September 17, 1993 between Empresa Estatald Telecomunicaciones Cuantia and CMI-STS (6313). p. Purchase Order dated December 4, 1995, Thorn Security Limited, Communications and Telecontrol Systems (6320) q. Purchase Order dated January 1, 1994, Thorn Security Limited, Communications and Telecontrol Systems (6320) r. Purchase Order dated November 20, 1995, Thorn Security Limited, Communications and Telecontrol Systems (6320) s. Purchase Order dated August 22, 1995, Thorn Security Limited, Communications and Telecontrol Systems (6320) t. Purchase Order dated January 31, 1994, Thorn Security Limited, Communications and Telecontrol Systems (5 revisions) (6320) u. Contract dated May 23, 1996 between Empresa Estatald Telecomunicaciones Cuantia and CMI-STS (6327). v. Contract 650603 for Goonhilly 5 Remote Control & Monitoring REF NVN4/434 dated July 8, 1997, between British Telecommunications plc and CMI-STS (6364) w. Contract No. 03/CVT/96 for the Provision of Domestic Satellite Link dated July 2, 1996, Between Cabo Verde Telecom S.A.R.L. of the Republic of Cape Verde and CMI-STS (6368) -14- x. Purchase Order dated March 10, 1995, Telephonica Sistemas de Satelites (Argentina) (6370) y. Contract Provisions for Inner Mongolia Satellite Earth Stations Project dated October 16, 1996, between Inner Mongolia Machinery Import and Export Corp. and CMI-STS, Contract No.:96MMDS--041--017IL (6423) z. Purchase Order dated June 10, 1997, Mitsubishi Corpration (6429) aa. Purchase Order dated June 10, 1997, Mitsubishi Corpration for on-site services (6429) ab. Purchase Order dated July 28, 1997, Mitsubishi Corpration (6429) ac. Contract Provisions for BTA 20m C Band Station Project dated May __, 1997, between China National Postal and Telecommunications Appliances Corporation and CMI-STS, contract Number 97QFKE/4IB1704US (6439) ad. Contract Provisions for BTA Ku Band Station Project dated May __, 1997, between China National Postal and Telecommunications Appliances Corporation and CMI-STS, contract Number 97QFKE/4IB1703US (6439) ae. Contract Provisions for BTA 7th Expansion Project dated May __, 1997, between China National Postal and Telecommunications Appliances Corporation and CMI-STS, contract Number 97QFKE/4IB1705US (6439) af. Agreement dated March 3, 1996, between BEZEQ, The Isreal Telecommunications Corp., Ltd. and STS (6473) Purchase Order dated August 23, 1996, O'Connor's Singapore Pte Ltd. (6498) ag. Purchase Order dated July 16, 1997, AT&T (7301) ah. Purchase Order dated August 8, 1997, AT&T (7301) ai. Contract dated July 2, 1997 between Hughes Network Systems and CMI-STS. aj. Cooperation and Project Funding Agreement dated June 15, 1994 between the Israel United States Binational Industrial Research and Development Foundation and Tadiran Ltd., Communication Systems Division and Satellite Transmission Systems Inc. ak. Contract between the Government of the Islamic Republic of Pakistan and California Microwave, Inc. Satellite -15- Transmission Systems dated March 17, 1996, concerning the supply of satellite earth station equipment. al. California Microwave Satellite Transmission Systems Division Conditions of Sale dated December 23, 1996 with CS Communications Company Limited. am. Purchase Orders dated March 7, 1997 to July 7, 1997 between Samsung America, Inc. and CMI-TTS pursuant to purchase orders issued by Samsung America, Inc. to CMI-TTS and accepted by STS. an. Master Purchase Agreement for hardware, equipment and associated software between Reuters SA and California Microwave, Inc.-STS. The contract was signed by CM-TTS on April 23, 1997 and by Reuters on May 6, 1977. ao. Standard contract terms and conditions dated May 22, 1996 between Romsat S.A. and CMI-STS. ap. Contract dated July 29, 1993 between CMI-STS and La Empresa Estatald Telecomunicaciones Cuantia (Ecuador). aq. Contract Provisions dated September 6, 1996 for DONSAT project between China National Postal and Telecommunications Appliances Corporation and CMI-STS. ar. Contract documents dated November 29, 1996 between Satellite Television Asian Region Limited and CMI-STS for supply and installation of Kuban Video Uplink Upgrade for Video Broadcast Service. as. Agreement between CMI-STS and Singapore Telecommunications Pte Ltd. pursuant to a series of purchase orders issued by Singapore Telecom to CMI-STS dated September 7, 1994, August 16, 1994, August 18, 1994, August 13, 1994. at. Purchase Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and Satellite Transmission Systems, Inc., as amended on November 19, 1995. au. Agreement dated December 19, 1994 between the Sudan Telecommunications Company Limited and Satellite Transmission Systems, Inc. av. Licensing Agreement dated July 19, 1995 between International Mobile Satellite Organization and Mobile Satellite Products Corporation. -16- (ii) U.S. GOVERNMENT CONTRACTS The U.S. government contracts listed under Schedule 3.9(c) will need to be novated. (iii) OEM AGREEMENT: a. OEM Agreement dated April 27, 1995, by and between Satellite Transmissions Systems, Inc. and Harris Corporation. (iv) VENDOR AGREEMENTS a. Purchase Agreement dated March 15, 1995 between Andrew Corporation and California Microwave, Inc. ("CMI") b. New Volume End User Agreement No. AMJ88 dated May 25, 1997 between Hewlett-Packard and STS c. Original Equipment Manufacturers Agreement dated May 1, 1997 between Leitch Incorporated and California Microwave, Satellite Transmission Systems d. Product Sales Agreement dated May 21, 1997 between California Microwave and Time Electronics e. Sales Distribution Agreement dated July 1, 1994 between Telecommunications Techniques Corporation and satellite Transmission Systems, Inc. f. Product Sales Agreement dated February 28, 1997 between California Microwave and TTI Inc. g. Product Sales Agreement dated May 21, 1997 between California Microwave and TTI, Incorporated (v) NON-DISCLOSURE/CONFIDENTIALITY AGREEMENTS: a. Confidentiality Agreement dated August 12, 1997, between STS and Capital Broadcasting Co., Inc. b. Non-disclosure Agreement dated May 9, 1997, between CMI-STS and GE American Communications, Inc. c. Letter Agreement dated October 25, 1996, between STS and ING (U.S.) Capital Corporation d. Mutual None-disclosure Agreement dated March 15, 1995, between STS and Pacific Communication Sciences Inc. e. Confidential Disclosure Agreement dated August 8, 1997, between CMI-STS and Philips Broadcast Television Systems Company. -17- f. Agreement dated April 2, 1995, between STS and VertiCom, Inc. (vi) DISTRIBUTOR/REPRESENTATIVE AGREEMENTS a. Agreement dated October 9, 1996 between CMI-STS and RE UK Ltd (vii) LICENSE AGREEMENTS a. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI. b. License Agreement dated September 22, 1997 from SPACEHAB, Inc. to CM-STS entered into in connection with the Lynxx Software Royalty Agreement dated September 22, 1997 between CM-STS, SPACEHAB, Inc. and Crosslink, Inc. (viii) OTHER AGREEMENTS a. Reference is made to the ABN ANRO Agreement, BankAmerica agreement and Bank of Tokyo Mortgage Agreement and related agreements identified in Schedule 3.10(a). b. Lease dated November 7, 1996 between SIMRAM Realty Corp. and Seller with respect to the warehouse on 65 Commerce Street, Hauppage, NY 11788. c. Guarantee dated January 17, 1995 pursuant to which California Microwave, Inc. guaranteed the obligations of STS with respect to the Purchase Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and STS, as amended on November 19, 1995. SCHEDULE 3.13 INVENTORIES None. -18- SCHEDULE 3.15 PRODUCT WARRANTIES 1. WARRANTIES: Copy of Form Product Warranty for STS is attached. See attached sheet specifying customer warranties that last for more than one year. Those Customer Agreements listed in Schedule 3.11(a) that are not listed in the attached sheet have a warranty period of one year or less. 2. WARRANTY CLAIMS IN EXCESS OF $50,000: None. -19- CALIFORNIA MICROWAVE SATELLITE TRANSMISSION SYSTEMS 125 Kennedy Drive Hauppauge, New York 11788 Tel: (516) 272-5600 Fax: (516) 272-5500 ISO 9001 Cert ATTACHMENT TO SCHEDULE 3.15 WARRANTIES AND REPAIRS (A) Terms of Warranty - California Microwave, Inc. - Satellite Transmission Systems Division ("CM-STS") warrants that the Equipment furnished will be free from defects in design, material and workmanship and will conform to the contract specifications for a period of one (1) year commencing from the date the Equipment is accepted under a Provisional or Final Acceptance. If not accepted, the Warranty Period shall commence thirty (30) days after delivery. This warranty shall survive acceptance and payment. At any time within the Warranty Period, CM-STS shall, at its facilities in Hauppauge, New York, at its option and at its own expense, correct or replace, within 60 days (if materials are available within a reasonable time), any part of the Work which is defective in design, materials, or workmanship, provided Buyer gives CM-STS prompt written notice of such defect and pays all costs of shipment to CM-STS facility. Shipments by CM-STS of repaired or replacement equipment to Buyer will be F.O.B. destination, freight prepaid. The foregoing shall not apply to, and CM-STS shall have no obligation in respect of, (i) defects in goods caused by improper operation, maintenance or modification by Buyer or (ii) goods which have been subject to any unauthorized repair. In this event, Buyer will be charged CM-STS' standard labor rates and material costs. Any applicable import taxes or duties will be the responsibility of Buyer. Should the defective equipment be a fixed part of the earth station, field warranty service may be necessary. In this case, unless otherwise agreed upon, CM-STS will begin onsite repairs within five (5) days of receipt of notice of defective equipment and make every effort to begin repairs within twenty-four (24) hours of arrival and inspection, pending availability of vendor material. Buyer shall reimburse CM-STS for all per diem and travel expenses associated with field warranty service. CM-STS will bear the costs of materials and labor during the on-site repairs, unless the failure is caused by Buyer. In this event, Buyer will be charged CM-STS' standard field man/day rates and material costs. THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ANY OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, AND OF ANY OTHER OBLIGATIONS OR LIABILITY ON CM-STS' PART. UNDER NO CIRCUMSTANCES WILL CM-STS BE LIABLE FOR ANY LOSS, DAMAGE, EXPENSE OR CONSEQUENTIAL DAMAGES ARISING IN CONNECTION WITH USE, OR INABILITY TO USE, THE EQUIPMENT, SERVICES OR DOCUMENTATION. 1 The Warranty Period for a11 work which is repaired or replaced under this Warranty shall extend until the later of the expiration of the Warranty Period, or ninety (90) days following the completion of the repair. (B) Return Procedures - CM-STS products are warranted against defects in materials and workmanship in accordance with the terms of this Warranty. CM-STS will, at its option, repair or replace products which prove to be defective during the warranty period, provided they are returned to CM-STS, and provided that the preventative maintenance procedures are followed. Repairs necessitated by misuse are not covered by this warranty. Before any product is returned for repair and/or adjustment, authorization from CM-STS is required. Instructions as to how and where the product should be shipped may be obtained from CM-STS Customer Service Department (516) 272-5600. The following information, as a minimum, is required: 1) Complete name and address of customer location returning material. 2) Name, position, and telephone number of individual returning equipment. 3) Name and telephone number of individual to contact in case of questions regarding material. 4) "Ship to" address for return of repaired material. 5) Whether or not equipment is within warranty. 6) Description, part number and serial number of failed unit. When reporting failure of HPA components, the EPA serial number is required. 7) Complete information regarding the nature of the failure. CM-STS Customer Service Desk will advise customer of a Return Authorization (RMA) number which should be prominently displayed on the outside of the container adjacent to address label. (Absence of this number may delay acceptance or repair.) Products returned to CM-STS for repair must be sent prepaid. CM-STS reserves the right to reject any warranty claim on any item that has been tampered with or altered in any way. Returned products should be carefully packaged in the original container or an equivalent, and unless otherwise indicated, shipped to: California Microwave, Inc. - Satellite Transmission Systems Division 125 Kennedy Drive Hauppauge, New York 11788 Attention: Customer Service RMA#_______________________ 2 When any product is returned for examination and inspection, or for any other reason, the customer and its shipping agency is responsible for all damage resulting from improper packing, mishandling and loss in transit. Repairs or replacements required for non-warranty equipment will not be initiated without prior customer approval and issuance of purchase order to cover this effort. This warranty is valid only for CM-STS originally supplied equipment. For "In Warranty" and "Out of Warranty" equipment, CM-STS assumes no responsibility whatsoever for operation, maladjustment or failure of equipment which results from any repair or replacement supplied by third parties without prior approval from CM-STS. By returning a product, the owner grants CM-STS permission to open and/or disassemble the product as required for evaluation. In all cases, CM-STS has sole responsibility for determining the cause and nature of failure, and the CM-STS determination shall be final. If it is found that a CM-STS product has been returned without cause and is still serviceable, the customer will be notified, the product returned to the customer and a charge for test and evaluation will be levied. No customer shall initiate a warranty repair or warranty field service visit with any CM-STS vendor without prior approval from CM-STS Customer Service Desk. Unnecessary expense and loss of time can often be avoided by customer adherence to the above procedures. CM-STS request that our international customers advise Customer Service by FAX of equipment being returned for repair. In turn, Customer Service will FAX the RMA number and any special instructions to the customer. Upon shipment, please provide the following information: 1) The airline carrier the equipment was shipped on. 2) The date of shipment. 3) The flight number and airway bill number. The CM-STS FAX number is (516) 272-5500. All customs documents should indicate that the equipment is being returned for repair. All customs duties, taxes, levies and other official costs paid by CM-STS related to the equipment clearing process will be invoiced back to the customer. Please enclose a copy of the export form with the equipment. This will ensure that the documentation field by CM-STS for the return shipment will carry the same information. Customer Service will FAX shipment information to the customer when the repaired equipment is returned. 3 (C) Out of Warranty Repairs - With respect to repairs to equipment purchased by Buyer after the expiration of the Warranty Period specified above, CM-STS agrees to provide repair service at Buyer's expense on all equipment ordered hereunder. Equipment to be repaired under this section shall be returned by Buyer to CM-STS' facility in Hauppauge, New York (freight prepaid). Unless otherwise agreed upon, CM-STS will ship the repaired unit which shall meet the unit's established specifications within thirty (30) days (if materials are available within a reasonable time) after receipt of the defective unit. Repaired units will be warranted for ninety (90) days from due date of shipment. If equipment returned for repair is determined to be beyond repair, CM-STS will so notify Buyer and, if agreed to by Buyer, ship a replacement unit within a reasonable time of such agreement. The Buyer agrees to pay for such replacement unit, and it shall be warranted for one (1) year from date of shipment. If requested by the Buyer, CM-STS will take the necessary steps to dispose of unrepairable equipment. Transportation costs of equipment for repair will be borne by Buyer and units shall be adequately packed so as to prevent shipping and transportation damage. All transportation costs associated with the return of repaired and replacement equipment will be borne by the Buyer. CM-STS will provide support and repair service for the equipment supplied over the design life of the equipment as long as such repair service remains available from the applicable equipment vendor. 4 ATTACHMENT TO SCHEDULE 3.15 CM-STS WARRANTY GREATER THAN 1 YEAR Page No. 1 10/03/97 SITE JOB NO SHIPPED WTY_YRS EXPIRES AT&T/CAYEY 1018 11/28/95 3 11/28/98 FORD MOTOR 1021 03/18/97 3 03/17/00 STSFL 5275 10/14/94 3 10/13/97 LOCKHEED 53166 06/26/96 3 06/26/99 TELEFONICA 53536 01/07/97 3 01/07/00 TELECOM/MD 5366 08/23/94 3 08/22/97 GOVT/CMIMD 5368 05/24/94 3 05/23/97 GOVT/CMIMD 5370 05/24/94 3 05/23/97 JASMINE/TH 5374 11/18/94 3 11/17/97 CAT/PERU 5375 08/30/94 3 08/29/97 GOI/MOD 5378 07/19/94 3 07/18/97 COMSAT/MD 5381 05/23/94 3 05/22/97 GOVT/CMIMD 5390 08/12/94 3 08/11/97 GOVT/CMIMD 5394 09/14/94 3 09/13/97 GOVT/GSA 5395 09/14/94 3 09/13/97 KELLY/GREE 5399 08/29/95 3 08/28/98 GOI/ISRAEL 5401 10/25/95 3 10/24/98 ETISALAT 5403 12/18/95 3 12/17/98 TIW/CA 5404 10/24/95 3 10/23/98 AT&T/NJ 5405 10/09/95 3 10/08/98 EMTELCUBA 5407 06/28/96 3 06/28/99 POSTS/AFRI 5408 12/01/95 3 11/30/98 BEZEQ/ISRL 5409 01/19/96 3 01/18/99 GOI/ISRAEL 5412 01/19/96 3 01/18/99 SPRINT 5416 12/04/95 3 12/03/98 TELEKOM 5420 12/09/94 3 12/08/97 AT&T/MARR 5421 01/31/95 3 01/30/98 GIO/MOD 5426 03/07/95 3 03/06/98 REUTERS 5427 12/13/94 3 12/12/97 GOVT/CMIMD 5428 02/13/95 3 02/12/98 LOXLY/THAI 5429 05/08/95 3 05/07/98 HYUNDAI/KO 5431 02/02/95 3 02/01/98 CAT/PERU 5434 02/21/95 3 02/20/98 MCI/YACOLT 5435 01/23/95 3 01/22/98 GOI/ISRAEL 5437 04/13/95 3 04/12/98 BHARAT/IND 5441 02/24/95 3 02/23/98 GTE/GOVT 5443 03/10/95 3 03/09/98 BEZEQ/ISRL 5445 05/08/95 3 05/07/98 ECIL/INDIA 5446 06/20/95 3 06/19/98 SAMSUNG/AM 5448 05/15/95 3 05/14/98 COMSAT/MD 5449 05/26/95 3 O5/25/98 LOXLY/THAI 5450 05/15/95 3 05/14/98 TELEGLOBE 5451 04/03/95 3 04/02/98 ANDREWS/TX 5452 03/30/95 3 03/29/98 GOI/MOD 5453 07/20/95 3 07/19/98 GOI/MOD 5454 08/28/95 3 08/27/98 GOVT/GTE 5456 06/09/95 3 06/08/98 MOBILSAT 5462 07/19/95 3 07/18/98 SOFIA/BULG 5465 11/02/95 3 11/01/98 AT&T/MTHS 5467 01/19/96 3 01/18/99 TELEPORT 5468 12/15/95 3 12/14/98 AEI/FC 5469 12/08/95 3 12/07/98 RAYTHEON 5470 12/14/95 3 12/13/98 ATTACHMENT TO SCHEDULE 3.15 CM-STS WARRANTY GREATER THAN 1 YEAR Page No. 2 10/03/97 SITE JOB NO SHIPPED WTY_YRS EXPIRES HONGK/TELE 5471 01/26/96 3 01/25/99 TELEPORT 5474 12/15/95 3 12/14/98 TELE/HONGK 5476 03/27/96 3 03/27/99 TURNKY/SAF 5477 01/16/96 3 01/15/99 REUT/UK 5487 01/19/96 3 01/18/99 DATALINC 5490 02/14/96 3 02/13/99 BEZEQ 6042 10/07/88 2+ 01/19/99 BEZEQ 6077 12/19/89 2+ 01/19/99 BEZEQ 6142 10/07/88 2+ 01/19/99 BEZEQ 6172 06/28/91 2+ 01/19/99 BEZEQ 6205 12/04/92 2+ 01/19/99 BEZEQ 6233 10/18/93 2+ 01/19/99 BEZEQ 6297 10/25/93 2+ 01/19/99 BEIJING II 6301 05/05/94 3 05/05/97 AT&T/PALUA 6307 06/24/94 3 06/24/97 BEZEQ 6312 10/15/93 2+ 01/19/99 THORN/MADL 6320 07/14/94 5 07/13/99 STSFL/ 6337 07/27/94 2 12/31/97 HNKONG/TEL 6351 01/24/95 2 01/24/97 EMBRATEL 6371 06/20/97 2 06/20/99 REUTERS SA 6430 05/08/97 2 05/08/99 SAMSUNG AM 6437 06/17/97 3 06/16/00 I.D.S.C 6439 08/26/97 3 08/25/00 TIME/MALAY 6463 11/10/95 2 11/09/97 SATSYST/VA 6464 08/25/95 2 05/30/98 BEZEQ 6473 / / 2+ 01/19/99 CHINASTAR 6491 12/24/96 2 12/24/98 SINGAPORE 6498 11/21/96 2 12/19/98 HQ AFSOUTH 7180 12/23/94 3 12/15/97 WARRENTON 7221 01/25/97 2 04/20/99 BEZEQ 84004 10/01/93 2+ 01/19/99 SCHEDULE 3.16(a) OWNED INTELLECTUAL PROPERTY 1. See attachment. 2. Ownership of GMACS software and related know-how 3. Ownership of Universal System Controller and related know-how. 4. A security interest in the following Intent to Use applications ("ITUs") listed on the attached Schedule 3.16(a) has been granted to BankAmerica Business Credit, Inc. ("Bank") pursuant to a Patent and Trademark Security Agreement dated June 30, 1997 entered into in connection with the Loan and Security Agreement dated June 30, 1997 between the Bank and Seller: NEWSTREK, FLEXCAST, FLEXHYBRID, FLEXMESH, FLEXSTAR and FLEXFRAME NETWORK. To the extent that any ownership interest of Seller in the ITUs is deemed to have been "assigned" to the Bank for the purpose of federal trademark law as a result of the assignment pursuant to the Patent and Trademark Security Agreement, there is a risk that the ITUs may have been invalidated. -20- 12-15-97 CALIFORNIA MICROWAVE, INC. SATELLITE TRANSMISSION SYSTEMS US TRADEMARK REGISTRATIONS -------------------------- MARK REGISTRATION NO. DATE REGISTERED - ---- ---------------- --------------- STS AND DESIGN 1,409,225 9-16-86 LYNXX 1,849,069 8-9-94 MINILYNXX 1,957,925 2-20-96 PSAT 1,598,265 5-29-90 PROGENY 2,070,201 6-10-97 VIDEOLYNXX 2,098,616 9-23-97 PENDING TRADEMARKS ------------------ NEWSTREK 75/l00,553 5-8-96 FLEXCAST ITU 75/204,102 11-25-96 FLEXHYBRID ITU 75/203,921 11-25-96 FLEXMESH ITU 75/149,594 8-13-96 FLEXSTAR ITU 75/149,585 8-13-96 FLEXFRAME NETWORIC ITU 75/111,438 5-29-96 UNREGISTERED TRADEMARK ---------------------- GMACS CURRENTLY USED AS A TRADEMARK LYNXXSurfer CURRENTLY USED AS A TRADEMARK PATENTS OWNED ------------- ADAPTIVE FM 4,816,770 3-28-89 THRESHOLD EXTENSION DEMODULATOR PATENT PENDING -------------- WIRELESS COMMUNICATIONS APPLICATION FILE DATE: 3-12-97 SYSTEM HAVING FIXED AND DYNAMICALLY ASSIGNED LINKS (FLEXFRAME NETWORK TM) SCHEDULE 3.16(b) INTELLECTUAL PROPERTY LICENSES 1. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI (Non-exclusive license to CM-STS regarding technology for use in the Lynxx Inmarsat B Transportable Earth Stations). 2. Lynxx Software Royalty Agreement dated September 22, 1997 between CM-STS, SPACEHAB, Inc. and Crosslink, Inc., including a License Agreement dated September 22, 1997 from CM-STS to SPACEHAB, Inc. and a License Agreement dated September 22, 1997 from SPACEHAB, Inc. to CM-STS (Cross-license regarding technology relating to the Lynxx Inmarsat B Transportable Earth Stations) 3. Licensing Agreement dated July 19, 1995 between International Mobile Satellite Organization and Mobile Satellite Products Corporation (Non-exclusive trademark license to Seller regarding use of the Inmarsat trademark on certain of its products). 4. Cooperation and Project Funding Agreement dated June 15, 1994 between the Israel-United States Binational Industrial Research and Development ("BIRD") Foundation, Binational Industrial Research and Development Foundation, Tadiran Ltd. Communications Systems Division and Satellite Transmissions Systems, Inc. (CM-STS jointly developed technology relating to Progeny with funds from the BIRD Foundation. CM-STS is repaying the BIRD Foundation by making payments based on a percentage of gross sales of Progeny units.) 5. Graphical Monitor and Control Software License Agreement (Non-exclusive site license from CM-STS to customers regarding technology required to control and monitor satellite earth stations and networks. Seller has entered into this agreement with every customer to which it sells such equipment). SCHEDULE 3.16(c) INFRINGEMENT BY THIRD PARTIES 1. None. -21- SCHEDULE 3.16(d) CLAIMS BY THIRD PARTIES 1. None. SCHEDULE 3.17 INSURANCE POLICIES 1. See attachment. -22- SCHEDULE 3.18(a) OWNED REAL PROPERTY 1. The property located at 50 Engineers Road, Hauppauge, NY 11788 was purchased by STS, Inc. in October, 1988. This property is used as for integration, assembly, testing and shipping of products. SCHEDULE 3.18(b) LEASES 1. The property located at 125 Kennedy Drive, Hauppauge, NY 11788 is subject to the lease from the Suffolk County Industrial Development Agency. 2. Seller leases a warehouse at 65 Commerce Drive, Hauppauge, NY 11788 pursuant to a lease dated November 7, 1996 between SIMRAM Realty Corp., as lessor, and CM-STS, as lessee. The term of the lease is eighteen months beginning on November 15, 1996 and ending on May 14, 1998. STS may renew for an additional term of six months. Annual basic rent is $52,807.50 in monthly installments of $4,400.62, and additional rent (for heat and electric) is $11,735 annually in monthly installments of $977.92. During any renewal term, annual basic rent increases to $4,645.10 per month. Seller has determined to vacate this warehouse on January 14, 1997 and has obtained the landlord's consent to do so. SCHEDULE 3.18(c) REAL PROPERTY TITLE MATTERS 1. Matters disclosed in the attached Policy of Title Insurance (policy no. 5-986928) issued January 12, 1989 with respect to the 50 Engineers Road property. 2. The following matters disclosed in the attached Title commitment (title no. S-67949 & A) issued on December 7, 1982, with respect to the 125 Kennedy Drive property: Items 4, 5 and 9 of Schedule B, and Survey Reading. 3. Any restrictions encumbering the Owned Real Property or Leased Real Property that are shown in the Survey of Property dated July 16, 1982 prepared by Teas, Barrett, Lanzisera & Fink with respect to the 125 Kennedy Drive property. -23- 4. Reference is made to the lien and security interests identified under Item 1 of Schedule 3.10(a). -24- ================================================================================ [COPY] POLICY OF TITLE INSURANCE No. S-986928 SECURITY TITLE AND GUARANTY COMPANY In Consideration of the payment of its charges for the examination of title and its premium for insurance, insures the within named insured against all loss or damage not exceeding the amount of insurance stated herein and in addition the costs and expenses of defending the title, estate or interest insured, which the insured shall sustain by reason of any defect or defects of title affecting the premises described in Schedule A or affecting the interest of the insured therein as herein set forth, or by reason of unmarketability of the title of the insured to or in the premises, or by reason of liens or incumbrances affecting title at the date hereof which has now gained or which may hereafter gain priority over the interest insured hereby, or by reason of a lack of access to and from the premises, excepting all loss and damage by reason of the estates, interests, defects, objections, liens, incumbrances and other matters set forth in Schedule B, or by the conditions of this policy hereby incorporated into this contract, the loss and the amount to be ascertained in the manner provided in said conditions and to be payable upon compliance by the insured with the stipulations of said conditions, and not otherwise. In Witness Whereof, SECURITY TITLE AND GUARANTY COMPANY has caused this policy to be signed and sealed on its date of issue set forth herein. [SECURITY TITLE AND GUARANTY COMPANY CORPORATE SEAL 1928 NEW YORK] /s/ Steven [illegible] /s/ [illegible] - ---------------------- ---------------------- Authorized Signature President ================================================================================ Name of Insured Policy No: 8-986928 Satellite Transmissions Amount of Insurance $ 2,060,000.00 Systems, Inc. Date of Issue January 12, 1989 The estate of Interest fee simple vested in the insured by means of insured by this policy is a deed made by Herbert Bernstein and Leon Bernstein to the insured dated January 12, 1989 and recorded in the Suffolk County Clerk's Office. SCHEDULE B The following estates, interests, defects, objections to title, liens and encumbrances and other matters are excepted from the coverage of this policy: 1. Defects and encumbrances arising or becoming a lien after the date of this policy, except as herein provided. 2. Consequences of the exercise and enforcement or attempted enforcement of any governmental, war or police powers over the premises. 3. Any laws, requisitions or ordinances (including, but not limited to, zoning, building, and environmental protection) as to the use, occupancy, subdivision or improvement of the premises adopted or imposed by any governmental body, or the effect of any noncompliance with any violation thereof. 4. Judgements against the insured or[ILLEGIBLE], interests, defense, objections, liens or incumbrances [ILLEGIBLE], suffered, assumed or agreed to, by or with the privicy of the insured. 5. This is any property beyond the lines of the premises, or to areas within as rights or easements in any abutting streets, roads, avenues. [ILLEGIBLE] 6. This is any private property, whether the [ILLEGIBLE] be attached to or used in connection with said premises or otherwise. 7. Survey by Teas & Steinbrenner dated July 18, 1968 shows a one story brick and stone building. No variations. Subject to any changes in the state of facts which an accurate survey would show from July 18, 1966. (As to Parcel II) 8. 1988/89 Town and School Taxes - Open. 9. Rights of tenants or persons in possession. 10. Covenants and restrictions in Liber 6277 Cp 520. 11. Water agreement in Liber 6080 Cp 137. 12. Electric agreement in Liber 0345 Cp 457. 13. Any state of facts which an accurate survey might show. (As to Parcel I) 14. Any state of facts an inspection of the premises may disclose. (As to Parcel I) 15. In the absence of a guaranteed survey, the exact location, distance and dimensions of the premises described in Schedule A are not insured. (As to Parcel I) Policy No. 8-986920 SCHEDULE A The premises in which the insured has the estate or interest covered by this policy PARCEL I All that certain plot, piece or parcel of land, situate, lying and being in Hauppauge Town of Smithtown, County of Suffolk and State of New York, and designated as part of lot 36 on map entitled "Map of Vanderbilt Industrial Park Section 3" filed in the Suffolk County Clerk's Office on September 13, 1966 as Map No. 4716 bounded and described as follows: BEGINNING at a point on the southerly line of Engineers Road distant 870.73 feet measured westerly along the southerly line of Engineers Road from the westerly end of a curve connecting the southerly line of Engineers Road with the westerly line of Old Willets Path (Willets Old Path) (Capebs Path); RUNNING THENCE South 5 degrees 38 minutes 18 seconds West, 502.46 feet; THENCE North 81 degrees 46 minutes 10 seconds West, 23.01 feet; THENCE North 5 degrees 38 minutes 18 seconds East, 501.33 feet to the southerly line of Engineers Road; THENCE South 84 degrees 21 minutes 42 seconds East along the southerly line of Engineers Road 25.00 feet to the point or place of BEGINNING. Policy No. 8-986920 SCHEDULE A The premises in which the insured has the estate or interest covered by this policy PARCEL II All that plot, piece or parcel of land, situate, lying and being in Hauppauge, Town of Smithtown, County of Suffolk and State of New York, and known and designated as part of lot 36 on map entitled "Map of Vanderbilt Industrial Park, Section 3" filed in the Suffolk County Clerk's office on 9-13-66 as Map No. 4716, bounded and described as follows: BEGINNING at a point on the southerly side of Engineers Road, distant 895.73 feet westerly when measured along the southerly side of Engineers Road from the extreme westerly end of the curve connecting the southerly side of Engineers Road with the westerly side of Old Willets Path (Willets Old Path). RUNNING THENCE South 05 degrees 38 minutes 18 seconds West 501.33 feet; THENCE North 81 degrees 46 minutes 10 seconds West 200.21 feet; THENCE North 05 degrees 38 minutes 18 seconds East 492.28 feet to the southerly side of Engineers Road; THENCE South 84 degrees 21 minutes 42 seconds East along the southerly side of Engineers Road 200.00 feet to the point or place of BEGINNING. SURVEY MAP OMITTED SURVEY MAP OMITTED 125 Kennedy Drive Title no S-679494 & A Premises:- Hauppauge - Town of Smithtown & Purchaser Borrower Satellite Transmissions Systems, Inc. and/or Suffolk County Industrial Development Agency. CERTIFICATE AND REPORT OF TITLE [logo] SECURITY TITLE AND GUARANTY COMPANY Mtge.: Rosenman, Colin, Freund, Lewis & Cohen, Esqs Certifies to 575 Madison Avenue, New York, N.Y. 10022 Fee: Wasserman, Chinitz, Geffner, Green & Wolf, Esq 131 Jericho Turnpike, Jericho, N.Y. 11753 that in consideration of the fees, due and payable upon the delivery of this certificate, it has examined the title to the premises described in Schedule A herein, in accordance with its usual procedure and agrees to issue its standard form of Fee & Mortgage policy in the sum of Fee: $4,200,000, Mtge: $4,200,000, insuring such interest and the marketability thereof excepting all loss or damage by reason of the estates, interests, defects, objections, liens, incumbrances and other matters set forth in this certificate which are not disposed of to its satisfaction prior to the closing of title or issuance of the policy. Such policy will be issued for the amount set forth herein, upon payment of the Company's fees and after the transaction has been closed and the closing instruments have been duly recorded and approved by this Company. This certificate is subject to any question or objection as a result of a continuation of the title to the date of closing or which may be brought to the attention of this company between the date hereof and the date of closing or if there be no closing, between the date hereof and the issuance of the policy. This certificate shall be null and void (1) if the Company's fees therefor are not paid (2) if the applicant, his attorney or agent makes any untrue statement with respect to any material fact or suppresses or fails to disclose any material fact or if any untrue answers are given to this company to material inquiries before the issuance of this certificate (3) in any event, upon the delivery of the policy. Any claim arising by reason of the issuance of this certificate shall be restricted to the terms and conditions of the standard policy of insurance. In case of insurance of title or interest or lien acquired prior to the delivery of this certificate, the Company assumes no liability except under the policy when issued. The land which is the subject of this transaction, lies in District 0800 Section 185.00 Block 02.00 Lot 030.000 and 031.000 Town of Smithtown on the Map of the County of Suffolk Dated: 8/18/82 9 a.m. /s/ [Illegible} -------------------- Authorized Signature Redated and Recertified: -------------------- 12-7-82 Closer If you have any questions regarding this report please communicate with /s/ [Illegible} -------------------- (516) 727-0600 Title Officer TITLE NO. S-679494 & A NOTE Commencing January 1, 1977, the recording officer of Suffolk County is prohibited from recording, or accepting for recording, any conveyance of realty unless the map designations on the property maps of the real property tax service agency of such county, are contained in the body of, or endorsed on, such conveyance. (Real Property Law, Sec. 333 as amended by Ch. 172, Laws, 1976.) The word "conveyance" is defined very broadly by Real Property Law, Sec. 290(3) and includes the great majority of instruments offered for recording. The premises described in this title report are currently designated on the real property tax service agency map as: Dist.: 0800 Sec.: 185.00 Blk.: 02.00 Lot(s): 030.000 031.000 This data is provided for your information and must be endorsed on the instrument to be recorded rather than be contained in the body of said instrument. Title No. S-679494 THIS COMPANY CERTIFIES that a good and marketable title to the premises described in Schedule A, subject to the liens, incumbrances and other matters, if any, set forth in this certificate may be conveyed/mortgaged by V.I.P ASSOCIATES, a co-partnership, which acquired title from Vanton Corp., by deed dated September 13, 1982 and recorded September 27, 1982 in Liber 9247 Cp 273. RECEIPT: Suffolk County Industrial Development Agency SCHEDULE B in which are set forth the additional matters which will appear in the policy as exceptions from coverage, unless disposed of to the Company's satisfaction prior to the closing or delivery of the policy; by /s/ [Illegible] dated 12/7/82 - ------------------------ Disposition See Within 1. Taxes, tax liens, tax sales, water rates, sewer rents and assessments set forth in schedule herein. 2. Mortgages returned herein (None). Detailed statement within. Omit For Policy 3. Survey exceptions set forth herein. 4. Rights of tenants or persons in possession. 5. Covenants, conditions, easements, leases, agreements of record, etc., more fully set forth in Schedule herein:-- (a) Suffolk County Water Authority Easement in Liber 6080 cp 137. (affects streets only) 6. Closing deed should contain a recital as to the mortgagor's source of title, as certified herein. [Illegible] 7. Any state of facts a personal inspection of the premises in Schedule A would disclose, [Illegible] 8. Title herein is certified as found of record and not in Vanderbilt Associates as stated on the application. [Illegible] 9. The exact courses and distances of the premises described in Schedule A cannot be insured in the absence of a satisfactory survey guaranteed to this Company. [Illegible] 10. NOTE: The survey of Teas, Barrett, Lanzisera and Frink, dated 7/6/82 cannot be read into this report as same is not guaranteed to this title company. Continued .... NOTE: If the subject transaction is one involving a sale subject to the mortgage(s) returned in item number 2 above, and since many lenders now have the mortgage instrument state that the debt will become due and payable at the option of the mortgagee upon any transfer of title, it is recommended that the applicant examine the mortgage document(s) as well as the note(s) or bond(s) and any agreement modifying said mortgage(s), or make inquiry of the mortgagee of the current terms of such instruments especially with respect to acceleration of the maturity date in case of sale. Upon request, we will obtain and furnish a copy of the recorded mortgage(s) for cost. S-679494 Schedule B continued.... 11. The articles of partnership of V.I.P. Associates or changes thereto must be submitted to this Company for consideration prior to closing, 12. Require proof that the party or parties executing the deed on behalf of V.I.P. Associates, a co-partnership, have full power and authority to do same. 13. See letter 11-16-82 Title No. S-679494 SCHEDULE A ALL that certain plot, piece or parcel of land, situate, lying and being at Hauppauge, in the Town of Smithtown, County of Suffolk and State of New York, known and designated as part of Lot 36 on a certain map entitled, "Map of Vanderbilt Industrial Park, Section 3" and filed in the Suffolk County Clerk's Office on September 13, 1966 as Map Number 4716; which said part of Lot 36 is more particularly bound and described as follows: BEGINNING at a point on the Northeasterly side of Kennedy Drive distant 700.56 feet Northerly from the Northerly end of a curve which connects the Easterly side of Kennedy Drive with the Northerly side of Vanderbilt Motor Pkwy; RUNNING THENCE along the Northeasterly side of Kennedy Drive in a Northwesterly direction along a curve to the left having a radius of 360 feet a length of 266.39 feet to a point; RUNNING THENCE North 6 degrees 22 minutes 00 seconds East, 471.33 feet to a point; RUNNING THENCE North 72 degrees 15 minutes 04 seconds East, 98.03 feet to a point; RUNNING THENCE South 84 degrees 21 minutes 42 seconds East, 300 feet to a point; RUNNING THENCE South 5 degrees 38 minutes 18 seconds West, 56.68 feet to a point; continued.... [Illegible] and interest of in and to any streets and continued.... Title No. S-679494 Pg. 2 SCHEDULE A RUNNING THENCE South 81 degrees 46 minutes 10 seconds East, 200.21 feet to a point; RUNNING THENCE South 1 degree 15 minutes 44 seconds West, 131.05 feet to a point; RUNNING THENCE South 5 degrees 38 minutes 18 seconds West, 133.90 feet to a point; and RUNNING THENCE South 57 degrees 04 minutes 10 seconds West, 478.45 feet to the Northeasterly side of Kennedy Drive at the point or place of BEGINNING. /s/ [Illegible] For conveyancing only, Together with all right, title and interest of, [Illegible] in and to any streets and [Illegible] Title No. S-679494 (Sheet 1 of 2) TAX SCHEDULE - ---------------------------- Town of Smithtown Hauppauge ( Not Inc. ) [Compass Rose] The tax search made herein covers School District No. 6 only the premises shown on above Premises Assessed 1981/82 diagram, and no search is made Assessed to VIP Associates against any part of the street on P/O Lot 36 Map of Vanderbilt which said premises abut. Indust Park Section 3 Map No. 4716 Filed 9-13-1966 2.90 Acres Item No. 22-859251 - ---------------------------- County Suffolk District 0800 City Section 185.00 Town Smithtown Block 02.00 Village Hauppauge Let 031.000 School District No. 6 Assessed Valuation Land $1300 Total $1300 - -------------------------------------------------------------------------------- Disposition RETURNS - -------------------------------------------------------------------------------- 1981/82 Town and School Taxes -- Total $624.58 Omit 1st Half -- $312.29 PAID l2-24-198l 2nd Half -- $312.29 PAID 5-11-1982 82/83 Town & School a lien 12/1/82 /s/ [Illegible] Escrow taken to pay. Prior Town and School Taxes Paid. Premises not in an Incorporated Village. EXCEPT Premises are in a municipal water district. /s/ [Illegible] Water meter and sewer rental charges accruing since the date of the last Title No. S-679494 (Sheet 2 of 2) TAX SCHEDULE - ---------------------------- Town of Smithtown Hauppauge ( Not Inc. ) [Compass Rose] The tax search made herein covers School District No. 6 only the premises shown on above Premises Assessed 1981/82 diagram, and no search is made Assessed to VIP Associates against any part of the street on P/O Lot 36 Map of Vanderbilt which said premises abut. Indust Park Section 3 Map No. 4716 Filed 9-13-1966 3.50 Acres Item No. 22-859326 - ---------------------------- County Suffolk District 0800 City Section 185.00 Town Smithtown Block 02.00 Village Hauppauge Let 030.000 School District No. 6 Assessed Valuation Land $1350 Total $1350 - -------------------------------------------------------------------------------- Disposition RETURNS - -------------------------------------------------------------------------------- 1981/82 Town and School Taxes -- Total $648.59 Omit 1st Half -- $324.30 PAID l2-24-198l 2nd Half -- $324.29 PAID 5-11-1982 82/83 Town & School a lien 12/1/82 /s/ [Illegible] Escrow taken to pay. Prior Town and School Taxes Paid. Premises not in an Incorporated Village. Omit EXCEPT Premises are in a municipal water district. /s/ [Illegible] [Illegible] the date of the last Title No. S-679494 SURVEY READING Survey made by Teas, Barrett, Lanzisera & Frink dated July 6, For 1982 and redated October 15, 1982 shows a building under Policy construction. Cobblestone curve along part of the Westerly line of title. Chain link fence varies slightly from part of the Easterly line of title. SCHEDULE 3.19(a) ENVIRONMENTAL PERMITS 1. Seller believes that there may be a tank located under the parking lot next to Building No. 2 at its 50 Engineers Road property that was formerly used to hold heating oil to heat Building No. 2. If so, Seller does not hold a permit from Suffolk County with respect to such tank and has not otherwise registered that tank with Suffolk County. 2. See attachment. -25- ATTACHMENT TO SCHEDULE 3.19 CALIFORNIA MICROWAVE, INC. SATELLITE TRANSMISSION SYSTEM, INC.
AMOUNT OF EXPIRATION TYPE OF COVERAGE COVERAGE INSURER POLICY NO. DATE - ---------------- -------- ------------------ ---- PROPERTY 28,902,000 Am. Guarantee and Liab. Ins.C 3/1/98 BUSINESS INTERRUPTION 7,893,000 PPR81953335-00 INSTALLATION - Ea. Location 7,500,000 WORLDWIDE TRANSIT - Ea. Shipment 7,500,000 Underwriters at Lloyds 3/1/98 MC1010 DOMETIC GENERAL LIABILITY Each Occurrence 1,000,000 Am. Guarantee and Liab. Ins.C 3/1/98 General Aggregate 2,000,000 GL08295352-00 Aggregate - Products/Completed Operations 2,000,000 DOMESTIC ERRORS & OMISSIONS CLAIMS MADE Zurich Insurance Co. 3/1/98 Each Claim 1,000,000 EOC8195354-00 Aggregate 2,000,000 FOREIGN NON-ADMITTED GEN. LIAB. Each Occurrence 1,000,000 Zurich Insurance Co. 3/1/98 General Aggregate 2,000,000 CGL8195351-00 Aggregate - Products/Completed Operations 2,000,000 Automobile Difference in Conditions Bodily Injury and Property Damage 1,000,000 Zurich Insurance Co. 3/1/98 CGL8195351-00 FOREIGN NON-ADMITTED WORK. COMP./ 1,000,000 Zurich Insurance Co. 3/1/98 EMPLOYERS LIABILITY WC8195353-00 DOMESTIC AUTOMOBILE INSURANCE Bodily Injury and Property Damage 1,000,000 Zurich Insurance Co. 3/1/98 BAP8210005-00 UMBRELLA INSURANCE Per Occurrence/Aggregate 25,000,000 TIG 3/1/98 XLB9262686 Errors and Omissions--Claims Made Per Occurrence/Aggregate 10,000,000 EXCESS LIABILITY Per Occurrence/Aggregate $10,000,000 Am. Guarantee & Liab. Ins. Co. 3/1/98 excess of EU08526601-01 $25,000,000 NON-OWNED AIRCRAFT LIABILITY Each Occurrence $5,000,000 Associated Aviation Underwriter 3/1/98 22BN0407488
Page 1 WORLDWIDE FIDELITY - EMPLOYEE THEFT 1,000,000 Travelers/Aetna 3/1/98 005BY101012469BCA FIDUCIARY LIABILITY - Each Loss 2,500,000 Travelers/Aetna 3/1/98 - Each Policy Period 005BY101012469BCA BUSINESS TRAVEL ACCIDENT - Class I 500,000 AIG Life Insurance Company 3/1/98 - Class II 250,000 GTP8044380 WORKERS' COMPENSATION Statutory American Casualty of Reading 7/1/98 Statutory Limits WC184191997 Employers Liab. - Each employee 1,000,000 - Disease Policy Limit 1,000,000 - Accident Each Accident 1,000,000 ANNUAL CUSTOMS BOND 100,000 SEGUROS BOLIVAR 11/22/97 99ECU00001
Page 2 CALIFORNIA MICROWAVE, INC. SINGAPORE SCHEDULE OF INSURANCE Coverage Company/Policy No. Term - -------------------------------------------------------------------------------- Property Insurance American Int'l Group 01-22-97/98 -107- CALIFORNIA MICROWAVE, INC. CHINA SCHEDULE OF INSURANCE Coverage Company/Policy No. Term - -------------------------------------------------------------------------------- General Liability Zurich Insurance Co. 03-01-97/98 -62- SCHEDULE 3.21(a) EMPLOYEE BENEFIT PLANS 1. See attachment. Reference is also made to the employment-related agreements identified under Item 9 on Schedule 3.11(a). -26- ATTACHMENT TO SCHEDULE 3.21(a) CM-STS Benefit Package Group Medical Benefits - 4 Plans Offered by Aetna U.S. Healthcare: EPO, P0S, PPO, US Healthcare HMO Group Dental Benefits -2 Plans Offered: Basic Dental Plan (no cost to employee) Enhanced Dental Plan Flexible Spending Accounts - available for Dependent Care & Medical Care Vision Care Plan - no cost to employee Employee Assistance Program - no cost to employee Group Life Insurance - 2x annual salary, no cost to employee Supplemental Life Insurance - optional - lx, l.5x, 2x or 2.5x Accidental Death & Dismemberment - 2x annual salary, no cost to employee Business Travel Accident Insurance - no cost to employee Dependent Life Insurance - no cost to employee if dependents covered by medical plan Short Term Disability - enhanced NYS benefits Long Term Disability - no cost to employee Sick Leave Vacation Leave Holiday Pay Tuition Reimbursement Stock Purchase Plan 401K Tax-Deferred Savings Plan Deferred Profit Sharing Plan SCHEDULE 3.23 SUPPLIERS AND CUSTOMERS 1. See attachments. -27- List of 20 Largest Customers of STS July 1, 1996 - present MFS NETWORK TECHNOLOGIES, INC. LUCENT TECHNOLOGIES INC., RIYADH, SAUDI ARABIA INNER MONGOLIA MACHINERY IMPORT AND EXPORT CORP. CSC-SHINAWATRA MITSUBISHI CORPORATION REUTERS SA OTE, GREECE GOVERNMENT OF ISLAMIC REPUBLIC OF PAKISTAN LOCKHEED MARTIN ASTRO SPACE COMMERCIAL ROMSAT S. A./ROMANIA CHINA NATIONAL POSTAL & TELECOMMUNICATIONS APPLIANCES CORPORATION SARAH VISION LTD., RIYADH, SAUDI ARABIA BDM INT'L INC., McLEAN, VIRGINIA NACISA NATO, BRUSSELLS, BELGIUM NATO U.S. ARMY, CECOM, FT. MONMOUTH, NEW JERSEY THORN SECURITY LIMITED, COMMUNICATIONS AND TELECONTROL SYSTEMS (ENGLAND) EMETEL/ ECUADOR SINGAPORE TELCOMMUNICATIONS PTE LTD. ITS SDN. BHD./TIME TELEKOM, PETALING JAYA, MALAYSIA home\hhy\customer SATELLITE TRANSMISSION SYSTEMS 20 LARGEST SUPPLIERS BASED ON PAYMENTS MADE FROM DATE: 07/96 To 12/97 - -------------------------------------------------------------------------------- Company Name City State - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EF Data Corp. Phoenix Arizona - -------------------------------------------------------------------------------- CPI SATCOM Division Palo Alto California - -------------------------------------------------------------------------------- VERTEX Dallas Texas - -------------------------------------------------------------------------------- Siemens Limited Chesire England - -------------------------------------------------------------------------------- NERAAS Billingstad Norway - -------------------------------------------------------------------------------- GE American Communications Princeton New Jersey - -------------------------------------------------------------------------------- Sierra Networks Inc. Buffalo New York - -------------------------------------------------------------------------------- Apollo Microwaves Ltd. Pointe Claire Quebec - -------------------------------------------------------------------------------- Andrew Corporation Orland Park Illinois - -------------------------------------------------------------------------------- Tadiran Scopus Holon Israel - -------------------------------------------------------------------------------- International Digital Systems Melbourne Florida - -------------------------------------------------------------------------------- Gulf Communications International Palm Bay Florida - -------------------------------------------------------------------------------- Hughes Network Systems Baltimore Maryland - -------------------------------------------------------------------------------- Microage Tempe Arizona - -------------------------------------------------------------------------------- Miteq Hauppauge New York - -------------------------------------------------------------------------------- ELB Electronics lnc. Old Bethpage New York - -------------------------------------------------------------------------------- Surf Tech Mfg. Corp. Bohemia New York - -------------------------------------------------------------------------------- Communication Techniques Newark New Jersey - -------------------------------------------------------------------------------- Maxtech Incorporated State College Pennsylvania - -------------------------------------------------------------------------------- Specialty Microwave Ronkonkoma New York - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10-Dec-97 - -------------------------------------------------------------------------------- Sole Source Suppliers To STS - --------------------------------------------------------------- EF DATA Channel Unit Lynxx - --------------------------------------------------------------- Plessey Antenna Panels Lynxx - --------------------------------------------------------------- EF DATA Modulators Progeny - --------------------------------------------------------------- Tadiran IRD and Encoder Progeny - --------------------------------------------------------------- Verticom Brick Progeny - --------------------------------------------------------------- HNS TDMA Systems - --------------------------------------------------------------- Microsource X Band Converters Systems - --------------------------------------------------------------- NERA Mini-M/ACSE Systems - --------------------------------------------------------------- Pascall Uplink Controls Systems - --------------------------------------------------------------- SAT Corp Satellite Systems Monitoring - --------------------------------------------------------------- Sumitomo/Mitshubishi DCME Systems - --------------------------------------------------------------- Technical Comm Corp Encrypters Systems - --------------------------------------------------------------- - --------------------------------------------------------------- 12/9/97 - --------------------------------------------------------------- Page 1 SCHEDULE 3.24 BACKLOG 1. See attachment. -28- Satellite Transmission Systems, Inc. 11/24/97 10:10 PM BOOKINGS/BACKLOG REPORT JMB Page: 1
JOB JOB OPENING CLOSING NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE ==================================================================================================================================== 1021 5 HUGHES NETWORK SYSTE FORD BASELINE UPGRADE I & II 59,076.10 0.00 0.00 59,076.10 1027 5 AT&T SATELLITE ENGIN BURST DETECTOR UNITS 32,330.00 0.00 0.00 32,330.00 - ------------------------------------------------------------------------------------------------------------------------------------ 1031 5 AT&T Tridom VIDEO HUB ADD-ON-NC STATE UNIV 17,642.00 0.00 0.00 17,642.00 1032 5 AT&T CONVERTERS 85,065.00 20,970.00 106,035.00 0.00 1034 5 GE SPACENET SERVICES KU BAND DIGITAL VIDEO E/S 60,305.00 142,445.00 0.00 202,750.00 - ------------------------------------------------------------------------------------------------------------------------------------ 1061 5 MFS NETWORK TECHNOLO STATE OF CONN. 6.1M & 2 TRANSP. 0.60 0.00 0.00 0.60 1074 5 RCN INTERNATIONAL F1 NON REDUNDANT 0.00 7,000.00 (7,000.00) 0.00 1079 5 HUGHES NETWORK SYSTE DOMESTIC-CANADIAN SPLIT 313,659.00 0.00 0.00 313,659.00 - ------------------------------------------------------------------------------------------------------------------------------------ 1080 5 AT&T SATELLITE ENGIN LNA SYSTEM w/INSTALLATION 98,780.00 0.00 0.00 98,780.00 1081 5 BT NORTH AMERICA INC PROJECT PLANET 992,081.00 0.00 0.00 992,081.00 ------------ ---------- --------- ------------ - ------------------------------------------------------------------------------------------------------------------------------------ 5 System/Network Domestic Proj. 1,658,938.70 155,415.00 99,035.00 1,716,318.70 53636 10 MULTIMEDIOS AMERICA PROGENY XP EXCITER&PS RECEIVER 0.00 1,029.40 1,029.40 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 53846 10 HARRIS BROADCAST DIV CHEVY TAHOE TRUCK 6,220.00 0.00 0.00 6,220.00 54046 10 TELECOM INTERNATIONA PROGENY UNITS 105,280.00 0.00 0.00 105,280.00 54276 10 TELEKOM MALAYSIA BER EQUALIZER 39,525.00 0.00 0.00 39,525.00 - ------------------------------------------------------------------------------------------------------------------------------------ 54306 10 BT CROYDON LPU USC, GMACS KEY & ACCESSORY 45,782.06 0.00 45,782.06 0.00 54316 10 TELESTAT CORPORATION PROGEN EXCITER & PG RECEIVER 63,083.00 0.00 0.00 63,083.00 54326 10 BT CROYDON LPU USC, GMACS KEY & ACCESSORY 31,255.34 0.00 31,255.34 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 54336 10 BT CROYDON LPU USC & GMACS ACCESSORY 24,862.07 0.00 24,021.08 840.99 54346 10 BT CROYDON LPU USC & ACCESSORY 11,893.17 0.00 11,311.17 582.00 54436 10 COMSAT BRASIL LTDA. PROGENY EXCITER & RECEIVER 84,150.00 0.00 0.00 84,150.00 - ------------------------------------------------------------------------------------------------------------------------------------ 54456 10 BT CROYDON LPU USC & ACCESSORY 9,971.60 0.00 9,971.60 0.00 54476 10 HARRIS BROADCAST DIV PROGENY UNITS 150,335.00 0.00 0.00 150,335.00 54536 10 BT pic USC & ACCESSORY 0.00 6,585.33 0.00 6,585.33 - ------------------------------------------------------------------------------------------------------------------------------------ 54546 10 BT pic GMACS & ACCESSORY 0.00 9,758.20 0.00 9,758.20 54578 10 TECHNOLOGY GROUP PROGENY UNITS 0.00 115,000.00 41,700.00 73,300.00 54606 10 BT pic Remote M&C System 0.00 17,660.79 0.00 17,660.79 - ------------------------------------------------------------------------------------------------------------------------------------ ------------ ---------- --------- ------------ 10 GCE Direct Order 572,357.24 147,974.92 163,011.85 557,320.31 - ------------------------------------------------------------------------------------------------------------------------------------ 6300 15 OFFICE OF NATIONAL P SM EUTELSAT VIDEO E/S MOROCCO 35,820.25 0.00 0.00 35,820.25 6308 15 SINGAPORE TELECOM Std. A Earth Station 5,703.18 0.00 0.00 5,709.18 6313 15 EMPRESA ESTATAL DE ECUADOR DOMSAT PROJECT 180,340.81 0.00 281,402.00 151,998.81 - ------------------------------------------------------------------------------------------------------------------------------------ 6320 15 THORN EMI ELECTRONIC REPLACE TX SYS IN MADLEY 1,2,3 18,552.00 0.00 15,065.00 3,487.00 6364 15 BRITISH TELECOMMUNIC GONNHILLY 5 REMOTE M&C 24,596.00 0.00 0.00 24,596.00 6367 15 SUDATEL 37 STATION DOM. SAT. NETWORK 779,852.00 50,000.00 207,689.00 622,163.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6371 15 BANCO DO BRASIL S.A. ku band project EMBRATEL 3,505,353.60 13.00 704,379.00 800,973.60 6387 15 HUGHES NETWORK SYSTE KU Band 16W [illegible] 14,990.17 0.00 0.00 4,990.00 6391 15 NISSHO IWAI AMERICAN Brunei IDR 6,913.00 0.00 0.00 9,913.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6400 15 LUCENT TECHNOLOGIES EARTH STATION EXPANSION IN SA 368,180.10 0.00 53,176.50 315,003.60 6407 15 LUCENT TECHNOLOGIES EARTH STATION EXPANSION IN SA 3,523,145.20 0.00 166,725.90 3,356,419.30 6416 15 HUGHES NETWORK SYSTE INSAT E/S/Marcsat 2,171.37 0.00 2,171.37 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6422 15 Posts and Telecommun Equipment and Services 101,567.40 0.00 0.00 101,587.40 6423 15 Posts and Telecommun Equipment and Services 191,576.40 216.00 211.00 191,576.40 6425 15 Satellite Television KU Band Upline/Upgrade 7,340.00 33,945.20 0.00 285.20 - ------------------------------------------------------------------------------------------------------------------------------------
Satellite Transmission Systems, Inc. 11/24/97 10:11 PM BOOKINGS/BACKLOG REPORT JMB Page: 2
JOB JOB OPENING CLOSING NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE ==================================================================================================================================== 6426 15 HUGHES NETWORK SYSTE Banco do Brazil Upgrade 51,154.50 0.00 0.00 51,154.50 6428 15 C.S. Communications RF Uplink & C. Band Turnaround 380,345.02 239.00 63,203.02 317,381.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6429 15 Space Communications Data Distribution E/S 63,381.00 0.00 63,381.00 0.00 6430 15 REUTERS SA 9.0m E/S w/SHELTER & SPARES 66,550.13 0.00 0.00 66,550.13 6439 15 BEIJING TELECOMMUNIC 300,058.00 0.00 0.00 300,068.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6463 15 ITS Sdn. Bhd. Earth Stations - SM 1,213.04 0.00 0.00 1,213.04 6480 15 SAMSUNG AMERICA, INC. Transit Hub Station 800.00 0.00 0.00 800.00 6481 15 TELEFONICA SISTEMAS DBS Up Converter Subsystem 36,500.00 0.00 36,500.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6485 15 PAKISTAN PHASE II PROJECT 10,389,010.00 0.00 0.00 10,389,010.00 6488 15 EMPRESA ESTATAL DE DOMSAT EXPANSION NETWORK 196,277.29 0.00 0.00 196,277.29 6491 15 LOCKHEED MARTIN CORP CHINA STAR-1 TT&C STATION 188,345.00 0.00 0.00 188,345.00 - ------------------------------------------------------------------------------------------------------------------------------------ 6495 15 Romsat 11M E/S Hub & Remotes 2,007,629.00 0.00 0.00 2,007,629.00 6498 15 O'CONNOR'S SINGAPRGE BKT-6P & BKT-7P Upgrade 59,523.00 0.00 0.00 59,523.00 6499 15 CHINA NAT. POSTAL & China MPT-Domsat 1,111,056.00 0.00 0.00 1,111,056.00 - ------------------------------------------------------------------------------------------------------------------------------------ 7300 15 LINK COMMUNICATIONS Remote VSAT & Hub Station 110,116.00 0.00 0.00 110,116.00 7302 15 TODAY TRADING SDN. B UPLINK/DOWNLINK EQUIPMENT 191,450.00 0.00 0.00 191,450.00 7303 15 TELEFONICA DE ESPANA v901 UUP CONVERTERS 64,317.92 0.00 0.00 64,317.92 - ------------------------------------------------------------------------------------------------------------------------------------ 7304 15 HUGHES NETWORK SYSTE FORD REFORMA SPARES 87,273.00 0.00 0.00 87,273.00 7305 15 IMPSAT IMPSAT ARGENTINA-TIGER ASSY. 0.00 168,598.00 0.00 168,598.00 7306 15 SARA VISION Ku BAND TV UPLINK E/S 0.00 1,486,651.00 0.00 1,489,651.00 - ------------------------------------------------------------------------------------------------------------------------------------ ------------- ------------ ------------ ------------- 15 International Project 24,071,120.38 1,739,636.20 1,340,908.79 24,469,847.79 - ------------------------------------------------------------------------------------------------------------------------------------ 7110 20 DEFENSE INFORMATION WHCA MAINTENANCE 108,367.50 0.00 0.00 108,367.50 7121 20 BDM INTERNATIONAL IN SPACE SEGMENT KUTE NET 229,004.00 0.00 229,004.00 0.00 7147 20 NATO COMMUNICATIONS NATO BROADBAND 3,112,570.40 0.00 0.00 3,112,570.40 - ------------------------------------------------------------------------------------------------------------------------------------ 7180 20 NATO COMM. & INFORMA X-SAT TERMINAL 10,000.00 0.00 0.00 10,000.00 7208 20 INDUSTRIAL & COMMERC BROADBANDING SPARE PARTS 215,404.80 0.00 0.00 215,404.88 7216 20 INDUSTRIAL & COMMERC CONVERTERS 715.00 0.00 0.00 715.00 - ------------------------------------------------------------------------------------------------------------------------------------ 7229 20 INDUSTRIAL & COMMERC CT-9C CONVERSION KIT 3,893.00 0.00 0.00 3,893.00 7231 20 INDUSTRIAL & COMMERC Modified CT3K System 36,630.00 0.00 36,630.00 0.00 7233 20 INDUSTRIAL & COMMERC MISC EQUIP 80,027.00 0.00 0.00 80,027.00 - ------------------------------------------------------------------------------------------------------------------------------------ 7234 20 INDUSTRIAL & COMMERC dehydrators 7,086.00 0.00 0.00 1,086.00 7236 20 INDUSTRIAL & COMMERC Down Converter 9,947.00 0.00 9,947.00 0.00 7237 20 INDUSTRIAL & COMMERC 3 Converters 32,955.00 0.00 32,955.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 7238 20 INDUSTRIAL & COMMERC CT-7C Terminals 857,014.00 0.00 0.00 857,014.00 7239 20 DFAS Columbus Center GSCL TERMINAL 1,565,337.00 0.00 0.00 1,565,337.00 7240 20 INDUSTRIAL & COMMERC ENGINEERING SERVICES 50,000.00 0.00 0.00 50,000.00 - ------------------------------------------------------------------------------------------------------------------------------------ ------------ -------- ---------- ------------ 20 Government Programs 6,318,990.70 0.00 308,576.00 6,010,414.70 - ------------------------------------------------------------------------------------------------------------------------------------ 1730 25 HUGHES NETWORK SYSTE MISC. CABLES 9,982.00 9,982.00 0.00 0.00 1744 25 HUGHES NETWORK SYSTE MISC SPARE PARTS 98,330.00 0.00 0.00 98,330.00 1755 25 RAYTHEON SUPPORT SER MISC SPARE PARTS 132,474.00 0.00 0.00 132,474.00 - ------------------------------------------------------------------------------------------------------------------------------------ 1763 25 RAYTHEON E-SYSTEMS HANDSET 0.00 250.00 250.00 0.00 1764 25 PanAmSat INC. SUMMARY ALARM PANEL 0.00 3,135.00 0.00 3,135.00 1766 25 HUGHES NETWORK SYSTE UPC-100 GRAY PANEL 0.00 15,150.00 0.00 5,150.00 - ------------------------------------------------------------------------------------------------------------------------------------
Satellite Transmission Systems, Inc. 11/24/97 10:12 PM BOOKINGS/BACKLOG REPORT JMB Page: 3
JOB JOB OPENING CLOSING NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE =================================================================================================================================== 1767 25 RALSAT INTERNATIONAL CRYSTAL OSCILLATOR 104.8958 33 0.00 932.00 0.00 932.00 1769 25 HUGHES NETWORK SYSTE JACK COVER 0.00 1,080.00 0.00 1,080.00 - ----------------------------------------------------------------------------------------------------------------------------------- 17656 25 PanAmSat INC SUMMARY ALARM PANEL 0.00 3,135.00 0.00 3,135.00 17686 25 CROSSLINK TRANSMIT & RECEIVE CABLES 0.00 591.00 591.00 0.00 ---------- --------- -------- ---------- - ----------------------------------------------------------------------------------------------------------------------------------- 25 System Product Spares Order 240,786.00 14,291.00 841.00 254,326.00 6532 35 ACUMEN CO., LTD. DEQ-703 4,950.00 0.00 4,950.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- 6902 35 EGYPTIAN RADIO & TV SPARES FOR JOB 6282 890.00 0.00 0.00 890.00 6985 35 TEE-COM ELECTRONICS, SOFTWARE MODIFICATION 5,950.00 5,950.00 0.00 0.00 6990 35 TMI COMMUNICATIONS MISC SPARE PARTS 1.00 0.00 0.00 1.00 - ----------------------------------------------------------------------------------------------------------------------------------- 65216 35 VIDESH SANCHAR NIGAM CRYSTAL OSCILLATORS 5,885.00 0.00 0.00 5,885.00 65256 35 PHILLIPPINE COMMUNIC OSCILLATOR RP LOCAL PREQ 20,250.00 0.00 0.00 20,250.00 65266 35 ARMENIA TELEPHONE CO MISC SPARE PARTS 25,983.00 0.00 0.00 25,983.00 - ----------------------------------------------------------------------------------------------------------------------------------- 65276 35 TELESAT CORPORATION MISC SPARE PARTS 191,948.00 0.00 0.00 191,948.00 65296 35 HARIFF CRYSTALS 24,419.00 0.00 0.00 24,419.00 65316 35 ACUMEN CO., LTD. misc spare parts 15,843.00 0.00 4,500.00 15,843.00 - ----------------------------------------------------------------------------------------------------------------------------------- 65346 35 RACAL SURVEY LTD. UPC100 15,150.00 0.00 0.00 15,150.00 65356 35 ETISALAT SUMMARY ALARM PANEL 5,715.05 0.00 0.00 5,715.05 65366 35 ETISALAT MISC SPARE PARTS 21,410.00 0.00 0.00 21,410.00 - ----------------------------------------------------------------------------------------------------------------------------------- ---------- --------- -------- ---------- 35 International Spares Order 338,394.66 5,950.00 9,450.00 332,994.66 - ----------------------------------------------------------------------------------------------------------------------------------- 7711 40 COMMERICAL ACCOUNTS OSCILLATORS 4,444.00 0.00 4,444.00 0.00 7712 40 CMI/GCS U/C &D/C TRIBAND (5.00) 0.00 0.00 (5.00) 7714 40 CMI/GCS MISC SPARE PARTD 36,500.00 0.00 36,500.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- 7715 40 CMI/GCS UNIVERSAL SYSTEMS CONTROLLER 16,000.00 0.00 0.00 16,000.00 7716 40 CMI/GCS MCU ASSY 0.00 6,353.75 6,353.75 0.00 7717 40 CMI/GCS TMSX-GIF TRANSFER SWITCH 0.00 1,200.00 1,200.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- 76666 40 FINANCE & ACCOUNTING MISC. 6CE SPARES 6,234.00 6,234.00 0.00 0.00 ---------- --------- -------- ---------- 40 Government Spares Order 63,173.00 1,319.75 48,497.75 15,995.00 - ----------------------------------------------------------------------------------------------------------------------------------- 6357 45 GOVERNMENT OF ISLAMI SERVICE AND MAINTENANCE PROJ 104,262.00 0.00 0.00 104,262.00 7202 45 INDUSTRIAL & COMMERC ENGINEERING SERVICE 28,673.00 0.00 0.00 108,673.00 - ----------------------------------------------------------------------------------------------------------------------------------- 8010 45 ELNA ELEKTRO-NAVIGAT LEASE EQUIPMENT 0.00 21,200.00 21,200.00 0.00 82009 45 HUGHES NETWORK SYSTE V/C 0.00 4,079.00 4,079.00 0.00 82169 45 HUGHES NETWORK SYSTE SEMI RIGID CABLE 0.00 611.00 611.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- 82229 45 CATERPILLAR INC HIGH VOLT CABLE 0.00 3,073.00 3,073.00 0.00 82429 45 TELESAT CANADA 0.00 100.00 100.00 0.00 82708 45 SOTELGU1 S.A. DC4021BU 0.00 4,638.00 4,638.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- 83507 45 CALIFORNIA MICROWAVE SC1100 5,514.00 0.00 0.00 5,514.00 84178 45 THOMSON-CSF R.C.C. P/S 0.00 304.00 304.00 0.00 84278 45 ENTERPRISE RENT-A-CA EXTENDER CARD 0.00 207.00 207.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- 86158 45 AT&T Tridom MODULATOR 0.10 0.00 0.00 0.00 86238 45 TELESAT CANADA LYNXX 0.00 6,363.00 6,363.00 0.00 86448 45 HELLENIC TELE ORGAN MODULATOR PCB 0.00 682.42 682.42 0.00 - -----------------------------------------------------------------------------------------------------------------------------------
Satellite Transmission Systems, Inc. 11/24/97 10:16 PM BOOKINGS/BACKLOG REPORT JMB Page: 4
JOB JOB OPENING CLOSING NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE ==================================================================================================================================== 86818 45 AMSC SUBSIDAIRY CORP IF AMPLIFIER 0.00 1,570.00 1,570.00 0.00 86876 45 DY GENERAL MANAGER PLA-1010-01 0.00 843.42 843.42 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 86887 45 HUGHES NETWORK SYSTE LNA 0.00 2,046.00 2,046.00 0.00 87258 45 AOS INC. LYNXX 0.00 1,053.66 1,053.66 0.00 87268 45 AOS INC. LYNXX 0.00 1,143.66 1,143.66 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 87438 45 HUGHES NETWORK SYSTE 125W TPA 0.00 1,300.00 1,300.00 0.00 87758 45 TELESAT CANADA LYNXX 0.00 6,512.00 6,512.00 0.00 87878 45 HUGHES NETWORK SYSTE ANTENNA PAINT 0.00 375.00 375.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 87887 45 TODAY TRADING SDN. B SERIAL INTFC PCB 193.83 0.00 0.00 193.83 87927 45 AT&T OF PUERTO RICO HELIX P/S 0.00 2,450.00 2,450.00 0.00 87938 45 TELEFONICA SISTEMAS GMACS KEY 0.00 304.00 304.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88188 45 HUGHES NETWORK SYSTE DC1233AB 0.00 1,865.25 1,865.25 0.00 88218 45 BOLAR ENTERPRISE CO. UPC100 650.00 0.00 650.00 0.00 88228 45 BOLAR ENTERPRISE CO. UPC100 1,280.00 0.00 1,280.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88317 45 CALIFORNIA MICROWAVE DEMOD MODULE 0.00 505.00 505.00 0.00 88318 45 TELESAT CANADA LYNXX 0.00 3,487.00 3,487.00 0.00 88327 45 CALIFORNIA MICROWAVE DEMOD MODULE 0.00 500.00 500.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88328 45 TELESAT CANADA PBX PCB 0.00 1,039.00 1,039.00 0.00 88438 45 RT COMUNICACIONES, S. D/C 0.00 905.00 905.00 0.00 88478 45 HUGHES NETWORK SYSTE U/C 0.00 1,849.75 1,849.75 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88548 45 NATIONAL PUBLIC RADI LYNXX 0.00 500.00 500.00 0.00 88558 45 HUGHES NETWORK SYSTE ACU 0.00 2,432.00 2,432.00 0.00 88618 45 EL PASO ANALYTICS, I DEMOD MODULE 0.00 812.00 812.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88628 45 HUGHES NETWORK SYSTE D/C 0.00 3,120.75 3,120.75 0.00 88668 45 UNIVERSITY OF WASHIN UC1431BB 0.00 4,012.00 4,012.00 0.00 88678 45 TRIDOM CORPORATION REPAIR FOR AT&T/HAI 0.00 2,792.00 2,792.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88738 45 CALIFORNIA MICROWAVE DAS200-2 0.00 1,859.00 1,859.00 0.00 88748 45 CALIFORNIA MICROWAVE DC1233AB 0.00 2,400.00 2,400.00 0.00 88778 45 CALIFORNIA MICROWAVE TRI BAND D/C 0.00 875.00 875.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88788 45 HUGHES NETWORK SYSTE REPAIR FOR HNS/FORD 0.00 1,986.00 1,986.00 0.00 88818 45 ENTERPRISE RENT-A-CA DEHYDRATOR 0.00 962.00 962.00 0.00 88828 45 HUGHES NETWORK SYSTE U/C 0.00 4,523.00 4,523.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 88928 45 COM NET SPA ADOS TERMINAL 0.00 803.00 803.00 0.00 88938 45 COM NET SPA ADOS TERMINAL 0.00 584.00 584.00 0.00 89001 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/CVS 0.00 2,514.89 2,514.89 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 89018 45 GOVERNMENT OF ISLAMI MAINTENANCE SERVICES PAKISTAN 276,409.25 2,700.00 43,386.00 230,323.25 89031 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/FORD 0.00 1,150.00 1,150.00 0.00 89061 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/TOYSO 0.00 2,246.00 2,246.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 89171 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/CONDISCO (WALS) 0.00 1,396.00 1,396.00 0.00 89181 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/CVS 0.00 2,585.00 2,585.00 0.00 89191 45 TRIDOM CORPORATION FLD TRIP-GE SPACN/AT&T/WAUKAS 0.00 2,931.00 2,931.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 89198 45 LILCO SPACE SEGMENT 7,111.00 6,412.50 6,412.50 7,111.00 89221 45 TRIDOM CORPORATION FLD TRIP-GE SPACENT/S1PCA 0.00 6,205.00 6,205.00 0.00 89298 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/FORD 0.00 1,350.00 1,350.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ 89329 45 HUGHES NETWORK SYSTE PREV MAINT-HNS/EDS 0.00 13,017.00 13,017.00 0.00 89341 45 BDM FEDERAL, INC. SPACE SEGMENT/BDM 0.00 458,088.00 0.00 0.00 89479 45 HUGHES NETWORK SYSTE HNS/CIRFY 0.00 16,417.00 16,417.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------
11/24/97 10:18 PM JMB Page: 5 BOOKINGS/BACKLOG REPORT
- ---------------------------------------------------------------------------------------------------------------------------------- JOB JOB OPENING CLOSING NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE ================================================================================================================================== 89619 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/PBS 0.00 11,783.00 11,783.00 0.00 89527 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/WALMART 0.00 12,053.00 12,053.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 89528 45 SNAPP PERFORMANCE TESTING 20,145.00 0.00 0.00 20,145.00 89529 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/TCI 0.00 12,334.39 12,334.39 0.00 89539 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/CHRYSLER 0.00 14,799.00 14,799.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 89549 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/WALGRN 0.00 11,006.00 11,006.00 0.00 89459 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/GM 0.00 12,805.00 12,805.00 0.00 89607 45 HUGHES NETWORK SYSTE FLD TRIP/HNS/TOYS R US VIDEO 0.00 6,731.00 6,731.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 89739 45 TRIDOM CORPORATION FLD TRIP - GE, SPACENET/FAA 0.00 28,601.00 28,601.00 0.00 89769 45 GLOBE TELECOM, GMCR GMACS UPGRADE 93,357.00 0.00 0.00 93,357.00 89798 45 AT&T Tridom AT&T/KEESLER AFB FIELD TRIP 1,937.50 0.00 0.00 1,937.50 - ---------------------------------------------------------------------------------------------------------------------------------- 89799 45 HUGHES NETWORK SYSTE PREV MAINT - HNS/COMDISCO 0.00 10,181.00 10,181.00 0.00 89829 45 HUGHES NETWORK SYSTE ANTENNA WASH - HNS/WALGREEN 0.00 11,470.00 11,470.00 0.00 89848 45 HUGHES NETWORK SYSTE HNS MEXICO MAINTENANCE CONTRA 39,000.00 15,000.00 15,000.00 39,000.00 - ---------------------------------------------------------------------------------------------------------------------------------- 89849 45 HUGHES NETWORK SYSTE PREV MAINT - HNS/TOYSV 0.00 10,919.00 10,919.00 0.00 89879 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/JMAXX 0.00 2,448.00 2,448.00 0.00 89889 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/CVS 0.00 3,503.00 3,503.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 89929 45 CATERPILLAR INC. SCAMP TRAINING - CATERPILLER/BZL 0.00 3,648.00 3,648.00 0.00 89969 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/CHRYSLER 0.00 7,277.00 7,277.00 0.00 89979 45 PT. APLIKANUSA LINTA PM/REPAIR- LINTASARYA, INDONESIA 25,080.00 0.00 0.00 25,080.00 - ---------------------------------------------------------------------------------------------------------------------------------- 89989 45 RED CORPORATIVA NACI PREV & REPAIR MAINT CONT - RON 0.00 7,000.00 8,000.00 0.00 89999 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/EDJONES 0.00 4,188.00 4,188.00 0.00 ---------- ---------- ---------- ------------ - ---------------------------------------------------------------------------------------------------------------------------------- 45 Repair Order 603,612.48 793,427.19 387,355.19 1,014,684.48 92418 65 TELESAT CANADA LYNXX 0.00 6,722.00 6,722.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- ---------- ---------- ---------- ------------ 65 Warranty Jobs 0.00 6,722.00 6,722.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22025 70 RADIOLA CORPORATION LYNXX AND ACCESSORIES 12,000.00 0.00 0.00 12,000.00 22071 70 AOS INC. (32) STV Options 32,000.00 0.00 0.00 32,000.00 22074 70 CANADIAN DND (37) stv 111 OPTIONS 99,750.00 0.00 0.00 99,750.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22134 70 RADIOLA CORPORATION LYNXX AND ACCESSORIES 9,000.00 0.00 0.00 [ILLEGIBLE] 22167 70 FROTRONICS INC. MULTIPLEXER 9,742.00 0.00 0.00 [ILLEGIBLE] 22188 70 TD COMMUNICATIONS LYNXX w/STV 111 OPTION HARD CASE 900.00 0.00 0.00 [ILLEGIBLE] - ---------------------------------------------------------------------------------------------------------------------------------- 22257 70 UNIMESA CO., LTD. LYNXX CABLE 300.00 0.00 0.00 300.00 22275 70 REMOTE SATELLITE SYS LYNXX w/STV_111 & ACCESSORY 7,932.00 212.00 4,830.00 3,314.00 22276 70 AOS INC. MASTER HANDSET FOR LYNXX 840.00 0.00 840.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22278 70 7E.COMMUNICATIONS LTD. [ILLEGIBLE] 17,850.00 [ILLEGIBLE] 17,879.00 0.00 22280 70 OMNES LTD. LYNXX & REMOTE ANTENNA KIT 1,170.00 52.00 1,222.00 0.00 22283 70 OMNES LTD. REMOTE ANTENNA KIT 1,170.00 52.00 1,222.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22284 70 ABLE COMMUNICATIONS LYNXX & ACCESSORY 0.00 24,652.00 24,625.00 0.00 22285 70 O'GARA SATELLITE NET LYNXX SURFER 0.00 3,750.00 3,750.00 0.00 22286 70 OMNES LTD. LYNXX & REMOTE ANTENNA KIT 0.00 20,810.00 20,810.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22287 70 CALIFORNIA MICROWAVE LYNXX 0.00 49,680.00 49,680.00 0.00 22288 70 AOS INC. LYNXX 0.00 20,786.00 20,786.00 0.00 22289 70 ABLE COMMUNICATIONS LYNXX 0.00 20,506.00 20,506.00 0.00 - ----------------------------------------------------------------------------------------------------------------------------------
11/24/97 10:20 PM JMB Page: 6 BOOKINGS/BACKLOG REPORT
- ---------------------------------------------------------------------------------------------------------------------------------- JOB JOB OPENING CLOSING NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE ================================================================================================================================== 22290 70 7E COMMUNICATIONS Lt HARD CASE 0.00 1,280.00 0.00 1,280.00 22291 70 FROTRONICS INC. LYNXX & ACCESSORY 0.00 20,384.00 22,834.00 1,050.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22292 70 UNIMESA CO., LTD LYNXX & ACCESSORY 0.00 21,000.00 0.00 121,000.00 22293 70 FROTRONICS INC. HARD CASE 0.00 682.00 0.00 682.00 22294 70 O'GARA SATELLITE NET REMOTE ANTENNA KIT 0.00 3,000.00 3,000.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- 22295 70 TOCOM REMOTE ANTENNA KIT 0.00 1,500.00 0.00 1,500.00 ------------- ------------ ------------ ------------- 70 MOBILESAT 232,654.00 193,448.00 193,584.00 232,518.00 ============= ============ ============ ============= - ---------------------------------------------------------------------------------------------------------------------------------- GRAND TOTALS 34,100,027.16 3,047,284.06 2,416,186.56 34,731,124.66 - ---------------------------------------------------------------------------------------------------------------------------------- 34,100,027.16 3,047,284.06 136,795.02 ------------ 2,552,981.58 34,594,329.64 - ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 4.2 GOVERNMENT APPROVALS AND OTHER CONSENTS 1. Hart-Scott-Rodino filing. 2. Consents required under Buyer's existing credit facility with Bank of America, as agent bank. -29- SCHEDULE 5.2(e) LETTERS OF CREDIT; PERFORMANCE AND SURETY BOND See attachment. -30- Attachment to Schedule 5.2(e) As of 12/11/97
BENEFICIARY ISSUANCE STANDBY IC OUTSTANDING LC# FOREIGN BANK (Customer) DATE MATURITY DATE AMOUNT - --- ------------ ---------- ---- ------------- ------ 226639 Bank of America-Athens Hellenic Telecommunications Org S.A. (OTE) 12/22/95 1/15/98(a) 120,000.00 3001458 Bank of China-Beijing China Nat'l Post & Telecomm 9/l9/96 1/30/98 482,168.00 Appliances Corp. No. 17A 3002082 China Merchant Bank-Shenyang Liaoning Int'l Trade Hongyu Corp 10/28/96 1/30/98 49,400.28 3002083 Industrial Coml Bank-Shanghai Inner Mongolia Machinery Import Export Corp 10/28/96 1/30/98 85,926.52 3002802 Banco Popular Del Ecuador Amazonas Emetel S.A. 12/20/96 1/31/98 47,500.00 3002803 Banco Popular Del Ecuador Amazonas Emetel S.A. 12/23/96 1/31/98 672,377.00 3005966 Bank Hapoalim-Tel Aviv Bezeq-Israel Telecomm Corp 8/28/97 2/13/98 225,000.00 225216 Bank of America-Athens Hellenic Telecommunications 12/22/95 2/14/98(a) 205,000.00 224990 Bank of America-Greece Hellenic Telecommunications 12/22/95 2/15/98(a) 65,000.00 Organization S.A. (OTE) 3003465 Bank Hapoalim-Tel Aviv Bezeq-Israel Telecomm Corp 2/13/97 2/28/98 82,396.65 139161 Union Bank of Bankok Jasmine International 9/15/95 3/14/98(e) 181,425.00 3002729 Arab American Bank-New York Syrian Telecommunications Est 12/17/96 3/15/98 15,587.00 220517 Arab African Int'l Bank, Egypt Egyptian Radio & Television 9/15/95 3/28/98(a) 9,948.00 Union Broadcast Engineering 3003068 Bank of America-Hong Kong Satellite TV Asian Region (STAR) 1/14/97 4/14/98(a) 148,501.00 3007586 Banque Commerciale Du Maroc Kingdom of Morroco-Nat'l 11/10/97 4/15/98 58,000.00 Office of Posts & Telecomm 226085 Bank of America US Samsung America Inc. l2/22/95 4/15/98(a) 146,883.00 225454 Nat'l Bank of Abu Dhabi Egyptian Radio & Television 8/1/95 4/30/98 8,759.00 Engineering Sector/Television 3004932 Banque Bruxelles Lambert NATO 6/11/97 5/16/98(b) 1,100,378.00 138479 Nat'l Bank of Abu Dhabi Emirates Telecommunications Ltd 12/15/95 6/14/98(a) 171,635.40 3004233 Bank of America-Pakistan Gov of Pakistan-Nat'l Logistic Cell 6/24/97 6/24/98(c) 2,175,000.00 223281 Nat'l Bank of Abu Dhabi Emirates Telecommunications Ltd 8/18/95 8/17/98(a) 485.23 3003262 Bank of America-Singapore Singapore Telecom 2/14/97 9/14/98 298,250.00 3005817 Turkiye IS Bankasi A.S. Turk Telekomlikasyon A.S. 8/19/97 12/19/98 14798.20 36222 Bank of America-Singapore Singapore Controller Income Tax 9/17/97 1/31/99(d) 25,103.48 Total Standby LCs 6,374,521.76 Global Perf Bond Bank of America-Antwerp Armed Forces of Belgium (f) 3/26/97 12/31/97(f) 636,637.03 Bank Declaration Bank of America-Antwerp Armed Forces of Belgium (g) 9/2/97 (g) 5,139,259.67 Grand Total 12,150,418.46 NOTE: (a) Automatically extends 6 mos from indicated maturity date (b) Automatically extends 1 yr from indicated maturity date (c) Extends addl 11 mos w/ bank's internal approval; max term of LC 26 mos from 6/24/97 (d) In process of cancelling, issued for Expat no longer employed w/ CMI (e) Automatically extends 3 mos from indicated maturity date (f) Performance bond outstanding until exp of bid validity date (12/31/97), may extend to 2/26/98 since STS extended its bid validity date to 2/26/98; if NOT awarded contract, bond expires; if awarded contract, term= 41 mos from contract execution; USD amt marked to market monthly based on 9/97 BEF value= 23,355,030= maximum amount, decreases from mos 16 (g) BofA declared to issue guarantee IF awarded contract; Bond amt noted above currently reserved under our credit line together w/ Global performance performance bond; USD amt marked to market monthly based on 9/97 BEF value 188,533,741 = maximum amount, decreases from mos 18
As of 12/11/97 except where noted Attachment to Schedule 5.2(e)
OUTSTANDING MAXIMUM BOND NUMBER BENEFICIARY TYPE OF BOND BOND AMOUNT CONTRACTUAL EXPOSURE ISSUANCE DATE - ----------- ----------- ------------ ----------- -------------------- ------------- 99ECU00001 Country of Equador Customs $100,000 $100,000 11/26/96 9000001 Emetel Advanced Pmt $8,913,251(a) $6,767,801(c) 3/17/94 K04693620 MFS Network Performance $1,701,458 $1,701,458 4/26/96 122 Emetel Performance $247,435 $247,435 7/6/98 68 Emetel Advanced Pmt $4,309,876(b) $3,970,314(c) 5/24/96 103 Emetel Customs $25,000 $25,000 9/96 ----------- ----------- TOTAL $15,297,020 $12,812,008
ALL ISSUED BY INSURANCE COMPANY OF AMERICA THROUGH SEGUROS BOLIVAR (a) as of 10/22/97, latest confirmed date available (b) as of 11/30/97, latest confirmed date available (c) Maximum Exposure reduced from Bond Amount in 11/97 due to customer acceptances SCHEDULE 5.2(f) SEVERANCE AGREEMENTS 1. Severance Agreement dated April 3, 1997 between Seller and Brian Maloney. 2. Severance Agreement dated May 20, 1997 between Seller and Bruce Strean. 3. Severance Agreement dated May 20, 1997 between Seller and Michael Pinto. -31- SCHEDULE 6.2(c) CONSENTS Customer Agreements a. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE Ltd. for design, manufacture, supply, installation, testing & commissioning on a semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at Seletar Earth Station (6308) b. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE Ltd. for Recomm Maintenance Parts (6308) c. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE Ltd. for design, manufacture, supply, installation, testing & commissioning on a semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at Seletar Earth Station (6308) d. Amended Purchase Order dated May 17, 1994, Singapore Telecommunications PTE Ltd. for two Intelsat STD-A Antennas & their buildings at Seletar Earth Station (6308) e. Contract between the Government of the Islamic Republic of Pakistan and California Microwave, Inc. Satellite Transmission Systems dated March 17, 1996, concerning the supply of satellite earth station equipment. f. Contract documents dated November 29, 1996 between Satellite Television Asian Region Limited and CMI-STS for supply and installation of Kuban Video Uplink Upgrade for Video Broadcast Service. g. Agreement between CMI-STS and Singapore Telecommunications PTE Ltd. pursuant to a series of purchase orders issued by Singapore Telecom to CMI-STS dated September 7, 1994, August 16, 1994, August 18, 1994, August 13, 1994. h. Purchase Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and Satellite Transmission Systems, Inc., as amended on November 19, 1995. Non-Disclosure Agreements Confidential Disclosure Agreement dated August 8, 1997, between CMI-STS and Philips Broadcast Television Systems Company. -32- License Agreements a. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI (Non-exclusive license to CM-STS regarding technology for use in the Lynxx Inmarsat B Transportable Earth Stations). b. Lynxx Software Royalty Agreement dated September 22, 1997 between CM-STS, SPACEHAB, Inc. and Crosslink, Inc., including a License Agreement dated September 22, 1997 from CM-STS to SPAGEHAB, Inc. and a License Agreement dated September 22, 1997 from SPACEHAB, Inc. to CM-STS (Cross-license regarding technology relating to the Lynxx Inmarsat B Transportable Earth Stations) c. Licensing Agreement dated July 19, 1995 between International Mobile Satellite Organization and Mobile Satellite Products Corporation (Non-exclusive trademark license to Seller regarding use of the Inmarsat trademark on certain of its products). d. Cooperation and Project Funding Agreement dated June 15, 1994 between the Israel-United States Binational Industrial Research and Development ("BIRD") Foundation, Binational Industrial Research and Development Foundation, Tadiran Ltd. Communications Systems Division and Satellite Transmissions Systems, Inc. (CM-STS jointly developed technology relating to Progeny with funds from the BIRD Foundation. CM-STS is repaying the BIRD Foundation by making payments based on a percentage of gross sales of Progeny units.) Other Agreements a. Amended and Restated Sale Agreement dated as of November 1, 1987 between Suffolk County Industrial Development Agency and Satellite Transmission Systems, Inc. b. Guarantee dated January 17, 1995 pursuant to which California Microwave, Inc. guaranteed the obligations of STS with respect to the Purchase Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and STS, as amended on November 19, 1995. Other a. Consents of the Federal Communications Commission. -33- EX-10.81 10 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT BETWEEN FAP TRUST AND L-3 COMMUNICATIONS CORPORATION FEBRUARY 10, 1998 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS ............................. 1 ARTICLE II PURCHASE AND SALE .......................... 6 II.1 Purchase and Sale ........................................ 6 II.2 Cash Purchase Price ...................................... 6 II.3 Adjustment of Cash Purchase Price ........................ 7 II.4 Post-Closing Payment ..................................... 8 II.5 Dispute Resolution ....................................... 11 II.6 Closing .................................................. 12 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER ............... 13 III.1 Due Organization of Seller ............................... 13 III.2 Requisite Consents; Nonviolation ......................... 13 III.3 Due Organization of the Company .......................... 14 III.4 Acquired Assets .......................................... 14 III.5 Subsidiaries, etc ........................................ 14 III.6 Financial Data ........................................... 14 III.7 No Material Changes ...................................... 14 III.8 Undisclosed Liabilities .................................. 15 III.9 Governmental Authorizations; Compliance with Law ......... 15 III.10 Litigation ............................................... 16 III.11 Employee Benefit Plans ................................... 16 III.12 Intellectual Property .................................... 17 III.13 Real and Personal Property ............................... 18 III.14 Insurance ................................................ 19 III.15 Tax Matters .............................................. 19 III.16 Environmental Matters .................................... 20 III.17 Contracts ................................................ 21 III.18 Inventory ................................................ 22 III.19 Accounts Receivable ...................................... 22 III.20 Condition of Plant and Equipment ......................... 22 III.21 Customers and Suppliers .................................. 22 III.22 Bank Accounts ............................................ 23 III.23 Brokers, Finders, Etc .................................... 23 III.24 Employees ................................................ 23 Page ---- III.25 Government Contracts ..................................... 23 III.26 Government Furnished Equipment ........................... 25 III.27 Organizational Conflicts of Interest ..................... 25 III.28 Affiliate Transactions ................................... 25 III.29 Disclosure in the Seller's Schedule ...................... 25 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER ............... 25 IV.1 Due Incorporation; Requisite Power and Authority ......... 25 IV.2 Requisite Consents; Nonviolation ......................... 26 IV.3 Broker's Fees ............................................ 26 ARTICLE V CERTAIN TRANSACTIONS AND AGREEMENTS PRIOR TO THE CLOSING DATE ...................... 26 V.1 Confidentiality .......................................... 26 V.2 Business Organization .................................... 26 V.3 Cooperation .............................................. 27 V.4 Subsidiary Merger ........................................ 28 V.5 No Seller Distributions .................................. 28 V.6 Further Assurances ....................................... 28 ARTICLE VI COVENANTS REGARDING POST CLOSING ACTIVITIES ............. 29 VI.1 Employee Matters ......................................... 29 VI.2 Seller's Indemnification ................................. 30 VI.3 Contracts Requiring Consent to Assignment ................ 33 VI.4 Company Plans ............................................ 33 VI.5 Research and Experimental Expenses ....................... 33 ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER ............ 34 VII.1 Government Approvals; Litigation ......................... 34 VII.2 Permits and Approvals .................................... 34 -ii- Page ---- ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATIONS .................. 34 VIII.1 Representations and Warranties; Performance .............. 34 VIII.2 Escrow Agreement ......................................... 34 VIII.3 Subsidiary Merger ........................................ 35 VIII.4 Material Adverse Change .................................. 35 VIII.5 Proceedings .............................................. 35 VIII.6 Ilex Agreement ........................................... 35 VIII.7 Non-Competition Agreements ............................... 35 ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLER ................. 35 IX.1 Representations and Warranties; Performance .............. 35 IX.2 Proceedings .............................................. 35 IX.3 Ilex Agreement ........................................... 36 ARTICLE X FEES AND EXPENSES .......................... 36 X.1 Expenses ................................................. 36 X.2 Fees or Commissions of Brokers ........................... 36 ARTICLE XI TERMINATION ............................. 36 XI.1 Termination of Agreement ................................. 36 XI.2 Effect of Termination .................................... 36 ARTICLE XII MISCELLANEOUS ............................ 37 XII.1 Time of the Essence ...................................... 37 XII.2 Entire Agreement ......................................... 37 XII.3 Press Releases and Public Announcements .................. 37 XII.4 Counterparts ............................................. 37 XII.5 Descriptive Headings ..................................... 37 XII.6 Notices .................................................. 37 XII.7 Arbitration .............................................. 38 XII.8 Choice of Law ............................................ 39 -iii- Page ---- XII.9 Bulk Sale and Other Tax Filings .......................... 39 XII.10 Transfer Taxes; Sales Tax ................................ 39 XII.11 Binding Effect; Benefits ................................. 39 XII.12 Assignability ............................................ 39 XII.13 Waiver and Amendment ..................................... 39 XII.14 Attorneys' Fees .......................................... 40 XII.15 Severability ............................................. 40 XII.16 No Recourse .............................................. 40 EXHIBIT A Seller's Schedule EXHIBIT VIII.2 Form of Assignment of Escrow Agreement EXHIBIT VIII.7 Form of Assignment of Non-Competition Agreements -iv- ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated as of February 10, 1998 is entered into by and among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation ("Buyer") and FAP TRUST, a Connecticut trust ("Seller"). RECITALS WHEREAS, the Buyer wishes to purchase from Seller, and Seller wishes to sell to the Buyer, all of the Acquired Assets (as hereinafter defined) subject to the assumption by the Buyer of the Assumed Liabilities (as hereinafter defined), upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows: ARTICLE I DEFINITIONS As used herein: "Acquired Assets" means all of the assets (tangible and intangible) of the Seller, including those of the Acquired Company (as hereinafter defined) (except for those assets listed in the proviso to this definition), including, without limitation, all of its right, title and interest in and to: (a) Leaseholds and subleaseholds of real property to which it is a party, and all, improvements, fixtures, and fittings thereon, and easements, rights-of-way, and other appurtenants thereto (such as appurtenant rights in and to public streets); (b) Tangible personal property (such as machinery, equipment, inventories of raw materials and supplies, manufactured and purchased parts, goods in process and finished goods, furniture, automobiles, trucks, tractors, trailers, tools, jigs, and dies); (c) Intellectual Property, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions; (d) Leases, subleases, and rights thereunder; (e) Agreements, contracts, indentures, mortgages, instruments, security interests, guaranties, other similar arrangements, and rights thereunder; -1- (f) Accounts, notes, and other receivables, except those excluded under clause (iv) of the proviso to this definition; (g) Claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment; (h) Franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies; (i) Prepaid expenses, except those excluded under clause (v) of the proviso to this definition; (j) Books, records, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings, and specifications, creative materials, advertising and promotional materials, studies, reports, and other printed or written materials (collectively, the "Books and Records"), except those excluded under clause (i) of the proviso to this definition; and (k) All cash and all bank accounts and brokerage accounts and similar accounts and cash equivalents, including deposits in transit, except as set forth in clause (iii) of the proviso to this definition. PROVIDED, HOWEVER, that notwithstanding the foregoing, the Acquired Assets shall not include: (i) With respect to the Company, the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, original Tax Returns and other documents relating to the organization, maintenance, and existence of the Company as a corporation; (ii) Any assets or rights which are not assignable pursuant to the terms of the document or instrument creating same or which are only assignable with the consent of a third party who refuses to grant such consent, which shall be transferred as and when such consent is obtained and otherwise as provided in Section VI.3 of this Agreement; (iii) Any cash held on deposit in a tax reserve account established by the Company for the payment of any federal, state, local or foreign income Taxes payable with respect to periods prior to the date three (3) Business Days prior to the Closing Date, so long as notice of the amount of such cash and the account number of such account shall be provided to the Buyer not later than such third Business Day); and -2- (iv) $1,000,000 book value of trade accounts receivable of the Acquired Company (which specific receivables shall be identified and reasonably agreed upon by the parties on or prior to the Closing Date); and (v) Prepaid expenses relating to the expenses incurred in connection with the negotiation and consummation of the transactions contemplated by this Agreement. "Acquired Company" means the direct and indirect assets, liabilities and business as a going concern of the Company transferred to Seller in the dissolution and liquidation of the Company. "Agreement" has the meaning set forth in the preface above. "Assumed Liabilities" means all Liabilities of the Acquired Company (except for those Liabilities expressly excluded in the proviso to this definition), including, but not limited to: (a) All Liabilities of the Company to be performed following the Closing expressly provided for under or incurred pursuant to the terms of the written agreements, contracts, employment agreements, leases, licenses, instruments and other items which are included as Acquired Assets, but only to the extent any required consents to the assignment thereof have been obtained or Buyer has otherwise expressly agreed to assume liability under such agreement; (b) All Liabilities for product warranty claims or any use of or defect in any of the products or services sold by the Company, the Subsidiary or the Acquired Company prior to the Closing Date; (c) Liabilities to employees of Acquired Company arising out of workers' compensation or disability leaves of absence if said employee is entitled to an offer of employment pursuant to this Agreement and any other similar obligations or liabilities; and (d) Liabilities resulting from, arising out of or caused by any breach of contract by the Company, the Subsidiary or the Acquired Company, tort, infringement, violation of law or any environmental liability or contamination, including, without limitation, Liabilities arising out of or relating in any way to any Government Bid, Government Contract or Government Disclosure. PROVIDED, HOWEVER, that notwithstanding the foregoing, the Assumed Liabilities shall not include: (A) Any Liability of the Acquired Company or Seller for income and other Taxes, including, but not limited to, any Taxes arising in connection with the consummation of the transactions contemplated hereby; provided, however, that any Taxes (other than federal, state, local or foreign income Taxes and other -3- than Taxes arising in connection with the consummation of the transactions contemplated hereby) accrued on the Closing Statement of Net Assets shall be Assumed Liabilities; (B) Except as otherwise provided for in this Agreement (including, without limitation, as provided for in Section VI.1 hereof), any Liability of the Company related to the employment or compensation of employees and former employees (including with respect to any Company Plan or any post-retirement benefits plan, if any)); (C) Except as otherwise provided for in this Agreement, any Liability of the Company for costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby; or (D) Any Liability of Seller which was not related to the Company, the Subsidiary or the Business or arising under this Agreement. "Business" means the business conducted or proposed or planned to be conducted by the Acquired Company on and as of the Closing Date. "Buyer" has the meaning set forth in the preface above. "Closing" has the meaning set forth in Section II.6 below. "Closing Date" has the meaning set forth in Section II.6 below. "Company" means Ilex Systems, Inc. "Code" means the Internal Revenue Code of 1986, as amended. "Employee" has the meaning set forth in Section VI.1 below. "GAAP" means United States generally accepted accounting principles as in effect as of the date hereof. "Government Bid" means any offer to sell made by the Acquired Company prior to the Closing Date which, if accepted, would result or may result in a "Government Contract". "Government Contract" means any prime contract, subcontract, teaming agreement or arrangement, joint venture, basic ordering agreement, pricing agreement, letter contract, purchase order, delivery order, change order, Government Bid or other arrangement of any kind between the Acquired Company and (i) the U.S. Government, (ii) any prime contractor of the U.S. Government in its capacity as a prime contractor or (iii) any subcontractor with respect to any contract of a type described in clauses (i) or (ii) above. "Government Disclosure" means any certification, representation, warranty or statement by the Acquired Company to the U.S. Government in that capacity, or any agent or -4- instrumentality thereof, which in any way relates to the operation of the Business or any business of the Acquired Company carried on prior to the Closing Date. "Knowledge of Seller" (or any similar expression) shall mean the actual knowledge of (i) W. Jeffrey Kramer, Vice President of First Union National Bank, trustee of Seller, Frederick Forster, Jeffrey Furman or Howard Tieg or (ii) each of Joseph Lopez, John Medea, Joseph Leadley, Scott Feldman, and all of the Vice Presidents and the members of the Board of Directors of the Company and the Subsidiary (provided, however, that for purposes of Section III.27, the individuals referred to in clause (ii) shall be limited to Joseph Lopez, John Medea, Thomas Deet and Robert Marchand), after, only in the case of those individuals referred to in clause (ii) of this definition, a reasonable investigation or inquiry of the subject matter thereof by or on behalf of such individuals. "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Ilex Agreement" means the agreement, dated as of February 9, 1998 by and among Seller, the Company and shareholders of the Company. "Liability" or "Liabilities" means any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise. "Losses" means all losses, liabilities, obligations, amounts paid in settlement, costs and expenses, including court costs, and reasonable attorneys' fees and expenses, incurred in connection with any action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, injunction, judgment, order, decree, ruling. "Person" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a limited liability company, or a governmental entity (or any department, agency, or political subdivision thereof). "Purchase Price" shall mean the sum of (i) any amounts paid by Buyer under Sections II.2 and II.4 and (ii) the amount of the adjustment, if any, to the Cash Purchase Price (as hereinafter defined) pursuant to Section II.3. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended. "Seller's Schedule" has the meaning set forth in Article III below. "Subsidiary" means Hygienetics Environmental Services, Inc., a California corporation, all of the issued and outstanding shares of capital stock of which are owned by the Company. "Subsidiary Merger" means the merger of the Subsidiary with and into the Company. -5- "Tax" and "Taxes" means all taxes, charges, fees, levies or other assessments imposed by any federal, state, local or foreign taxing authority, whether disputed or not, including without limitation, income, profits, gross receipts, capital, estimated, excise, occupational, custom, duty, ad valorem, value-added, stamp, property, sales, transfer, withholding, real estate, use, employment, payroll, alternative or add-on minimum, environmental (including Taxes under Section 59A of Code) and franchise taxes and such terms shall include any interest, penalties or additions attributable to or imposed on or with respect to such assessments and any expenses incurred in connection with the settlement of any tax liability. "Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. ARTICLE II PURCHASE AND SALE II.1 Purchase and Sale. (a) General. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from Seller and Seller agrees to sell, transfer, convey, assign and deliver to the Buyer, all of the Acquired Assets at the Closing for the consideration specified below in Section II.2. (b) Assumption of Liabilities. On and subject to the terms and conditions of this Agreement, the Buyer agrees to assume and become responsible for the Assumed Liabilities at the Closing. II.2 Cash Purchase Price. (a) Subject to adjustment as set forth in Section II.3, at the Closing (as defined in Section II.6), as consideration for the purchase of the Acquired Assets, Buyer agrees to pay in aggregate: (i) Fifty-One Million Nine Hundred Twenty-Three Thousand Dollars ($51,923,000), plus or minus, respectively; (ii) the amount equal to one hundred seven and one-half percent (107.5%) of the amount by which the Estimated Closing Date Net Assets (as defined in Section II.3) as determined in accordance with Section II.3 below exceeds or fails to equal Ten Million Two Hundred Thousand Dollars ($10,200,000). The above consideration, in the aggregate, is hereinafter referred to from time to time as the "Cash Purchase Price." (b) The Cash Purchase Price shall be paid on the Closing Date by wire transfer in immediately available funds to the account designated by the Seller in a written notice delivered -6- to Buyer at least 5 Business Days (as defined in Section II.3) prior to the Closing Date (as defined in Section II.6); (c) (i) If the Company shall be awarded the Software Engineering and Technical Support ("SWEATS") contract at Fort Huachuca upon the terms of the bid proposal submitted by the Company in effect as of November 25, 1997, or awarded the SWEATS contract based on such bid as amended after the date of this Agreement with the prior written consent of Buyer, in addition to the Cash Purchase Price, Buyer shall pay to the Seller as additional consideration for the Acquired Assets in aggregate an amount (the "SWEATS Payment") equal to (i) $3,762,500, if the SWEATS contract is awarded to the Company as a "prime" contractor, or (ii) $1,612,500, if the SWEATS contract is awarded to the Company as a subcontractor. The SWEATS Payment shall be paid by Buyer within 30 days following the later of (x) the Business Day following the expiration of the period to protest the SWEATS contract award and (y) the date of final resolution of any bid protest raised in respect of the award of the SWEATS contract. No payment shall be due from Buyer if any such bid protest is upheld. (d) The parties to this Agreement agree to allocate the Purchase Price in accordance with the rules under Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations promulgated thereunder. The parties recognize that the Purchase Price does not include Buyer's acquisition expenses and that Buyer will allocate such expenses appropriately. The Seller and Buyer agree to act in accordance with such allocations (including any modifications thereto reflecting any post-closing adjustment of the Purchase Price pursuant to Sections II.3 and II.4, as applicable) in any relevant Tax returns or filings, including any forms or reports required to be filed pursuant to Section 1060 of the Code, the Treasury Regulations promulgated thereunder or any provisions of local, state and Commonwealth law ("1060 Forms"), and to cooperate in the preparation of any 1060 Forms and to file such 1060 Forms in the manner required by applicable law. II.3 Adjustment of Cash Purchase Price. (a) Preparation of Estimated Closing Statement of Net Assets. At least five Business Days prior to the Closing Date, the Seller shall cause to be delivered to Buyer a statement of estimated Acquired Assets and Assumed Liabilities (the "Estimated Closing Statement of Net Assets") as of the date three Business Days prior to the Closing Date. The Estimated Closing Statement of Net Assets shall be prepared in the same manner and in accordance with the procedures that the Closing Statement of Net Assets is to be prepared pursuant to Section II.3(c), except that it shall be unaudited. The term "Estimated Closing Date Net Assets" shall mean the book value of the Acquired Assets set forth on the Estimated Closing Statement of Net Assets in excess of the amount of the Assumed Liabilities set forth on the Estimated Closing Statement of Net Assets, determined in accordance with the procedures set forth in Section II.3(c). For the purposes of this Agreement, "Business Day" means any day that is not a Saturday, Sunday or day in which banks in New York, New York or San Francisco, California are authorized or obligated by law or governmental action to close. (b) Calculation of Adjustment. The Cash Purchase Price shall be (i) increased by one hundred seven and one-half percent (107.5%) of the amount that the Closing Date Net Assets (as hereinafter defined) is greater than the Estimated Closing Date Net Assets; or (ii) decreased by -7- one hundred seven and one-half percent (107.5%) of the amount that the Closing Date Net Assets is less than the Estimated Closing Date Net Assets. The term "Closing Date Net Assets" as used herein shall mean the book value of the Acquired Assets set forth on the Final Closing Statement of Net Assets (as hereinafter defined) in excess of the amount of the Assumed Liabilities set forth on the Final Closing Statement of Net Assets, determined in accordance with the procedures set forth in Section II.3(c). The amount of any decrease or increase to the Cash Purchase Price pursuant to this Section II.3(b) plus interest from the Closing Date at the Prime Rate (as hereinafter defined) shall be paid by the Seller or Buyer, as the case may be, by wire transfer in immediately available funds within five (5) Business Days after the Final Closing Statement of Net Assets agreed to on behalf of the Seller and Buyer or is determined by the Neutral Auditor (as hereinafter defined). For purposes of this Agreement, "Prime Rate" means the rate of interest announced from time to time by Bank of America as its prime rate of interest. (c) Preparation of Closing Statement of Net Assets. As soon as practicable, and in any event within thirty (30) days after the Closing Date, the Buyer shall cause to be prepared a statement of net assets for the Business consisting of the Acquired Assets and the Assumed Liabilities, as of the close of business on the date three (3) Business Days prior to the Closing Date determined on a pro forma basis as if the parties to the Ilex Agreement had not consummated the transactions contemplated thereby on such date (the "Closing Statement of Net Assets"). The Closing Statement of Net Assets will be prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a basis consistent with the September Balance Sheet through full application of the policies and procedures used in preparing the September Balance Sheet and with changes in contract estimates at completion ("EAC's") and estimates to complete ("ETC's") determined on a basis consistent with the method used for the determination of the September Balance Sheet, and will, at the option of the Buyer, be audited by an independent public accounting firm selected by Buyer (the "Auditor"). The Closing Statement of the Net Assets shall be accompanied by an Auditor's report based upon the audit of the Audited Closing Statement of Net Assets stating that such statement presents fairly, in all material respects, the Acquired Assets and Assumed Liabilities presented on such statement as provided for in this Agreement at the third Business Day prior to the Closing Date in conformity with GAAP consistently applied with the September Balance Sheet, except as modified by any modification which is mutually agreed upon by the parties hereto. Buyer shall provide the Auditor access to the Books and Records as may reasonably be required for the preparation of the Closing Statement of Net Assets. Buyer shall be responsible for the costs and expenses of the Auditor in preparing the Closing Statement of Net Assets. II.4 Post-Closing Payment. (a) As additional consideration for the Acquired Assets ("Additional Consideration"), Buyer shall make the payments or deliveries to the Seller required pursuant to this Section II.4. With respect to each of fiscal years of the Acquired Company ending December 31, 1998, 1999 and 2000, respectively. Buyer shall pay to the Seller in aggregate for any such fiscal year an amount in cash (subject to Section II.4(c)) equal to the product of (i) $3,000,000 for 1998, $3,300,000 for 1999 and $3,630,000 for 2000 and (ii) a percentage (the "Percentage") calculated by dividing (x) EBIT (as defined below) for the Acquired Company for each in each of fiscal 1998, 1999 and 2000 by (y) $8,800,000 for 1998, $10,300,000 for 1999 and $12,300,000 for 2000, respectively provided that the maximum Percentage for any fiscal year shall be 120%. -8- No Additional Consideration will be due to the Seller under this Section II.4 in respect of any fiscal year if the Percentage for that fiscal year shall be less than 60%. "EBIT" means for any fiscal year operating income of the Acquired Company before interest and income taxes; provided that for purposes of calculating EBIT there shall be eliminated (i) the effect of any purchase accounting adjustments (including any increase in depreciation or amortization of tangible or intangible assets of the Business resulting from a write-up of the Acquired Assets for accounting purposes) in connection with the acquisition of the Company, (ii) all costs and expenses paid in connection with financing and refinancing the purchase of the Company, (iii) all operating income, if any, attributable to the SWEATS contract, (iv) all gains (or losses) from extraordinary items and investments, (v) the cumulative effect of changes in accounting principles and (vi) the effect (whether revenue or expense) as a result of any allocation by Buyer of any Buyer-incurred general and administration expenses or management fees (but only to the extent such allocation of expenses or fees exceeds amounts which would be an expense of the operation of the Acquired Company on a stand-alone basis consistent with the Company's method of operation prior to February 10, 1998). In the event of the disposition or discontinuation of any of the Acquired Company's current businesses or operations or the addition of any business or operation to the Acquired Company, the target EBIT amount referred to above shall be adjusted appropriately (determined in good faith by the Buyer, in consultation with the Seller) to reflect such disposition, discontinuation or addition, for purposes of calculating the Percentage. (b) For each of the 1998, 1999 and 2000 fiscal years, Buyer shall, no later than 45 days following the availability of financial statements for such period, prepare and deliver to Seller a report (the "EBIT Report") reflecting in reasonable detail Buyer's calculation of EBIT for the applicable fiscal year (including any adjustments to Buyer's financial statements made in connection with such calculation), together with a copy of the financial statements from which such calculation is derived. EBIT will be calculated in accordance with GAAP applied on a basis consistent with the Financial Statements (as defined in Section II.6) and with changes to EAC's and ETC's determined on a basis consistent with the methods used in the Financial Statements. (c) Any payment of Additional Consideration with respect to any fiscal year shall be payable to the Seller within 30 days after the date on which the calculation of EBIT for such fiscal year shall have been finally determined pursuant to this Section II.4 and Section II.5; provided that no such payment of Additional Consideration (except portions thereof as to which Early Cash Payment Elections (as defined in Section II.4(e)) have been received by Buyer in accordance with Section II.4(e)) with respect to any fiscal year shall be payable by Buyer pursuant to this Section II.4 prior to the earlier of (i) the date 60 days following the completion of the initial sale to the public pursuant to an effective registration statement (other than a registration statement on Form S-4 or Form S-8 or any similar or successor form) (the "Initial Public Offering") filed under the Securities Act of 1933, as amended (the "Securities Act"), of shares of the Class A Common Stock, par value $.0l per share of L-3 Communications Holdings Inc. ("Holdings") (or such other class of common stock of Holdings issued to the holders of such Class A Common Stock in connection with a reclassification thereof) ("Class A Common Stock") and (ii) September 30, 2001. Seller shall not be permitted to elect to receive shares in lieu of Additional Consideration for any fiscal year in an amount less than $250,000 unless the Seller is electing to receive shares for all of such Additional Consideration for such fiscal year. Each cash payment pursuant to this Section II.4 shall be made by wire transfer of immediately -9- available funds to the account designated by the Seller in a written notice to Buyer given at least 5 Business Days prior to the date of payment. (d) Prior to the date of any payment of Additional Consideration pursuant to Section II.4(b) (other than payments pursuant to Early Cash Payment Elections), Buyer shall offer the Seller the opportunity to elect to receive, in lieu of such payment, any Additional Consideration in the form of shares of Freely Tradable (as defined below) Class A Common Stock. Such offer of such shares shall be made in a transaction meeting the requirements of the Securities Act (and any applicable state securities laws). The number of shares of Class A Common Stock to be delivered if the Seller elects to receive such shares pursuant to such offer shall be determined by dividing (i) the amount of such payment of Additional Consideration by (ii) $20 to the extent such Additional Consideration relates to fiscal 1998, $22 to the extent such Additional Consideration relates to fiscal 1999 and $24.20 to the extent such Additional Consideration relates to fiscal 2000. In the event of any change in the outstanding Class A Common Stock by reason of stock split, stock combination, reclassification or similar event, the number of shares to be delivered pursuant to the preceding sentence shall be adjusted appropriately (e.g., if the outstanding shares of Class A Common Stock are split on a two-for-one basis, the $20, $22 and $24.20 amounts referred to in clause (ii) would be adjusted to be $10, $11 and $12.10, respectively). In the event that the Initial Public Offering is not completed by August 1, 2001, no offer to elect to receive shares of Class A Common Stock shall be made pursuant to this Section II.4(d). If the Seller elects to receive shares pursuant to this Section II.4(d) such shares will be delivered by registered mail to the address designated by the Seller in a written notice to Buyer given at least five (5) Business Days prior to the date of delivery. No fractional shares of Class A Common Stock will be issuable pursuant to this Section II.4. In lieu thereof, any person who would otherwise be entitled to a fractional share pursuant to the provisions hereof shall receive an amount in cash equal to the amount of Additional Consideration which would have been payable in cash with respect to such fraction. For purposes of this Section II.4, "Freely Tradable" shall mean Class A Common Stock which (a) may be sold (without legal restriction) to any member of the public, including a sale by or through a securities exchange and/or broker-dealer, without the necessity of (I) obtaining an opinion of counsel, obtaining permission or authorization of the United States Securities & Exchange Commission or any state securities administrator, (II) providing any advance notice to any such body or (III) taking other action to remove any legend or legend condition applicable to such shares of Class A Common Stock that would delay the sale thereof and (b) is not subject to any material delay in attempting the sale thereof on a public securities exchange due to any attribute of the Class A Common Stock. (e) At any time and from time to time, the Seller shall have the right, by written notice (an "Early Cash Payment Election") to Buyer, to elect to require Buyer to pay to the Seller the cash amount of any Additional Consideration payable to the Seller pursuant to Section II.4(c), with the date of payment being determined pursuant to the first sentence of such Section without regard to the proviso thereto. (f) Upon a Change of Control (as hereinafter defined) that occurs prior to the earlier to occur of the dates referred to in clauses (i) and (ii) of the proviso to the first sentence of Section II.4(c), the Seller shall receive in connection with such Change of Control all Additional Consideration payable to the Seller pursuant to Section II.4(c) but not then paid by reason of the -10- proviso contained in the first sentence of such Section prior to the date of such Change of Control the amount and kind of consideration the Seller would have received in respect of the shares of Class A Common Stock which the Seller would have been entitled to elect to receive pursuant to subsection (d) of this Section II.4 if there had been an Initial Public Offering immediately prior to the date of the Change of Control. Such amount shall be payable at such time as the holders of Class A Common Stock receive consideration in connection with such Change of Control. In the event of a Change of Control, notwithstanding anything to the contrary contained herein, any Additional Consideration which becomes payable pursuant to Section II.4(c) following the date of such Change of Control shall be payable in cash. For purposes of this Section II.4(f), "Change of Control" shall mean (i) an acquisition by any person (other than stockholders of Holdings as of the Closing Date or any of their affiliates) of more than 50% of the combined voting power of the outstanding voting securities entitled to vote generally of Holdings or (ii) the sale of substantially all of the direct or indirect assets of Holdings to any person (other than stockholders of Holdings as of the Closing Date or any of their affiliates). (g) The rights of the Seller under this Section II.4 shall be assignable (in whole or in part) by Seller, subject to the following requirements: (i) any such assignment shall be made prior to the date six months following the Closing Date; (ii) if such assignment is to more than one person or entity, (1) any payment or delivery pursuant to this Section II.4 shall be pro rata, based on the relative percentage of Additional Consideration to which such person or entity is entitled hereunder, (2) the $250,000 limitation contained in Section II.4(c) shall apply to each such person or entity and (3) adequate provision shall be made in connection with such assignment so that one assignee in connection with any disputes concerning the calculation and determination of any amounts payable pursuant to this Section II shall be authorized to resolve any and all disputes with the Buyer on behalf of all assignees; and (iii) notwithstanding any such assignment, the right of offset against Seller referred to in the last sentence of Section VI.2(a) shall continue to apply notwithstanding such assignment (i.e., a claim against the Seller under Section VI.2 may be satisfied by exercising such right of offset against amounts due to an assignee of Seller). II.5 Dispute Resolution. (a) Review of Closing Statement of Net Assets and EBIT Report. After receipt of the Closing Statement of Net Assets or the EBIT Report, Buyer or the Seller, as the case may be, shall have thirty (30) days to review it. Buyer or the Seller, as applicable, and their respective authorized representatives shall have full access to all Books and Records and employees of the Company and, with respect to the Closing Statement of Net Assets, the Auditor to the extent required to complete their review of the Closing Statement of Net Assets or the EBIT Report, as applicable, including Auditor work papers used in preparation or the Closing Statement of Net Assets. Unless the Buyer delivers written notice to the Seller, or the Seller delivers written notice to Buyer, on or prior to, the 30th day after receipt of the Closing Statement of Net Assets or the EBIT Report specifying in reasonable detail all disputed items and the basis therefor, the parties shall be deemed to have accepted and agreed to the Closing Statement of Net Assets or the EBIT Report. The parties shall, within thirty (30) days following the date of such notice (the "Resolution Period"), attempt to resolve their differences and any resolution by them as to any -11- disputed amount shall be final, binding, conclusive and nonappealable for all purposes under this Agreement. (b) Resolution. If at the conclusion of the Resolution Period the parties have not reached an agreement on the objections, then all amounts remaining in dispute may, at the election of either party, be submitted to Price Waterhouse or another large international accounting firm not otherwise engaged by either party (the "Neutral Auditor"). Each party agrees to execute if requested by the Neutral Auditor, a reasonable engagement letter. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditor shall be borne equally by the Seller and Buyer, unless the Neutral Auditor finds one party acted in bad faith in which case that party pays all such fees and expenses. Except as provided in the preceding sentence, all other costs and expenses incurred by the parties in connection with resolving any dispute hereunder before the Neutral Auditor shall be borne by the party incurring such cost and expense. The Neutral Auditor shall act as an arbitrator to determine, based solely on the presentations by the Seller and Buyer, and not by independent review, only those issues still in dispute. The Neutral Auditor's determination shall be made within thirty (30) days of its engagement (which engagement shall be made no later than five (5) business days after an election by either party to submit the objections to the Neutral Auditor) or as soon thereafter as possible, shall be set forth in a written statement delivered to the Seller and Buyer and shall be final, binding, conclusive and nonappealable for all purposes hereunder. The term "Final Closing Statement of Net Assets" shall mean the definitive Closing Statement of Net Assets agreed to in accordance with Section II.5(a) or the definitive Closing Statement of Net Assets resulting from the determination made by the Neutral Auditor in accordance with this Section II.5(b). II.6 Closing. (a) Subject to satisfaction or waiver of the conditions to closing set forth in Articles VII, VIII and IX, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the local close of business, or such other time as the parties may mutually agree (the "Effective Time") on February 26, 1998, at the offices of Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco, California, or at such other date and place as the parties may mutually agree (the "Closing Date"). (b) At the Closing (i) Seller will execute, acknowledge (if appropriate), and deliver to the Buyer (A) an assignment of lease(s), in reasonable customary form, (B) such other instruments of sale, transfer, conveyance, and assignment as the Buyer and its counsel may reasonably request; and (C) an Assignment of Non-Competition Agreements in the form attached hereto as Exhibit VIII.5 (the "Assignment of Non-Competition Agreements"); (ii) the Buyer will execute, acknowledge (if appropriate), and deliver to Seller such instruments of assumption as Seller and its counsel reasonably may request; (iii) the Buyer will deliver to Seller the consideration specified in sections II.2 and II.3 herein; and (iv) the Buyer and Seller will execute and deliver an Assignment of Escrow Agreement, in the form attached hereto as Exhibit VIII.2 (the "Assignment of Escrow"). -12- ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to the Buyer as follows (except as specified to the contrary in the disclosure schedule prepared by Seller and attached hereto as Exhibit A (the "Seller's Schedule"). The Seller's Schedule is arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Article III): III.1 Due Organization of Seller; Authorization; Title to Acquired Assets. Seller is a trust duly organized and is validly existing and in good standing under the laws of the State of Connecticut. Seller has all requisite trust power and authority to execute, deliver and perform its obligations under this Agreement, the Assignment of Non-Competition Agreements and the Assignment of Escrow Agreement (collectively, the "Transaction Documents"), and consummate all the transactions in the manner contemplated by the Transaction Documents. This Agreement has been and, when delivered, the remainder of the Transaction Documents will have been, duly executed and delivered by Seller and duly authorized and approved by all necessary action on the part of Seller. This Agreement constitutes and, when delivered, the remainder of the Transaction Documents will constitute, the valid and binding obligations of Seller, enforceable against Seller in accordance with its or their terms, subject to bankruptcy and similar laws and equitable principles regarding the enforcement of contracts. As of the Closing Date, following Seller's acquisition of the Company pursuant to the Stock Purchase Agreement, the Company will be dissolved in accordance with applicable law and all of its assets and Liabilities will be distributed to Seller. Seller does not have and will not as of Closing Date have any Liabilities other than the Assumed Liabilities except as set forth in Section III.1 of the Seller's Schedule. At the Closing, the Seller will hold the entire legal, equitable and beneficial title (in the case of assets owned by the Acquired Company) and interest in the assets of the Company and the Subsidiary and will transfer to Buyer good title to the Acquired Assets, free and clear of all liens, claims, encumbrances and restrictions of any kind or nature whatsoever ("Liens"). III.2 Requisite Consents; Nonviolation. The execution, delivery and performance of this Agreement by Seller and, when delivered, the execution, delivery and performance of the remainder of the Transaction Documents by Seller do not on the date hereof and will not on the Closing Date (a) require the consent, approval or authorization of any governmental person or entity or other third party (except such approvals or filings as may be required to comply with applicable state securities and antitrust laws), (b) violate or conflict with the trust agreement under which Seller is organized, (c) constitute a default under, violate or conflict with, result in the acceleration of or give rise to any party the right to terminate, modify or cancel, or result in the loss of any rights, privileges, options or alternatives under or result in the creation of any Liens on any assets of the Company or the Subsidiary under or require the consent of any other party to any material contract, note, lease, mortgage or other agreement or instrument to which the Seller or the Company or the Subsidiary is a party or by which the Seller or the Company or the Subsidiary is bound or to which any Seller, the Company or the Subsidiary or any of their respective properties is subject (except any Liens held by Seller's lender which Liens shall be released at or prior to Closing) or (d) violate or conflict with the charter documents of the Company or the Subsidiary or any material statute, ordinance, rule, regulation, order, judgment or degree of any court or governmental or regulatory agency or authority applicable to the Seller -13- or the Company or the Subsidiary or by which any of their respective properties or assets may be bound. III.3 Due Organization of the Company and the Subsidiary. The Company and the Subsidiary (i) have been duly organized and are validly existing and in good standing as corporations under the laws of the State of California, (ii) except as set forth in Section III.3 of the Seller's Schedule, are duly qualified to do business in and are in good standing under the laws of every jurisdiction where each of them is required to be so qualified, except where the failure to be so qualified would not materially adversely affect their properties, assets, results of operations or financial condition and (iii) have all requisite corporate power and authority to own or lease and to operate their properties and carry on the Business. III.4 Acquired Assets. The Acquired Assets constitute all of the property and assets necessary to conduct the business of the Company and the Subsidiary as currently conducted and as conducted immediately prior to the Subsidiary Merger. III.5 Subsidiaries, etc. The Company does not, directly or indirectly, own or control any equity interest in any corporation, partnership, joint venture or other legal entity other than, prior to the Subsidiary Merger, its ownership of all of the outstanding capital stock of the Subsidiary. III.6 Financial Data. Buyer has been provided with (a) the unaudited consolidated balance sheet of the Company at September 30, 1997 (the "September Balance Sheet"), together with the related unaudited consolidated statements of income and shareholders equity for the nine-month period ended September 30, 1997, and (b) the audited consolidated balance sheets of the Company at December 31, 1996 and 1995, together with the related unaudited consolidated statements of income and shareholder equity and the notes thereto (the "Financial Statements"). The Financial Statement are in accordance with the Company's books and records, have been prepared in accordance with GAAP, consistently applied, and fairly present the financial position of the Company and the Subsidiary as of their respective dates and the results of the Company's and the Subsidiary's operations for the periods then ended. III.7 No Material Changes. Since September 30, 1997, there has not been (a) any material adverse change (or any event specifically relating to the Company that would reasonably be expected to result in such a change) in the business, financial condition or results of operations of the Acquired Company, or any change that could materially delay or impair the ability of Seller to effect the Closing on materially and adversely affect the operation of the business of the Acquired Company after the Closing Date as the Company had been operated immediately prior to Seller's acquisition thereof pursuant to the Stock Purchase Agreement, (b) any damage, destruction or loss (whether or not covered by insurance) individually or in the aggregate in excess of $100,000; (c) any labor dispute or any labor union organizing activity, or any actual or threatened strike, work stoppage, slowdown or lockout, or any material change in its relationship with employees, customers, distributors or suppliers; (d) any sale, lease, transfer or other disposition of any asset of the Company or the Subsidiary having a fair material value in excess of $l00,000 or for proceeds in excess of $100,000; or (e) army discharge or satisfaction of any obligation or liability of the Company or the Subsidiary other than in the ordinary course of business in accordance with the terms of such obligation or liability. -14- Since September 30, 1997, except in connection with the transactions contemplated hereby, neither the Company nor the Subsidiary has engaged in any of the following transactions, (i) issued or committed to issue any shares of common stock (except upon exercise of duly issued stock options which were outstanding as of such date) or other ownership interest of the Company or the Subsidiary, or any obligations, understanding or commitment regarding the issuance of capital stock or any option, right, warrant or other security exercisable or exchangeable for or convertible into capital stock of the Company or the Subsidiary, (ii) redeemed, purchased or otherwise acquired or committed to acquire any shares or other ownership interest of the Company or the Subsidiary, (iii) effected a split or reclassification of any shares of the Company or the Subsidiary or a recapitalization of the Company or the Subsidiary, (iv) made any change in the compensation of, or increased benefits available to, any officer, other employee, sales agent or representative of the Company or the Subsidiary under any bonus or pension plan or other contract or commitment, or paid or agreed or promised to pay, whether conditionally or otherwise, any bonus, incentive, retention or composition, or increased or agreed or promised to increase any retirement, welfare, fringe or severance benefits or vacation pay, to or in respect of any officer, other employee, sales agent or representative of the Company or the Subsidiary, other than, with respect to any employee other than officers, in the ordinary course of business and consistent with past practice, (v) incurred, assumed or guaranteed any obligation or liability, whether absolute, accrued, contingent or otherwise, or any indebtedness for borrowed money, except current liabilities for trade or business obligations incurred in connection with the purchase of goods or services in the ordinary course of the business consistent with past practice, (vi) mortgaged, pledged or subjected to any lien any property or assets, tangible or intangible of the Company or the Subsidiary, (vii) transferred or granted any rights under, or entered into any settlement regarding the breach or infringement of, any Intellectual Property, or modified any existing rights with respect thereto, (viii) received any notice of termination or of default or breach of any material contract, lease or other agreement, (ix) made any capital expenditures, or commitments to make any capital expenditure in excess of $250,000 in the aggregate (x) entered into any transaction, contract or commitment with any affiliate of the Company or (xi) entered into any transaction, contract or commitment other than in the ordinary course of business. III.8 Undisclosed Liabilities. The Acquired Company has no debts, claims, liabilities or obligations (whether absolute, contingent or otherwise) which are material to the Acquired Company, except for (a) those reflected, reserved against or otherwise disclosed in the September Balance Sheet or the notes thereto and not heretofore paid or discharged or (b) those incurred in, or as a result of, the ordinary course of business of the Company and the Subsidiary since the date of the September Balance Sheet to the extent reflected in the Closing Statement of Net Assets. III.9 Governmental Authorizations; Compliance with Law. (a) The Acquired Company has all material governmental licenses, permits, approvals and other governmental authorizations necessary to permit the operation of the business of the Company as presently conducted and is in compliance in all material respects with such governmental licenses, permits, approvals and other governmental authorizations. Section III.9 of the Seller's Schedule sets forth a complete and accurate list of all such governmental licenses, permits, approvals and other governmental authorizations. -15- (b) The Acquired Company is in compliance in all material respects with all laws, statutes, ordinances, rules, regulations, orders, judgements or degrees applicable to it and its business and none of Seller, the Company or the Subsidiary has received any notice that any violation or potential violation or any action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against the Company or the Subsidiary alleging failure to comply. III.10 Litigation. There is no pending or, to the Knowledge of the Seller, threatened action, suit, arbitration proceeding or investigation in any court or before any governmental commission or agency against the Company or the Subsidiary seeking unspecified damages, damages in excess of $50,000, or injunctive or other equitable relief. There is no order, judgment or decree of any court or governmental authority or agency which specifically applies to the Company or the Subsidiary except as listed in Section III.10 of the Seller's Schedule. III.11 Employee Benefit Plans. (a) Section III.11 of the Seller's Schedule contains a true and complete list of each "employee benefit plan" (within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including, without limitation, multi-employer plans within the meaning of ERISA section 3(37)), stock purchase, stock option, severance, employment, change-in- control, fringe benefit, collective bargaining, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transaction contemplated by this Agreement or otherwise), whether formal or informal, oral or written, legally binding or not, under which any employee or former employee of the Company or its Subsidiary has any present or future right to benefits or under which the Company or its Subsidiary has any present or future liability. All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the "Company Plans". (b) With respect to each Company Plan, the Seller has delivered to the Buyer a current, accurate and complete copy (or, to the extent no such copy exists, an accurate summary thereof) and, to the extent applicable; (i) any related trust agreement or other funding instrument; (ii) the most recent determination letter, if applicable; (iii) any summary plan description and other written communications (or a description of any oral communications) by the Company or its Subsidiary to their employees concerning the extent of the benefits provided under a Company Plan; and (iv) for the three most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements, (C) actuarial valuation reports and (D) attorney's response to an auditor's request for information. (c) (i) Each Company Plan has been established and administered in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations; (ii) each Company Plan which is intended to be qualified within the meaning of Code section 401(a) is so qualified and has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (iii) no event has occurred and no condition exists that would subject the Company or its Subsidiary, either directly -16- or by reason of their affiliation with any member of their "Controlled Group" (defined as any organization which is a member of a controlled group of organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv) for each Company Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form since the date thereof; (v) no "reportable event" (as such term is defined in ERISA section 4043), "prohibited transaction" (as such term is defined in ERISA section 406 and Code section 4975) or "accumulated funding deficiency" (as such term is defined in ERISA section 302 and Code section 412 (whether or not waived)) has occurred with respect to any Company Plan; and (vi) no Company Plan provides retiree welfare benefits and neither the Company nor its Subsidiary have any obligations to provide any retiree welfare benefits. (d) None of the Company Plans is subject to Title IV of ERISA and none of the Company Plans is a multi-employer Plan (within the meaning of Section 400l(a)(3) of ERISA). (e) With respect to any Company Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or threatened, (ii) to the Knowledge of Seller, no facts or circumstances exist that could give rise to any such actions, suits or claims, and (iii) no written or oral communication has been received from the PBGC in respect of any Company Plan subject to Title IV of ERISA concerning the funded status of any such plan or any transfer of assets and liabilities from any such plan in connection with the transactions contemplated herein. (f) No Company Plan exists that could result in the payment to any present or former employee of the Company or its Subsidiary of any money or other property or accelerate or provide any other rights or benefits to any present or former employee of the Company or its Subsidiary as a result of the transaction contemplated by this Agreement, whether or not such payment would constitute a parachute payment within the meaning of Code section 280G. III.12 Intellectual Property. Each of the Company and the Subsidiary owns or has the right to use all Intellectual Property necessary to conduct their businesses substantially as such businesses are currently conducted. All of the material Intellectual Property owned by the Company and the Subsidiary that has been issued or registered by or filed with any Governmental Authority (as defined in Section III.25(b)) and all material license agreements in which the Company or the Subsidiary is the licensee of Intellectual Property or by which the Company or the Subsidiary permits any person to use the Intellectual Property owned by it are listed in Section III.12(a) of the Seller's Schedule. As of the date hereof and at the Closing, all Intellectual Property licenses are and will be in full force and effect in accordance with their terms, and are and will be free and clear of any Liens. Except as set forth in Section III.12(b) of the Seller's Schedule, (i) all of the Intellectual Property owned or used by the Company or the Subsidiary is valid, subsisting and unexpired, has not been abandoned, and is not the subject of any Lien; (ii) no judgment, decree, injunction, rule or order has been rendered by any court, tribunal or other government entity which would limit, cancel or question the validity of, or the Company or the Subsidiary's rights in and to, any Intellectual Property; (iii) the Company has taken adequate steps to protect, maintain and safeguard its Intellectual Property and its rights therein including any Intellectual Property for which improper or unauthorized disclosure would -17- impair its value or validity, and has executed appropriate agreements (including nondisclosure agreements and employee assignments) and made appropriate filings and registrations in connection with the foregoing, (iv) there is no claim or demand pertaining to, or any proceeding which is pending, or to the Knowledge of the Seller, threatened that challenges the rights of the Company or the Subsidiary to or the validity of any of its Intellectual Property or claims that a default exists under license by the Company or the Subsidiary of Intellectual Property and (v) to the Knowledge of Seller, none of the Company's or the Subsidiary's Intellectual Property is being infringed or otherwise impaired by third parties. "Intellectual Property" means all intellectual property, including without limitation all (i) inventions, discoveries, processes, formulae, designs, methods, techniques, procedures, concepts, developments, technology, new and useful improvements thereof and know-how relating thereto, whether or not patented or eligible for patent protection; copyrights and copyrightable works, including computer applications, programs, software, databases and related items; trademarks, service marks, trade names, brand names, corporate names, logos and trade dress, the goodwill of any business symbolized thereby, and all common-law rights relating thereto; trade secrets and other confidential information; (ii) registrations, applications, recordings, and licenses or other similar agreements related to the foregoing; (iii) rights to sue at law or in equity for any infringement or other impairment of the foregoing occurring prior to the Closing Date, including the right to receive all damages and proceeds therefrom; and (iv) rights to obtain reissues, re-examinations, continuations, continuations-in-part, divisions, extensions, renewals or other legal protections pertaining to the foregoing. III.13 Real and Personal Property. (a) Section III.13 of the Seller's Schedule contains a list of all real and personal property owned or leased by the Company and the Subsidiary as of the date hereof having, in the case of leased property, an annual lease obligation in excess of $10,000 or, in the case of owned property, a fair market value in excess of $100,000. The Company has good, valid and marketable title to such owned property. Each lease covering leased real property is a legal, valid and binding agreement enforceable in accordance with its terms and there is not under any of such leases any existing default on the part of the Company or the Subsidiary or, to the Knowledge of Seller, any other party thereto nor any facts that would, with the passage of time or notice, or both, constitute such a default. (b) All material property and assets owned or utilized by the Company and the Subsidiary are in good standing condition and repair (except for ordinary wear and tear), free from any material defects (except such minor defects as do not materially interfere with the use thereof in the conduct of normal operations), have been maintained consistent with standards generally followed in the industry and are sufficient to carry on the business of the Company and the Subsidiary as presently conducted. All buildings, plants and other structures utilized by the Company and the Subsidiary are in good condition and repair (except for ordinary wear and tear). (c) The Company and the Subsidiary enjoy peaceful and quiet possession of the real property owned or leased by the Company and the Subsidiary. Buyer has been provided with a true and complete copy of each lease and all amendments thereto pertaining to any leased real property. The rental set forth in each lease is the actual rental being paid, and there are not separate agreements or understandings with respect to the same. Except as listed in Section III.13(c) of the Seller's Schedule, neither the execution of this Agreement nor the consummation -18- of the transactions contemplated hereby shall cause a default under any lease or require prior written consent of any landlord under any lease. III.14 Insurance. Section 111.14 of the Seller's Schedule lists all material insurance policies in force with respect to the Company, the Subsidiary and their respective employees and directors. Such policies are in full force and effect and all premiums due thereon have been paid or accrued. No notice of cancellations, terminations or reductions of coverage, and no notice of intention to cancel, terminate or reduce coverage, has been received by the Company or the Subsidiary. III.15 Tax Matters. (a) Tax Returns Filed and Taxes Paid. All Tax Returns required to be filed by the Company have been duly filed on a timely basis and all Taxes shown to be payable on the Tax Returns or on subsequent assessments with respect thereto have been paid in full on a timely basis or are being disputed in good faith by the Company. All Tax Returns filed by the Company are true and correct in all material respects. (b) Tax Reserves. The Company's liability for unpaid Taxes for all periods ending before the date of this Agreement has been reserved or accrued for in the Financial Statements (other than reserves or accruals for deferred income Taxes established to reflect differences between book basis and Tax basis of assets and liabilities), applicable to all periods ending on or before the Closing Date in conformity with GAAP. The Company's liability for unpaid Taxes for all periods ending on or before the Closing Date will be reserved for or accrued for in the Closing Statement of Net Assets in conformity with GAAP (other than reserves or accruals for deferred income Taxes established to reflect differences between book basis and Tax basis of assets and liabilities). (c) Tax Returns Furnished. For all periods ending on and after December 31, 1992, Buyer has been provided access to true and complete copies of (i) relevant portions of income tax audit reports, statements of deficiencies, closing or other agreements received by the Company or Seller or on behalf of the Company or Seller relating to Taxes, and (ii) all pro-forma separate federal and state income or franchise tax returns for the Company and Seller. (d) Tax Deficiencies; Audits; Statutes of Limitations. No deficiencies have been asserted with respect to Taxes of the Company. The Company is not a party to any action or proceeding for assessment or collection of Taxes, nor has such event been asserted or threatened against the Company or any of its assets. No waiver or extension of any statute of limitations is in effect with respect to Taxes or Tax Returns of the Company. Except as set forth in Section III.15 of the Seller's Schedule, the Tax Returns of the Company have not in the past four (4) years been audited by a government or taxing authority, nor is any such audit in process, pending or threatened. There is no material agreement or other document extending, or having the effect of extending, the period of assessment or collection of any Taxes and no power of attorney with respect to any material Taxes of the Company has been executed or filed with any Governmental Authority, and, no power of attorney granted by or with respect to the Company relating to any material Taxes claimed to be due from the Company is currently in force. The Company has not executed or entered into a Closing agreement pursuant to section 7121 of the Code or any -19- predecessor provisions thereof (or similar provision for purposes of state, local or foreign income taxes). (e) Tax Elections and Special Tax Status. The Company is not a party to any safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982. The Company is not a "consenting corporation" under Section 341(f) of the Code. The Company has not entered into any compensatory agreements with respect to the performance of services which payment thereunder would result in a nondeductible expense to the Company pursuant to Section 280G of the Code or any excise tax to the recipient of such payment pursuant to Section 4999 of the Code. (f) Tax Liens. There are no unpaid Taxes with respect to any period, or a portion thereof, ending on or before the Closing Date which are or could become a lien on the Acquired Assets, except for current Taxes not yet due and payable or reserved for in the Financial Statements. (g) Tax Sharing or Other Agreements. The Company is not a party to or bound by (nor will it become a party to or bound by on or prior to the Closing Date) any Tax indemnity, Tax sharing, Tax allocation or similar agreement (whether or not written). (h) Sales Taxes. The Company (i) has collected all material sales and use Taxes required to be collected, and has remitted, or will remit, such Taxes as required by all applicable statutes and regulations, and (ii) regarding all exempt transactions for all periods open under the applicable statute of limitations as of the Closing Date, has maintained all such records and supporting documents, in all material respects in substantial compliance with all applicable sales and use Tax statutes and regulations. (i) FIRPTA. The Company is not, and for the applicable period specified in section 897(c)(1)(A)(ii) of the Code, has not been, a United States real property holding corporation under section 897 of the Code. (j) Affiliated Group Liability. The Company (and any predecessor) (i) has not been a member of an affiliated group filing a consolidated federal income Tax Return and (ii) has no liability for the Taxes of any person under Treasury Regulation section 1.1502-6(a) (or any analogous or similar provision of state, local or foreign law or regulation), as a transferee or successor, by contract, or otherwise. III.16 Environmental Matters. (a) For purposes of this Agreement, the following definitions shall apply: (i) "Hazardous Materials" shall include any hazardous substance, pollutant, contaminant, flammable explosives, radioactive materials and hazardous, toxic or dangerous wastes and any other chemicals, materials or substances which are identified, defined or regulated pursuant to any Hazardous Materials Laws, or the release, discharge or exposure to which is prohibited, limited or regulated by any federal, state or local government under Hazardous -20- Materials Laws and any petroleum, waste oil and petroleum by-products, asbestos in any form, urea formaldehyde. (ii) "Hazardous Materials Laws" shall mean all applicable laws, statutes, ordinances, rules, regulations, orders, judgements, or decrees relating to the protection of the environment, to human health and safety, or to any emission, discharge, generation, processing, storage, holding, abatement exercise, release, threatened release, arrangement for the disposal or transportation of Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. Section 9601 et seq.); the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.); Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); and any so called "Superfund" law. (iii) "Environmental Report" shall mean any report, study, assessment, audit, or other similar document that addresses any issue of actual or potential noncompliance with, or actual or potential liability under or cost arising out of, any Environmental Law that may in any way affect the Company or the Subsidiary; provided, however, that "Environmental Report" shall not include any such document prepared by Subsidiary in the ordinary course of business for any of its clients. (b) Each of the Company and the Subsidiary is and, to the Knowledge of Seller, has been in compliance in all material respects with applicable Hazardous Materials Laws and has all environmental permits required for the handling, use, storage and disposition of Hazardous Materials under Hazardous Materials Laws that are applicable to its operations as presently conducted. (c) Neither the Company nor the Subsidiary has received any notice from any Governmental Authority that the Company or the Subsidiary is in violation of, or may be subject to liability under, any of the terms or conditions of Hazardous Materials Laws or the Company's or the Subsidiary's material environmental permits for the handling, use, storage or disposition of Hazardous Materials under Hazardous Materials Laws. (d) Buyer has been provided with true and complete copies of all Environmental Reports in the possession or control of Seller, the Company, or the Subsidiary. III.17 Contracts. Section 111.17 of the Seller's Schedule contains a complete list of the material agreements, contracts, commitments, proposals, orders, licenses, leases and other instruments ("Contracts") of the Company and the Subsidiary which (i) is made with any officer, director or stockholder of the Company or the Subsidiary, or with any affiliate or relative of any such officer, director or stockholder, (ii) is a contract of employment, consulting, agency or other similar agreement or arrangement relating to or for the benefit of employees, sales representatives, distributors, dealers, agents, independent contractors or consultants, (iii) is made with any labor union, or other labor organization, (iv) is a loan or other credit agreement, indenture, mortgage, letter of credit, security agreement, pledge agreement, deed of trust, bond, note, guarantee or other agreement or instrument relating to the borrowing of money or extension of credit in excess of $25,000, (v) requires, individually, annual payments of more than $50,000 or aggregate payments over the life of the contract of more than $250,000, (vi) is for a remaining -21- term of more than one year and is not cancelable as to all its provisions upon 90 days or less notice without payment of any material penalty, (vii) provides in whole or in part for the use of, or limiting the use of, Intellectual Property, (viii) is a joint venture, partnership and other similar contract involving a sharing of profits or expenses (including but not limited to joint research and development and joint marketing, contracts), (ix) is an asset purchase agreement or other acquisition or investment agreement, (x) is a contract or arrangement with respect to the representation of the Company or the Subsidiary in foreign countries, (xi) restricts or limits in any manner the operation of the business of the Company or the Subsidiary, or (xii) is material to the business of the Company or the Subsidiary and was entered into outside of the normal course of business. Buyer has been provided with true and complete copies of each Contract so listed. The Company, the Subsidiary and, to the Knowledge of Seller, each of the other parties to the Contracts set forth in Section III.17 of the Seller's Schedule have in all respects performed all material obligations required to be performed by them under such Contracts and, no event has occurred which, after notice or lapse of time or both would constitute a default or an event of default that would give any other party to any such Contract the right to terminate or otherwise fail to perform its obligations under the Contracts. Each Contract is the legal, valid and binding obligation of the Company, the Subsidiary and, to the Knowledge of the Seller, the other parties thereto enforceable in accordance with its terms against the parties thereto. No consent of any third party is required under any Contract as a result of or in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. III.18 Inventory. All inventory of the Company and the Subsidiary consists of a quality and quantity consistent with good business practices net of any reserves reflected in (i) the case of inventory on the date hereof, the September Balance Sheet or (ii) the Closing Statement of Net Assets in the case of inventory on the Closing Date and are salable in the ordinary course consistent with past practice. III.19 Accounts Receivable. The accounts receivable of the Company and the Subsidiary reflected in the September Balance Sheet represent bona fide sales actually made in the ordinary course of business, and have been properly accrued in accordance with GAAP, net of any reserves reflected in the September Balance Sheet. To the Knowledge of Seller there are no facts or circumstances (other than general economic conditions) which would result in any material increase in the uncollectibility of the accounts receivable as a class in excess of the reserves therefor set forth in the September Balance Sheet. III.20 Condition of Plant and Equipment. To the Knowledge of Seller there are no material structural defects in the improvements to the real property owned or leased by the Company or the Subsidiary. To the Knowledge of the Seller, the equipment of the Company and the Subsidiary is in good operating condition and repair, ordinary wear and tear excepted. III.21 Customers and Suppliers. Section III.21 of the Seller's Schedule lists the ten largest customers of the Company and the ten largest suppliers of the Company for the most recent fiscal year. To the Knowledge of the Seller, since January 1, 1997, there has been no -22- material adverse change in the business relationship of the Company with any customer or supplier named on Section III.21 of the Seller's Schedule. III.22 Bank Accounts. Section III.22 of the Seller's Schedule sets forth the names and locations of all banks, trust companies, brokerage firms or other financial institutions at which the Company maintains an account and the name of each person authorized to draw thereon or make withdrawals therefrom. III.23 Brokers, Finders, Etc. All negotiations relating to this Agreement, and the transactions contemplated hereby, have been carried on without the participation of any person or entity acting on behalf of the Seller in such a manner as to give rise to any valid claim against Buyer or the Company for any brokerage or finder's commission, fee or similar compensation, or for any bonus payable to any officer, director, employee, agent or sales representative of or consultant to Seller upon consummation of the transactions contemplated hereby. III.24 Employees. All sums payable to Employees (as defined in Section VI.1(a)) after the Closing Date with respect to pre-Closing pending items, which sums shall include, without limitation, salary, wages, overtime, bonuses, accrued and unused vacation time and any other payments due pursuant to any agreements between the Acquired Company and such Employees or as required by applicable law, shall be accrued as a liability on the Closing Statement of Net Assets. III.25 Government Contracts. (a) With respect to each and every Government Contract or bid to obtain a Government Contract to which the Company is a party and except as set forth in Section III.25 of the Seller's Schedule: (i) the Company has fully complied with all material terms and conditions of such Government Contract or bid for a Government Contract as required as of the date hereof and as of the Closing Date; (ii) the Company has fully complied with all material requirements of statute, rule or regulation pertaining to such Government Contract or bid for a Government Contract; (iii) all representations and certifications executed with respect to such Government Contract were accurate in every material respect as of their effective date and the Company has fully complied with all such representations and certifications in every material respect; and (iv) no termination or default, cure notice or show cause notice has been issued or, to the Knowledge of the executive officers of Seller and the management of the Business, will be issued. (b) To the Knowledge of Seller, except as set forth in Section III.25(b) of the Sellers Schedule, (i) none of the Company's or the Subsidiary's respective employees, consultants or agents is (or during the last three years has been) under administrative, civil or criminal investigation, indictment or information by any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing ("Governmental Authority"), (ii) there is not any pending audit or investigation of the Company, its officers, employees or representatives nor within the last three years has there been any audit or investigation of the Company, officers, employees or representatives -23- resulting in a material adverse finding with respect to any alleged irregularity, misstatement or omission arising under or relating to any Government Contract or bid; and (iii) during the last three years, neither the Company nor the Subsidiary has made a voluntary disclosure to the U.S. Government or any non-U.S. government, with respect to any alleged irregularity, misstatement or omission arising under or relating to a Government Contract or bid. Except as set forth in Section III.25(b) Seller's Schedule, to the Knowledge of Seller neither the Company nor the Subsidiary has had any irregularities, misstatements or omissions arising under or relating to any Government Contract or bid that has led or is expected to lead, either before or after the Closing Date, to any of the consequences set forth in clause (i) or (ii) of the immediately preceding sentence or any other material damage, penalty assessment, recoupment of payment or disallowance of cost. (c) Except as set forth in Section III.25(c) of the Seller's Schedule, there are (i) no outstanding claims against the Company or the Subsidiary, either by the U.S. Government or by any non-U.S. government or by any prime contractor, subcontractor, vendor or other third party, arising under or relating to any Government Contract or bid referred to in Section III.25(a) of the Seller's Schedule and (ii) no disputes between the Company or the Subsidiary and the U.S. Government or any non-U.S. Government under the Contract Disputes Act or any other Federal statute or between the Company or the Subsidiary and any prime contractor, subcontractor or vendor arising under or relating to any such Government Contract or bid. Except as set forth in Section III.25(c) of the Seller's Schedule, to the Knowledge of Seller, there are no facts that could reasonably be expected to result in a claim or a dispute under clause (i) or (ii) of the immediately preceding sentence. (d) Except as set forth in Section III.25(d) of the Seller's Schedule, neither the Company or the Subsidiary nor any of their respective employees, consultants or agents is (or during the last three years has been) suspended or debarred from doing business with the U.S. Government or any non-U.S. government or is (or during such period was) the subject of a finding of non-responsibility or ineligibility for U.S. Government or non-U.S. government contracting. Except as set forth in Section III.25(d) of the Seller's Schedule, the Company and its affiliates conducted their operations in compliance with all requirements of all material laws pertaining to all Government Contracts and bids. (e) Except as set forth in Section III.25(e) of the Seller's Schedule, no statement, representation or warranty made by the Company in any Government Contract, any exhibit thereto or in any certificate, statement, list, schedule or other document submitted or furnished to the U.S. Government or any non-U.S. government in connection with any Government Contract or bid (i) contained on the date so furnished or submitted any untrue statement of a material fact, or failed to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading or (ii) contains on the date hereof any untrue statement of a material fact, or fails to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading, except in the case of both clauses (i) and (ii) any untrue statement or failure to state a material fact that would not result in any material liability to the Company or the Subsidiary as a result of such untrue statement or failure to state a material fact. -24- III.26 Government Furnished Equipment. Section III.26 of the Seller's Schedule incorporates the most recent schedule delivered to the U.S. Government or any non-U.S. Government which identifies by description or inventory number certain equipment and fixtures loaned, bailed or otherwise furnished to or held by the Company or the Subsidiary by or on behalf of the United States or any foreign country. To the Knowledge of Seller, such schedule was accurate and complete on its date and, if dated as of the Closing Date, would contain only those additions and omit only those deletions of equipment and fixtures that have occurred in the ordinary course of business, except for such inaccuracies that could not reasonably be expected to have a material adverse effect on the operations of the Company and the Subsidiary. III.27 Organizational Conflicts of Interest. Except as set forth in Section III.27 of the Seller's Schedule, prior to the close of business on the date three Business Days prior to the Closing Date, to the Knowledge of the Seller each of the Company and the Subsidiary as part of its performance of the "IEW Contract" has, in the past four years, not had access to non-public information nor provided systems engineering, technical direction, consultation, technical evaluation, source selection services of services any type, nor prepared specifications or statements of work, nor engaged in any other conduct that would create in any current Government procurement an Organizational Conflict of Interest, as defined in Federal Acquisition Regulation 9.501, with the Company or, based on the Knowledge of the Seller of the business of L-3 as conducted on the date three Business Days prior to the Closing Date, with L-3 if the Company or the Subsidiary were to become an affiliate or division thereof. III.28 Affiliate Transactions. Except with respect to the Ilex Agreement and the agreements, arrangements, undertakings and transactions contemplated thereby, there are no agreements, arrangements, undertakings or other transactions between the Company or the Subsidiary and the Seller or any affiliate of the Seller. III.29 Disclosure in the Seller's Schedule. The disclosure in any Section of the Seller's Schedule to this Agreement of an exception to any representation and warranty shall constitute disclosure of such exception for all applicable representations and warranties under this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller that the statements related to Buyer contained in this Article IV are correct and complete as of the as of the date hereof and will be correct and complete as of the Closing Date, except as specified to the contrary in the disclosure schedule prepared by Buyer and attached hereto as Exhibit B (the "Buyer's Schedule"). The Buyer's Schedule is arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Article IV. IV.1 Due Incorporation; Requisite Power and Authority. Buyer is a corporation duly organized, validly existing and in good standing as a corporation under the laws of the State of Delaware and has all the requisite power and authority to execute and deliver the Transaction -25- Documents and to perform all transactions in the manner contemplated by the Transaction Documents. This Agreement has been and, when delivered, the remainder of the Transaction Documents will have been duly executed and delivered by Buyer and duly authorized and approved by all necessary corporate action on the part of Buyer. This Agreement constitutes and, when delivered, the remainder of the Transaction Documents will constitute the valid and binding obligations of Buyer, enforceable against Buyer in accordance with its or their terms, subject to bankruptcy and similar laws and equitable principles regarding the enforcement of contracts. IV.2 Requisite Consents; Nonviolation. The execution, delivery and performance of this Agreement by Buyer does not and the execution, delivery and performance of the remainder of the Transaction Documents by Buyer will not (a) violate or conflict with (i) the provisions of the Certificate of Incorporation or Bylaws of Buyer, (ii) any applicable law, rule or regulation, (iii) any resolution of the Board of Directors or the shareholders of Buyer, or (iv) order, writ, injunction or decree by which Buyer is bound; or (b) except as set forth in this Agreement, require the consent, license, permit, approval, authorization or other action by or with respect to, any governmental person or entity (except such approvals, permits or filings as may be required to comply with applicable state securities and antitrust laws). IV.3 Broker's Fees. Buyer has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. ARTICLE V CERTAIN TRANSACTIONS AND AGREEMENTS PRIOR TO THE CLOSING DATE V.1 Confidentiality. The Company and Seller have provided Buyer information relating to the Company, the Subsidiary and Seller and have permitted Buyer to make an investigation of the Company, the Subsidiary and their business. To facilitate a smooth transition in ownership of the Company, prior to the Closing Date, Buyer, through its officers, employees, counsel, accountants and other authorized representatives, will continue to discuss the Company's business with Seller and the Company's and the Subsidiary's officers, employees, independent accountants, actuaries and other agents during the Company's normal business hours only in a manner that does not interfere with the Company's normal business or contravene any agreement to which the Company is bound. V.2 Business Organization. (a) Seller shall use its reasonable best efforts to cause each of the Company and the Subsidiary, through the Closing Date, (i) to operate its business only in the usual, regular and ordinary manner, on a basis consistent with past practice and to the extent consistent with such operation to preserve substantially intact its business organization, (ii) to keep available the services of the present officers and employees of the Company and the Subsidiary, and (iii) to preserve the present relationships of the Company and the Subsidiary with all entities or persons having significant business dealings with either of them. -26- (b) Except as may be approved in writing by Buyer, (1) from the date hereof to and including the date four Business Days prior to the Closing Date, Seller shall use its reasonable best efforts to cause the Company and its affiliates not to, and (2) from the date three Business Days prior to the Closing Date to and including the Closing Date, Seller shall not and shall cause its affiliates not to (i) transfer, sell, encumber or otherwise convey any asset of the business of the Company and the Subsidiary other than the sale of inventory in the ordinary course, (ii) grant or agree to any bonuses to any employee of the Company or the Subsidiary, any general increase in the rate of salary or compensation of the employees of the Company or the Subsidiary, (iii) commit the Company or the Subsidiary to provide any additional pension, retirement or other employee benefits to any employee of the Company or the Subsidiary, or any increase of existing benefits for such employees, (iv) enter into any contract, agreement or commitment other than in the ordinary course of business which involves aggregate consideration of in excess of $100,000 and which is not cancelable without penalty within 30 days, (v) incur or increase any indebtedness for borrowed money or guarantee the debt of any other person (other than any incurrence or increase in the ordinary course of business and then only if the amount of such incurrence or increase (to the extent not repaid prior to the date three Business Days prior to the Closing Date) is reflected as a liability on the Estimated Closing Statement of Net Assets), (vi) submit any bid or proposal, or modify any existing bid or proposal, in excess of $2,000,000, (vii) make any capital expenditure, or commit to make any capital expenditure, in excess of $100,000 in the aggregate, (viii) take any act on inconsistent with the representations and warranties of Seller hereunder or that would cause any of the representations and warranties of Seller hereunder to become untrue in any material respect, (ix) except for conversion of the Company from its status as a subchapter S Corporation under the Code to a subchapter C Corporation under the Code, make or change any material tax election or settle or compromise any material federal, state, local or foreign income tax liability or file any amended Tax Returns, (x) increase the compensation or fringe benefits of any present or former director, officer or employee of the Company or its Subsidiary (except for the payment of bonuses and increases in salary or wages of employees (other than officers) in the ordinary course of business consistent with past practice), (xi) grant severance or termination pay to any present or former director, officer or employee of the Company or its Subsidiary, in excess of $100,000 in the aggregate, (xii) loan or advance any money or other property to any present or former director, officer or employee of the Company or its Subsidiary (except for travel and other similar advances in the ordinary course of business and consistent with past practice), (xiii) establish, adopt, enter into, amend or terminate any Company Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Plan if it were in existence as of the date of this Agreement, (xiv) following the fourth Business Day prior to the Closing Date, make, declare or set a record date with respect to any distribution of assets of the Company or the Subsidiary in respect of the capital stock of the Company (whether by dividend, redemption, share purchase or otherwise) other than a liquidation and dissolution of all of the assets of the Company or (xv) agree, whether or not in writing, to do any of the foregoing. V.3 Cooperation. (a) General. Each of the parties will use all reasonable efforts to take all action and to do all things reasonably necessary, proper or advisable in order to consummate and make effective the transaction contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions). -27- (b) Filings and Consents. As soon as practicable, Buyer and Seller shall make, or cause to be made, any and all filings which are required under the Hart-Scott-Rodino Act, or any other required filings in any jurisdiction. The parties will furnish to each other such necessary information and assistance as each may reasonably request in connection with their preparation of necessary filings or submissions to any governmental agency, including, without limitation, any filings necessary under the provisions of the Hart-Scott-Rodino Act or any other required filings in any jurisdiction. Buyer shall pay the filing fee(s) associated with all Hart-Scott-Rodino Act filings. Seller shall use its reasonable efforts to obtain at the earliest practicable date all material required third party consents, identified in Section V.3(b) of the Seller's Schedule, of all third parties to leases, licenses, agreements, indentures or other instruments necessary to the consummation of the transactions contemplated hereby, and Buyer shall cooperate with Seller in order to obtain such consents at the earliest practicable date by performing such actions and by providing Seller with such information, including, without limitation, publicly-available financial information relating to Buyer, all as Seller may reasonably request. Anything contained in this Section V.3(b) to the contrary notwithstanding this Agreement shall not constitute an agreement to assign any claim, contract, license, lease, commitment, sales order or purchase order if an attempted assignment of the same without the consent of the other party thereto would constitute a breach thereof or in any way materially and adversely affect the rights of Seller thereunder. (c) Access. Prior to Closing, Seller will use its reasonable best efforts to cause the Company to permit representatives of Buyer to have reasonable access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Company upon reasonable advance notice, to all premises, properties, personnel, books, records (including Tax records), contracts and documents of or pertaining to the Company. (d) Notice of Developments. Each party will give prompt written notice to the other of any material adverse development causing or constituting a breach of any of its own representations and warranties. V.4 Subsidiary Merger. Prior to the Closing, Seller shall consummate the Subsidiary Merger. V.5 No Seller Distributions. Until such time as the transactions pursuant to this Agreement have been consummated in accordance with the terms hereof, Seller shall not distribute nor transfer any of its assets now owned or hereafter acquired. V.6 Further Assurances. Each of the parties hereto agrees that it will, from time to time after the date of the Agreement, execute and deliver such other certificates, documents and instruments and take such other action as may be reasonably requested by the other party to carry out the actions amid transactions contemplated by this Agreement. -28- ARTICLE VI COVENANTS REGARDING POST CLOSING ACTIVITIES VI.1 Employee Matters. (a) Immediately following the Closing on the Closing Date, Buyer shall offer employment at will in a similar position to each employee of the Business who on the Closing Date is employed by the Acquired Company or on an approved leave of absence (the "Employees") at a rate of base compensation and salary equal to not less than one hundred percent (100%) of their base compensation and salary immediately prior to the Closing Date; provided, however, that nothing herein shall interfere with or otherwise impair any right of Buyer to terminate the employment of any employee at any time. Buyer shall assume the responsibility for all obligations and liabilities arising out of or in any way connected with its employment of the Employees or the termination thereof, including, without limitation, any and all claims for wrongful discharge, discrimination or other violations of law or for payment under any employee benefit plans for claims incurred after the Closing on the Closing Date. Buyer shall also offer to Employees participation in benefit programs in accordance with Buyer's employee benefit plans and other fringe benefits which programs shall be, at a minimum, substantially comparable, in the aggregate, to the Company Plans (excluding for these purposes any Company Plans providing equity awards or equity based awards) and shall be eligible to participate in said employee benefit plans and other fringe benefits of Buyer immediately and on the same basis as such plans and benefits are offered to new employees of Buyer; provided, however, that payment of any deductibles under the Company Plans by such Employees will be credited under Buyer's plans during 1998; provided, further, that Buyer may change, amend or terminate any such Company Plans at any time following the Closing Date. In addition, Buyer agrees that any preexisting condition clause in any of the Acquired Company's health or disability insurance coverage shall not be applicable to the Employees to the extent allowable. (b) Buyer shall assume and be responsible for all sums then due any Employee who accepts Buyer's offer of employment, which sums shall include, without limitation, salary, wages, overtime, bonuses, accrued and unused vacation time and any other payments due pursuant to any agreements between the Acquired Company and such Employee payable after the Closing Date or as required by applicable law. All Employees who accept Buyer's offer of employment shall receive credit for years of service with or as granted by the Acquired Company. (c) Any former employee of the Acquired Company (or their dependents) who becomes eligible for health continuation coverage under the Acquired Company's major medical plan by virtue of his or her failure to accept Buyer's offer of employment being tantamount to a qualifying event, for the entitlement to such coverage, shall have available health continuation coverage satisfying the requirements of Section 4870 B of the Code and Section 601 through 608 of ERISA after the Closing through health benefit plans maintained by Buyer or its affiliates. (d) Buyer covenants and agrees that it will assume and be responsible for any obligations after the Closing Date to Employees who are on workers' compensation or a similar leave of absence from the Acquired Company on the Closing Date to the extent such obligations -29- are (i) pursuant to fully insured Company Plans, or (ii) fully accrued on the Closing Statement of Net Assets. VI.2 Seller's Indemnification. (a) Seller's Indemnification. Subject to the limitation of Section VI.2(c), Seller shall indemnify, defend and hold Buyer and its affiliates (and their respective officers, directors, employees and agents), harmless from any liability, damages, deficiency, loss, cost or expense (including but not limited to reasonable attorney's fees and any expenses of investigation in connection with any claim hereunder) actually incurred or paid by Buyer and its affiliates (or their respective officers, directors, employees and agents), arising out of or resulting from (i) the inaccuracy of any representation or the breach of any warranty made in this Agreement by Seller to Buyer; (ii) any failure of Seller to perform or comply with any of its covenants and agreements set forth in this Agreement; (iii) any Liability of the Seller or any of its affiliates or the Company or any of its affiliates other than Assumed Liabilities; or (iv) any Government Bid, Government Contract or Government Disclosure; provided, however, that Seller shall only indemnify Buyer and its affiliates for the first $10,000,000 of claims related to any Government Bid, Government Contract or Government Disclosure. Notwithstanding anything to the contrary contained herein, the Buyer shall be permitted to offset any amounts which would otherwise become payable to the Seller under Section 11.4 against amounts owing by the Seller under this Section VI.2(iv); provided that such right of offset shall only be exercisable with respect to Additional Consideration if notice of the exercise of such right is delivered to the Seller by the Buyer prior to the date on which the calculation of EBIT with respect to such Additional Consideration shall have been finally determined and agreed to pursuant to Section II.5. (b) Tax Indemnification. Seller shall indemnify and hold harmless the Buyer and its affiliates (and their respective officers, directors, employees and agents) from and against any and all Taxes for or in respect of each of the following (excluding, in all cases, Taxes included within the definition of Assumed Liabilities): (i) any and all Taxes with respect to any taxable period or a portion thereof, of the Company (or any predecessor) ending on or before the close of business on the date three Business Day's prior to the Closing Date; (ii) with respect to any and all Taxes of any member of a consolidated, combined or unitary group of which the Company (or any predecessor) is or was a member on or prior to the close of business on the date three Business Days prior to the Closing Date by reason of the liability of the Company pursuant to Treasury Regulation Section 1.1502-6(a) (or any analogous or similar state, local or foreign law or regulation), as a transferee or successor, by contract, or otherwise; (iii) any Taxes arising out of a breach of the representations and warranties contained in Section III.15; and (iv) any payments required to be made after the Closing Date under any Tax sharing, Tax indemnity, Tax allocation or similar contracts (whether or not written), to -30- which the Company or any predecessor was obligated, or was a party, on or prior to the close of business on the date three Business Days prior to the Closing Date. (c) Notification; Control of Proceedings. Buyer shall promptly give to the Seller written notice if it becomes aware of any liability, loss, damage, claim, cost and expense with respect to which indemnity may be asserted; provided that the failure to give prompt notice will not release the Seller from liability hereunder, except to the extent they are actually prejudiced thereby. If any claim is made by a third person or an action or proceeding commenced for which Buyer shall seek indemnity from Seller, Buyer shall give to the Seller reasonable written notice of the claim and request Seller to defend the same. Seller shall have the right to defend against such liability at their expense, and shall give written notice to Buyer of the commencement of such defense with reasonable promptness after the giving of the written notice of the claim by Buyer. Buyer shall be entitled to participate with Seller in such defense, but shall not be entitled in any way to release, waive, settle, modify or pay such claim without the written consent of the Seller, if Seller have assumed such defense. In the event Seller does not assume the defense of the matter as provided above, or does not notify Buyer of its election to defend such a matter within 30 days, Buyer shall have the full right to defend against such liability in such manner as it may deem appropriate. In the event Seller shall assume the defense, Buyer shall cooperate in the defense of such action, and the records of each shall be available to the other with respect to such defense, provided, however, that the Seller shall not, in the defense of any such action, consent to the entry of any judgment or enter into any settlement where such entry of judgment or settlement does not include a provision releasing the Buyer from all liability with respect to such action or that provides for a remedy other than the payment of money damages, except with the written consent of Buyer, such consent not to be unreasonably withheld or delayed. (d) Limitation on Indemnification. Notwithstanding the provisions of Sections VI.2(a) (except with respect to (A) clauses (ii), (iii) and (iv) of Section VI.2(a) and (B) Taxes as provided under Section VI.2(b)), (i) Seller shall not be liable to Buyer on account of any breach of any warranty or representation by Seller in this Agreement until the aggregate amount of all claims against Seller for which indemnification would have been available hereunder but for the application of the limitation set forth in this clause (i) for all breaches exceeds one percent (1%) of the Cash Purchase Price and then only for the amount by which such aggregate cumulative liability is in excess of one percent (1%) of the Cash Purchase Price; and (ii) in no event shall Seller's obligations to Buyer under Section VI.2(a)(i) exceed, in the aggregate, $5,000,000. (e) Survival. The indemnification obligations of Seller under this Section VI.2 (except with respect to indemnification pursuant to Section VI.2(a)(ii), (iii) and (iv)) shall terminate on June 30, 1999 as to any claim not asserted prior to such date, except that the indemnification obligations of Seller for (x) a breach of Sections III.1, III.2, III.3, III.5 and III.15 and (y) for Taxes under Section VI.2(b) shall not terminate until the expiration of the sixty-day period after the expiration of the applicable statute of limitations as to any claim not asserted prior to such date and that the indemnification obligations of Seller for a breach of Sections III.4, III.11 and III.16 shall terminate three (3) years after the date hereof as to any claim not asserted prior to such date. The indemnification obligations of Seller (I) under Section VI.2(a)(ii) shall terminate ten (10) years after the date hereof and (II) under Section VI.2(a)(iv) shall terminate on June 30, 2000, in each case as to any claim not asserted prior to such date. -31- (f) Indemnification Provisions for Benefit of Seller. (i) In the event Buyer breaches (or in the event any third party alleges facts that, if true, would mean Buyer has breached) any of its representations, warranties, and covenants contained in this Agreement or in any of the Transaction Documents, then the Buyer agrees to indemnify Seller and its affiliates (and their respective officers, directors, employees and agents) from and against the entirety of any Losses (up to but not in excess of the Cash Purchase Price) Seller or its affiliates (and their respective officers, directors, employees and agents) may suffer through and after the date of the claim for indemnification (including any Losses Seller or its affiliates (and their respective officers, directors, employees and agents) may suffer after the end of any applicable survival period) resulting from, arising out of, or caused by the breach (or the alleged breach). (ii) Notwithstanding anything to the contrary herein contained, (i) Buyer will indemnify, defend and hold harmless Seller and its affiliates (and their respective officers, directors, employees and agents) from and against any Losses as a result of claims based on or arising from any Assumed Liabilities or the operation of the Business after the Closing Date and (ii) such indemnification shall not be limited in time or amount or subject to any deductible or cap. (iii) Seller or its affiliates shall with reasonable promptness give to the Buyer written notice if it becomes aware of any Losses with respect to which indemnity may be asserted; provided that the failure to give prompt notice will not release the Buyer from liability thereunder, except to the extent they are actually prejudiced thereby. If any claim is made by a third person or an action or proceeding commenced for which Seller or other indemnified parties shall seek indemnity from Buyer, Seller or its affiliates shall give to Buyer reasonable written notice of the claim and request Buyer to defend the same. Buyer shall have the right to defend against such liability at their expense, and shall give written notice to Seller of the commencement of such defense with reasonable promptness after the giving of the written notice of the claim by Seller or its affiliates. Seller or other indemnified parties shall be entitled to participate with Buyer in such defense, but shall not be entitled in any way to release, waive, settle, modify or pay such claim without the written consent of the Buyer, if Buyer has assumed such defense. In the event Buyer does not assume the defense of the matter as provided above, or does not notify Seller of their election to defend such a matter within 30 days, Seller or other indemnified parties shall have the full right to defend against such liability in such manner as it or they may deem appropriate. In the event Buyer shall assume the defense, Seller or other indemnified parties shall cooperate in the defense of such action, and the records of each shall be available to the other with respect to such defense, provided, however, that the Buyer shall not, in the defense of any such action, consent to the entry of any judgment or enter into any settlement where such entry of judgment or settlement does not include a provision releasing the Seller or other indemnified parties from all liability with respect to such action or that provides for a remedy other than the payment of money damages, except with the written consent of Seller or other indemnified parties. (iv) The indemnification obligations of Buyer under this Section VI.2(f) shall not terminate until the expiration of the applicable statute of limitations; provided, however, -32- that the indemnification obligations of Buyer related to any failure of Seller to perform or comply with any of its covenants and agreements set forth in this Agreement shall terminate ten years from the date hereof as to any claim not asserted prior to such date. VI.3 Contracts Requiring Consent to Assignment. Notwithstanding anything in this Agreement, neither this Agreement nor any document or instrument delivered pursuant hereto shall constitute an assignment of any claim, contract, agreement, license, lease, commitment, sales order or purchase order or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof without the consent of any other Person would constitute a breach thereof or in any way adversely affect the rights to be assigned. Until such consent is obtained, or if an attempted assignment thereunder would be ineffective or would affect the rights of Seller or any affiliate thereunder so that the Buyer would not in fact receive all such rights, Seller and the Buyer will cooperate with each other (and, to the extent required, Seller shall cause its affiliates to cooperate with the Buyer) to provide for the Buyer the benefits of, and to permit the Buyer to assume all liabilities under, any such claim, contract, agreement, license, lease, commitment, sales order or purchase order, including enforcement at the request and expense of the Buyer for the benefit of the Buyer of any and all rights of Seller or any affiliate against a third party thereto arising out of the breach or cancellation thereof by such third party; and any transfer or assignment to the Buyer by Seller or any affiliate of any property or property rights or any contract or agreement which shall require the consent or approval of any third party shall be made subject to such consent or approval being obtained. The parties shall each use their best efforts to obtain any required consent to assignment. VI.4 Company Plans. From and after the Closing, Buyer agrees to assume Seller's obligations under and become the plan sponsor of each of the Company Plans in effect immediately prior to the Closing Date and Buyer shall be entitled to all rights, obligations and duties of Seller under such Company Plans and Seller shall cause any assets, set-aside or otherwise, pertaining to the Company Plans to be transferred to Buyer; such assets shall include, but not be limited to, qualified trusts, VEBAs, and grantor trusts and insurance policies. Notwithstanding anything to the contrary herein contained, the assumption of such obligations is not intended to and shall not be construed to impair the right or ability of Buyer to unilaterally amend or terminate any such benefit plans and other fringe benefits, or any Company Plan in effect immediately prior to the Closing Date, at any time after the Closing Date. VI.5 Research and Experimental Expenses. Seller will use its reasonable best efforts to cause to be furnished to Buyer as soon as reasonably practicable, but in no event more than 180 days after Closing, all information reasonably requested relating to the base period research expenses and any other information to allow Buyer to claim research and experimental credits in accordance with the relevant sections of the Code and treasury regulations promulgated thereunder. -33- ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER The obligations of Buyer and Seller to consummate the transactions contemplated by this Agreement on the Closing Date shall be subject to the fulfillment at or prior to the Closing of each of the following conditions, except to the extent such conditions are waived in writing by Buyer and Seller: VII.1 Government Approvals; Litigation. All requisite governmental approvals and authorizations necessary, including, but not limited to, any such approvals or authorizations under the Hart-Scott-Rodino Act, for the consummation of the transactions contemplated hereby shall have been duly issued or granted and all applicable waiting periods shall have expired or otherwise been terminated. No action or proceeding by any governmental authority or any third party challenging the transactions contemplated by this Agreement or any parties' ability or right to participate therein shall be pending or threatened against any party. No unfavorable decree or order shall exist that would prevent or make the consummation of any of the transactions contemplated by this Agreement unlawful or would result in the payment of damages or other consequences materially adverse to the business or assets of Seller, Buyer or the Company. VII.2 Permits and Approvals. Buyer, Seller and the Company shall each have received all consents, waivers, approvals, licenses, or other authorizations required for the performance of this Agreement by the parties hereto. ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATIONS The obligation of Buyer to consummate the transactions contemplated by this Agreement on the Closing Date shall be subject to the fulfillment at or prior to the Closing of each of the following conditions, except to the extent such conditions are waived by Buyer, such waiver to be evidenced by Buyer's consummation of the transaction contemplated hereby: VIII.1 Representations and Warranties; Performance. The representations and warranties of the Seller set forth in this Agreement shall be true in all material respects (except that where any statement in a representation or warranty expressly includes a standard of materiality, such statement shall be true and correct in all respects) as of the Closing Date with the same effect as though made at such time. Seller shall have performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing. Seller shall have delivered to Buyer a certificate, dated the Closing Date, as to the foregoing. VIII.2 Escrow Agreement. The Escrow Agreement to be entered into pursuant to the Stock Purchase Agreement shall have been assigned to Buyer pursuant to an Assignment of Escrow Agreement in substantially the form of Exhibit VIII.2 hereto. -34- VIII.3 Subsidiary Merger. The Subsidiary Merger shall have been consummated. VIII.4 Material Adverse Change. Between the date of this Agreement and the Closing, there shall have been no material adverse change (or any event that would reasonably be expected to result in such change) in the condition (financial or otherwise), results of operation, business, assets or properties of the Company. VIII.5 Proceedings. All proceedings to he taken in connection with the transactions contemplated by this Agreement and all documents incident thereto shall be reasonably satisfactory in form and substance to Buyer and its counsel, and Buyer shall have received copies of such documents and such other evidence as it or its counsel may reasonably request in order to establish the consummation of such transaction and the taking of all proceedings in connection therewith. VIII.6 Ilex Agreement. The Closing (as defined therein) under the Ilex Agreement shall have occurred in accordance with the terms thereof. VIII.7 Non-Competition Agreements. The Non-Competition Agreements entered into pursuant to the Stock Purchase Agreement shall have been assigned to Buyer pursuant to an Assignment of Non-Competition Agreements in substantially the form of Exhibit VIII.6 hereto. ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLER The obligations of Seller to consummate the transactions contemplated by this Agreement on the Closing Date shall be subject to the fulfillment at or prior to the Closing of each of the following conditions, except to the extent such conditions are waived by Seller, such waiver to be evidenced by Seller's consummation of the transaction contemplated hereby. IX.1 Representations and Warranties; Performance. The representations and warranties of Buyer set forth in this Agreement shall be true in all material respects (except that where any statement in a representation or warranty expressly includes a standard of materiality, such statement shall be true and correct in all respects) as of the Closing Date, with the same effect as though made at such time. Buyer shall have paid the Cash Purchase Price and otherwise performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing. IX.2 Proceedings. All proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents incident thereto shall be reasonably satisfactory in form and substance to Seller and their counsel, and Seller shall have received copies of such documents and such other evidence as they or their counsel may reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith. -35- IX.3 Ilex Agreement. The Closing (as defined therein) under the Ilex Agreement shall have occurred. ARTICLE X FEES AND EXPENSES X.1 Expenses. Except as explicitly provided hereunder each party hereto shall bear its own expenses incurred in connection with the negotiation and consummation of the transactions contemplated by this Agreement. X.2 Fees or Commissions of Brokers. Buyer has no obligation to pay any fees or commissions of any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Seller could be liable. ARTICLE XI TERMINATION XI.1 Termination of Agreement. This Agreement and the transactions contemplated hereby may be terminated at any time before the Closing Date, as follows, and in no other manner: (a) by mutual consent of Buyer and Seller; (b) by either Buyer or Seller if the Closing shall not have occurred on or before 5:00 p.m., Pacific Time, on March 31, 1998; provided that the right to terminate this Agreement under this Section XI.1 shall not be available to any party whose failure to fulfill any obligations under this Agreement has been the cause of, or results in, the failure of the Closing to have occurred within such period; (c) by either Buyer or Seller, respectively, if there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of the other party and such breach of a covenant or agreement has not been cured within ten (10) days after notice of such breach has been given to the other party; or (d) by either Buyer or a majority in interest of Seller if (i) there shall be a final, non-appealable order of a federal or state court in effect preventing consummation of the transaction, or (ii) there shall be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the acquisition by any governmental entity which would make consummation of the transaction illegal. XI.2 Effect of Termination. In the event of a termination of this Agreement by any party pursuant to Section XI.1, this Agreement shall become void and have no effect, and there shall be no obligations or liability on the part of any party or its respective officers, directors or -36- trustees, except as set forth in Sections V.1 and X.1 (except to the extent that termination has occurred pursuant to subsection XI.1(c), above). ARTICLE XII MISCELLANEOUS XII.1 Time of the Essence. Time is of the essence in this Agreement; provided, however, that the parties shall have a reasonable period of time to cure any failure to perform their obligations hereunder, which period shall not be longer than three (3) Business Days for purposes of any obligations under Article II. XII.2 Entire Agreement. Except as set forth in Section V.1 above, this Agreement and the other agreements contemplated hereby contain the entire agreement of the parties hereto, and supersedes any prior written or oral agreements between them concerning the subject matter contained herein. There are no representations, agreements, arrangements or understandings, oral or written, between the parties to this Agreement, relating to the subject matter contained in this Agreement, which are not fully expressed herein or the agreement identified in Section V.1 above. The Schedules and each Exhibit attached to this Agreement or delivered pursuant to this Agreement is incorporated herein by this reference and constitutes a part of this Agreement. XII.3 Press Releases amid Public Announcements. Neither Seller nor Buyer shall issue any press release or make any public announcement concerning the matters set forth in this Agreement (other than as required by applicable disclosure rules or regulations) without the consent of the other party, which consent shall not be unreasonably delayed or withheld. Seller and Buyer will cooperate to jointly prepare and issue any press release which may be issued to announce the entering into this agreement or the closing of the transaction contemplated by this Agreement. XII.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. XII.5 Descriptive Headings. The Article and Section headings in this Agreement are for convenience only and shall not affect the meanings or construction of any provision of this Agreement. XII.6 Notices. Any notices required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficiently given on the date delivered personally or by telecopier (if a copy is sent by mail), or five (5) days after posting by registered or certified mail, postage prepaid, addressed as follows: -37- If to Buyer: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Telecopier Number: (212) 805-5494 Attention: Christopher C. Cambria With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telecopier Number: (212) 455-2502 Attention: William E. Curbow And if to Seller: FAP Acquisition Trust c/o First Union National Bank 10 State House Square Hartford, CT 06103-3698 Telecopier Number: (860) 247-1356 Attention: W. Jeffrey Kramer With copies to: Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, CA 94104 Telecopier Number: (415) 983-1200 Attention: Graham Taylor and Bingham Dana LLP 100 Pearl Street Hartford, CT 06103 Telecopier Number: (860) 527-5188 Attention: James G. Scantling or to such other address or addresses as a party shall have previously designated by notice to the sender given in accordance win this Section. XII.7 Arbitration. Any dispute under this Agreement prior to June 30, 2000 (and after such date, but in such case only if and for so long as there are Impounded Funds (as defined in the Escrow Agreement between Seller, the Company and the stockholders of the Company (the -38- "Escrow Agreement")) with respect to such dispute) (the "Initial Arbitration Period") which is not settled by mutual agreement among the parties hereto, shall be finally settled by binding arbitration in New York, New York, conducted by and in accordance with the rules then in effect of the Judicial Arbitration and Mediation Service; provided that after the Initial Arbitration Period or the payment or distribution of all amounts held in escrow pursuant to the Escrow Agreement (or when a Notice of Release (as defined in the Escrow Agreement) has been received with regard to all remaining amounts in such escrow), whichever occurs earlier, any such dispute shall be settled by binding arbitration in San Francisco, California, conducted by and in accordance with the rules then in effect of the Judicial Arbitration and Mediation Service. Each party shall bear its own costs and attorneys' and witness' fees. The prevailing party in any arbitration, as determined by the arbitration panel, shall be entitled to an award against the other party in the amount of the prevailing party's costs and reasonable attorneys' fees. In making any such award, the arbitration panel shall take into consideration the outcome of the proceeding and the reasonableness of the conduct of each such party in connection with the dispute, in light of the facts known to such party at the time such party engaged in such conduct. The arbitrator shall not have authority to award punitive damages hereunder. XII.8 Choice of Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York. XII.9 Bulk Sale and Other Tax Filings. The Buyer and Seller agree to waive compliance with applicable state sales Tax, bulk sales notification statutes and regulations and any applicable state tax statutes, in connection with the sale of the Acquired Assets to the Buyer. XII.10 Transfer Taxes; Sales Tax. The parties agree that the Buyer shall pay the sales Tax on the transfer of personal property and each of the Seller or the Buyer, as appropriate, shall be responsible for such other transfer Taxes applicable to the transaction contemplated hereby as are customary in the jurisdiction in which the Tax is payable (other than Taxes computed on the basis of income) and each party so responsible shall indemnify, defend and hold the other harmless with respect to such Taxes. Each Party shall file, or cooperate with the other Party in filing, all necessary documentation and Tax Returns with respect to such Transfer Taxes. XII.11 Binding Effect; Benefits. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. XII.12 Assignability. Except as explicitly contemplated hereunder, neither this Agreement nor any of the parties' rights hereunder shall be assignable by any party without the prior written consent of the other party and any attempted assignment without such consent shall be void provided, however, that this Agreement may be assigned by Buyer to an affiliate of Buyer which shall have been formed for the purpose of consummating the transactions contemplated hereby. XII.13 Waiver and Amendment. Any term or provision of this Agreement may be waived at any time by the party which is entitled to the benefits thereof. The waiver by any -39- party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The parties may, by mutual agreement in writing, amend this Agreement in any respect. XII.14 Attorneys' Fees. In the event of any action or proceeding to enforce the terms and conditions of this Agreement, the prevailing party shall be entitled to an award of reasonable attorneys' and experts' fees and costs, in addition to such other relief as may be granted. XII.15 Severability. If and to the extent that any court of competent jurisdiction holds any provisions (or any part thereof) of this Agreement to be illegal, invalid or unenforceable, such holding shall not affect the validity of the remainder of this Agreement. XII.16 No Recourse. It is expressly understood and agreed that this Agreement is executed and delivered on behalf of Seller by First Union National Bank ("First Union"), not in its individual capacity but solely as Trustee under the trust agreement under which Seller is organized, in the exercise of the powers and authority conferred and vested in it as the Trustee thereunder, and each of the representations, warranties, undertakings and agreements herein made on the part of Seller is made and intended not as a personal representations, warranty, undertaking and agreement by First Union but is made and intended for the purpose of binding only the trust estate created by the trust agreement under which Seller is organized (the "Trust Estate"), and all persons having any claim against First Union or Seller by reason of the transactions contemplated by this Agreement shall for payment or satisfaction thereof not seek recourse against First Union except in its capacity as trustee and then only to the extent of the Trust Estate. -40- IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above written. L-3 COMMUNICATIONS CORPORATION By: /s/ [ILLEGIBLE] --------------------------------- Name: Title: FAP TRUST By: First Union National Bank, not in its individual capacity but solely as trustee By: --------------------------------- Name: W. Jeffrey Kramer Title: Vice-President IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above written. L-3 COMMUNICATIONS CORPORATION By: --------------------------------- Name: Title: FAP TRUST By: First Union National Bank, not in its individual capacity but solely as trustee By: /s/ W. Jeffrey Kramer --------------------------------- Name: W. Jeffrey Kramer Title: Vice-President EXHIBIT A FAP Trust Disclosure Schedule Section III.1 Due Organization of Seller; Authorization; Title to Acquired Assets The Company has a five million dollar line of credit with Comerica Bank which grants the Bank a security interest in the assets of the Company. The Company also has a $100,000 line of credit with IBM which grants IBM a security interest in the assets of the Company. The Company has not drawn down either line of credit as of February 9, 1998. Seller will borrow all or a portion of the funds required to acquire all of the capital stock of the Company pursuant to the Ilex Agreement and will repay such borrowings (the "Borrowings") with the Cash Purchase Price to be received from Buyer in connection with the consummation of the transactions contemplated by the Asset Purchase Agreement. Buyer may grant in favor of its lender various Liens upon some or all of the capital stock of the Company and some or all of the assets of the Company and the Subsidiary, which Liens will be released upon consummation of the transactions contemplated hereby and repayment of the Borrowings. FAP Trust Disclosure Schedule Section III.2 Requisite Consents; Nonviolations Specific consent by the owner of the Milpitas facility (Barber Associates LP C/O Menlo Equities 2901 Tasman Dr., Suite 220, Santa Clara, CA 95054) at 1570 Buckeye Drive, Milpitas, CA 95035 leased by the Company will be required as stipulated in the lease agreement in connection with the execution of the Ilex Agreement, this Asset Purchase Agreement and the consummation of the transactions contemplated hereby and thereby. The referenced lease agreement specifically states that consent cannot be unreasonably denied. (See chart that is a part of Section III.13.) Consent by Comerica Bank, lender under the Company's line of credit may also be required in connection with the execution of the Ilex Agreement, this Asset Purchase Agreement and the consummation of the transactions contemplated hereby and thereby. The consent of the U.S. Government in connection with (or novation of) the IEW contract (See Section III.17) is required in connection with the execution of the Ilex Agreement, this Asset Purchase Agreement and the consummation of the transactions contemplated hereby and thereby. Other Government Contracts and bids for Government Contracts require consent in connection with the execution of the Ilex Agreement, this Asset Purchase Agreement and the consummation of the transactions contemplated hereby and thereby (see attached list). In addition to the above, the consent of the counterparty to various of the agreements to which the Company or the Subsidiary is a party may be required in connection with the 2 execution and delivery of this Asset Purchase Agreement and the consummation of the transactions contemplated hereby. - -------------------------------------------------------------------------------- Novation or corporate name change required: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Novation: - -------------------------------------------------------------------------------- DELIVERY - -------------------------------------------------------------------------------- ORDER - -------------------------------------------------------------------------------- SOURCE CONTRACT NUMBER NUMBERS - -------------------------------------------------------------------------------- Fort Monmouth-CECOM DAAB07-91-D-Q501 21-47 incl. - -------------------------------------------------------------------------------- Fort Monmouth-CECOM DAAB07-96-D-H510 1-14 incl. - -------------------------------------------------------------------------------- MD PROCUREMENT MDA904-97-C-0172 - -------------------------------------------------------------------------------- MD PROCUREMENT MDA904-97-C-0100 - -------------------------------------------------------------------------------- MD PROCUREMENT MDA904-96-C-1161 - -------------------------------------------------------------------------------- MD PROCUREMENT MDA904-95-C-2215 - -------------------------------------------------------------------------------- MD PROCUREMENT MDA904-98-C-A813 - -------------------------------------------------------------------------------- USPS (Hygienetics) BID - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Name Change Notification or Amendment: PO or TASK - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BOOZ ALLEN 25704NS100 1038-4 - -------------------------------------------------------------------------------- GENERAL INSTRUMENT 2101438 CORP. - -------------------------------------------------------------------------------- L3-NERVETRUNK SUB ON MDA904-94-C-8028 - -------------------------------------------------------------------------------- L3-MAROON ARCHER SUB ON MDA904-96-C-0291 KT0156608 & KTO137830 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FAP Trust Disclosure Schedule Section III.3 Organization and Authorization The Company is not qualified to do business in Arizona, Colorado, Georgia, New York, North Carolina, Tennessee, and Texas. Company Employees in all of these states work on U.S. Military installations under Government Contracts. FAP Trust Disclosure Schedule Section III.5 Subsidiaries, etc. The Subsidiary is a California corporation and is operated as a wholly owned subsidiary of the Company. Joseph Lopez is Chairman of the Board of Directors and the Sole Director of the Subsidiary. Ralph Vitagliano is the Chief Financial Officer and Secretary of the Subsidiary. Officers of the Subsidiary are: Scott Feldman President Scott Sargis Vice President Richard Peduto Vice President Robert Bays Vice President When the Company changed from a C to an S corporation in March 1997, the Subsidiary was also changed to an S form so that earnings could be consolidated and distributed to the Company shareholders. The Company owns Series E preferred shares of OSI, an affiliate of Jack Harris (see Section III.28 below). The Company also owns some warrants and common stock of TWA, and some common stock of Continental Airlines which it acquired for uncollectible accounts receivable. The Company will dispose of these TWA and Continental shares and warrants in advance of consummation of the Ilex Agreement. FAP Trust Disclosure Schedule Section III.7 No Material Changes Disclosure required re the OSI financial situation. (See Section III.28 below.) Disclosure required in connection with the issuance of stock to Jack Harris. Director Jack Harris' fees for the first four meetings (April 1997 through January 1998) at the rate of 850 shares per meeting were issued in January. There are 25,000 stock options outstanding at an exercise price of $17.50 per share. Terms of the Stock Incentive Option Plan are disclosed (see Section III.11) and the options all vest in the acquisition of the Company under the Company's Stock Option Plan. FAP Trust Disclosure Schedule Section III.8 Undisclosed Liabilities Not disclosed in the financial statements is the commission which will be due to Bowles Hollowell Conner in the event that the Company is sold. Expenses which include preparation of a confidential offering memorandum and out-of-pocket travel and legal fees incurred by the Company in connection with the sale of stock which are recorded as prepaid expenses of the Company on closing financial statements as per advice from the Company's outside accountants. See discussion of the OSI investment in Section III.28 below. FAP Trust Disclosure Schedule Section III.9 Governmental Authorizations; Compliance with Law See attached list FAP Trust Disclosure Schedule Section III.10 Litigation The Subsidiary entered into an Agreement with the Florsheim Group, Inc. (Florsheim) for the survey, engineering and construction management of the abatement and demolition of the former headquarters building of Florsheim in Chicago, IL. The Subsidiary subcontracted the abatement and demolition phases of the project to EHC, Inc. (EHC), who subsequently subcontracted a portion of the demolition to MasterCraft, Inc. (MasterCraft). The subcontract Agreement executed between the Subsidiary and EHC includes a provision restricting EHC and their subcontractors from filing mechanic liens against the property, as well as a provision to indemnify and hold the Subsidiary harmless from any and all damages associated with EHC's actions of those of its subcontractors. A work quality issue arose between EHC and MasterCraft, resulting in EHC terminating the subcontract Agreement. MasterCraft then filed suit against EHC, claiming contract breach by improper contract termination. The suit also named the Subsidiary, Florsheim, and other project development and financing entities, and includes a demand for damages for $51,000. The Subsidiary has answered these charges, and has contacted plaintiff's counsel to investigate terminating the action against the Subsidiary. Plaintiff did not object to this approach, and may decide to accept that proposal at a hearing on the matter scheduled for February 17, 1998. The Subsidiary has also contacted EHC regarding its obligations to accept defense cost and other financial responsibilities, which it admits. The Subsidiary management anticipates that the Subsidiary will ultimately be dismissed from the action. FAP Trust Disclosure Schedule Section III.11 Employee Benefits Plan ILEX SYSTEMS, INC. EMPLOYEE BENEFIT PLANS (INSURANCE) Plan + Coverage/Benefit Insurer Medical (PPO) Great West Life Dental Plan Great West Life Medical (HMO) Kaiser Permanente Basic Life/Accidental Death & Great West Life Dismemberment Long Term Disability ITT Hartford HYGIENETICS ENVIRONMENTAL SERVICES, INC. EMPLOYEE BENEFIT PLANS Plan + Coverage/Benefit Insurer Medical (PPO) AETNA Dental Delta Dental Basic Life/Accidental Death & AETNA Dismemberment Long Term Disability ITT Hartford The Company and the Subsidiary also maintain an incentive stock option plan (copy attached). In addition, the Company provides a bonus plan for its senior management which is based on the achievement profit targets. The plan is approved and paid on an annual basis. The Company and the Subsidiary also offer normal days off, two week of paid vacation per year and customary holidays. The attached Benefits Summary provides details on the listed plans. The Company sponsors a Section 401(k) Plan through T. Rowe Price and the Subsidiary sponsors a Section 401(k) Plan through Fidelity Investments. (Copies of plan documents attached.) FAP Trust Disclosure Schedule Section III.12 Intellectual Property The Company has rights in the following firmware or software, the copyright for none of which has been registered, as a different version of the software is created for each customer's specific needs. 1. SCADA System Software 2. DGU Software 3. (Medical) Pharmaceutical Software 4. RTU Firmware (8100, 8200, 9500) Environmental System Management 5. Software (to Boston University) The Company uses form license agreements in connection with its marketing of these products. The Company uses the trade names Ilex and Ilex Systems; its wholly owned subsidiary uses the trade name Hygienetics. The Company is the licensee of many "off the shelf" software programs used in conducting its business. FAP Trust Disclosure Schedule Schedule Section III.13 Real & Personal Property Real Property - See Attached Lease Analysis Personal Property - See Attached Fixed Asset Schedules FAP Trust Disclosure Schedule Section III.14 Insurance Policies See attached list and analysis FAP Trust Disclosure Schedule Section III.17 Contracts The Company has two large contracts. The IEW contract and the $5.0 million line of credit with Comerica Bank. (i) See Section III.7 and III.28 for director and affiliate contract. (ii) The Company's employees (including officers) are employed at "at will" basis at current salaries and salaries are reviewed annually. Discretionary bonuses also paid. See also Disclosure Schedule Section III.11 for additional benefits information. (iii) None (iv) The Company has a $5,000,000 line of credit with Comerica Bank and a $100,000 line of credit with IBM. [(v) See Section III.3.] (vi) See (xii) below. (vii) See Schedule III.12. (viii) None (ix) None (x) None (xi) See (iv) above; other contracts have terms which have incidental effects on the manner in which the business of the Company is operated. (xii) IEW Contract FAP Trust Disclosure Schedule Section III.21 Largest Customers & Suppliers See attached lists FAP Trust Disclosure Schedule Section III.22 Bank Accounts See attached lists for Company and Subsidiary bank accounts FAP Trust Disclosure Schedule Schedule Section III.26 Government Property Held by the Company See attached Schedules FAP Trust Disclosure Schedule Section III.28 Transactions with affiliates. The Company has no contacts or arrangements with its officers, directors, major affiliates, subsidiaries and entities which they control except as follows: In January, 1995 the Company made a $250,000 investment in 62,500 shares of series E preferred stock of Optical Specialties Inc. (OSI). Mr. Jack Harris, a director of the Company, is the president of OSI. The investment was made pursuant to the Series E Preferred Stock Purchase Agreement dated December 14, 1994. FAP Trust Disclosure Schedule Section V.3(b) Filings and Consents To the extent material, those consents referred to in Section III.2 and Section III.13 hereof. Schedule 1 - Products Ocean Systems Product List Airborne AQS-18 AQS-18A AQS-18 V1A AQS-18V(3) AQS-13B (Spares, and R&O only) AQS-13F AQS-24B Test Bench AWS-18M (Japan) HELRAS SHELRAS Test Adapter Test Set (TATS) Reeling Machine Test Set (RMTS) ASW System Trainer (AST) Related Spares, service, R&O, provisioning, engineering and technical support, documentation and publications. Sea Systems Non-Standard Towed Array (NSTA) TB-23 Towed Array Modules, Tow Cables TB-23 Towed Array Receiver Coupler (TARC) TB-16 Towed Array AN/SQR-19 Towed Array ADC MK3 Countermeasure TB-16 Array Module Test Set TB-23 Array Module Test Set Integrated Side Looking Sonar (ISLS) Expendable Mine Destructor (EMD) Low Frequency Active Towed Sonar (LFATS) WLY-1, SSTD Sensors/Telemetry Related spares, service, R&O, provisioning, engineering and technical support, documentation and publications. Engineering Hybrids Various Transducers Fiber Optic Rotating Joint ELAC Product List Navigation Systems Navigation Sounders Echosounders type LAZ 5000, 4400 for depth measurement and recording. Echosounder VE 59 Naval Depth Sounder acc. to military standards for surface ships and submarines. Operating frequencies between 12 kHz and 1 MHZ. For submarines additional Sound Velocity Measurement Bases with or without Temperature Sensor and CTD-Sensors (conductivity, temperature, depth) to compute density, salinity and sound velocity. Fog Horns Foghorns designed for stationary application at the coast or on off-shore platforms, available in directional and non-directional version. Hydrographic Sounding Systems Dual-Frequency Echosounders LAZ 4400/20 LAZ 4400 is a dual-frequency echograph with integrated LCD-display including digital depth information for multi-purpose application, i.e. navigation, fishery and survey. Its successor, the LAZ 4420, offers two echosounders in one housing, each operating completely independently via its own transmitter and transducer. Hydrographic Survey Sounder LAZ 4700 LAZ 4700 is ELAC's state-of-the-art graphic echosounder for all types of hydrographic survey. It provides a choice of frequencies, transducers, transmitters, precision digitizers and other peripheral equipment. While suited for stand-alone use it has been designed to form the basis of an integrated computer-based survey system. Hydrographic Survey System LAZ 4721 LAZ 4721 is an integrated dual-frequency system (at customer choice, from 12 kHz up to 200 kHz) comprising Echosounder LAZ 4700 and Digitizer STG 721, including two digital displays. Multibeam Mapping System BOTTOMCHART and HDP 4061 The BOTTOMCHART multibeam mapping system is used for commercial and scientific applications and offers real-time wide area bathymetry together with facilities for onboard post-processing. Collected data are used to create a digital terrain model. Graphic output is provided with the Hydrographic Data Processing Software System HDP 4061 on a high resolution color monitor and on color printers/plotter which offer real-time output in the form of a bicolor, ship centered contour chart. Processing of measured data is performed on a high performance computer which allows production of depths charts having already undergone corrections for position, speed, heave, roll and pitch. Additionally the HDP 4061 provides extensive data analysis and graphic presentation, for example presentation of Variance, Density, Heave, Roll, Pitch and Runtime. Navigation System ONCOURSE ONCOURSE is designed as central operating software for an integrated survey system. Main features are: cruise planning, track steering (autopilot interface), calculation of optimum position, acquisition and storage of navigation data from different sources, heave/roll/pitch and depth, acquisition of sound velocity depth, and graphical presentation of track charts, depth profiles, wrecks and other symbols. SEACLASS SEACLASS is a data acquisition and postprocessing software package for sediment analysis according to the Echostrength Measuring Technique. The most famous result of ELAC's efforts was the echostrength measuring unit EMG II which SEACLASS now replaces. The system also provides postprocessing capabilities for calculating different geophysical parameters of the sediment and allows graphical output, e.g. sections, coverage and track plot. Sonar Systems and Components Underwater Communication System UT 2000 A microprocessor-controlled communication system with integrated EL-display for surface ships and submarines. Wide frequency range (from 1 - 60 kHz) and output power (from 0,03 to 300 W), sector and/or omnidirectional operation, includes communication with divers. Operating modes e.g. telephony, telegraphy, pinger, transponder, distance measurement, noise monitoring, emergency mode. Transducers, Hydrophones and other Wet-Ends A wide range of transducers, hydrophones, baffles, special staves, submarine cables, outboard connectors and pressure hull penetrators is available for installation on submarines in Active-, Passive-, HF-Intercept-, Passive Ranging-, Flank-Array Sonar Systems. Sonar Systems Passive-, HF-Intercept-, Passive Ranging- and Flank Array Sonars are available as stand-alone systems or as components of integrated systems such as SUBICS (Submarine Integrated Combat System) and ISAACS (Integrated Sensor and Arms Control System). Integrated Systems Following integrated systems can be provided with teaming partners: ISAACS: (Integrated Sensor and Armaments Control System) Terma Elektronik AS SUBICS: (Submarine Integrated Combat System) Lockheed Martin Librascope, US These integrated systems integrate data collection, monitoring and processing as well as combat systems monitoring and control. Low Frequency Active Sonar (LFAS) A towed low frequency sonar for surface ships with high output level for long range transmission. Remote controlled towed body and automatic launching and handling system. LFAS is a part of the German ATAS, Activated Towed Array System. Navigation and Detection Sonar NDS 3070 A supplementary dual-frequency sonar for navigation, detection and obstacle avoidance for use on board of submarines and surface ships. NDS 3070 is a small, microprocessor-controlled high resolution sonar with color display and optional audio channel. Diver Sonar An active/passive sonar for divers with EL-display, search and display sector 64 degrees, max. scale range 200 m, audio channel 1-50 kHz, endurance max. 90 minutes, rechargeable NiCd-batteries. Sonar Beacon Equipment SBE An independent submarine emergency device system with its own power supply that provides acoustic signals which enable rescue sonar systems to detect and locate a submarine in distress situations. SBE is available as mono or dual frequency system with different operating frequencies, pulse repetition rates and pulse lengths. UZG (SUBTAS for export)-Mobile Acoustic Underwater Target System The Mobile Target UZG is a self-propelled underwater vehicle for fleet ASW training. It is operated in open sea without instrumental range. The system is capable of simulating a submarine's dynamic behavior relative to its acoustic characteristics. ELAC has been awarded a development contract by the BWB (Federal Office for Technology and Procurement) to develop the UZG System. The two prototype systems have undergone trials by the German Navy in a one year Operational Evaluation (OPEVAL). The production contract for the German Armed Forces has been given to ELAC in 1997. TOSO The torpedo sonar components have been designed for the new German heavy-weight torpedo DM2A3 to enhance acquisition capabilities. TAU - Torpedo Countermeasure System TAU is a soft-kill torpedo countermeasure system for submarines. TAU was initiated by a feasibility study funded by the German Federal Office for Technology and Procurement (BWB). LCAW LCAW is a low cost weapon for anti-submarine-warfare. ELAC as a member of a team with STN (Vulkan Group) and Rheinmetall has successfully completed the concept phase for a NATO programme. The development phase will start in 1998. Serial production to be expected for 2001. Mine Countermeasure Systems (MCM) Multibeam BOTTOMCHART Mapping System The BOTTOMCHART system can also be used as a MCM system. Sediment Classifier System SEACLASS SEACLASS, a fast Bottom Classifier System provides differentiated information about structure and nature of upper soft and non-solidified sediments as well as clear, high-contrast detection of buried objects with different reflectivity from surrounding matter. Buried objects detection system SEFAS SEFAS, a fan beam system, enables a fast and extensive sweep of threatened areas to detect and display objects buried in the seabed. Services Spare parts, service, R&O, provisioning, engineering and technical support, and documentation and publications services are provided in connection with the above referenced products. Schedule 1.1(a) - Personal Property The following documents, which have been delivered to Purchaser, are incorporated by reference herein: 1. Schedule of Ocean Systems' Fixed Assets, dated September 30, 1997 2. Schedule of ELAC Fixed Assets dated September 30, 1997 Schedule 1.3(j) - Excluded Assets Excluded Technology Technical and Intellectual Property developed in connection with and related to using sensors to detect occupant's position for passenger side air bags is excluded from the sale. Excluded Services The following services are provided to Ocean Systems and ELAC by AlliedSignal, and are not included in the sale: Contracts and Business Development Offset Administration International Sales Representative Administration Legal Support Services Export Control Administration Government Relations through Allied Signal's Washington, DC Government Relations Office Real estate Purchase and Sales Services Public Relations Services Letter of Credit Management Operations/Purchasing Metrology Commodity Team Support Services (Limited) Negotiation of Long Term Agreements (Limited) Circuit Card Assemblies Financial Payroll Processing Including Check Writing, Payroll Tax Submission and W-2 Processing Income and Property Tax Return Services Consolidating Financial Reporting System Travel and Expense Processing Including American Express Administration Risk Management Services Fixed Property Accounting System and Related Support Walker General Ledger and Support Services Walker Accounts Receivable System and Related Cash Application Function Credit and Collections Support Treasury Services Forward Pricing Rate Proposal Submissions to ACO Government Compliance Support Information Systems Mainframe Computer Processing and Related Support Essbase Server Resident in Tempe, AZ MSMail Gateway Enterprise-Wide Network Electronic Data Interchange Internet Human Resources PeopleSoft Human Resource Management System Pension, Savings Plan and Benefits Management Expatriate Employment Management Schedule 4.6(a) -Intellectual Property See also Schedule 4.6(c). Patents and Patent Applications Ocean Systems Patents DEPLOYABLE SONAR ARRAY WITH INTERCONNECTED TRANSDUCERS OPERATED IN THE BENDING MODE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4208738 17JE1980 GRANTED EXPIRES 01MY1998 TERMINATION AND METHOD OF TERMINATING ROPES OR CABLES OF ARAMID FIBER OR THE LIKE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4184784 22JA1980 GRANTED EXPIRES 03JL1998 HYDRODYNAMIC CONFIGURATION FOR TOWED SUBMERSIBLE BODY Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France 7836235 OIAP1985 GRANTED EXPIRES 22DE1998 Great Britain 2010764 17MR1982 GRANTED EXPIRES 14DE1998 West Germany P2855443.0 16JL1987 GRANTED EXPIRES 21DE1998 Japan 1401012 21FE1987 GRANTED EXPIRES 26DE1998 United States 4173195 06NO1979 GRANTED EXPIRES 27DE1997 COLLET TYPE CYLINDER SEPARATION DEVICE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4120519 17OC1978 GRANTED EXPIRES 03OC1997 SPHERICAL VEHICLE FOR OPERATION IN A FLUID MEDIUM Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4377982 29MR1983 GRANTED EXPIRES 29MR2000 PRESSURE-COMPENSATED ACCELERATION INSENSITIVE HYDROPHONE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 860012 12DE1977 SECRECY ORDER HYDRODYNAMIC CONFIGURATION FOR UNDERWATER VEHICLE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 226314 19JA1983 SECRECY ORDER DELAY LINE TIME COMPRESSION CORRELATION CIRCUIT Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4270180 26MY1981 GRANTED EXPIRES 09NO1999 FISH COUNTER WITH SCANNING TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 1129981 17AU1982 GRANTED EXPIRES 17AU1999 United States 4225951 30SE19S0 GRANTED EXPIRES 05FE1999 WHEEL SPEED SIGNAL- PRODUCING SYSTEM FOR SKID CONTROL Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4267575 12MY1981 GRANTED EXPIRES 09JLI999 CABLE CONSTRUCTION Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Great Britain 2056157 13AP1983 GRANTED EXPIRES 21JL2000 West Germany P3028113.1 18OC1990 GRANTED EXPIRES 24JL2000 Japan 1486221 14MR1989 GRANTED EXPIRES 08AU2000 United States 4250351 10FE1981 GRANTED EXPIRES 08AU1999 PROPULSION SYSTEM FOR AN UNDERWATER VEHICLE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4424042 03JA1984 GRANTED EXPIRES 23JL2001 CONNECTOR FOR SMALL DIAMETER ELONGATED SONAR ARRAYS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4304456 08DE1981 GRANTED EXPIRES 10DE1999 CONNECTOR FOR ELONGATED UNDERWATER TOWED ARRAY Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4346954 31AU1982 GRANTED EXPIRES 31AU1999 FUNNEL CONSTRUCTION FOR A DIPPING SONAR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 43887091 4JE1983 GRANTED EXPIRES 19JA2001 SONAR TRANSCEIVER SYSTEM AND METHOD Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4442513 10AP1984 GRANTED EXPIRES 05FE2002 SALMON COUNTER WITH SEPARATE KING SALMON TABULATOR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 1194976 08OC1985 GRANTED EXPIRES 08OC2002 TUNED CIRCUIT & METHOD FOR SONAR BEAM PATTERN OPTIMIZATION Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 5309410 03MY1994 GRANTED EXPIRES 03MY2011 CONSTRUCTION AND METHOD FOR ELONGATED TOWED UNDERWATER SONAR ARRAY Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France EP0113623 07SE1988 GRANTED EXPIRES 15DE2003 Great Britain EP0113623 07SE1988 GRANTED EXPIRES 15DE2003 West Germany P3377954.6 07SE1988 GRANTED EXPIRES 15DE2003 Japan 1727441 19JA1993 GRANTED EXPIRES 27DE2003 United States 4538250 27AU1985 GRANTED EXPIRES 27DE2002 DIGITAL DRIVE SYSTEM FOR PULSE WIDTH MODULATED POWER CONTROL Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Great Britain EP0187282 17MR1993 GRANTED EXPIRES 09DE2005 West Germany P3587191.1 17MR1993 GRANTED EXPIRES 09DE2005 Italy EP0187282 17MR1993 GRANTED EXPIRES 09DE2005 United States 4613933 23SE1986 GRANTED EXPIRES 07JA2005 EXPANDABLE SONAR ARRAY STRUCTURE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France EP0580808 08JA1997 GRANTED EXPIRES 15AP2012 Great Britain EP0580808 08JA1997 GRANTED EXPIRES 15AP2012 Germany EP0580808 08JA1997 GRANTED EXPIRES I5AP2O12 Italy EP0580808 08JA1997 GRANTED EXPIRES 15AP2012 Japan 510286/92 15AP1992 FILED United States 5091892 25FE1992 GRANTED EXPIRES 25FE2009 SYSTEM FOR DEPLOYING AN ARRAY OF SONAR PROJECTORS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France EP0205740 29JA1992 GRANTED EXPIRES 17FE2006 Great Britain EP0205740 29JA1992 GRANTED EXPIRES 17FE2006 West Germany P3683692.3 29JA1992 GRANTED EXPIRES 17FE2006 Italy EP0205740 29JA1992 GRANTED EXPIRES 17FE2006 Japan 2017615 19FE1996 GRANTED EXPIRES 28MR2006 United States 4725988 16FE1988 GRANTED EXPIRES 28MR2005 HELRAS MECHANICAL CONFIGURATION AND HYDRAULIC DRIVE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 758909 25JL1985 SECRECY ORDER ELONGATED RETAINING AND ELECTROMAGNETIC SHIELDING MEMBER FOR A TOWED UNDERWATER ACOUSTIC ARRAY Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4636998 13JA1987 GRANTED EXPIRES 27AU2002 POLYURETHANE HEAT FORM AND BONDING OF CABLE JACKETS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4533418 06AU1985 GRANTED EXPIRES 21SE2004 VIBRATION ISOLATION MODULE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4628851 16DE1986 GRANTED EXPIRES 24DE2004 SELF THREADING CAPSTAN DRIVE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4634102 06JA1987 GRANTED EXPIRES 23DE2005 ELECTRICAL TILT SWITCH Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4628160 O9DE 1986 GRANTED EXPIRES 28OC2005 UNDERWATER TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Australia 590050 22FE1990 GRANTED EXPIRES 23FE2007 France EP0243591 14AP1993 GRANTED EXPIRES 09FE2007 Great Britain EPO243591 14AP1993 GRANTED EXPIRES 09FE2007 West Germany P3785384.8 14AP1993 GRANTED EXPIRES 09FE2007 Italy EP0243591 14AP1993 GRANTED EXPIRES 09FE2007 Japan 2033626 19MR1996 GRANTED EXPIRES 30AP2007 Netherlands EP0243591 14AP1993 GRANTED EXPIRES 09FE2007 United States 4764907 16AU1988 GRANTED EXPIRES 30AP2006 FLEXURAL DISK TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France EP0265679 22JL1992 GRANTED EXPIRES 28SE2007 Great Britain EPO265679 22JL1992 GRANTED EXPIRES 28SE2007 West Germany P37805592 22JL1992 GRANTED EXPIRES 28SE2007 Italy EPO265679 22JL1992 GRANTED EXPIRES 28SE2007 Japan 2579173 07NO1996 GRANTED EXPIRES 28OC2007 United States 4709361 24NO1987 GRANTED EXPIRES 30OC2006 CABLE WIPER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4845683 04JL1989 GRANTED EXPIRES 16OC2006 UNDERWATER SONAR ARRAY Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4901287 13FE1990 GRANTED EXPIRES 28MR2008 FIBER OPTIC SENSOR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Eur. Patent Cony. 94112474.5 10AU1994 FILED United States 5359445 25OC1994 GRANTED EXPIRES 25OC2011 LEVEL WIND SYSTEM Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4795108 03JA1989 GRANTED EXPIRES 17SE2007 MARINE ACOUSTIC AEROBUOY AND METHOD OF OPERATION Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 5060206 22OC1991 GRANTED EXPIRES 25SE2010 PISTON & DRUM DRIVE SYSTEM Country Number Date STATUS Substatus Date - ---------------------------------------------------------------------- Canada 2069494-7 07NO 1990 FILED France EP0505437 16MR1994 GRANTED EXPIRES 07NO2010 Great Britain EP0505437 16MR1994 GRANTED EXPIRES 07NO2010 Germany P69007492.1 16MR1994 GRANTED EXPIRES 07NO2010 Italy EP0505437 16MR1994 GRANTED EXPIRES 07NO2010 Japan 501453/91 07NO1990 FILED United States 4973893 27NO1990 GRANTED EXPIRES 12DE2009 SHOCK RESISTANT FLEXTENSIONAL TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 2007096 04JA 1990 FILED France 9001617 12FE1990 FILED Great Britain 2303760 03JE 1997 GRANTED EXPIRES 04JA2010 United States 5497357 05MR1996 GRANTED EXPIRES 05MR2013 HYDRODYNAMIC CONFIGURATION FOR UNDERWATER VEHICLE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4919066 24AP1990 GRANTED EXPIRES 19JA2009 FIBER OPTIC ROTARY JOINT Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 2107878 25MR1992 FILED France EP0582639 08JA1997 GRANTED EXPIRES 25MR2012 Great Britain EP0582639 08JA1997 GRANTED EXPIRES 25MR2012 Germany P692166032 08JA1997 GRANTED EXPIRES 25MR2012 United States 5078466 07JA1992 GRANTED EXPIRES 19AP2011 LOW FREQUENCY SONAR PROJECTOR AND METHOD Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Australia 664961 07JEI996 GRANTED EXPIRES 04MY2013 France EP0640020 13MR1996 GRANTED EXPIRES 04MY2013 Great Britain EP0640020 13MR1996 GRANTED EXPIRES 04MY2013 Germany P69301819.4 13MR1996 GRANTED EXPIRES 04MY2013 Italy EP0640020 13MR1996 GRANTED EXPIRES 04MY2013 Japan 503624/94 04MY1993 FILED FIBER OPTIC ROTARY JOINT Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 5450509 12SE1995 GRANTED EXPIRES 26JL2014 IMPROVED SENSORS BASED ON STRETCH-DENSIFIED MATERIALS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 000000 29MY1997 FILED DIGITAL HOMODYNE PROCESSING SYSTEM Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4280202 21JL1981 GRANTED EXPIRES 3lOC1999 CAGE-ENHANCED SENSORS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 08/617529 15MR1996 FILED ELAC Patents ELECTRO ACOUSTIC TARGET SEARCHING SYSTEM FOR TORPEDOES Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Great Britain 2265218 22SE1993 GRANTED EXPIRES 05NO2001 United States 5341347 23AU1994 GRANTED EXPIRES 23AU2011 ECHO-SOUNDING APPARATUS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 1210129 19AU1986 GRANTED EXPIRES 19AU2003 SOFT PROTECT LAYER FOR SOUND TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P3422206.5 10SE1987 GRANTED EXPIRES 15JE2004 TUBE-LIKE ELECTROACOUSTIC TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France 8708243 24DE1993 GRANTED EXPIRES 12JE2007 West Germany P3620085.9 10MR1994 GRANTED EXPIRES 14JE2006 United States 4823327 18AP1989 GRANTED EXPIRES 01JE2007 ACOUSTIC SIMULATION OF UNDERWATER TARGET Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P3809900.4 11JA1989 GRANTED EXPIRES 24MR2008 PAT#P3809900.4 UNDER SECRECY ORDER BROAD BAND OMNIDIRECTIONAL ELECTROACOUSTIC TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 1310739 24NO1992 GRANTED EXPIRES 24NO2009 West Germany P3812244.8 09NO1989 GRANTED EXPIRES 13AP2008 Italy 1231754 21DE1991 GRANTED EXPIRES 13AP2009 Norway 171700 11JA1993 GRANTED EXPIRES 12AP2009 United States 4916675 10AP1990 GRANTED EXPIRES 01MY2009 DIVER SONAR MONITOR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 1330587 05JL1994 GRANTED EXPIRES 05JL2011 France EPO345718 15DE1993 GRANTED EXPIRES 06JE2009 Great Britain EPO345718 15DE1993 GRANTED EXPIRES 06JE2009 Italy EP0345718 15DE1993 GRANTED EXPIRES 06JE2009 Norway 174826 13JL1994 GRANTED EXPIRES 08JE2009 UNDERWATER DIRECTION FINDING Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France EP0355669 06AP1994 GRANTED EXPIRES 16AU2009 Great Britain EP035S669 06AP1994 GRANTED EXPIRES 16AU2009 Italy EP0355669 06AP1994 GRANTED EXPIRES 16AU2009 Norway 173528 22DE1993 GRANTED EXPIRES 18AU2009 Spain EPO355669 06AP1994 GRANTED EXPIRES 16AU2009 DEFENSE AGAINST TORPEDO ATTACK Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P3914248.5 29AP1989 SECRECY ORDER DIGITAL BEAM FORMER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P3920705.6 23MY1991 GRANTED EXPIRES 24JE2009 PROTECTION CIRCUIT FOR TRANSDUCER Country Number Date Substatus Date - ---------------------------------------------------------------------- West Germany P3939398.4 24JA1991 GRANTED EXPIRES 29NO2009 DEFENSE AGAINST TORPEDO ATTACK FROM BACKSIDE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P4010475.3 11MR1993 GRANTED EXPIRES 31MR2010 DETERMINATION OF PULSE LENGTH OF ACOUSTIC SIGNALS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P4013684.1 07AP1994 GRANTED EXPIRES 28AP2010 Japan 96665/91 26AP1991 FILED Norway 91.1671 26AP1991 FILED United States 5132691 21JL1992 GRANTED EXPIRES 24AP2011 NOISE SUPPRESSION FOR THE INPUT SIGNAL OF SONAR SYSTEMS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P4017849.8 12MR1992 GRANTED EXPIRES 02JE2010 ELECTROACOUSTIC TRANSDUCER WITH REDUCED BUNDLING Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Denmark 1539/91 02SE1991 FILED West Germany P4027949.9 20AU1992 GRANTED EXPIRES 04SE2010 SONAR BUOY WITH DRAG CHAIN Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P4039031.4 24MR1994 GRANTED EXPIRES 07DE2010 PASSIVE ACOUSTICAL CAMOUFLAGE MEANS FOR UNDERWATER BODIES Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P4131991.5 18AU1992 GRANTED EXPIRES 26SE2011 PAT# P4131991.5 UNDER SECRECY ORDER SONAR TRANSDUCER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Denmark EP0524371 11AU1994 GRANTED EXPIRES 20MR2012 France EP0524371 11AU1994 GRANTED EXPIRES 20MR2012 Great Britain EP0524371 11AU1994 GRANTED EXPIRES 20MR2012 Germany P69200439.4 11AU1994 GRANTED EXPIRES 20MR2012 Italy EP0524371 11AU1994 GRANTED EXPIRES 20MR2012 Netherlands EP0524371 11AU1994 GRANTED EXPIRES 20MR2012 Sweden EP0524371 11AU1994 GRANTED EXPIRES 20MR2012 OWNED BY THE KILDARE CORPORATION ACCORDING TO A LICENSE AGREEMENT BETWEEN THE KILDARE CORPORATION, 95 TRUMBULL STREET. SUITE D NEW LONDON, CT 06320-5595 & ALLIEDSIGNAL ELAC NAUTIK GmbH. SONAR SYSTEM TEST APPARATUS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P4213121.9 21APP1992 FILED METHOD AND CIRCUITRY FOR DETERMINING THE BEGINNING OF ECHO PULSES Country Number Date Status Substatus Date - ---------------------------------------------------------------------- France 9400492 18OC1996 GRANTED EXPIRES 18JA2014 Great Britain 2274560 11SE1996 GRANTED EXPIRES 29DE2013 Germany P4301341.4 21OC1993 GRANTED EXPIRES 20JA2013 United States 5436580 25JL199S GRANTED EXPIRES 30DE2013 INTERCONNECTION OF UNDERWATER TRANSDUCER ARRAY Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P4307843.5 19MY1994 GRANTED EXPIRES 12MR2013 PATENT TITLE: UNKNOWN Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P4323212.4 12MR1993 FILED ANTI-SEA MINE EFFECTOR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P4323904.8 16JL1993 FILED JOINTLY OWNED BY ALLIEDSIGNAL ELAC NAUTIK GmbH AND DIEHL GmbH. UNDERWATER TARGET LOCALIZER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Eur. Patent Cony. 94112749.0 16AU1994 FILED Germany P4327841.8 09MR1995 GRANTED EXPIRES 19AU2013 METHOD FOR LOCALIZING AND SWEEPING OF SEA MINES Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Eur. Patent Cony. 95925762.7 26JE1995 FILED Germany P4423235.7 02JL1994 FILED Pat. Coop. Treaty PCT/EP95/02476 26JE 1995 FILED United States 000000 26JE 1995 FILED ECHO SIGNAL STACK CIRCUIT Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Canada 1095162 03FE1981 GRANTED EXPIRES 03FE1998 ECHO-SOUNDING RECORDER WITH DIFFERENT DEPTH MEASURING RANGES Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4104643 01AU1978 GRANTED EXPIRES 20JL1997 ABRASION PROTECTION SHIELD FOR ECHO SOUNDER Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Norway 145594 21AP1982 GRANTED EXPIRES 07JL1998 RECEIVER CIRCUIT FOR AN ECHO-SOUNDING SYSTEM Country Number Date Status Substatus Date - ---------------------------------------------------------------------- United States 4245332 13JA1981 GRANTED EXPIRES 12AP1999 DIVER SONAR MONITOR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P58906406.1 15DE1993 GRANTED EXPIRES 06JE2009 UNDERWATER DIRECTION FINDING Country Number Date Status Substatus Date - ---------------------------------------------------------------------- West Germany P58907386.9 06AP1994 GRANTED EXPIRES 16AU2009 APPARATUS FOR ULTRA-SOUND TREATMENT OF FLOWING LIQUID Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Great 96221170.0 24OC1996 FILED Germany 19541417.9 11NO199S FILED PROGRAMMABLE PLL OSCILLATOR Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P19625970.3 28JE1996 FILED ELECTRONIC FUNCTION GENERATOR USING A STATUS ENGINE Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P19632553.6 13AU1996 FILED BEAM FORMING METHOD FOR DIRECTION FINDING SYSTEMS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P19648327.1 22NO1996 FILED SHOCK ABSORBING BEARING FOR GEAR WHEELS Country Number Date Status Substatus Date - ---------------------------------------------------------------------- Germany P19652143.2 14DE1996 FILED Trademarks, Copyrights and Trade Names Trademarks - Ocean Systems AlliedSignal holds no registered trademarks for Ocean Systems, but the following product names and acronyms may be subject to certain usage rights and protections afforded under common law: Common Law Product Name Trademark ------------ --------- Helicopter Long Range Sonar HELRAS Low Frequency Active Dipping Sonar LFADS Shipboard HELRAS SHELRAS Expendable Mine Detector EMD Light Minehunting Sonar LMHS Integrated Side Looking Sonar ISLS Low Frequency Active Towed Sonar LFATS ASW Systems Trainer AST Trademarks - ELAC ELAC holds the following registered trademarks: Country Registration No. Trademark ------- ---------------- --------- Germany 1051300 Hydrostar International(1) 480581 Hydrostar Germany 989375 ELAC (black letters on white background) International(2) 458578 ELAC (black letters on white background) Germany 1006999 ELAC (black letters on white background) International(2) 458579 ELAC (black letters on white background) - ---------- (1) for Belgium, Luxembourg, Netherlands, France and Italy (2) for Egypt, Algeria, Belgium, Luxembourg, Netherlands, Spain, France, Italy, Morocco, Slowenia, Croatia, Yugoslavia, Macedonia, Romania, Russia, Kazakstan, Belorus, Ukrainia, Ouzbekistan, Vietnam Intellectual Property Agreements License and Technical Assistance Agreements. between AlliedSignal and: ELAC, dated July 18, 1995 Compagnia Generale Di Elettricita, dated December 1, 1970 Aero International, Inc., dated April 26, 1996, and amendment dated June 10, 1997 Mitsubishi Heavy Industries, Ltd., dated February 2, 1989 Manufacturing License Agreement, between AlliedSignal and: Aeronautica Industrial, S.A., dated July 16, 1990 Technical Assistance and Manufacturing License Agreement, between ELAC and: The Kildare Corporation, dated March 15, 1993 Software Licenses - Ocean Systems
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ------------------------------------------------------------------------------------ VAX - General/Utilities - ------------------------------------------------------------------------------------ Micro Tech CIQBA 2.8 INC. VAX/VMS X - ------------------------------------------------------------------------------------ ACCESS 2020 3.02.13 TECH VAX/VMS X - ------------------------------------------------------------------------------------ ADA 2.3 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------------
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ------------------------------------------------------------------------------- BASE-VMS 5.5-2 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- BASIC 3.5 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- C 3.1 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- CDD S DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- CDD - PLUS DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- CMS 3.5-05 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- COBOL DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DBMS 4.3 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DSNLINK 1.2B DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DTM 3.3 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DTR 6 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DECnet (end node) 5.5-2 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DECnet (routing node) 5.5-2 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- DEC Windows MOTIF 1.2-4 DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- FMS DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- FORTRAN DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- GKS DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- LSE DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- MMS DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- RDB DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- RDB-RUNTIME DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- SNA-3270-DSPI DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- SNA-3270-TE DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- SNA-PRE DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- SNA-RJE DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- SNA-VMS DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- SSU DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- STRIPING DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- UCX DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- VAXCLUSTER DIGITAL VAX/VMS X - ------------------------------------------------------------------------------- VMS-USER DIGITAL VAX/VMS X - -------------------------------------------------------------------------------
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ---------------------------------------------------------------------------------- VOLSHAD DIGITAL VAX/VMS X - ---------------------------------------------------------------------------------- VAX - CONTROL Manufacturing and Associated Software - ---------------------------------------------------------------------------------- Accounting 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Accounts Payable 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Accounts Receivable 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Bill Of Material 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Cost Accounting 7.3 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Engineering Config. 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Order Management System 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Inventory Control 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Master Production Scheduling 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- MRP 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Order Entry Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------- Project Accounting 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Purchasing 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Shop Floor Control 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Purchase Part and Quote 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Soft Pegging Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------- Interfaces Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------- Control Link 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- DCLS Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------- MANTIS User BRP/BRP 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- Spectra Custom 7.2.2 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- QRW 7 Cincom VAX/VMS X - ---------------------------------------------------------------------------------- PC NT Servers - ---------------------------------------------------------------------------------- MMTA Microsoft NT X - ---------------------------------------------------------------------------------- MSMAIL Microsoft NT/W95 X - ---------------------------------------------------------------------------------- DNS Microsoft NT X - ---------------------------------------------------------------------------------- WINS Microsoft NT X - ---------------------------------------------------------------------------------- DHCP Microsoft NT X - ----------------------------------------------------------------------------------
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ------------------------------------------------------------------------------------------ Internet Information Server Microsoft NT X - ------------------------------------------------------------------------------------------ McAfee Anti Virus McAfee NT/W95 X - ------------------------------------------------------------------------------------------ ArcServer Cheyenne NT X - ------------------------------------------------------------------------------------------ Remote Access (RAS) Microsoft NT X - ------------------------------------------------------------------------------------------ Remote Mail Microsoft NT X - ------------------------------------------------------------------------------------------ System Management Server Microsoft NT X - ------------------------------------------------------------------------------------------ NetBoy Suite NDG SW NT X - ------------------------------------------------------------------------------------------ VAX - Database / SW Development - ------------------------------------------------------------------------------------------ SQL*Forms 3 Oracle VAX/VMS X - ------------------------------------------------------------------------------------------ Developer/2000 Forms 45 Oracle VAX/VMS X - ------------------------------------------------------------------------------------------ Developer/2000 Reports 2.5 Oracle VAX/VMS X - ------------------------------------------------------------------------------------------ Oracle Enterprise Manager 1.2.2 Oracle Windows95 X - ------------------------------------------------------------------------------------------ Oracle SQL*Net 2.3.2.1.3 Oracle VMS/W95 X - ------------------------------------------------------------------------------------------ Oracle Server Manager 2.0.3.1 Oracle VAX/VMS X - ------------------------------------------------------------------------------------------ Oracle SQL*Plus 3.1 Oracle Windows95 X - ------------------------------------------------------------------------------------------ Oracle SQL*Plus 3.1.3.5.1 Oracle VAX/VMS X - ------------------------------------------------------------------------------------------ Airborne Sonar R&O Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Applicant Flow Log Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Auto Stock Withdrawal Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Automatic Carousel Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Substitute Part List Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Customer Inquiry Tracking Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ DCMC Inspection System Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Discrepancy Reporting Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Drawing Info System Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Estimating System Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Failure and R&O Reporting Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Gov't Property Inventory Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Job Scheduler Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ KITPRINT Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------ Labor/Timekeeping Custom In-house VAX/VMS X - ------------------------------------------------------------------------------------------
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ---------------------------------------------------------------------------------------- Lost Time Tracking Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Maint. Work Request Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Payroll Timecard Entry Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Personnel Info System Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- P&D Request System Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Procedure Master Index Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Workstream Product Load Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Production Scheduling Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Proms/Pals Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Rec Inspection Requests Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Repair & Overhaul System Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Risk Analysis/Control Plan Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- SSR System Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Tooling System Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- TQM Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- Wire list System Custom In-house VAX/VMS X - ---------------------------------------------------------------------------------------- PC Desktop - ---------------------------------------------------------------------------------------- Windows 95 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- PVCS 5.01 PVCS NT/W95 X - ---------------------------------------------------------------------------------------- MSExcel 7 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MS Word 7 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MsPowerpnt 7 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MSSchedule Plus 7 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MS WinProject 4 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MSAccess 2 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MSAccess 7 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MSExchange Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- MSProject 4 Microsoft NT/W95 X - ---------------------------------------------------------------------------------------- Designer 4.1 Micrografix NT/W95 X - ---------------------------------------------------------------------------------------- MathCAD 6 MathCAD NT/W95 X - ---------------------------------------------------------------------------------------- Visio 4 Visio NT/W95 X - ----------------------------------------------------------------------------------------
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ------------------------------------------------------------------------------------------ Photo Magic 1 Micrografix NT/W95 X - ------------------------------------------------------------------------------------------ Corel 4 Corel NT/W95 X - ------------------------------------------------------------------------------------------ ABCFlowcharter Micrografix NT/W95 X - ------------------------------------------------------------------------------------------ Acrobat 3 Adobe NT/W95 X - ------------------------------------------------------------------------------------------ Netscape 3.01 Netscape NT/W95 X - ------------------------------------------------------------------------------------------ COMIINS 3.1 Custom NT/W95 X - ------------------------------------------------------------------------------------------ Peoplesoft 5.1 Peoplesoft NT/W95 X - ------------------------------------------------------------------------------------------ NT 4 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ Interleaf 6.1 Interleaf NT/W95 X - ------------------------------------------------------------------------------------------ Visio Technical 4.5 Visio NT/W95 X - ------------------------------------------------------------------------------------------ ASPPP97 3 Corporate NT/W95 X - ------------------------------------------------------------------------------------------ DOS 6.22 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ AutoCAD 13 AutoDesk NT/W95 X - ------------------------------------------------------------------------------------------ AutoCAD 12 AutoDesk NT/W95 X - ------------------------------------------------------------------------------------------ CADStar 2.2.2.4 AutoDesk NT/W95 X - ------------------------------------------------------------------------------------------ DatalO (Futurenet) Futurenet NT/W95 X - ------------------------------------------------------------------------------------------ Windows 3.1 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ Windows 3.11 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ MS Word 6 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ MSExcel 5 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ MSPowerpnt 4 Microsoft NT/W95 X - ------------------------------------------------------------------------------------------ HP Unix Desktop - ------------------------------------------------------------------------------------------ oce3-2/ANSYS 5.3 ANSYS HP 9000 X - ------------------------------------------------------------------------------------------ oce305/UGII 9.1 UGII HP 9000 X - ------------------------------------------------------------------------------------------ oce306/ProE IS PTC HP9000 X - ------------------------------------------------------------------------------------------ oce307/Mentor Graphics B.4 Mentor HP 9000 X - ------------------------------------------------------------------------------------------ oce3l8/Intercap 7.83 Intercap HP 9000 X - ------------------------------------------------------------------------------------------ oce319/interleaf 6 Interleaf HP 9000 X - ------------------------------------------------------------------------------------------ oce322/IDEAS 5 SDRC HP 9000 X - ------------------------------------------------------------------------------------------ IBM (Ocean Systems Specific) - ------------------------------------------------------------------------------------------
Support Provided by: Local System/Application Version Vendor Platform Infrastructure App. Support - ------------------------------------------------------------------------------------ Payroll Distr. (HP & SP) Custom Corporate IBM X - ------------------------------------------------------------------------------------ Sun Unix Desktop - ------------------------------------------------------------------------------------ SW Development VX-Works VX-Works X - ------------------------------------------------------------------------------------ Signal Processing AP-Labs AP-Labs X - ------------------------------------------------------------------------------------
GlobalLink Software Licenses GlobalLink is an AlliedSignal corporate initiative that focused on upgrading the desktop and server infrastructure and software at all divisions to a common level of performance. These upgrades would allow AlliedSignal to roll out corporate based software applications and economize on desktop support given the common software / infrastructure. Ocean Systems did not receive any hardware improvements from this initiative. The division did receive, and is being charged, for software products covered under GlobalLink umbrella. These software products include all of the following (note that some of these products are not actually in use at this division but are being assessed none the less): o 32-bit Desktop Operating System o LANdesk (Electronic (NT or W95 Inventory Tool - NOT USED) o Netscape o Microsoft Exchange (Email o McAfee VirusScan Client Licenses - NOT USED) o Netware 4.1 (Network Operating System o Attachmate (IBM Connectivity -NOT USED) Tools) o Managewise (Remote Desktop o Office97 Management Tool - NOT USED) o Server Tools This software was purchased at $278 / seat in 1996 and is being amortized over three-years ($74,319 per year). If licenses were not part of the sale, the impact to Ocean Systems is as follows: o Little or no impact related to current desktop operating system as most are already owned o Requires procurement of replacement WEB tool (Netscape) and virus protection (McAfee) o Impact related to IBM connectivity would depend on new owner IBM access requirements o Future impact related to desktop upgrades (NT, Office97, Microsoft Exchange) Software Licenses - ELAC Software at ELAC, current through November 6, 1997 - ------------------------------------------------------------ Program Provider Version License - ------- -------- ------- ------- - ------------------------------------------------------------ Transcend 3Com 6.0 250 - ------------------------------------------------------------ Powerchut Plus APC 4.2.4 2 - ------------------------------------------------------------ ACAD AutoDesk 13 1 - ------------------------------------------------------------ ACAD AutoDesk 12 1 - ------------------------------------------------------------ C++ Borland 3.1 5 - ------------------------------------------------------------ Paradox Borland 1 - ------------------------------------------------------------ Pascal Borland 7.0 5 - ------------------------------------------------------------ Quatropro win Borland 1 - ------------------------------------------------------------ Arcserve Cheyenne 6.2 1 - ------------------------------------------------------------ Corel Draw Corel Corporation 5.0 10 - ------------------------------------------------------------ Corel Flow Corel Corporation 2.0 10 - ------------------------------------------------------------ Paisy GSI 3 - ------------------------------------------------------------ VPPS Infor 4.5 75 - ------------------------------------------------------------ Landesk VirusProtect001 Intel 3.01 1 - ------------------------------------------------------------ Landesk VirusProtect002 Intel 3.01 1 - ------------------------------------------------------------ Landesk VirusProtect003 Intel 3.01 1 - ------------------------------------------------------------ Landesk VirusProtect004 Intel 3.01 1 - ------------------------------------------------------------ Varial isb 2.7 10 - ------------------------------------------------------------ Side Meeter McAfee 50 - ------------------------------------------------------------ Cobol Microfocus 3.2 5 - ------------------------------------------------------------ Infonnix Microfocus 7.1 5 - ------------------------------------------------------------ Foxpro Dos Microsoft 2.0 5 - ------------------------------------------------------------ Foxpro Win Microsoft 2.5 5 - ------------------------------------------------------------ MS Access Microsoft 2.0 50 - ------------------------------------------------------------ MS-Mail Microsoft 3.2 150 - ------------------------------------------------------------ MS-Office Microsoft 4.2 50 - ------------------------------------------------------------ MS-Projekt Microsoft 4.0 15 - ------------------------------------------------------------ - -------------------------------------------- Program Provider Version License - ------- -------- ------- ------- - -------------------------------------------- Windows 3.11 Microsoft 3.11 100 - -------------------------------------------- Windows 95 Microsoft 4.00950 60 - -------------------------------------------- Disc View Microtest 4.10a 1 - -------------------------------------------- LanWorkplac Novell 16 5 - -------------------------------------------- Manage Wise Novell 2.1 250 - -------------------------------------------- Manage Wise Novell 2.1 5 - -------------------------------------------- ManageWise Novell 2.1 5 - -------------------------------------------- ManageWise Novell 2.1 5 - -------------------------------------------- Netware00l Novell 4.1 75 - -------------------------------------------- Netware002 Novell 4.1 50 - -------------------------------------------- Netware003 Novell 4.1 50 - -------------------------------------------- Netware004 Novell 4.1 250 - -------------------------------------------- Netware100 Novell 3.12 2 - -------------------------------------------- Netware101 Novell 4.1 2 - -------------------------------------------- Orcad Orcad 4.0 6 - -------------------------------------------- Easy-Archiv Recognita 2000 1 - -------------------------------------------- Unix102 SCO 5 - -------------------------------------------- PCNFS SunSelect 5.1 5 - -------------------------------------------- Rumba SunSelect 4.0 2 - -------------------------------------------- PCAnywhere Symantec 1 - -------------------------------------------- PS-Gef Weka Verlag 2.1 1 - -------------------------------------------- Confidentiality Agreements - Ocean Systems
- ---------------------------------------------------------------------------------------------------- Agreement Effective Term/ OS Company Subject Number Date Expiry Contact - ---------------------------------------------------------------------------------------------------- ADI Limited RAN ASSTASS SEA 11000 96-033 11/6/96 10 years A.J. Garber - ---------------------------------------------------------------------------------------------------- ADI Limited Underwater Warfare Business 95-007 4/10/95 3 - ---------------------------------------------------------------------------------------------------- Aero International International Spares 95-010 3 years P.A. Boskovich - ---------------------------------------------------------------------------------------------------- Agusta/Italy Quality Assurance Survey 4/28/97 1 year L. Daniels - ---------------------------------------------------------------------------------------------------- Albion Group Intl. Inc. Hellenic Navy Offset 95-013 7/12/95 3 years J. Hall/L. Daniels - ----------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------- Alliant Techsys. Seismic data 96-027 10/16/97 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- Atlantic Aero Elect Corp. Various 95-001 1/17/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- Australian Defense Industries Undersea Warfare Business 95-007 5/10/95 3 years K.D. Adams - -------------------------------------------------------------------------------------------------- Atlantic Aero Elect. Corp. Foreign Integrated Sonar Suites 95-0 17 8/21/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- AT&T Various Information 8/7/95 2 years D. Samsury - -------------------------------------------------------------------------------------------------- Babcock Intl. Sonar 2087 Feasibility Study 3/7/95 5 years J. Caughey - -------------------------------------------------------------------------------------------------- BBN US Navy 6152 97-0 15 5/30/97 1 year A.J. Garber - -------------------------------------------------------------------------------------------------- Cambridge Bank Ltd. Sonar Equip. Brazil/Peru 96-0 17 5/28/96 5 years V. Riehl - -------------------------------------------------------------------------------------------------- Celsius Tech Sys. Mine Counter Measurers 94-021 8/19/94 3 years L. Daniels - -------------------------------------------------------------------------------------------------- Celsius Tech Sys. Proprietary Info. 11/14/97 5 years J. Devine - -------------------------------------------------------------------------------------------------- Chesapeake Sciences TARS 95-0 18 8/28/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- Chesapeake Sciences TB 16/BQ 10/18/94 4 years R. Tomlinson - -------------------------------------------------------------------------------------------------- Chevron Petroleum Bore Hole Seismic Multi Level 94-037 3/3/94 3 years A.J. Garber Receiver - -------------------------------------------------------------------------------------------------- Computing Devices Maritime Helicopter 95-014 7/14/95 3 years J. Anderson - -------------------------------------------------------------------------------------------------- C-Tech Y52000 96-029 10/2/96 2 years J. Roscigno - -------------------------------------------------------------------------------------------------- DAF Special Products NH-90 96-006 2/15/96 3 years D. Webb - -------------------------------------------------------------------------------------------------- DRA Hunt Class Mid Life 11/22/96 1 year A.J. Garber - -------------------------------------------------------------------------------------------------- Defense Evaluation Research Agency Defense Hunt Class Mid Life 11/27/96 1 year A.J. Garber - -------------------------------------------------------------------------------------------------- Devonport Management Ltd. Sonar 2087/Type 23 Frigates 96-007 2/13/96 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- Durodyne, Inc. Epichlorohydrin rubber compound 88-01 4/DA 5/1/88 10 years J. Andersen - -------------------------------------------------------------------------------------------------- Dynacon, Inc. LFATS Handling System 94-023 6/2/94 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- E-Systems Montek Siesmic Receiving 95-012 6/28/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------- Electramotive TB16 Towed Array 11/12/93 3 years J. Proko - -------------------------------------------------------------------------------------------------- FIAR NH-90 96-005 1/18/96 3 years D. Webb - -------------------------------------------------------------------------------------------------- Fokker Aviation EMD 97-008 2/4/97 1 year S. McDonald - -------------------------------------------------------------------------------------------------- Greenblatt MCDV 95-004 3/27/95 3 years L. Daniels - -------------------------------------------------------------------------------------------------- Goldstar ATE 11/24/82 5 years B. Polaski - -------------------------------------------------------------------------------------------------- Geo Test Inc. AQS-18 Test Equipm 95-032 12/14/95 3 years L. Daniels - -------------------------------------------------------------------------------------------------- Hughes Naval Marine Airborne Sonar Sys. 96-026/1 5/13/97 2 years R. Husar - -------------------------------------------------------------------------------------------------- Hughes Naval Marine Surface Ship Programs 96-026 8/9/96 2 years R. Husar - --------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- Hewlett Packard Weapons Replaceable Assy. Test Set 96-002 1/8/96 3 years L. Daniels - ------------------------------------------------------------------------------------------------------- Hollandse Signaalapparten Alkmaar class mine counter 97-007 1/23/97 2 years S. McDonald - ------------------------------------------------------------------------------------------------------- Kaman Aerospace AQS-18 Dipping Sonar SH-2G 94-019 7/19/95 5 years L. Daniels - ------------------------------------------------------------------------------------------------------- Loral Canada Maritime Helicopter Program 7/29/95 10 years J. McDermott - ------------------------------------------------------------------------------------------------------- Lockheed Martin Canadian Remote Minehunting Sonar 95-024 12/19/95 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------- Loral ASIC B2TC 5/28/95 10 years A.J. Garber - ------------------------------------------------------------------------------------------------------- Litton Sys. Acoustic Sensor Array Systems 5/24/96 5 years L. DiRienzo - ------------------------------------------------------------------------------------------------------- Northop Grumman Hybrids 95.020 9/15/95 3 years J.P. Andersen - ------------------------------------------------------------------------------------------------------- NUWC Wide-Band Omni Telemetry Sys. 10/31/96 A.J. Garber - ------------------------------------------------------------------------------------------------------- Optiphase Fiber Optic Technologies 96-003 1/10/96 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------- Paulsson Geo Svc. Inc. Boreholde Seismic Systems 11/22/96 1 year - ------------------------------------------------------------------------------------------------------- Penn State LELFAS 96-034 12/17/96 3 years V. Riehl - ------------------------------------------------------------------------------------------------------- Raytheon Electronics LFATS/Taiwan/Australian/Spanish 10/25/96 2 years V. Riehl - ------------------------------------------------------------------------------------------------------- Raytheon Electronics Y52000/Italian Navy ASW Frig 7/2/96 5 years - ------------------------------------------------------------------------------------------------------- STN Atlas Undersea Warfare Business 95-006 4/25/95 3 years K. Adams - ------------------------------------------------------------------------------------------------------- STN Atlas Australia ASSTASS LFAPS 2/11/97 1 year D. MacCulloch - ------------------------------------------------------------------------------------------------------- Signal Processing Sys. Norwegian Towed Array 97-014 5/23/97 3 years W. Tally - ------------------------------------------------------------------------------------------------------- Sikorsky Aircraft Job Shoppers 11/22/96 7 years D. Bennett - ------------------------------------------------------------------------------------------------------- Transfield Defense Sys. SEA 1000 Australian Surface Ship 8/6/96 10 years J. Winters Towed - ------------------------------------------------------------------------------------------------------- 3M Specialty Optical Fibers Fiber Optic Technologies 95-029 11/30/95 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------- Taiwan Int Standard S-70C Offset 96-010 5/11/96 5 years J. Corso/ Electronics Ltd. J. Winter - ------------------------------------------------------------------------------------------------------- Witten Technologies Mine Warfare 94-030 7/11/94 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------- Whitehead Alenia Sistemi Subacquci Undersea Warfare Business 95-003 4/27/95 3 years S. Schorer - -------------------------------------------------------------------------------------------------------
Confidentiality Agreements - ELAC --------------------------------- 95-01-01 Marimatek 95-01-02 SeaBeam 95-01-03 Qubit 95-01-04 95-01-05 Ultra Electronics 95-01-06 BASYS Marine Ltd. 95-01-07 BAeSEMA 95-01-08 Westinghouse 96-01-01 Evia 96-01-02 Mjellum & Carlson 96-01-03 Reson 96-01-04 Raytheon Anschutz 96-01-05 HDW 96-01-06 Elektro-Optik GmbH 97-01-01 SEPA 97-01-02 97-01-06 Sonatech 97-01-07 NautroniX 97-01-08 EdgeTech 97-01-09 Kongsberg 97-01-10 Camber Corp. Schedule 4.6(c) - Licensed Intellectual Property See also Intellectual Property expiration information contained in Schedule 4.6(a). Intellectual Property to be Licensed to Purchaser o Armour Cable for Airborne Dipping Sonar o Impact Resistant, Lightweight, Composite Sonar Panels o Improved Clutter Rejection Algorithms o Lead Magnesium Niobate (PMN) Activer Sonar Source Material US Patent No. 5,239,518 o Piezoelectric Ceramic Copolymer US Patent Application No. 08/618690 o Autonomous Underwater Mine Hunting Algorithms o Enhanced Thickness Piezoelectric Polymer/Ceramic Composite Active Transducer Schedule 4.6(d) - Intellectual Property The following Intellectual Property agreements may involve certain third party rights. License and Technical Assistance Agreements, between AlliedSignal and: ELAC, dated July 18, 1995 Compagnia Generale Di Elettricita, dated December 1, 1970 Aero International, Inc., dated April 26, 1996, and amendment dated June 10, 1997 Mitsubishi Heavy Industries, Ltd., dated February 2, 1989 Manufacturing License Agreement, between AlliedSignal and: Aeronautica Industrial, S.A., dated July 16, 1990 Technical Assistance and Manufacturing License Agreement, between ELAC and: The Kildare Corporation, dated March 15, 1993 Confidentiality Agreements - Ocean Systems
Agreement Effective Term/ OS Company Subject Number Date Expiry Contact - -------------------------------------------------------------------------------------------------------------- ADI Limited RAN ASSTASS SEA 11000 96-033 11/6/96 10 years A.J. Garber - -------------------------------------------------------------------------------------------------------------- ADI Limited Underwater Warfare Business 95-007 4/10/95 3 - -------------------------------------------------------------------------------------------------------------- Aero International International Spares 95-010 3 years P.A. Boskovich - -------------------------------------------------------------------------------------------------------------- Agusta/Italy Quality Assurance Survey 4/28/97 1 year L. Daniels - -------------------------------------------------------------------------------------------------------------- Albion Group Intl. Inc. Hellenic Navy Offset 95-013 7/12/95 3 years J. Hall/L. Daniels - -------------------------------------------------------------------------------------------------------------- Alliant Techsys. Seismic data 96-027 10/16/97 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------- Atlantic Aero Elect Corp. Various 95-001 1/17/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------- Australian Defense Industries Undersea Warfare Business 95-007 5/10/95 3 years K.D. Adams - -------------------------------------------------------------------------------------------------------------- Atlantic Aero Elect. Corp. Foreign Integrated Sonar Suites 95-017 8/21/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------- AT&T Various Information 8/7/95 2 years P. Saxnsury - -------------------------------------------------------------------------------------------------------------- Babcock Intl. Sonar 2087 Feasibility Study 3/7/95 5 years J. Caughey - -------------------------------------------------------------------------------------------------------------- BBN US Navy 6152 97-015 5/30/97 1 year A.J. Garber - -------------------------------------------------------------------------------------------------------------- Cambridge Bank Ltd. Sonar Equip. Brazil/Peru 96-017 5/28/96 5 years V. Riehl - -------------------------------------------------------------------------------------------------------------- Celsius Tech Sys. Mine Counter Measurers 94-021 8/19/94 3 years L. Daniels - -------------------------------------------------------------------------------------------------------------- Celsius Tech Sys. Proprietary Info. 11/14/97 5 years J.Devine - -------------------------------------------------------------------------------------------------------------- Chesapeake Sciences TARS 95-018 8/28/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------- Chesapeake Sciences TB16/BQ 10/18/94 4 years R.Tomlinson - --------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------- Chevron Petroleum Bore Hole Seismic Multi Level 94-037 3/3/94 3 years A.J. Garber Receiver - -------------------------------------------------------------------------------------------------------------------- Computing Devices Maritime Helicopter 95-014 7/14/95 3 years J. Anderson - -------------------------------------------------------------------------------------------------------------------- C-Tech Y52000 96-029 10/2/96 2 years J. Roscigno - -------------------------------------------------------------------------------------------------------------------- DAF Special Products NH-90 96-006 2/15/96 3 years D. Webb - -------------------------------------------------------------------------------------------------------------------- DRA Hunt Class Mid Life 11/22/96 1 year A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Defense Evaluation Research Agency Defense Hunt Class Mid Life 11/27/96 1 year A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Devonport Management Ltd. Sonar 2087/Type 23 Frigates 96-007 2/13/96 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Durodyne, Inc. Epichlorohydrin rubber compound 88-014/DA 5/1/88 10 years I. Andersen - -------------------------------------------------------------------------------------------------------------------- Dynacon, Inc. LFATS Handling System 94-023 6/2/94 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------------- E-Systems Montek Siesmic Receiving 95-012 6/28/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Electramotive TB16 Towed Array 11/12/93 3 years J. Proko - -------------------------------------------------------------------------------------------------------------------- FIAR NH-90 96-005 1/18/96 3 years D. Webb - -------------------------------------------------------------------------------------------------------------------- Fokker Aviation EMD 97-008 2/4/97 1 year S. McDonald - -------------------------------------------------------------------------------------------------------------------- Greenblatt MCDV 95-004 3/27/95 3 years L. Daniels - -------------------------------------------------------------------------------------------------------------------- Goldstar ATE 11/24/82 5 years B. Polaski - -------------------------------------------------------------------------------------------------------------------- Geo Test Inc. AQS-18 Test Equipm 95-032 12/14/95 3 years L. Daniels - -------------------------------------------------------------------------------------------------------------------- Hughes Naval Marine Airborne Sonar Sys. 96-026/1 5/13/97 2 years R. Husar - -------------------------------------------------------------------------------------------------------------------- Hughes Naval Marine Surface Ship Programs 96-026 8/9/96 2 years R. Husar - -------------------------------------------------------------------------------------------------------------------- Hewlett Packard Weapons Replaceable Assy. Test Set 96-002 1/8/96 3 years L. Daniels - -------------------------------------------------------------------------------------------------------------------- Hollandse Signaalapparten Alkmaar class mine counter 97-007 1/23/97 2 years S. McDonald - -------------------------------------------------------------------------------------------------------------------- Kaman Aerospace AQS-18 Dipping Sonar SH-2G 94-019 7/19/95 5 years L. Daniels - -------------------------------------------------------------------------------------------------------------------- Loral Canada Maritime Helicopter Program 7/29/95 10 years I. McDermott - -------------------------------------------------------------------------------------------------------------------- Lockheed Martin Canadian Remote Minehunting Sonar 95-024 12/19/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Loral ASIC B2TC 5/28/95 10 years A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Litton Sys. Acoustic Sensor Array Systems 5/24/96 5 years L. DiRienzo - -------------------------------------------------------------------------------------------------------------------- Northop Grumman Hybrids 95-020 9/15/95 3 years J.P. Andersen - -------------------------------------------------------------------------------------------------------------------- NUWC Wide-Band Omni Telemetry Sys. 10/31/96 A.J. Garber - -------------------------------------------------------------------------------------------------------------------- Optiphase Fiber Optic Technologies 96-003 1/10/96 3 years A. 3. Garber - -------------------------------------------------------------------------------------------------------------------- Paulsson Geo Svc. Inc. Boreholde Seismic Systems 11/22/96 1 year - -------------------------------------------------------------------------------------------------------------------- Penn State LELFAS 96-034 12/17/96 3 years V. Riehl - --------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------- Raytheon Electronics LFATS/Taiwan/Australian/Spanish 10/25/96 2 years V. Riehl - -------------------------------------------------------------------------------------------------------- Raytheon Electronics YS2000/Italian Navy ASW Frig 7/2/96 5 years - -------------------------------------------------------------------------------------------------------- STN Atlas Undersea Warfare Business 95-006 4/25/95 3 years K. Adams - -------------------------------------------------------------------------------------------------------- STN Atlas Australia ASSTASS LFAPS 2/11/97 1 year D. MacCulloch - -------------------------------------------------------------------------------------------------------- Signal Processing Sys. Norwegian Towed Array 97-014 5/23/97 3 years W. Tally - -------------------------------------------------------------------------------------------------------- Sikorsky Aircraft Job Shoppers 11/22/96 7 years D. Bennett - -------------------------------------------------------------------------------------------------------- Transfield Defense Sys. SEA 1000 Australian Surface Ship 8/6/96 10 years J. Winters Towed - -------------------------------------------------------------------------------------------------------- 3M Specialty Optical Fibers Fiber Optic Technologies 95-029 11/30/95 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------- Taiwan Int Standard S-70C Offset 96-010 5/11/96 5 years J. Corso/ Electronics Ltd. J. Winter - -------------------------------------------------------------------------------------------------------- Witten Technologies Mine Warfare 94-030 7/11/94 3 years A.J. Garber - -------------------------------------------------------------------------------------------------------- Whitehead Alenia Sistemi Undersea Warfare Business 95-003 4/27/95 3 years S. Schorer Subacquei - --------------------------------------------------------------------------------------------------------
Confidentiality Agreements - ELAC --------------------------------- 95-01-01 Marimatek 95-01-02 SeaBeam 95-01-03 Qubit 95-01-04 95-01-05 Ultra Electronics 95-01-06 BASYS Marine Ltd. 95-01-07 BAeSEMA 95-01-08 Westinghouse 96-01-01 Evia 96-01-02 Mjellum & Carlson 96-01-03 Reson 96-01-04 Raytheon Anschfltz 96-01-05 HDW 96-01-06 Elektro-Optik GmbH 97-01-01 SEPA 97-01-02 97-01-06 Sonatech 97-01-07 Nautronix 97-01-08 EdgeTech 97-01-09 Kongsberg 97-01-10 Camber Corp. Schedule 4.7 - Contracts See also Schedule 4.12. Ocean Systems - Open Contracts over $75,000 Contract Contract Value Country Status - -------- -------------- ------- ------ N00019-90-G-0200YC94 471117.95 USA OP N00019-90-G-0200YC95 1645386.00 USA OP N00019-93-G-0131UU2K 245635.00 USA OP N00019-97-G-00080001 8299107.00 USA OP N00019-97-G-0008UU0l 348023.00 USA OP N00024-89-C-6066 20440163.00 USA OP N00024-91-C-6501 11539100.00 USA OP N00024-92-C-6225 5963263.00 USA OP N00024-92-C-6502 83243508.87 USA OP N00024-92-C-6503 27614976.00 USA OP N00024-94-C-6152 9464260.00 USA OP N00024-96-C-6214 34217858.00 USA OP N00024-97-C-6375 149911.00 USA OP N00104-96-P-G022 81408.00 USA OP N00140-95-D-N083 208958.00 USA OP N00140--97-D-E156 131418.00 USA OP N00383-88-G-K3010108 820326.88 USA OP N00383-88-G-K3010131 9460000.10 USA OP N00383-94-G-700N0020 307778.00 USA OP N00383-94-G-700N0030 2742742.00 USA OP N00383-94-G-700N5045 3218001.12 USA OP N00383-94-G-700N5209 266598.00 USA OP N00383-94-G-700N5212 448500.00 USA OP N00383-94-G-700N5213 77000.00 USA OP N00383-95-G-209N0002 157836.00 USA OP N00383-95-G-2O9NUUIR 79367.00 USA OP N00383-95-G-2O9NUUIT 75108.00 USA OP N00383-95-G-209NUU51 117108.00 USA OP N00383-95-G-209NUU55 165960.00 USA OP N00383-95-G-209NUU57 100500.00 USA OP N00383-95-G-209NUU65 178536.00 USA OP N00383-95-G-209NUU66 153500.00 USA OP N00383-95-G-209NUU68 83060.00 USA OP N00383-95-G-209NUU69 87888.00 USA OP N00383-95-G-209NUU76 170072.00 USA OP N00383-95-G-209NUU77 164572.00 USA OP N00383-95-G-209NUU91 100500.00 USA OP N00383-95-G-209NUU92 100500.00 USA OP N00383-95-G-209NUU93 134000.00 USA OP N5588983 149111.99 USA OP N66001-96-C-6008 819118.00 USA OP N66604-92-C-1078 288121.00 USA OP N66604-93-C-0788 148716.00 USA OP N66604-97-M-5934 100814.00 USA OP N68335-94-G-000IUU08 153189.00 USA OP N68335-96-G-0047UU02 152100.00 USA OP P015101 106873.00 USA OP P7805158 4862872.00 USA OP P7822564 154500.00 USA OP R9525401 357259.00 USA OP SP0960-97-M-0936 95880.00 USA OP A1EO2546 - Aero International 4697043.00 VAR- Non US OP W8472-5-BGV1 3309635.27 CAN OP P7900173 25843178.00 CHN OP 0774888 20566000.00 EGY OP GWG864609 378168.00 GBR OP SSDW1/434 429712.00 GBR OP 7/1994 5017476.00 GRC OP P7870275 3879870.00 GRC OP 1248USA 25818944.00 ITA OP 31-1/96 237671.00 ITA OP L40870 1649997.00 ITA OP 1E295 86880.00 JPN OP 1E312 963086.00 JPN OP 1F449 425999.00 JPN OP 1F450 1295177.00 JPN OP 1F458 103293.00 JPN OP 1F480 334691.00 JPN OP 1F481 979628.00 JPN OP 1F483 257503.00 JPN OP 1F485 127123.00 JPN OP 1F496 76584.00 JPN OP 1F509 691160.00 JPN OP 1F511 129420.00 JPN OP 1F514 95524.00 JPN OP 56S265 75754.00 JPN OP 5S0226 1680670.00 JPN OP 5S0227 919541.00 JPN OP 5S250 1751240.00 JPN OP 5S251 3502480.00 JPN OP 5S252 3502480.00 JPN OP 5S253 1751240.00 JPN OP 5S257 75921.00 JPN OP 5S258 252534.00 JPN OP 5S259 398143.00 JPN OP 5S260 163056.00 YPN OP 5S262 919541.00 JPN OP 5S265 75754.00 JPN OP 5S266 619421.00 JPN OP 5S267 78446.00 JPN OP 5S268 158862.00 JPN OP 5S270 86446.00 JPN OP 5S271 92524.00 JPN OP 5S276 99749.00 JPN OP 5S277 267555.00 JPN OP 960050 389850.00 KOR OP 970050 224977.00 KOR OP KFX-DPA-72DA57025 29700000.00 KOR OP MGP-DGMIDAR-95-074 122720.00 PER OP DNOl/96 151793.00 PRT OP TURKEY 1 15548572.00 TUR OP PA2314-C059 272645.00 TWN OP PB4961-C067-POO 281000.00 TWN OP ROCN 25843178.00 TWN OP N00019-90-G-0200YCIF 83400.00 USA OP N00019-90-G-0200YC93 715362.76 USA OP Ocean Systems - Open POs Over $75,000 - -------------------------------------
PO No. PO Value Status Open Amt Pd Amt Vendor ID Vendor Name - ------ -------- ------ -------- ------ --------- ----------- A00458 $ 81,547 Open $ 63,245 $ 18,302 80863 SPECTRUM ENGINEERING CORP. A00493 $1,059,969 Open $ 345,849 $714,120 70212 PRECISION INTERCONNECT A00499 $ 731,090 Open $ 255,965 $475,125 00169 AT&T A00573 $ 115,000 Open $ 65,000 $ 50,000 65109 OCEAN PROJECTS ASSOCIATES A01277 $ 185,600 Open $ 185,600 29152 DYNACON, INC. A01597 $ 115,961 Open $ 106,734 $ 9,227 65109 OCEAN PROJECTS ASSOCIATES A46821 $ 178,423 Open $ 1 $178,423 81041 SPIRATEX COMPANY A48903 $5,000,000 Open $5,000,000 16113 CDI CORPORATION WEST A48904 $ 500,000 Open $ 500,000 81750 STANDARD REGISTER B00541 $ 375,000 Open $ 375,000 72749 RAM TEK BUSINESS CO B01149 $ 333,750 Open $ 333,750 47287 INTERTEK TECHN. SERVICES B01263 $ 200,000 Open $ 200,000 29744 EGGHEAD SOFTWARE B01742 $ 106,000 Open $ 100,800 $ 5,200 63168 NAVAL UNDERWATER SYSTEMS B03266 $ 155,760 Open $ 155,760 04216 ALLIEDSIGNAL AEROSPACE CO. B04402 $ 436,000 Open $ 436,000 56881 FORSYTHE MCARTHUR B04984 $ 136,751 Open $ -- $136,751 64014 NORMALAIR GARRETT LIMITED B05158 $ 111,000 Open $ 111,000 52284 LAIDLAW ENVIRONMENTAL B05579 $ 152,500 Open $ 152,500 72935 RAWLINGS MECHANICAL CORP. B05829 $ 150,000 Open $ 150,000 27698 DIGITAL SYSTEM RESOURCES B05859 $ 160,000 Open $ 160,000 22781 COMPUDRAFT B06572 $ 98,950 Open $ 98,950 18762 CARRIER BUILDING SERVICES B07260 $ 152,770 Open $ 139,735 $ 13,035 41300 HAMILTONIAYNET ELECTRONIC B07471 $ 240,750 Open $ 35,310 $205,440 72805 RANTEC COMPANY
B07815 $ 432,000 Open $ 432,000 89966 VP AND ASSOCIATES B07816 $ 140,000 Open $ 140,000 83135 STREAMLINE SYSTEM INTEGRA B07875 $ 123,410 Open $ 81,866 $ 41,544 42916 HERMETIC SEAL CORP. C00l14 $ 145,000 Open $ 145,000 32469 ENTEX INFORMATION SERVICES C00954 $ 112,975 Open $ 5,575 $107,400 65109 OCEAN PROJECTS ASSOCIATES C01624 $ 139,600 Open $ 139,600 75689 ROMIC ENVIRONMENTAL TECH. C02490 $ 200,000 Open $ 200,000 47873 JAMAR PACKAGING CO., INC. C03546 $ 98,000 Open $ 98,000 19035 CAPTAIN C.J. CAUGHEY RN (RET) C03692 $ 153,400 Open $ 153,400 92011 WACKENHUT CORP. C03842 $ 547,580 Open $ 80,135 $467,447 69973 POWERTECH INC. C04282 $ 160,000 Open $ 160,000 72935 RAWLINGS MECHANICAL CORP. C06070 $ 231,951 Open $ 231,951 52935 R E LEE DESIGN C06215 $ 75,270 Open $ 73,101 $ 2,169 62372 NATEL ENGINEERING CO., IN D00281 $ 200,000 Open $ 200,000 27310 JOHN DEVINE D00401 $ 96,900 Open $ 96,900 19010 CATALINA COMPUTER SOLUTIONS D00522 $ 85,000 Open $ 85,000 89966 VP AND ASSOCIATES D00528 $ 84,450 Open $ 84,450 26748 DELTA CONSULTING SERVICES D00553 $ 85,000 Open $ 85,000 32469 ENTEX INFORMATION SERVICES D00768 $ 77,175 Open $ 77,175 03086 AIRFLYTE ELECTRONICS CO. D00815 $ 190,400 Open $ 27,200 $163,200 23230 CONSOLIDATED PRODUCTS CORP. D00821 $ 99,900 Open $ 99,900 26382 DIS RESEARCH D01326 $ 189,909 Open $ 20,000 $169,909 72935 RAWLINGS MECHANICAL CORP. D01546 $ 78,000 Open $ 78,000 03955 ALL PHASE ELECTRIC SUPPLY D01619 $ 100,000 Open $ 100,000 28352 DOUBLE "3" PACKAGING CO., INC. D01646 $ 227,916 Open $ 227,916 52935 R E LEE DESIGN D01714 $ 480,585 Open $ 325,962 $154,623 76365 SMTEK, INC. D02115 $ 75,226 Open $ 51,718 $ 23,508 20582 CICON ENGINEERING, INC. D03621 $ 120,000 Open $ 120,000 72935 RAWLINGS MECHANICAL CORP. D04093 $ 96,600 Open $ 96,600 23230 CONSOLIDATED PRODUCTS CORP. D04316 $ 151,265 Open $ 151,265 70212 PRECISION INTERCONNECT D04599 $ 79,468 Open $ 79,468 62372 NATEL ENGINEERING CO., INC. Y23066 $ 143,500 Open $ 143,500 12628 BIG 3 INDUSTRIES, INC. Y27874 $ 422,114 Open $ 81,122 $340,992 56881 FORSYTHE MCARTHUR 738189 $ 110,000 Open $ 110,000 25171 DVR ENTERPRISE 740850 $ 250,000 Open $ 250,000 29742 EGGHEAD DISCOUNT SOFTWARE Z40937 $1,012,000 Open $1,012,000 92011 WACKENHUT 740952 $ 647,220 Open $ 634,685 $ 12,535 56881 FORSYTHE MCARTHUR
Ocean Systems - Marketing Consulting Agreements* Sigma International, dated June 1, 1995 Guy Reynolds Reynolds Beckwith Kerry Stephen LeeCor, Inc. (Ronald Beckwith) Omicron Corp. John Caughy SMAT, Est. John Devine Kuo-Chun, Henry Feng John McDermott Ocean Systems - International Service Representative Agreements* C.I.E.R., dated June 30, 1996 Sigma International, dated June 1, 1995 Atkem, A.S., dated July 7, 1997 Ocean Systems - Sales Representative Agreements* Taewoos LLC, dated January 7, 1995 Hollinda N.V., dated August 1, 1995 Itochu Aviation, Inc., dated October 1, 1994 Siam Aviation Company, Ltd., dated November 1, 1995 Benavia AB, dated October 1, 1995 Panamerica Organization Properties, Inc., dated November 1, 1995 Hovet & Co., dated October 1, 1995 Compania Aeronautica Espanola, S.A, dated October 1, 1995 Aktem A.S., dated March 1, 1997 Top Entity, dated January 1, 1997 Sistemas Electronicos S.A., dated June 1, 1997 J.C. Rangel, Representacoes Ltd., dated June 1, 1997 Alberto Maria Bravo & Filhos, dated July 1, 1997 Southwest Trading Company, dated April 1, 1997 Technica De Electronica Y Metalurgia (TADEM), dated July 1, 1997 Aero Precision Industries, Inc., dated June 1, 1997 BD Miltech Ltd., July 1, 1997 Mereit Lab Corporation, dated August 1, 1997 Ocean Systems - Computer Equipment Leases* Vendor Name Expires Equipment Description - ----------- ------- --------------------- Forsythe McArthur Assoc. August 7, 1998 VAX7620 VAX4100 MTI CIQBU adaptor high capacity tape drive Forsythe McArthur Assoc. August 31, 1998 VAX6610 Forsythe McArthur Assoc. August 31, 1998 MicroTechnology Raid Disk Farm and associated devices Forsythe McArthur Assoc. January 14, 1999 SUN Spark 20 Ocean Systems - Information Technology Service Agreements*
- ------------------------------------------------------------------------------------------------------------------------------------ Type of Vendor Name Service Agreement Description Coverage Expires - ------------------------------------------------------------------------------------------------------------------------------------ Xerox Corporation HW maintenance (208017080 printers) Maintenance 9/26/97 - ------------------------------------------------------------------------------------------------------------------------------------ Hewlett - Packard Workstation Operating System Maintenance Maintenance 9/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ Cabletron Systems Inc. Network Infrastructure maint (software) Maintenance 9/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ Omega Logistics Int Logistics software (DILSA) Maintenance 10/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ Sterling Design Engineering Systems Vmetric - EDCAS - System Design Utility Maintenance 10/15/97 - ------------------------------------------------------------------------------------------------------------------------------------ Tornado Software Development toolkit Maintenance 10/31/97 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Parametric Technology Corp. Designer software (Pro-E) Maintenance 11/11/97 - ------------------------------------------------------------------------------------------------------------------------------------ Cincom MRP utilities USER FEE (QRW) Maintenance 11/20/97 - ------------------------------------------------------------------------------------------------------------------------------------ Micro-Frame Technologies PC based estimating (Microframe) Maintenance 12/1/97 - ------------------------------------------------------------------------------------------------------------------------------------ Executive Software Disk de-fragmentation (Diskeeper) Maintenance 12/14/97 - ------------------------------------------------------------------------------------------------------------------------------------ Intersolv Inc Software config mgmt (PVCS) Maintenance 12/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ Struct. Dyn. Res. Corp. CAD (IDeas) Maintenance 12/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ Digital Equipment Corp. HW & SW maintenance (VAXcluster) Maintenance 12/31/97 - ------------------------------------------------------------------------------------------------------------------------------------ Silverado Software & Consultants Analysis SW maintenance (ANSYS) Maintenance 1/2/98 - ------------------------------------------------------------------------------------------------------------------------------------ Intercap Graphics System Technical Illustration (Intercap) Maintenance 1/8/98 - ------------------------------------------------------------------------------------------------------------------------------------ Barr Systems Remote Printer (XEROX) RJE-RS232 Maintenance 1/9/98 - ------------------------------------------------------------------------------------------------------------------------------------ West Coast Terminals, Inc. Xerox FAX machine maintenance Maintenance 1/23/98 - ------------------------------------------------------------------------------------------------------------------------------------ Talaris Systems INC. Printer HW maintenance (3290s) Maintenance 1/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Zuken-Redac CAD (CADstar) Maintenance 2/20/98 - ------------------------------------------------------------------------------------------------------------------------------------ Datalok Off-site tape storage Maintenance 2/27/98 - ------------------------------------------------------------------------------------------------------------------------------------ Select Sfotware Tools, Inc. Select Yordon - FOR SSTO Maintenance 4/15/98 - ------------------------------------------------------------------------------------------------------------------------------------ Amtek HW maintenance (HP 9000) Maintenance 4/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Lasersource/DCI HW maintenance (Talaris 1590s) Maintenance 4/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ QMS HW maintenance (QM5860 laser printer) Maintenance 4/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Computer Upgrade Corporation AMASS SW maintenance Maintenance 4/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Mathworks SW maintenance (MATLAB, float license) Maintenance 5/1/98 - ------------------------------------------------------------------------------------------------------------------------------------ Cincom MRP software USER FEE (Control) Maintenance 6/24/98 - ------------------------------------------------------------------------------------------------------------------------------------ Cabletron Systems Inc. Network Infrastructure maint (hardware) Maintenance 6/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Muzak Music on Hold Maintenance 6/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Interleaf Desktop publishing (Interleaf) Maintenance 8/28/98 - ------------------------------------------------------------------------------------------------------------------------------------ Micro-Technologies (SI) HW maintenance (CIQBA Controler) Maintenance 8/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ Exide HW maintenance on UPS system Maintenance 9/25/98 - ------------------------------------------------------------------------------------------------------------------------------------ Oracle Database software (Oracle) Corporate/ 2Q/each Maintenance year - ------------------------------------------------------------------------------------------------------------------------------------ Lasersource/DCI Blanket maintenance for HP printers Blanket 12/30/97 - ------------------------------------------------------------------------------------------------------------------------------------ Software Spectrum Supplies (software blanket) Blanket 12/31/97 - ------------------------------------------------------------------------------------------------------------------------------------ DIS Research Capital/Supplies (blanket) - replace HW Blanket 12/31/97 - ------------------------------------------------------------------------------------------------------------------------------------ Graymar Business Systems Supplies (toner) Blanket 3/2/98 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ AP Labs Signal processing software (SUNs) Blanket 3/6/98 - ------------------------------------------------------------------------------------------------------------------------------------ Walker Richer and Quinn Reflection Blanket 3/10/98 - ------------------------------------------------------------------------------------------------------------------------------------ Xerox Corporation HW maintenance (4050,4075,3700) Blanket 3/31/98 - ------------------------------------------------------------------------------------------------------------------------------------
Ocean Systems - Confidentiality Agreements*
- ------------------------------------------------------------------------------------------------------------------------------------ Agreement Effective Term/ OS Company Subject Number Date Expiry Contact - ------------------------------------------------------------------------------------------------------------------------------------ ADI Limited RAN ASSTASS SEA 11000 96-033 11/6/96 10 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ ADI Limited Underwater Warfare Business 95-007 4/10/95 3 - ------------------------------------------------------------------------------------------------------------------------------------ Aero International International Spares 95-010 3 years P.A. Boskovich - ------------------------------------------------------------------------------------------------------------------------------------ Agusta/Italy Quality Assurance Survey 4/28/97 1 year L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Albion Group Intl. Inc. Hellenic Navy Offset 95-013 7/12/95 3 years J. Hall/ L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Alliant Techsys. Seismic data 96-027 10/16/97 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Atlantic Aero Elect Various 95-001 1/17/95 3 years A.J. Garber Corp. - ------------------------------------------------------------------------------------------------------------------------------------ Australian Defense Undersea Warfare Business 95-007 5/10/95 3 years K.D. Adams Industries - ------------------------------------------------------------------------------------------------------------------------------------ Atlantic Aero Elect. Foreign Integrated Sonar Suites 95-017 8/21/95 3 years A.J. Garber Corp. - ------------------------------------------------------------------------------------------------------------------------------------ AT&T Various Information 8/7/95 2 years D. Samsury - ------------------------------------------------------------------------------------------------------------------------------------ Babcock Intl. Sonar 2087 Feasibility Study 3/7/95 5 years J. Caughey - ------------------------------------------------------------------------------------------------------------------------------------ BBN US Navy 6152 97-015 5/30/97 1 year A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Cambridge Bank Ltd. Sonar Equip. Brazil/Peru 96-017 5/28/96 5 years V. Riehl - ------------------------------------------------------------------------------------------------------------------------------------ Celsius Tech Sys. Mine Counter Measurers 94-021 8/19/94 3 years L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Celsius Tech Sys. Proprietary Info. 11/14/97 5 years J. Devine - ------------------------------------------------------------------------------------------------------------------------------------ Chesapeake Sciences TARS 95-018 8/28/95 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Chesapeake Sciences TB16/BQ 10/18/94 4 years R. Tomlinson - ------------------------------------------------------------------------------------------------------------------------------------ Chevron Petroleum Bore Hole Seismic Multi Level Receiver 94-037 3/3/94 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Computing Devices Maritime Helicopter 95-014 7/14/95 3 years J. Anderson - ------------------------------------------------------------------------------------------------------------------------------------ C-Tech YS2000 96-029 10/2/96 2 years J. Roscigno - ------------------------------------------------------------------------------------------------------------------------------------ DAF Special Products NH-90 96-006 2/15/96 3 years D. Webb - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ DRA Hunt Class Mid Life 11/22/96 1 year A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Defense Evaluation Defense Hunt Class Mid Life 11/27/96 1 year A.J. Garber Research Agency - ------------------------------------------------------------------------------------------------------------------------------------ Devonport Management Ltd. Sonar 2087/Type 23 Frigates 96-007 2/13/96 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Durodyne, Inc. Epichlorohydrin rubber compound 88-014/DA 5/1/88 10 years J. Andersen - ------------------------------------------------------------------------------------------------------------------------------------ Dynacon, Inc. LFATS Handling System 94-023 6/2/94 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ E-Systems Montek Siesmic Receiving 95-012 6/28/95 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Electramotive TB16 Towed Array 11/12/93 3 years J. Proko - ------------------------------------------------------------------------------------------------------------------------------------ FIAR NH-90 96-005 1/18/96 3 years D. Webb - ------------------------------------------------------------------------------------------------------------------------------------ Fokker Aviation EMD 97-008 2/4/97 1 year S. McDonald - ------------------------------------------------------------------------------------------------------------------------------------ Greenblatt MCDV 95-004 3/27/95 3 years L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Goldstar ATE 11/24/82 5 years B. Polaski - ------------------------------------------------------------------------------------------------------------------------------------ Geo Test Inc. AQS-18 Test Equipm 95-032 12/14/95 3 years L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Hughes Naval Marine Airborne Sonar Sys. 96-026/1 5/13/97 2 years R. Husar - ------------------------------------------------------------------------------------------------------------------------------------ Hughes Naval Marine Surface Ship Programs 96-026 8/9/96 2 years R. Husar - ------------------------------------------------------------------------------------------------------------------------------------ Hewlett Packard Weapons Replaceable Assy. Test Set 96-002 1/8/96 3 years L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Hollandse Signaalapparten Alkmaar class mine counter 97-007 1/23/97 2 years S. McDonald - ------------------------------------------------------------------------------------------------------------------------------------ Kaman Aerospace AQS-18 Dipping Sonar SH-2G 94-019 7/19/95 5 years L. Daniels - ------------------------------------------------------------------------------------------------------------------------------------ Loral Canada Maritime Helicopter Program 7/29/95 10 years J. McDermott - ------------------------------------------------------------------------------------------------------------------------------------ Lockheed Martin Canadian Remote Minehunting Sonar 95-024 12/19/95 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Loral ASIC B2TC 5/28/95 10 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Litton Sys. Acoustic Sensor Array Systems 5/24/96 5 years L. DiRienzo - ------------------------------------------------------------------------------------------------------------------------------------ Northop Grumman Hybrids 95-020 9/15/95 3 years J.P. Andersen - ------------------------------------------------------------------------------------------------------------------------------------ NUWC Wide-Band Omni Telemetry Sys. 10/31/96 A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Optiphase Fiber Optic Technologies 96-003 1/10/96 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Paulsson Geo Svc. Inc. Boreholde Seismic Systems 11/22/96 1 year - ------------------------------------------------------------------------------------------------------------------------------------ Penn State LELFAS 96-034 12/17/96 3 years V. Riehl - ------------------------------------------------------------------------------------------------------------------------------------ Raytheon Electronics LFATS/Taiwan/Australian/Spanish 10/25/96 2 years V. Riehl - ------------------------------------------------------------------------------------------------------------------------------------ Raytheon Electronics Y52000/Italian Navy ASW Frig 7/2/96 5 years - ------------------------------------------------------------------------------------------------------------------------------------ STN Atlas Undersea Warfare Business 95-006 4/25/95 3 years K. Adams - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ STN Atlas Australia ASSTASS LFAPS 2/11/97 1 year D. MacCulloch - ------------------------------------------------------------------------------------------------------------------------------------ Signal Processing Sys. Norwegian Towed Array 97-014 5/23/97 3 years W. Tally - ------------------------------------------------------------------------------------------------------------------------------------ Sikorsky Aircraft Job Shoppers 11/22/96 7 years D. Bennett - ------------------------------------------------------------------------------------------------------------------------------------ Transfield Defense Sys. SEA 1000 Australian Surface Ship Towed 8/6/96 10 years J. Winters - ------------------------------------------------------------------------------------------------------------------------------------ 3M Specialty Optical Fiber Optic Technologies 95-029 11/30/95 3 years A.J. Garber Fibers - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Int Standard S-70C Offset 96-010 5/11/96 5 years J. Corso/ Electronics Ltd. J. Winter - ------------------------------------------------------------------------------------------------------------------------------------ Witten Technologies Mine Warfare 94-030 7/11/94 3 years A.J. Garber - ------------------------------------------------------------------------------------------------------------------------------------ Whitehead Alenia Undersea Warfare Business 95-003 4/27/95 3 years S. Schorer Sistemi Subacquei - ------------------------------------------------------------------------------------------------------------------------------------
Ocean Systems - Retention Agreements* o Retention Agreements with key management (V. Davisson, V. Riehl, A. Logan, D. Dunlop, J. Roscigno, L. DiRienzo, M. Charley, B. Smith, S. Erdman), aggregate contingent payment of $199,400 for all eight managers (Purchaser responsibility). o Retention Agreement with Steve Schorer (AlliedSignal responsibility). ELAC - Retention Agreements* o Retention Agreements with key management (L. Hogrefe, W. Tietz, G. Jordt), aggregate contingent payment of $108,200 for all three managers (Purchaser responsibility). ELAC - Contracts Greater Than TDM 100.00
- ------------------------------------------------------------------------------------------------------------------------------------ 3.2 Contracts, Value > TDM 100.0 Status: Cut-off 09/97 - ------------------------------------------------------------------------------------------------------------------------------------ Customer Enduser Contents Date of Value of Remaining Last Contract Contract Backlog Shipment/Service TDM TDM - ------------------------------------------------------------------------------------------------------------------------------------ BAZAN, Spain Spanish Navy 4 Echosounders for 9/4/95 442.0 331.5 August 1999 Minehunter - ------------------------------------------------------------------------------------------------------------------------------------ Blohm und Voss, Turkish Navy 2 Echosounders for 8/15/96 251.0 131.1 May 1998 Germany MEKO - ------------------------------------------------------------------------------------------------------------------------------------ Blohm und Voss, German Navy 1 Echosounder and UT 7/14/97 281.1 281.1 October 2005 Germany Equipment for F124 - ------------------------------------------------------------------------------------------------------------------------------------ BWB Koblenz, German Navy Target Simulator 2/29/96 11,217.4 4,581.8 December 2005 Germany (SUBTAS) - ------------------------------------------------------------------------------------------------------------------------------------ BWB Koblenz, German Navy Advanced Data 9/23/97 398.5 398.5 December 1997 Germany Evaluation System (SUBTAS) - ------------------------------------------------------------------------------------------------------------------------------------ BWB Koblenz, German Navy Spares (Transducer) 8/20/97 340.6 340.6 December 1997 Germany - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ 3.2 Contracts, Value > TDM 100.0 Status: Cut-off 09/97 - ------------------------------------------------------------------------------------------------------------------------------------ Customer Enduser Contents Date of Value of Remaining Last Contract Contract Backlog Shipment/Service TDM TDM - ------------------------------------------------------------------------------------------------------------------------------------ BWB Koblenz, German Navy 1000 Transducers 8/28/97 2,047.0 1,647.8 December 1997 Germany LSE 800 - ------------------------------------------------------------------------------------------------------------------------------------ BWB Koblenz, German Navy LFTASS Development 8/7/95 712.5 0.0 December 1998 Germany and Delivery of 4 ea. Reflexducerelements - ------------------------------------------------------------------------------------------------------------------------------------ DLA, Korean Navy 2 UT Equipments 12/5/96 404.4 404.4 December 1997 Korea (Training) - ------------------------------------------------------------------------------------------------------------------------------------ DLA, Korean Navy 2 Echosounders for 2/26/97 329.1 202.4 December 1998 Korea KDX Destroyers - ------------------------------------------------------------------------------------------------------------------------------------ HDW, Korean Navy 3 Echosounders, 3/1/95 2,541.8 1,673.3 December 1998 Germany UT Equipments, Sonar Beacon, Tape Recorder for Subs U209 - ------------------------------------------------------------------------------------------------------------------------------------ HDW, Brazilian Navy Echosounder, UT's, 1/12/96 791.2 791.2 March 1999 Germany Sonar Beacon for Sub Tupi mod - ------------------------------------------------------------------------------------------------------------------------------------ HDW, German Navy 2 Echosounders and UT 8/14/97 1,757.5 1,757.5 December 2005 Germany Equipments incl. ILS for Subs U212 - ------------------------------------------------------------------------------------------------------------------------------------ HDW, German Navy 1 Echosounder and UT 8/14/97 281.1 281.1 October 2002 Germany Equipment for F124 - ------------------------------------------------------------------------------------------------------------------------------------ HDW, Turkish Navy 2 Echosounders 7/1/95 861.9 14.4 February 1998 Germany 2 Sonar Beacons for Submaries - ------------------------------------------------------------------------------------------------------------------------------------ HDW/TNSW, Israel Navy 3 Sonar Beacons 12/17/93 842.0 20.5 June 1999 Germany for Submarine "Dolphin-Class" - ------------------------------------------------------------------------------------------------------------------------------------ HSA, Taiwan Navy Sonar Spares 4/1/97 111.9 111.9 November 1997 Netherlands - ------------------------------------------------------------------------------------------------------------------------------------ Intermarine, Thai Navy 21 Echosounders for 6/17/97 225.0 225.0 July 1998 Italy Minehunter - ------------------------------------------------------------------------------------------------------------------------------------ Lurssen, Turkish Navy 3 Sonar Beacons 10/10/95 321.8 9.3 October 1997 Germany for Patrolers "Dogan-Class" - ------------------------------------------------------------------------------------------------------------------------------------ NAMRIA, NAMRIA, BCC-SW MK II 8/14/97 791.0 791.0 November 1997 Phillipines Phillippines - ------------------------------------------------------------------------------------------------------------------------------------ Naval Indian Navy Test Equipment 7/23/97 193.1 193.1 December 1997 Headquarters, India - ------------------------------------------------------------------------------------------------------------------------------------ ORCA, France French Navy 7 Diver Sonars 6/18/97 966.8 41.5 December 1997 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ 3.2 Contracts, Value > TDM 100.0 Status: Cut-off 09/97 - ------------------------------------------------------------------------------------------------------------------------------------ Customer Enduser Contents Date of Value of Remaining Last Contract Contract Backlog Shipment/Service TDM TDM - ------------------------------------------------------------------------------------------------------------------------------------ Racal Survey, Racal Survey, UK BCC-MW 3/6/97 693.1 90.0 December 1997 UK 3 Upgrades MK I - M II - ------------------------------------------------------------------------------------------------------------------------------------ SeaBeam, INHO, India 4 SeaBeam 1180 4/17/97 1,784.9 888.7 April 1998 USA ($1=1,75DM) - ------------------------------------------------------------------------------------------------------------------------------------ SeaBeam, NAMRIA, 2 SeaBeam 1180 MK II 7/31/97 792.2 792.2 November 1997 USA Phillippines - ------------------------------------------------------------------------------------------------------------------------------------ STN ATLAS, German Navy 2 Echosounders 10/16/95 642.0 46.1 July 1998 Germany 2 UT Equipment for Minehunter MJ332 - ------------------------------------------------------------------------------------------------------------------------------------ STN ATLAS, Israel Navy 4 UT Equipments for 11/24/93 1,070.3 10.2 June 1999 Germany Submarines "Dolphin-Class" - ------------------------------------------------------------------------------------------------------------------------------------ STN ATLAS, various 30 Echosounders 9/19/97 139.5 139.5 November 1997 Germany LAZ 5000 - ------------------------------------------------------------------------------------------------------------------------------------ STN ATLAS, various 30 Echosounders 9/24/97 139.5 139.5 February 1998 Germany LAZ 5000 - ------------------------------------------------------------------------------------------------------------------------------------ STN ATLAS, German Navy MTW - Mini Torpedo 12/6/95 430.0 30.0 December 1997 Germany Development and Testvehicle - ------------------------------------------------------------------------------------------------------------------------------------ TNSW, German Navy 2 Echosounders and UT 8/11/97 1,792.5 1,792.5 December 2005 Germany Equipments incl. ILS for 2 Subs U212 - ------------------------------------------------------------------------------------------------------------------------------------ TNSW, German Navy 1 Echosounder and UT 9/29/97 296.0 296.0 October 2004 Germany Equipment for F124 - ------------------------------------------------------------------------------------------------------------------------------------ Technical Technical Development of 3/10/97 140.7 140.7 December 1997 University, University, High Frequency Berlin, Germany Berlin, Germany Transducers - ------------------------------------------------------------------------------------------------------------------------------------ Wilton-Fijenoord, Taiwan Navy Sonar Spares 1/22/97 815.6 815.6 December 1997 Netherlands - ------------------------------------------------------------------------------------------------------------------------------------ WDA WSA Bremerhaven, BCC-SW MK II 9/10/97 428.4 428.4 November 1997 Bremerhaven, Germany Germany - ------------------------------------------------------------------------------------------------------------------------------------ WTV, Siegburg, Wahnbachtalsperre PIA 2000 Plancton 5/31/96 3,067.1 2,480.5 June 1999 Germany n Inactivation System Verband Germany - ------------------------------------------------------------------------------------------------------------------------------------
ELAC - Guarantees and Bank Bonds*
Deutsche Bank Bank Bonds 02.10.97 item type of guarantee customer no. amount DEM due date 1 A advance payment bond Atlas 431 221.490,00 28.02.1998 2 V performance bond Atlas 363 237.188,00 until further 3 V performance bond Atlas 396 63.945,67 01.03.1999 4 G warranty bond Atlas 463 33.690,00 until further 5 V performance bond Atlas 328 9.589.450,00 -1.436.000,00 -877.800,00 -501.600,00 -836.000,00 -627.000,00 -627.000,00 -1.379.400,00 -543.400,00 -1.170.400,00 ------------- 1.590.850,00 31.12.1999 ============= 6 A advance payment bond Blohm + Voss 460 18.300,00 31.08.1998 7 A advance payment bond Blohm + Voss 461 17.625,00 31.08.1997 8 V performance bond Blohm + Voss 395 26.470,00 until further 9 G warranty bond Blohm + Voss 459 6.110,00 31.08.2000 10 G warranty bond Blohm + Voss 462 7.248,00 31.08.2001 11 G warranty bond Blohm + Voss 485 16.164,00 until further 12 V performance bond Daewoo 353 1.079,00 31.10.1997 13 V performance bond Daewoo 354 1.122,00 31.10.1998 14 A advance payment bond Def. Proc. Agency 391 191.500,00 31.10.1996 15 A advance payment bond Def. Proc. Agency 478 221.600,000 30.09.1998 16 A advance payment bond Def. Proc. Agency 480 82.515,00 31.01.1999 17 V performance bond Def. Proc. Agency 390 38.300,00 30.09.1999 18 V performance bond Def. Proc. Agency 397 3.313,52 09.07.1996 19 G warranty bond Def. Proc. Agency 479 22.160,00 30.11.1999 20 G warranty bond Def. Proc. Agency 481 17.825,00 31.01.2003 21 A advance payment bond Empresa Nacional 423 19.050,00 01.08.1999 22 A advance payment band Empresa Nacional 425 19.050,00 01.05.1998 23 A advance payment bond Empresa Nacional 426 19.050,00 01.12.1998 24 G warranty bond Empresa Nacional 474 6.370,00 until further 25 A advance payment bond HDW, Kiel 464 41.988,80 until further 26 A advance payment bond HDW, Kiel 465 85.852,10 until further 27 A advance payment bond HDW, Kiel 466 32.223,00 until further 28 A advance payment bond HDW, Kiel 473 72.450,00 30.09.1998 29 A advance payment bond HDW, Kiel 475 88.255,60 until further 30 A advance payment bond HDW, Kiel 476 33.126,90 until further 31 A advance payment bond HDW, Kiel 477 43.164,10 until further 32 A advance payment bond HDW, Kiel 482 41.988,80 until further 33 A advance payment bond HDW, Kiel 483 32.223,00 until further 34 A advance payment bond HDW, Kiel 399 72.450,00 15.10.1998 35 A advance payment bond HDW, Kiel 446 41.988,80 31.01.1998 36 A advance payment bond HDW, Kiel 447 32.223,00 31.01.1998 37 A advance payment bond HDW, Kiel 448 85.852,10 31.01.1998 38 V+G performance bond HDW, Kiel 261 19.654,70 31.08.1998 39 V performance bond HDW, Kiel 388 238.050,00 15.10.1998 40 V+G performance bond HDW, Kid 401 42.926,00 30.11.2001 41 V+G performance bond HDW, Kid 402 41.757,00 30.11.2000 42 V+G performance bond HDW, Kiel 403 44.128,00 30.11.2002 43 V+G performance bond HDW, Kiel 404 15.673,00 30.11.2000 44 V+G performance bond HDW, Kiel 405 16.563,00 30.11.2002
45 V+G performance bond HDW, Kiel 406 16.112,00 30.11.2001 46 V+G performance bond HDW, Kiel 407 20.424,00 30.11.2000 47 V+G performance bond HDW, Kiel 408 20.990,00 30.11.2001 48 V+G performance bond HDW, Kiel 409 21.582,00 30.11.2002 49 V+G performance bond HDW, Kiel 410 25.726,00 30.11.2000 50 V+G performance bond HDW, Kiel 411 26.447,00 30.11.2001 51 V+G performance bond HDW, Kiel 412 27.187,00 30.11.2002 52 G warranty bond HDW, Kiel 369 36.397,50 31.01.2000 53 G warranty bond HDW, Kiel 442 36.337,00 31.01.1999 54 G warranty bond HDW, Kiel 443 15.111,00 31.01.1999 55 G warranty bond HDW, Kiel 444 36.967,00 31.12.1999 56 G warranty bond HDW, Kiel 445 15.364,00 31.12.1999 57 A advance payment bond Intermarine 484 35.550,00 until further 58 V performance bond Kockums 265 45.512,90 01.10.1998 59 V performance bond Kockums 275 13.500,00 01.10.1998 60 G warranty bond Lurssen Werft 456 18.750,00 30.06.1997 61 G warranty bond Lurssen Werft 468 13.214,00 01.05.1999 62 G warranty bond Lurssen Werft 469 13.214,00 01.12.1999 63 G warranty bond P.T. PAL Indonesia 457 38.500,00 3 1.12.1996 64 G warranty bond President of India 435 4.721,75 until further 65 V performance bond Saudi Arabien 366 17.793,50 10.01.1998 66 G warranty bond Societe d'Armement 379 8.487,50 12.09.1997 67 G warranty bond Societe d'Armement 486 73.433,85 11.07.1998 68 V performance bond Thyssen 385 238.050,00 15.09.1999 69 G warranty bond Thyssen 368 27.772,50 30.06.1999 70 A advance payment bond Wilton 472 400.000,00 until further total 5.251.697,59 Foreign currency item type of guarantee customer no. amount Ablauf 1 V performance bond Taneer, Karacki 48.044,00 Pak.R until further 2 V performance band Def.Proc.Agency, 441 1.870,39 USD 31.05.1997 Korea 3 V performance bond SeaBeam 482 49.371,00 USD 31.07.1999
ELAC - Confidentiality Agreements* Date Party ---- ----- 95-01-01 Marimatek 95-01-02 SeaBeam 95-01-03 Qubit 95-01-04 95-01-05 Ultra Electronics 95-01-06 BASYS Marine Ltd. 95-01-07 BAeSEMA 95-01-08 Westinghouse 96-01-01 Evia 96-01-02 Mjellum & Carlson 96-01-03 Reson 96-01-04 Raytheon Anschtitz 96-01-05 HDW 96-01-06 Elektro-Optik GmbH 97-01-01 SEPA 97-01-02 97-01-06 Sonatech 97-01-07 Nautronix 97-01-08 EdgeTech 97-01-09 Kongsberg 97-01-10 Camber Corp. ELAC - Other Contracts* o ELAC Lease, between Honeywell Regelsysteme GMBH and Honeywell ELAC-Nautik, dated April 1, 1994 o Intercompany note between Ocean Systems and ELAC with respect to the cash in the AlliedSignal German cash pool, and related agreements o Stock Purchase Agreement by and among AlliedSignal Deutchland GmbH, AlliedSignal, Inc., Honeywell AG and Honeywell, Inc., dated March 30, 1994 o Lease agreement by and between ELAC and Christian-Albrecht Universitat, Kiel, dated April 1995 o Long term agreement for cable repair with AS Aerospace GmbH Ocean Systems - Other Contracts o The following pages contain information regarding certain contracts signed between August 1, 1997 and December 19, 1997. o Effective December 19, 1997, Ocean Systems is under contract with the Turkish Navy to provide 4 AQS-18A dipping sonar systems plus spares, ground support equipment and performance testing. o Ocean Systems has an opportunity to propose a significant contract with Egypt. In the event that OS moves forward to compete on that contract, it is likely that OS will retain an in-country representative and will sign a letter of intent with that representative to retain post-contact award services which would likely exceed $250,000. - ------------------------ * Included without regard to dollar amount. May or may not exceed $75,000 or DM100,000. CONTRACTS RECEIVED 8/97 Through 12/97 (Over $250K) CUSTOMER SALES ORDER CONTRACT # DESCRIPTION VALUE - -------- ----------- ---------- ----------- ----- NAVSEA SS3442 N00024-92-C-8502 TB-23 Spares $279.3K NUWC SU3498 N66604-7225-4BF7 AMTS Upgrade $100.8K ITOCHU SY3591 5S277 Q18M Spares $268K ITOCHU SY3714 5S272 Q18M Spares $3700K ITOCHU SY3717 5SS275 Q18M Spares $1800K ITOCHU SY3725 1F528 Ql8M Spares $368K HELLENIC NAVY 1 Q18V System $2200K NAVSEA ECP320/325 TB16 Upgrade $6600K NAVSEA TB23 Repairs $300K
ASOS-58-R010 ALLIEDSIGNAL OCEAN SYSTEMS PAGE NO: 197 PURCHASING STATISTIC AWARD REPORT RUN DATE: 12/19/97 ALL PURCHASE ORDERS FROM 06/01/97 THRU 12/15/97 BUYER VENDOR VENDOR VENDOR AWARD TECH PO LINE DEPT/ACCT/JOB COMM TOTAL ID NAME NUMBER CLASS CODE CODE NUMBER ITEM CODE DOLLARS 12 CONSOLIDATED 23230 SB 1A 1A DP5064 007 3000-031-01-0-0000-0-0-0 5002 47,600.00 PRODUCTS CORP. 12 CONSOLIDATED 23230 SB 1A 1A DP5064 008 3000-031-01-0-0000-0-0-0 5002 68,000.00 PRODUCTS CORP. 12 CONSOLIDATED 23230 SB 1A 1A DP5064 009 3000-031-01-0-0000-0-0-0 5002 54,400.00 PRODUCTS CORP. TOTAL DOLLARS FOR THIS PO 462,400.00 $ 500,000 AND UP TOTAL DOLLARS FOR THIS BUCKET 462,809.30 TOTAL NUMBER OF PO'S FOR THIS BUCKET 4
Schedule 4.8 - Titles and Leases No items to schedule. Schedule 4.9 - Litigation See also Schedules 4.21(a) and 4.21(b). Ocean Systems Sellers are presently aware of two pending suits: Brown v. AlliedSignal, case no. 15826, filed in the Superior Court of the State of California, County of Los Angeles, North Valley Judicial District on May 28, 1996. Tomlinson V. AlliedSignal, case no. BC 163670, filed in the Superior Court of the State of California, County of Los Angeles, North Valley Judicial District on May 23, 1997. Sellers are presently aware of an international sales matter, which Purchaser acknowledges having had the opportunity to discuss with Sellers' counsel (voluntary disclosure #329, relating to sales to the government of Greece and the United States). ELAC There is one contractual dispute related to a German Government contract. ELAC intends to solve the dispute prior to January 21, 1998. Contract Data: Customer: BWB, Koblenz, Germany Content: Development and delivery of 4 ea. Reflexducers Date of Contract: 8/7/1995 Value: DM 712.5 k Last Shipment: Dec. 1998 Current Status: An agreement with the customer was settled on 5th November, 1997, to close the contract end of December 1997 without shipment of transducers. ELAC agreed to pay back 438 k DM of the total payment of 712.5 k DM that was received end of 1996. BWB accepts the development results. Payback has to be transferred 30 days after written approval of BWB. ELAC confirmed agreement in writing 7th of November, BWB approval expected in the last week of December, 1997, payment to be released January 1998. Schedule 4.10 - Environmental Disclosure The following documents, which have been delivered to Purchaser, are incorporated herein by reference: 1. Environmental, Health and Safety Disclosure Document AlliedSignal Ocean Systems, Sylmar, CA Prepared for AlliedSignal Electronic Systems June 30 to July 2, 1997 2. Phase I Environmental Site Assessment 15825 Roxford Street, Sylmar, CA July 1997 3. Health, Safety and Environmental Disclosure AlliedSignal Electronic Systems - ELAC Nautik GmbH September 29, 1997 4. ELAC Environmental Disclosure Statement Ocean Systems Permits City of Los Angeles, Department of Building and Safety, Certificates of Occupancy Permit No.'s: LA76447/60 VN00435/73 VN50140/76 LA76448/60 LA64337/73 VN39348/76 VN92138/66 LA77430/73 VN89736/79 VN98941/66 VN16035/74 VN93597/79 LA72477/68 LAl6583/75 VN40476/82 LA72479/68 LA16584/75 LA20231/85 VN87685/72 VN44208/76 VN98937/86 VN83102/72 VN41832/76 VN15222162 VN81765/72 VN43697/76 VN13124-62 VN968742/73 VN39986/76 City of Los Angeles, Department of Building and Safety Water Conservation Program Certificate of Compliance No. 310437 City of Los Angeles Fire Permit Permit No.'s 777456-33/F/701 777456-33/F/828 City of Los Angeles Office of the City Clerk, Tax and Permit Division Hazardous Material Certificate Renewal No. 587720-23/F/803 City of Los Angeles Certificates of Disclosure of Hazardous Substances Account No. 587720-23/F/206 City of Los Angeles, Department of Building and Safety and Division of Occupational Safety and Health of the State of California, Certificates of Inspection and Permit to Operate Steam Boiler or Pressure Vessel Permit No.'s AC09411 AC09412 AC4018 AC4019 AC4020 City of Los Angeles, Department of Public Works and Bureau of Sanitation, Industrial Wastewater Permit User No. 1U000068 Permit No. W482195 City of Los Angeles, Department of Public Works and Bureau of Sanitation, Industrial Waste Permit No. 482195 County of Los Angeles, Hazardous Waste License No. 103 453285 County of Los Angeles, Public Health License, SIC# 3699 13 South Coast Air Quality Management District Permit No.'s M35231 Spray Booth M09716 Spray Booth P19724 Bake Oven D29049 Surface Prep. Tank Application No.'s 327865 Spray Booth/UV Cure 327866 Degreaser ELAC ELAC approval to release waste water dated June 25, 1997 ELAC business and local licenses are listed in Schedule 4.17 See also Schedule 4.15. Schedule 4.11 - Benefit Plans and Policies See also Schedule 6.6. U.S. Pension, Savings and Stock Option Plans Salaried Employees Pension Plan of AlliedSignal, Inc. AlliedSignal, Inc. Pension Plan for Hourly Employees AlliedSignal, Inc. Retirement Program AlliedSignal, Inc. Supplemental Retirement Plan AlliedSignal, Inc. Savings Plan AlliedSignal, Inc. Thrift Plan AlliedSignal, Inc. Supplemental Savings Plan 1993 Stock Plan for Employees of AlliedSignal, Inc. and its Affiliates (option plan for certain managers) U.S. Health and Welfare Plans Medical-Managed Care-HCC-Salaried Blue Cross/Blue Shield - Hourly Dental Plan Vision Plan-VSP-Salaried Sick Days Life Insurance Group Universal Life Insurance Long Term Disability (Salaried provided through pension plan) Short Term Disability Severance Plan Drug Testing Supplemental Unemployment Benefit per UAW Labor Agreement (hourly) Personal Accident Insurance (voluntary) Employment Laws in Germany and Agreements at ELAC German Government Laws Every employee must have insurance for: Health Unemployment Pension (retirement) * Daily working time is limited to 10 hours. * Each employee is entitled to a minimum of 4 weeks vacation annually. * Significant restrictions apply to employee lay-offs, including, without limitation, a 4 week minimum notice requirement prior to lay-off and restrictions on layoffs for pregnant women and employees over 56 years old. Wage and Salary Agreements Agreements between the Metal and Electro Employer Association and the German Metal Union cover the following: Standard wages and salaries. Amount of extra payment for Christmas (50% of monthly salary) Amount of extra payment for holidays (30% of monthly salary) Payment during illness (6 weeks) Annual vacation time (6 weeks) These agreements have the status of laws. Company Agreements There are additional agreements between Sellers and the ELAC work council covering the following: Daily and weekly working time Working rules Pension plan Redundancy payment plan (severance) Employers contribution plans (savings plan) Other German Benefit Programs ELAC Pension Plan Worldwide AlliedSignal Stock Purchase Plan Statutory German Health and Welfare Plans Company Automobiles U.S. Other Programs Education Assistance Holidays Vacation Student Loan Program Matching Gifts Savings Bonds Credit Union Employee Mortgage Program Ride Sharing Incentives Reward and Recognition Financial Planning Seminars Service Awards Bereavement Pay Family Leave Military Pay Jury Duty Adoption Assistance Employee Assistance Company Automobiles Ocean Systems - Retention Agreements * Retention Agreements with Key Management (V. Davisson, V. Riehl, A. Logan, D. Dunlop, J. Roscigno, L. DiRienzo, M. Charley, B. Smith, S. Erdman), aggregate contingent payment of $199,400 (Purchaser responsibility). * Retention Agreement with Steve Schorer (AlliedSignal responsibility) ELAC - Employment Agreements All ELAC employees have employment agreements including temporary employees and Apprentices. Most employees have "standard" agreements ("Anstellungsvereinbarung"). As of November 1, 1997, there were 170 employees, as follows: Category Employment Agreement Form Number -------- ------------------------- ------ Employees Standard 136 Temporary Temporary 3 Apprentices Apprentice 4 Managers AT - Individual 26 Senior Manager GT - Individual 1 The following individuals have "AT-Individual" agreements: Bjornsen, Bohm, Bornhorst, Brundel, Bumbe, Diehl, Eigenbrod, Gumpel, Gnutzmann, Gorl, Heir, Holm, Jordt, Knoop, Kuhn, Maschmann, Olden Gueg, Raether, Schaefer, Schultz, Seibkin, Tietz, Timm, Westerbeck, Wieczorek, Ziegenbein. Dr. Luder Hogrefe has the "GT-Individual" agreement. The following individuals are parties to retention agreements with an aggregate contingent payment of $108,200: Dr L. Hogrefe, W. Tietz, G. Jordt (Purchaser responsibility). Schedule 4.12 - Material Changes Pre - Closing Committments ELAC ELAC and STN-ATLAS will sign a Teaming Agreement for the joint development and marketing of a Mine Avoidance Sonar for Submarines Ocean Systems * Effective December 19, 1997, Ocean Systems is under contract with the Turkish Navy to provide 4 AQS-18A dipping sonar systems plus spares, ground support equipment and performance testing. * Ocean Systems has an opportunity to propose a significant contract with Egypt. In the event that OS moves forward to compete on that contract, it is likely that OS will retain an in-country representative and will sign a letter of intent with that representative to retain post-contact award services which would likely exceed $250,000. * Additionally, Greece System 6 contract ($2.2M Sales value) effectivity expected by December 31, 1997, and a $6 million booking is expected on the TB-23 Refurbishment program. * See also Schedule 4.7, containing recent contract information. Pre-Closing Changes in Employment, Compensation and Benefits ELAC ELAC is covered by the "Tarifvertrag" of IG Metall Schleswig-Holstein. This law covers all major employee issues such as salary, vacation, illness, etc. The "Tarifvertrag" is valid for a certain time period and is a topic of collective bargaining events between the Union and industrial representatives. The basic salary is always an important topic for upcoming negotiations. ELAC expects a salary increase of 2.5%, becoming effective on the 1st of April 1998. This increase is covered within the 1998 AOP. Recent Hirings -ELAC ELAC expects to hire a replacement sales manager in December 1997 One additional marketing consultant was contracted in November 1997 Positions Currently Open at Ocean Systems Sr. Transducer Engineer Systems Engineer Advanced Manufacturing Engineer (2) Sr. Staff Electrical Design Engineer (2) Sr. Mechanical Engineer Program Manager Planner, Sr. Sr. Engineer - Tech Process Lead - Towed Array Manager, Contracts Sr. Cost Control Analyst Sr. Financial Analyst Human Resource Generalist Schedule 4.14 - Compliance with Law See Schedules 49, 4.10, 4.21(a) and 4.21(b). Schedule 4.15 - Consents The following may not be assigned without the written consent of the contracting party: * Service Agreement #SER00006, dated June 1, 1995, between AlliedSignal and C.I.E.R. Service Agreement #SER00007, dated June 1, 1995, between AlliedSignal and Sigma International Memorandum of Agreement dated October 31, 1996, between AlliedSignal and Celsius Tech Systems AB Teaming Agreement dated February 11, 1997, between AlliedSignal and STN Atlas PTY, Limited The following may be terminated by either party upon the sale of the other party: Cooperation Agreement dated February 19, 1996, between AlliedSignal and FIAR The following may be assigned upon a sale of assets, but Lockheed Martin Librascope Corp. must be notified of the assignment and sale of assets: Teaming Agreement, dated May 31, 1996, by and between AlliedSignal and Lockheed Martin Librascope Corporation. * The lease between Honeywell and ELAC, dated March 31, 1994, may not be assigned without the consent of Honeywell, which may not be unreasonably withheld. Any and all government contracts, U.S. or foreign, may not be assignable without the consent of the government party. Certain of the confidentiality agreements, software licenses, equipment leases, and equipment service agreements listed on Schedule 4.6(a) may not be assignable without the consent of the contracting party. The export licences set forth on schedule 4.17 may not be assignable without consent. The permits, licenses, certificates and registrations referenced in Schedules 4.10 and 4.17 may require action by the Buyer in the form of notification, reapplication or otherwise, upon a change in ownership. - ------------------------ * Material consent. Schedule 4.16 - ELAC Taxes * Tax audit executed by the Tax Authorities of Kiel for the years 1989 through 1993. During the last tax audit, covering the period ending December 31, 1993, the tax authorities made minor routine findings which are not expected to have a significant impact in subsequent years. Years after 1993 are still open but no specific tax exposure is known. * ELAC is a party to the profit pooling agreement with AlliedSignal Deutchland GmbH for the period 1995 to 1997. * Annual audit of the General Ledger executed by Price Waterhouse for the year 1996. Schedule 4.17 - Permits and Licenses Ocean Systems - Permits City of Los Angeles, Department of Building and Safety, Certificates of Occupancy Permit No.s: LA76447/60 VN00435/73 VN50140/76 LA76448/60 LA64337/73 VN39348/76 VN92138/66 LA77430/73 VN89736/79 VN98941/66 VN16035/74 VN93597/79 LA72477/68 LA16583/75 VN40476/82 LA72479/68 LA16584/75 LA20231/85 VN87685/72 VN44208/76 VN98937/86 VN83102/72 VN41832/76 VN15222/62 VN81765/72 VN43697/76 VN13124-62 VN968742/73 VN39986/76 City of Los Angeles, Department of Building and Safety Water Conservation Program Certificate of Compliance No. 310437 City of Los Angeles Fire Permit Permit No.s 777456-33/F/701 777456-33/F/828 City of Los Angeles Office of the City Clerk, Tax and Permit Division Hazardous Material Certificate Renewal No. 587720-23/F/803 City of Los Angeles Business Tax Registration Certificates Cert. No.s 435532-82/L/190 Profs/Occupations 435532-82/L/167 Retail Sales 435532-82/L/166 Wholesale Sales City of Los Angeles Certificates of Disclosure of Hazardous Substances Account No. 587720-23/F/206 City of Los Angeles, Department of Building and Safety and Division of Occupational Safety and Health of the State of California, Certificates of Inspection and Permit to Operate Steam Boiler or Pressure Vessel Permit No.s AC09411 AC09412 AC4018 AC4019 AC4020 City of Los Angeles, Department of Public Works and Bureau of Sanitation, Industrial Wastewater Permit User No. IU000068 Permit No. W482195 City of Los Angeles, Department of Public Works and Bureau of Sanitation, Industrial Waste Permit No. 482195 County of Los Angeles, Hazardous Waste License No. 103 453285 County of Los Angeles, Public Health License, SIC# 3699 13 South Coast Air Quality Management District Permit No.s M35231 Spray Booth M09716 Spray Booth P19724 Bake Oven D29049 Surface Prep. Tank Application No.s 327865 Spray Booth/UV Cure 327866 Degreaser Ocean Systems - Vessel Registrations U.S. Department of Transportation and U.S. Coast Guard Certificates of Documentation Vessel Official Number ------ --------------- 3 Acres 600022 Sonar Queen 511517 Ocean Systems - Vehicle Registrations (License Plate Numbers) 1PXL241 5A19782 2SDR083 2MRJ696 1FN4696 2SI5252 2SDR082 3BGK180 1JOE389 ELAC - Permit Approval to release waste water, dated June 25, 1997 Ocean Systems - Export Licenses
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Abu Dhabi Middle East T071358 8/16/93 Temporary Hardware Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Algeria N. Africa 454071 6/28/90 Technical Data Unclassified Expired AS AQS-18(V)1 No - ------------------------------------------------------------------------------------------------------------------------------------ Argentina S. America 707475 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Argentina S. America 612612 8/1/94 Technical Data Unclassified 4 years AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 696980 4/4/97 Technical Data Unclassified Pending SSLF LFAPS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 696980 4/4/97 Technical Data Unclassified 4 years SSLF LFAPS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 684669 1/17/97 Technical Data Unclassified 4 years SSLF LFAPS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific C17445 10/25/95 Technical Data Classified 4 years TA TB-23 No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 641004 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-l9 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 622537 12/23/94 Technical Data Unclassified 4 years TA TB-23 No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 579069 11/16/93 Technical Data Unclassified 4 years WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific T069558 4/12/93 Temporary Hardware Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific T068072 12/23/92 Temporary Hardware Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific T067456 12/7/92 Temporary Hardware Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 405452 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 350699 10/23/87 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 350699 l0/23/87 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific 041582 10/5/77 Technical Data Unclassified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ Australia Asia/Pacific C04056 10/5/77 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Bahrain Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Bahrain Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Bahrain Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Belgium Europe 450681 5/9/90 Technical Data Unclassified Expired WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 706261 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America - 7/14/97 Technical Data Unclassified Pending AS AQS-18(V)1 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America AG 1322-96 2/6/97 TAA DSAM 10 years AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 647890 9/21/95 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 405450 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Brazil S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-18(V)1 No - ------------------------------------------------------------------------------------------------------------------------------------ Brunei Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Brunei Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Canada N. America C04640 Unknown Technical Data Classified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ Canada N. America C17445 10/25/95 Technical Data Classified 4 years TA TB-23 No - ------------------------------------------------------------------------------------------------------------------------------------ Canada N. America 622537 12/23/94 Technical Data Unclassified 4 years TA TB-23 No - ------------------------------------------------------------------------------------------------------------------------------------ Canada N. America 553757 2/22/93 Technical Data Unclassified Expired SURV ARCSSS No - ------------------------------------------------------------------------------------------------------------------------------------ Canada N. America C012075 6/21/88 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Canada N. America C05342 4/23/79 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Chile S. America - 7/21/97 Technical Data Unclassified Pending SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Chile S. America 679402 10/11/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Chile S. America 569850 7/22/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Chile S. America 569850 7/22/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Chile S. America 499932 8/28/91 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ China PRC Asia/Pacific 342257 8/27/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Colombia S. America 707475 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Colombia S. America 556072 4/1/93 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Denmark Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Denmark Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Denmark Europe 618752 l2/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Denmark Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Denmark Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Ecuador S. America 663624 3/13/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Ecuador S. America 651988 11/28/95 Technical Data Unclassified 4 years AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Ecuador S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-18(V)1 No - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East T081685 8/27/96 Temporary Hardware 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East 666411 3/14/96 Technical Data Unclassified 4 years SSLF SADS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East 663626 3/13/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East 480606 1/23/91 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East 480606 1/23/91 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Egypt Middle East 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Finland Europe 337560 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ France Europe 641139 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ France Europe 641139 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ France Europe 618752 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ France Europe 559494 4/30/93 Technical Data Unclassified Expired CMSR ADC EX-11 No - ------------------------------------------------------------------------------------------------------------------------------------ France Europe CO12678 5/2/89 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ France Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ France Europe T043212 6/1/87 Temporary Hardware Expired AS AQS-l8 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 703020 5/5/97 Technical Data Unclassified 4 years ASLF HELRAS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 693546 2/19/97 Technical Data Unclassified 4 years MWF EMD Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 693546 2/19/97 Technical Data Unclassified 4 years MWF LMHS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe T082205 9/25/96 Temporary Hardware 4 years AS XDUCER Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe T078950 10/17/95 Temporary Hardware 4 years AS XDUCER Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years AS AQS-18 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years AS AQS-18(V) Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe AG 124-95C 6/6/95 MLA ELAC lO years AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years ASLF HELRAS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years SSLF SADS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 620446 2/14/95 Technical Data Unclassified 4 years SSLF Sonar 90 Yes - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe T072207 11/3/93 Temporary Hardware Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 551381 1/6/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 551381 1/6/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 551381 1/6/93 Technical Data Unclassified Expired MWF SLS No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 533052 7/16/92 Technical Data Unclassified Expired WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 522678 3/3/92 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 522678 3/3/92 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 450681 5/9/90 Technical Data Unclassified Expired WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 408204 4/26/89 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 318506 1/12/87 Technical Data Unclassified Expired ASLF XDUCER No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 318505 10/31/86 Technical Data Unclassified Expired ASLF XDUCER No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe C011096 10/20/86 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe C010909 8/27/86 Technical Data Classified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 306318 8/26/86 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 300089 5/5/86 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 200603 6/14/83 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe C07892 3/31/82 Technical Data Classified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe C07473 10/19/81 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe 136259 4/21/81 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Germany Europe C04056 10/5/77 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 618752 l2/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 405451 4/19/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 397934 1/10/89 Technical Data Unclassified Expired AS AQS-18(V)6 No - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 356156 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Greece Europe 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ India Asia/Pacific 344238 8/7/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ India Asia/Pacific 191510 2/24/83 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ India Asia/Pacific T023031 3/22/82 Temporary Hardware Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Indonesia Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Indonesia Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Indonesia Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Indonesia Asia/Pacific 405450 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Indonesia Asia/Pacific 296001 5/9/86 Technical Data Unclassified Expired AS AQS-18(V)3 No - ------------------------------------------------------------------------------------------------------------------------------------ Israel Middle East 713415 9/12/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Israel Middle East 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Israel Middle East 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 707479 7/24/97 Technical Data Unclassified 4 years AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years AS AQS-18 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years AS AQS-18(V) Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years ASLF HELRAS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 674284 7/12/96 Technical Data Unclassified 4 years ASLF HELRAS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 641314 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe T078240 7/19/95 Temporary Hardware 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe T077737 6/9/95 Temporary Hardware 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe T067349 10/1/92 Temporary Hardware Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe C013453 1l/17/89 Technical Data Classified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 405451 4/l9/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 341967 8/12/87 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe T032482 12/10/84 Temporary Hardware Expired AS AQS-13F No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe 162852 5/27/82 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe Unknown 3/10/82 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Italy Europe C04856 10/2/78 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 703026 7/11/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 405452 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 399819 1/24/89 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 396862 10/29/88 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 396862 10/29/88 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 383356 9/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Japan Asia/Pacific 123720 1/26/80 Technical Data Unclassified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 703026 7/11/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 694217 2/6/97 Technical Data Unclassified 4 years AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 584759 12/20/93 Technical Data Unclassified 4 years TA SQR-19 No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific T071257 8/3/93 Temporary Hardware Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific T069585 5/3/93 Temporary Hardware Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific T068073 3/24/93 Temporary Hardware Expired AST AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 551512 1/25/93 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 547067 12/2/92 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 405452 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 347285 9/30/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 335191 6/15/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Korea Asia/Pacific 196264 6/9/83 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 707480 5/15/97 Technical Data Unclassified Pending AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 700687 4/8/97 Technical Data Unclassified 4 years ASLF HELRAS Yes - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 641140 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 641140 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Kuwait Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia Asia/Pacific 682259 10/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia Asia/Pacific 579069 11/16/93 Technical Data Unclassified 4 years WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia Asia/Pacific 422198 8/31/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia Asia/Pacific 422198 8/31/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Malaysia Asia/Pacific 344233 9/24/87 Technical Data Unclassified Expired As AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Morocco N. Africa 707478 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Morocco N. Africa 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Morocco N. Africa 467183 9/27/90 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Nato HQ NATO 318505 l/l2/87 Technical Data Unclassified Expired ASLF XDUCER No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 662765 3/21/96 Technical Data Unclassified 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 357187 11/24/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ Netherlands Europe C04056 10/5/77 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ New Zealand Asia/Pacific 568040 7/12/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ New Zealand Asia/Pacific 568040 7/12/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ New Zealand Asia/Pacific 559491 5/10/93 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Nigeria N. Africa 139824 6/3/81 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 707474 8/18/97 Technical Data Unclassified 4 years TA TBE Yes - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 641314 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 618752 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe T074459 6/13/94 Temporary Hardware 4 years SSLF SADS No - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 533052 7/16/92 Technical Data Unclassified Expired WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 389416 8/26/88 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 389416 8/26/88 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Norway Europe C04856 10/2/78 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Oman Middle East 622177 10/4/95 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Oman Middle East 597362 5/27/94 Technical Data Unclassified 4 years SSLF SADS No - ------------------------------------------------------------------------------------------------------------------------------------ Oman Middle East 537957 9/1/92 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Oman Middle East 537957 9/1/92 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Oman Middle East 537957 9/1/92 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan Asia/Pacific 418823 5/9/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan Asia/Pacific 418823 5/9/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan Asia/Pacific 405450 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan Asia/Pacific 380693 9/9/88 Technical Data Unclassified Expired AS AQS-18(V)3 No - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan Asia/Pacific 344028 6/19/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Pakistan Asia/Pacific 227320 9/24/84 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Peru S. America 707481 8/21/97 Technical Data Unclassified 4 years AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Peru S. America 658908 3/21/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Peru S. America 662443 3/13/96 Technical Data Unclassified 4 years AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Peru S. America 405450 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Peru S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-l8(V)1 No - ------------------------------------------------------------------------------------------------------------------------------------ Philippines Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Philippines Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe T072026 10/22/93 Temporary Hardware Expired AST AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 530482 4/14/92 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 530482 4/14/92 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 405451 4/19/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 367625 2/8/88 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Portugal Europe 143053 7/15/81 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Qatar Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia Middle East 707480 5/15/97 Technical Data Unclassified Pending AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia Middle East 673977 8/27/96 Technical Data Unclassified 4 years ASLF HELRAS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia Middle East 572591 7/1/93 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia Middle East 568039 6/29/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Saudi Arabia Middle East 568039 6/29/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 682259 10/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific T077151 2/16/95 Temporary Hardware 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 616626 9/13/94 Technical Data Unclassified 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 579069 11/16/93 Technical Data Unclassified 4 years WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific T045433 11/9/87 Temporary Hardware Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 344233 9/24/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Singapore Asia/Pacific 227322 9/24/84 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 436195 2/16/90 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 423778 9/18/89 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 394948 10/13/88 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 371131 3/11/88 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 357187 11/24/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Spain Europe 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ Sweden Europe T081685 8/27/96 Temporary Hardware 4 years ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Sweden Europe 654582 8/15/96 Technical Data Unclassified 4 years TA Y52000 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Sweden Europe 641313 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No - ------------------------------------------------------------------------------------------------------------------------------------ Sweden Europe 394942 10/31/88 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Sweden Europe 394942 10/31/88 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Sweden Europe 356158 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific - 7/30/97 Technical Data Unclassified Pending SSTD SLQ-25B Yes - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 679403 2/5/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 640109 8/4/95 Technical Data Unclassified 4 years AS AQS-18(V)3 No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific T068073 3/24/93 Temporary Hardware Expired AST AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 5443038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 413670 3/31/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 413670 3/31/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 398329 11/14/88 Technical Data Unclassified Expired AS AQS-l8(V)3 No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 288454 3/11/86 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 215206 3/8/84 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 196265 6/21/83 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Taiwan Asia/Pacific 161678 7/14/82 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 694217 2/6/97 Technical Data Unclassified 4 years AS AQS-18A Yes - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 682259 10/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 637851 5/26/95 Technical Data Unclassified 4 years SSLF SADS No - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 344233 9/24/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ Thailand Asia/Pacific 227321 9/24/84 Technical Data Unclassified Expired AS AQS-18 No - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 618752 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 456852 6/29/90 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 456852 6/29/90 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 405451 4/19/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Turkey Europe 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ UAE Middle East 647889 10/13/95 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ UAE Middle East 637849 8/4/95 Technical Data Unclassified 4 years SSLF SADS No - ------------------------------------------------------------------------------------------------------------------------------------ UAE Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ UAE Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ UAE Middle East 550980 1/21/93 Technical Data Unclassified Expired AS AQS-18(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe C17445 10/25/95 Technical Data Classified 4 years TA TB-23 No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 617076 2/14/95 Technical Data Unclassified 4 years SSLF Sonar 2087 Yes - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 622537 12/23/94 Technical Data Unclassified 4 years TA TB-23 No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 607252 7/7/94 Technical Data Unclassified 4 years SSLF Sonar 2087 No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe T071358 8/16/93 Temporary Hardware Expired AS AQS-18(V) No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 559130 5/18/93 Technical Data Unclassified Expired TA B-T-P No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-l8(V)1A No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 533052 7/16/92 Technical Data Unclassified Expired WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 468501 10/16/90 Technical Data Unclassified Expired FO FO Array No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 455675 6/1/90 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 450681 5/9/90 Technical Data Unclassified Expired WPN LCAW No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe T053927 8/16/89 Temporary Hardware Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe CO12679 8/8/88 Technical Data Classified Expired SSTD SSTD No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe C012021 3/3/88 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 350682 11/23/87 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 350696 10/27/87 Technical Data Unclassified Expired MWF AQS-17 No - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Country Region License# Date Type Subtype Status Product System ELAC - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 350696 10/27/87 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe Various 7/9/86 Temporary Hardware Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 207510 12/8/83 Technical Data Unclassified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No - ------------------------------------------------------------------------------------------------------------------------------------ UK Europe C04056 10/5/77 Technical Data Classified Expired ASLF HELRAS No - ------------------------------------------------------------------------------------------------------------------------------------ Venezuela S. America 707475 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes - ------------------------------------------------------------------------------------------------------------------------------------ Venezuela S. America 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No - ------------------------------------------------------------------------------------------------------------------------------------ Venezuela S. America 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No - ------------------------------------------------------------------------------------------------------------------------------------ Venezuela S. America 405450 5/2/89 Technical Data Unclassified Expired AS AST No - ------------------------------------------------------------------------------------------------------------------------------------ Venezuela S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-18(V)1 No - ------------------------------------------------------------------------------------------------------------------------------------
ELAC- Export Licenses
- -------------------------------------------------------------------------------------------------- 4.1.2 EXPORT LICENSES Status: Sep. 30. 1997 - -------------------------------------------------------------------------------------------------- No. Validity Consignee Goods Value DM - -------------------------------------------------------------------------------------------------- DE / 253 7046 27.12.97 Wilton-Fijenoord Sonar Spares 1.075.000,00 Schiedam / Netherlands for export Taiwan - -------------------------------------------------------------------------------------------------- DE / 264 8651 21.01.98 Defence Procurement Agency Underwater Telephone 443.200,00 Seoul, Rep. of Sudkorea UT 2000 - -------------------------------------------------------------------------------------------------- DE / 264 8654 11.02.98 Hollandse Signaalapparaten BV Sonar Cables 231.015,00 Hengelo / Netherlands for export Taiwan - -------------------------------------------------------------------------------------------------- DE / 253 7049 14.02.98 Merkaz Aspaka Spares for Echosounder 8.596,00 Tel Aviv / Israel VE 59 - -------------------------------------------------------------------------------------------------- DE / 264 8660 12.03.98 Chilean Navy Spares for Echosounder 144.679,81 Taleahauno / Chile VE 59 - -------------------------------------------------------------------------------------------------- DE / 264 8659 17.03.98 Naval Headquarters Spares for Echosounder 68.239,30 India VE 59 - -------------------------------------------------------------------------------------------------- DE / 253 7044 24.04.99 Marinha Repair of Dipping Sonar up to Almada / Portugal 1.500.000,00 - -------------------------------------------------------------------------------------------------- DE / 253 7021 29.10.98 Ministeria de Defensa Armada Repair of Dipping Sonar up to Spain 200.000,00 - -------------------------------------------------------------------------------------------------- DE / 253 7036 14.03.99 AlliedSignal Aerospace Spares for Echosounder up to Canada VE 59 1.500.000,00 - --------------------------------------------------------------------------------------------------
Zehner Zehner Tausender Hunderster 13579 Tausender Hunderster 24680 [illegible] - ----------------------------------------------------------------------------------------------------------------------------------- Vorstan Personlich haftende Grundoder Gesellschafter a) Tag der Eintragung Stammkapital Geschafesfuhrer und Unterschrut [illegible] Unternehmens DM Abwickler Prokura Rechtsverhaltniste b) Bemerkungen - ----------------------------------------------------------------------------------------------------------------------------------- 2 3 4 5 6 7 - ----------------------------------------------------------------------------------------------------------------------------------- [illegible] GmbH 20.000 -- DM Dr. Ing. Reinhard Gesellschaft mit a) 9.Februar 1978 Ludwig in Kiel. beschrunkter Haftung. [illegible] und der Ver- Der Gesellschaftsvertrag Erzeugnissen auf der Burkhard Kubisch in ist am 7. Februar 1978 /s/ [illegible] Elektroakustic, [illegible] Hamburg. errichtet. der allgemeinen [illegible] und des Ma- [illegible] Die Geschuftsfuhrer Dr. insbesondere [illegible] Reinhard Ludwig und der Mautik [illegible] Burkhard Kubisch vertreten die Gesellschaft gemeinsam. - ----------------------------------------------------------------------------------------------------------------------------------- [illegible] Elac-Nautik Dr. Helmut Hoss Gesellsehaft naft mit be- in Birstein. Durch den Beschluss der a) 22.Juni 1978 [illegible] Haftung Gesellschafterversammlung vom 17 Mai 1978 ist der Gesllschaftsvertrag in /s/ [illegible] ss.1 (Firma) geundert worden. Burkhard Kubisch ist nicht mehr Geschaftsfuhrer. Dr. Helmut Hoss ist zum weiteren Geschuftsfuhrer bestellt worden ; er ist alleinvertretungs- berechtigt. Der Geschuftsfuhrer Dr. Ing. Reinhard Ludwig vertritt die Gesellschaft gemeinsam mit einem anderen Geschuftsfuhrer. - ----------------------------------------------------------------------------------------------------------------------------------- Dr.Ing. Norbert a) 27.Juli 1978 Schmitt, Otten- dorf. /s/ [illegible] Dipl.-Ing. Uwe Miers, Strande. Dr. rer.nat. Fritz Horing. Kiel. ist derert Prokura erteilt. dess jeder von ihnen gemeinsam mit einem Ceschaftsfuhrer vertretungaber- ochtight ist. - -----------------------------------------------------------------------------------------------------------------------------------
Ruckselte von Blatt [ILLEGIBLE] -----------------------
- ------------------------------------------------------------------------------------------------------------------------ Vorstand Personlich haftende Grundoder Gesellschafter a) Tag der Eintragung Stammkapital Geschaftsfuhrer und Unterschrift Unternehmens DM Abwickler Prokura Rechtsverhaltnisse b) Bemerkungen - ----------------------------------------------------------------------------------------------------------------------- 2 3 4 5 6 7 - ----------------------------------------------------------------------------------------------------------------------- 3.000.000,- Durch den Beschluss a) 31.August 1978 DM. der Gesellschafter- /s/ [ILLEGIBLE] versammlung vom 4.August 1978 ist der Gesellschaftsvertrag in ss. 3 (Stammkapital) geandert und das Stammkapital der Gesellschaft auf 3.000.000,- DM erhoht worden. - ----------------------------------------------------------------------------------------------------------------------- Kaufman Manfred Diplom-Kaufman Kaufmann Manfred a) 8.Februar 1979 Fiedler, Neustadt Manfred Stolzle, Fiedler, Kronberg i.H. Kronberg/Ts, ist Neustadt i.H. Ts., ist b) Manfred Fiedler derart Prokura zum Geschaftsfuhrer wohnt in Neu- erteilt, dass er bestellt. Er ist stadt i.H. gemeinsam mit gemeinsam mit einem Shreibfehler einem Ge- anderen Geschafts- berichtigt schaftsfuhrer fuhrer oder zusammen am 22. Februar 1979 vertretungs- mit einem Prokuristen berechtigt ist. vertretungsberechtigt. /s/ [ILLEGIBLE] Ist er alleiniger Geschaftsfuhrer, so ist er alleinvertretungs berechtigt. - ----------------------------------------------------------------------------------------------------------------------- Die Prokura Dr. a) 17.Januar 1980 Ing. Norbert /s/ [ILLEGIBLE] Schmitt. Ottendorf ist erloschen. - ----------------------------------------------------------------------------------------------------------------------- Die Prokura Uwe a) 21.August 1980 Miers, Strande, /s/ [ILLEGIBLE] ist erlsochen. - ----------------------------------------------------------------------------------------------------------------------- Dipl.-Ing. Peter a) 25.Juni 1981 Hoehne, Hamburg, /s/ [ILLEGIBLE] Ing, grad, Rolf Obermuller, Kiel und Dipl.-Ing, Helmut Spahn, Kipl. ist derart Prokura erteilt, dass jeder von ihnen gameinsam mit einem Geschaftsfuhrer vertretungsberechtigt ist. - ------------------------------------------------------------------------------------------------------------------------
Fortsetzung auf dem ____ ten Blett.
Zehner Zehner Tausender Hunderster 13579 Tausender Hunderster 34680 [ILLEGIBLE] - ----------------------------------------------------------------------------------------------------------------------------------- Vorstan Personlich haftende Grundoder Gesellschafter a) Tag der Eintragung Stammkapital Geschafesfuhrer und Unterschrut Unternchmens DM Abwickler Prokura Rechtsverhaltniste b) Bemerkungen - ----------------------------------------------------------------------------------------------------------------------------------- 2 3 4 5 6 7 - ----------------------------------------------------------------------------------------------------------------------------------- 5.710.000,- Gunter Boeckmann in Durch den Beschluss der a) 16.Dezember 198 Hamburg ist derart Gesellschafterversammlung [ILLEGIBLE] Prokura erteilt, dass vom 15. Juli 1982 ist das /s/ [ILLEGIBLE] er die Gesellschaft Stammkapital der Gesellschaft gemeinsam mit einem um 2.710.000,--DM auf Geschaftsfuhrer ............... 5.710.000,-- vertritt. DM erhoht und ss. 3 des Die Prokura Manfred Gesellschaftsvertrages Stolzle ist erloschen. entsprechend geandert worden. - ----------------------------------------------------------------------------------------------------------------------------------- Dipl. Ing. Peter Dr. Helmut Hoss ist Dipl,-Ing. Peter Gielen Dr. a) 8. August 1985 Gielen, Bruch- nicht mehr Geschafts- Helmut Hoss und Ilmer G. /s/ [ILLEGIBLE] kobel, Ing, Ilmar fuhrer. Raudsep sind zu G. Raudsep, Dipl, Ing, Peter Gielen, Geschaftafuhrern bestellt Maintal Bruchkobel. worden. Ing. Ilmar G. Raudsep, Jeder von Ihnen Maintal vertritt die Gesellschaft gemeinsam mit einem anderen Geschaftsfuhrer oder einem Prokuristen. Dr. Helmut Hoss ist nicht mehr Geschaftsfuhrer. - ----------------------------------------------------------------------------------------------------------------------------------- Harald Book in Kronshagen a) 28.November 1985 ist derart Prokura erteilt, /s/ [ILLEGIBLE] dass er gemeinsam mit einem Geschaftsfuhrer vertretungsberechtigt ist. - ----------------------------------------------------------------------------------------------------------------------------------- 15.070.000,- Durch den Beschluss der a) 13. Februar 1986 Gesellschafterversammlung /s/ [ILLEGIBLE] vom 26. November 1985 ist das Stammkapital der Gesellschaft um 9.360.000,-- DM auf 15.070.000,-- DM erhoht und ss. 3 des Gesellschaftsvertrages entsprechend geandert worden. - ----------------------------------------------------------------------------------------------------------------------------------- Harald Book Die. Prokura Harald Harald Book [ILLEGIBLE] ist a) 17. Dez. 1987 in Kronshagen. Book ist erloschen. zum stellvertretenden /s/ [ILLEGIBLE] Geschaftsfuhrer bestellt worden. Er ist gemeinsam mit einem anderen Geschaftsfuhrer vertretungsberechtigt. - -----------------------------------------------------------------------------------------------------------------------------------
Ruckselte von Blatt 2 HR B 1221
- ------------------------------------------------------------------------------------------------------------------------------------ Vorstand Personlich haftende a) Tag der Eintragung und Grundoder Gesellschafter Unterschrift Stammkapital Geschaftsfuhrer Unternchmens DM Abwickler Prokura Reditsverhaltalsse b) Bemerkungen - ------------------------------------------------------------------------------------------------------------------------------------ 3 4 5 6 7 - ------------------------------------------------------------------------------------------------------------------------------------ Manfred Fiedler ist a) 4. September 1986 nicht merh Geschaftsfuhrer. Der Geschaftsfuhrer Dr. Ing. Reinhard Ludwig vertritt die Gasellschaft zusammen Die Prokuren Petor mit einem enderen Hoehne und Gunter Geschaftsfuhrer oder Boeckmann sind zusammen mit ainem erloschen. Prokuristen. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Mit der Honeywell Aktiengesellschaft in a) 12. Februar 1987 Offenbach am Main ist ein Beherrachungs-und Gewinnabfuhrungsvertrag geschlossen worden. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Dr. Jorg Boscher in Ingenieur Illmar a) 23. April 1987 Preetz und Lutz G. Raudsep ist nicht Hoffmann in Kiel ist mehr Geschaftsfuhrer. derart Prokura erteilt, dass jeder von ihnen gemeinschaftlich mit einem Geschaftsfuhrer vertretungsberechtigt ist. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Harald Book in Kronshagen ist zum atellvertretenden Geschaftsfuhrer a) 17. Dez. 1987 bestellt worden. Er ist gemeinsem mit einem Harald Book in Die Prokura Harad Book anderen Geschaftsfuhrer Kronshagen. ist erloschen. vertretungsberechtigt. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Der bisherige stellvertretende Geschaftsfuhrer Harald Book ist zum Geschaftsfuhrer bestellt worden; er ist a) 23.Febr. 1989 gemeinsem mit einem Die Prokura fur Ing. anderen Geschaftsfuhrer grad. Rolf Obermuller oder einum Prokuristen ist erloschen. vertretungsberechtight. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Dipl.-Ing. Ivar Eldring in Altanholz ist derart a) 20. Juli 1989 Prokura erteilt, dass er gemeinschaftlich mit einem Geschaftsfuhrer vertretungsberechtigtist. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Heino Glimm in Revensdorf ist derart Prokura erteilt, dass a) 05. Juli 1990 er gemeinschaftlich mit einem Geschaftafuhrer vertretungberechtigt ist. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------
Zehner Zehner Tausender Hunderster 13579 Tausender Hunderster 24680 [ILLEGIBLE] - ----------------------------------------------------------------------------------------------------------------------------------- Vorstand Personlich haftende Grundoder Gesellschafter a) Tag der Eintragung Stammkapital Geschaftsfuhrer und Unterschrift [ILLEGIBLE] Unternehmens DM Abwickler Prokura Rechtsverhaltnisse b) Bemerkungen - ----------------------------------------------------------------------------------------------------------------------------------- 2 3 4 5 6 7 - ----------------------------------------------------------------------------------------------------------------------------------- Diplomphysiker Dr. Folgende Prokuren sind Dr. Reinhard Ludwig a) 14. Jan. 1993 Egon Tyssen in erloschen: Heino Glimm, ist nicht mehr /s/ [ILLEGIBLE] Alzenau Lutz Hoffman, Ivar Geschaftsfuhrer. Eldring, Helmut Spahn. Wilfried Berghmann in Der Diplomphysiker Dr. b) 04. Marz 1993 Grosskbrotzenburg und Egon Tyssen in Alzenau /s/ [ILLEGIBLE] Franz Werthmann in ist zum Geschaftsfuhrer Erlensee ist derart bestellt worden. Er Prokura erteilt, dass vertritt die jeder von ihnen Gesellschaft gemeinsam gemeinsam mit einem mit einem anderen Geschaftsfuhrer Geschaftsfuhrer oder in vertratungsharechtigt Gemeinschaft mit einem ist. Prokuristen. - ----------------------------------------------------------------------------------------------------------------------------------- Dr Luder Hogrefe Herald Book ist nicht in Kiel mehr Geschaftsfuhrer. Dr Luder Hogrefe in Kiel ist zum stellvertretendon Geschaftsfuhrer bestellt worden; er ist gemeisam mit einem anderen Geschaftsfurhrer oder in Gemeinschaft mit einem Prokuristen vertretungsberechtigt. - ----------------------------------------------------------------------------------------------------------------------------------- Gesamtprokuristen: a) 28. Okt. 1993 /s/ [ILLEGIBLE] Gerhard Jordt in Schonberg, Willi Tietz in Wattenbek. Jeder von ihnen ist gemeinsam mit einem Geschaftsfuhrer vertretungsberechtigt. Die Gesamtprokuren Franz Worthmann und Wilfried Bergmann sind erloschen. - ----------------------------------------------------------------------------------------------------------------------------------- Die Prokura Dr. Jorg a) 07. April 1994 Boscher ist erloschen. /s/ [ILLEGIBLE] - ----------------------------------------------------------------------------------------------------------------------------------- [Illegible] Durch die Beschlusse a) 09. Juni 1994 ELAC Nautik der Gesellschafterver- /s/ [ILLEGIBLE] sammlungen vom 13./27. April 1994 ist der Gesellschaftsvertrag in ss.1 (Firma) geandert worden. Dr. Egon Tysse und Peter Gielen sind nicht mehr Geschaftsfuhrer. Der Beherrschungs- und Gewinnabfuhrungs- vertrag vom 21./25. November 1986 ist durch Aufhebungsvertrag vom 31. Marz 1994 zum Ablauf des 31. Marz 1994 beendet worden. - ----------------------------------------------------------------------------------------------------------------------------------- Fortseizung Ruckselte
Rictselte von Blatt Vorstand Personlich haftende Grundoder Gesellschafter a) Tag der Eintragung Stammkapital Geschaftsfuhrer und Unterschrift [ILLEGIBLE] Unternehmens DM Abwickler Prokura Rechtsverhaltnisse b) Bemerkungen - ----------------------------------------------------------------------------------------------------------------------------------- 2 3 4 5 6 7 - ----------------------------------------------------------------------------------------------------------------------------------- Robert A. Scrofano, Der Kaufmann Robert a) 03. Nov. 1994 Kaufmann in Agoura, A. Scrofano in /s/ [ILLEGIBLE] CA 91301, USA Agoura, CA 91301, USA, ist zum Geschaftsfuhrer bestallt worden; er ist alle- invertretungs- berechtigt - ----------------------------------------------------------------------------------------------------------------------------------- Die Gesellschaft hat a) 26. Jan. 1995 als beherrschte /s/ [ILLEGIBLE] Gesellschaft mit Unternehmensvertrag vom 01./08. Dezember 1994 einen Beherrschungs- und Gewinnabfuhrungs- vertrag mit der Allied-Signal Deutschland GmbH in Raunheim abgeschlossen, dem die Gesellschafter- versammlung am 14. Dezember 1994 zugestimmt hat.
[Illegible] HR B 1221 Blatt 4
- ------------------------------------------------------------------------------------------------------------------------------------ a) Firma Vorstand Personlich b) Sitz haftende a) Tag der Eintragung und Grundoder Gesellschafter/In Unterschrift c) Cegenstand des Stammkapital Geschaftsfuhrer/In Unternchmens DM Abwickler/In Prokura Reditsverhaltalsse b) Bemerkungen - ------------------------------------------------------------------------------------------------------------------------------------ 2 3 4 5 6 7 - ------------------------------------------------------------------------------------------------------------------------------------ Rovert A. Scrofano ist a) 15. Aug. 1996 nicht mehr Die Prokura Dr. Fritz Geschaftsfuhrer. Horing ist erloschen. /s/ [Illegible] Wilhelm Gorl in Grossbarkau ist derart Prokura erteilt, dass er gemeinschaftlich mit Der Geschaftsfuhrer Dr. einem Geschaftsfuhrer Loder Hogrefe ist vertretunsberechtigt ist. alleinvertretungsberechtigt. - ------------------------------------------------------------------------------------------------------------------------------------ Die Prokuren Gerhard Jordt, Willi Tietz und Wilhelm Corl sind dahingehend geandert, dass jeder der Prokuristen die a) 29. Aug. 1996 Gesellschaft in Gemeinschaft mit einem Geschaftsfuhrer oder Prokuristen vertritt. /s/ [Illegible] - ------------------------------------------------------------------------------------------------------------------------------------ Es wird ausdrucklich darauf hingewiesen, dass die unterstrichenen Teile der Eintragung in der nachstehenden Fotokopie in Verbindung mit den Veranderungs- und Loschungsvermerken geloscht sind. - ------------------------------------------------------------------------------------------------------------------------------------
Fortsetzung Ruckseite - -------------------------------------------------------------------------------- DE/203 7050 07.07.99 Hellenic Navy Spares for Echosounder 107.344,00 Piraeus/Greece VE 59 - -------------------------------------------------------------------------------- DE/264 8662 10.09.99 ORCA Instrumentation Diver Sonar DSE 1 909.829,40 Brest/France - -------------------------------------------------------------------------------- ELAC - Vehicle Registrations -------------------------------------------------------------------- Kfz-Kennzeichen Fahrer KSt. Nr. des Kfz-Briefes - -------------------------------------------------------------------------------- 1 K1 - DC 409 EX 710 - -------------------------------------------------------------------------------- 2 K1 - AS 554 EX 710 - -------------------------------------------------------------------------------- 3 K1 - AS 908 EX 710 BB810307 - -------------------------------------------------------------------------------- 4 K1 - AS 885 EX 710 BB805514 - -------------------------------------------------------------------------------- 5 K1 - DA 605 Dr. L. Hogrefe 210 - -------------------------------------------------------------------------------- 6 K1 - AS 760 G. Jordt 210 BB849466 - -------------------------------------------------------------------------------- 7 K1 - AS 403 W. Tietz 300 BB847854 - -------------------------------------------------------------------------------- 8 K1 - AS 1O5 H.-J. Maschmann 400 BB911508 - -------------------------------------------------------------------------------- 9 K1 - AS 121 EX 710 - -------------------------------------------------------------------------------- Erprobungsschiff MS "Skjoldnaes" - -------------------------------------------------------------------------------- ELAC - Business and Local Licenses ELAC business and local licenses are listed on the following pages. ELAC - Vessel Registrations ELAC vessel registrations are provided on the following pages. [Letterhead of Honeywell ELAC] 27. Januar 1982 ERKLARUNG Hiermit erklaren wir, Honeywell-ELAC-Nautik GmbH, Kiel, Eigentumer der MS "Skjoldnaes" zu sein. Wir haben das MS "Skjoldnaes" im Mai 1978 im Rahmen der Obernahme des gesamten nautischen Bereichs der fruheren Electroacustic GmbH i.K. kauflich erworben. Honeywell [Illegible] Nautik Gesellschaft mbH Westring 425-429 o Tel. [Illegible] D 2300 Kiel /s/ [Illegible] BESTATIGUNG Wir, die Fa. Electroacustic GmbH i.K., Kiel, bestatigen hiermit, dass die Fa. Honeywell-ELAC-Nautik GmbH, Kiel, das MS "Skjoldnaes" im Mai 1978 im Rahmen der Obernahme des gesamten nautischen Bereichs unserer Gesellschaft kauflich erworben hat. ELECTROACUSTIC Gesellschaft mit beschrankter Haftung KONKURSVERWALTUNG GUNTHER GUSTAFSEN /s/ [Illegible] IM(3) lyst nr. 1105/1 - -------------------------------------------------------------------------------- [SEAL OF DENMARK] INTERNATIONALT MALEBREV (International Tonnage Certificate) udfaerdiget i overensstemmelse med den Internationale konvention (issued in accordance with the International Convention afsluttet i Oslo den 10. juni 1947 (Regel I) concluded in Oslo the 10th of June 1947 (Rule I) Skibets navn (Name of ship) "SKJOLDNAES" -------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ Skibets art Nationalltet Hjemsted Kendingssignal Fremdrivnings-middel (Description of ship) (Nationality) (Port of registry) (Signal letters) (Propelled by) - ------------------------------------------------------------------------------------------------------------------------ Heldaekket lystfartoj Dansk Skovshoved. -- Sejl &.Skrus. - ------------------------------------------------------------------------------------------------------------------------ Aflabsdato Hvor og nar bygget Navn og adresse pa byggevserftet Navn og adresse pa reder[Illegible] (Date of launching) (Where and when built) (Name and address of builders) (Name and address of owners) - ------------------------------------------------------------------------------------------------------------------------ -- Danmark i 1936 Nordbjaergs Baadevaerft A/S, Kobenhavn Jabrikant J. Allench[Illegible] Raadmandsgade 6, N. - ------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Antal daek Et Forskib Middelfyldigt -glat staevn Antal skruer En __________________ Agterskib Spidsgattet Maskineriets art Motor Antal master En Byggemateriale Teak _______________________ Rigning Kutter __________________________________ Antal skorstene________ - -------------------------------------------------------------------------------- Kendingsmal (Identification dimensions) Feet Meter - -------------------------------------------------------------------------------- Laengde (Length) fra forkant af den overste ende af forstaevnen til agterkant af den overste ende af rorstaevnen . 38,1 11,61 Bredde (Bredth), storste udenbords ........................... 13,2 4,02 Dybde, midtskibs pa halv laengde fra undersiden af malingsdaekket til overkant af bundstokke .................... 5,6 1,69 Laengde overalt (Overall length) ............................. 38,3 11,68
Registertons Kubikmeter Registertons Kubikmeter Underdaekstonnage [Illegible] [Illegible] [Illegible] [Illegible]
Registertons Kubikmeter ----------------------------------- Underdaekstonnage (Space below tonnage [Illegible] 13,09 37,08 - -------------------------------------------------------------------------------- Rum over malingsdaek Mellemdaeksrum (Tween-deck space) .......................... - -------------------------------------------------------------------------------- Rum i abne overdaeksrum (Round houses etc.) ......................... - -------------------------------------------------------------------------------- Bak (Forecastle) ............................ - -------------------------------------------------------------------------------- Rum i aben bak (R'd h. etc) ................. - -------------------------------------------------------------------------------- Brohus (Bridge) ............................. - -------------------------------------------------------------------------------- Rum i abent brohus (R'd h.) ................. - -------------------------------------------------------------------------------- Loftet Daek (Raised Deck) ............................... - -------------------------------------------------------------------------------- Hytte (Poop) ................................ - -------------------------------------------------------------------------------- Rum i aben hytte (R'd h. etc) ............... - -------------------------------------------------------------------------------- Trunk (Trunk space) ......................... - -------------------------------------------------------------------------------- Ruf (Deck houses) (2) ...................... 1,16 3,29 - -------------------------------------------------------------------------------- Maskinruf (Machinery space above upper deck) ........................... - -------------------------------------------------------------------------------- Tillaeg for luger (Excess of hatchways) ....................... - -------------------------------------------------------------------------------- Brutto (Gross) tonnage ...................... 14,25 40,37 ================================================================================ [Illegible] tonnage overfort [Illegible] Fradrag (deductions) Registertons Forer (Master) Mandskab (Crew) ........... 3,09 - --------------------------------------- Provlantrum (Provision room) .......... - --------------------------------------- Navigeringsrum (Navigation spaces) ....... 1,58 - --------------------------------------- Pumperum (Pump rooms) .............. - --------------------------------------- Kabelrum (Boatswains stores) ....... - --------------------------------------- Vandballastrum (Water ballast spaces) ................... [Illegible] - ------------------------------------------------------ Netto tonnage som sejkskib (If a sailing vessel) [Illegible] - ------------------------------------------------------ Fradrag for maskinrum (Machinery space) 25,40% af BRT. [Illegible] - ------------------------------------------------------ Netto (Net) tonnage [Illegible] ====================================================== Det attesteres herved, at det ovennaevnte skib er blevet malt i overensstemmelse med de internationale [Illegible] (This is to certify that above-names ship has been measured in conformity with the International Regulations for the [Illegible] tonnagemaling af skibe i henhold til den i Oslo den 10. juni 1947 afsluttede konvention, of Ships in accordance with the International Convention concluded in Oslo the 10th of June 1947) og at brutto tonnagen er: Kubikmeter and that the gross tonnage is: - 14,25 - Registertons - 40,37 - (cubic meters) og at netto tonnagen er: Kubikmeter and that the net tonnage is: - 5,96 - Registertons - 16,89 - (cubic meters) STATENS SKIBSTILSYN Kobenhavn den 3. juni 19[Illegible] [Illegible] [Seal] /s/ [Illegible] [SCHEMATIC OF SHIP] Bow Short Midship Section: Light, Normal, Heavy Displ. ------ Stern: Doubleender Fitted with Bowsplit Yes. L.W.L. [Illegible] Designed Lloyd's Register Measured -------- Hull form: Day Racing Ocean Racing Cruising Heavy Cruising Commercial -------- Designer [Illegible] Builder [Illegible] Date built 1936 Ballast Keel Lead. Weight ab. 7000 kg. Internal Ballast 70 Weight 0 Mainmast: hollow, built-up, solid hollow built up Material Oregon Pines AUXILIARY INSTALLATION Petrol, Paraffin, Diesel, Semi-Diesel Engine ------ Maker's Name and Address Ford marine Diesel F.M.D.T. Model No. 55863 R. H.P. 52 No. of Cylinders 4 Is Reverse Gear fitted Yes. Is Reduction Gear fitted Yes Ratio 1:2.1 Weight of Installation without Propeller and Shafting ab. 563 kg. Position of Engine in Hull [Illegible] in Centerline. Propeller: Solid 2 blade On centre line in aperture Propeller diam. 1.650 ----- -------------------------- Feathering 3 blade On centre line not in aperture Distance of prop. ------- hub off centre Folding On quarter P/S B/20 count as ON/OFF centre
Internal fittings and equipment, etc. -- Light, normal, heavy. ------ Details of Raised Deck, if any __________________________________________________________ R.D.B. Measurer's Recommendation as to Division _______________ Any other comments: KONGELIG DANSK YACHTKLUB /s/ [Illegible] RATING CERTIFICATE According to the RORC rule of 1957 Metric Measurements [SEAL of Deutscher Segler-Verband] Yacht Skjoldnas Owner Fabr. J. Allesch Address Raadmandsgade. 6. Copenhagen ------------------- ------------- RATING T.C.P. 7.365 M. 24.157 FT 0.6915 ------------------- ------------- WHEN RACING WITH THIS CERTIFICATE THE POL[ILLEGIBLE] MUST NOT BE EXCEEDED 1. Length of spinnaker boom, including cup or goose neck fitting .......... 2. Maximum width of largest spinnaker set ................................. 3. Luff or leech of any spinnaker set ..................................... 4. Width of the foot of any spinnaker set in which the width at 3/4-height is less than 3/4 of the foot ........ 5. Foot of genoa or yankee--measured horizontally from tack to a perpendicular dropped from the clew ................... 6. Height above main deck of highest block on wihch any headsail or spinnaker can be set ........................ 7. Height above main deck of highest block ................................ upon which mizzen staysail can be set ................................ N.B. (Yawls and Ketebes only). A.mizzen staysail (may, may not) be [illegible] L.O.A. ......................... 11.600 F.G.O. ......................... .285 A.G.O. ......................... .450 L.B.G. ......................... 16.865 F.F. ........................... 1.450 F.A. ........................... 1.000 G.S.D.f. ....................... 0.310 G.S.D.a. ....................... 0.115 F.S.F.D. ....................... 0.060 A.S.F.D. ....................... 0.022 G.D. ........................... ______ y. ............................. ______ F.O.C. ......................... 0.249 A.O.C. ......................... 0 L. ............................. 10.616 B. ............................. 4.000 Q.B.D. ......................... 1.380 F.D. ........................... 1.600 t. ............................. 0.045 F.M.D. ......................... 0.740 F.F.D. ......................... 0.980 D. ............................. 2.053 Draft excl. Centre board ______ Draft Centre board down ______ Mast height to highest point of measurement 16.050 Rating Formula for Measured Rating = M.R. = 0,15*L*(sq.root)S / (sq.root)(B*D) + 0,2(L+(sq.root)S) SAIL AREA FORETRIANGLE Sq. M. Height I 12.10 Base J. 6.10 Penalty _____ Penalty 0.550 Meas'd Area 34.515 Allowance 0.945 I cor. _____ J cor. 5.705 MAINSAIL (MIZZEN of W'BONE KETCH) b 7.400 p 14.650 Meas'd Area 54.205 h _______ d ______ g ______ TOPSAIL l______ p-h_____ Meas'd Area ______ MIZZEN b miz ____, p miz ____ b(1) _____ h miz ____ d miz ____ g miz ____ p(a) __ Meas'd Area ______ WISHBONE KETCH SCHOONER BETWEEN MASTS p(1) ______ b(1) _______ p(9) ______ Meas'd Area ______ Other Areas ________________ Meas'd Area ______ ------ Measured Sail Area (M.S.A.) ..................... Sum 88.720 A.R.A. 10.093 Rated Sail Area (S.) 70.893 ------ (sq. root)S .......................................... 8.420 Mast Height Penalty .................................. ______ Sum ______ ------ MEASURED RATING ...................................... 8.485 ------ Length of Bowsprit 2.500 Penalties are carried on _____________________________ ______________________________________________________ SCANTLINGS All Dimensions are mm Main Frames of ore Scantlings or Thickness (if metal) _________________ sizes of angles [Illegible] Intermediate Frames of ore Scantlings or Reversed Frames, thickn. _____________ sizes of angles [Illegible] Reinforcement or addt. Scantlings or Frames or Stringers of _______________ sizes of angles ________ Deck Beams of ore Scantlings or Thickness (if metal) _________________ sizes of angles [Illegible] Topsides of Teak. Thickness 0.045 [Illegible] Deck of Teak Thickness 0.045 [Illegible] W 6.156 R.D.B. __________ 0,5 Bk 0.225 [Illegible] STABILITY ALLOWANCE Scantling Component .......... 16.057 Shallow Draft Component ...... ______ Iron Ballast Component ....... ______ Wt. of Engine Component ...... 2.060 ------ [RIGHT COLUMN ILLEGIBLE] Sum 18.117 ------ Light Alloy Mast Component ... ______ ------ S.T.A. = 18.119 Difference ______ If Positive, STA corrected ... 9.506% ------ Measured at Copenhagen Date [Illegible] Measured by /s/ [Illegible] Schedule 4.19 - Labor Relations See also Schedules 4.11, 4.19(x). Ocean Systems Collective Bargaining Agreements Local Agreement between AlliedSignal Government Electronic Systems, Sylmar, Ca., and UAW Local No. 179, dated May 3, 1995 Master Agreement between Divisions of AlliedSignal, Inc. and UAW, dated May 3, 1995 Supplemental Agreement between AlliedSignal Government Electronic Systems, Sylmar, Ca. and UAW Local No. 179, dated March 4, 1995 Letters of Understanding No.s 1-35, covering Supplemental Agreement dated May 4, 1995 Written Personnel Policies Employee Handbook for Employees Covered Under the Master Bargaining Agreement Salaried Employee Handbook Retention Agreements Retention Agreements with key management, V. Davisson, V .Riehl, A. Logan, D. Dunlop, J. Roscigno, L. DiRienzo, M. Charley, B. Smith, S. Erdman), aggregate contingent payment of $199,400 for all eight managers. ELAC ELAC is covered by the "Tarifvertrag" of IG Metall Schleswig-Holstein. This law covers all major employee issues such as salary, vacation, illness, etc. The "Tarifvertrag" is valid for a certain time period and is a topic of collective bargaining events between the Union and industrial representatives. Collective Bargaining Agreements Gultige Betriebsvereinbarungen Nr. Betreff Tag des Inkrafttretens 6/79 Inteme Richtlinien fur innerbetriebliche Stellanausschreibungen 01.01.80 1/83 Stoirzeiten-Erfassungsgerate an den CNC-Maschinen 01.03.83 1/89 Bildschirm-Arbeitsplatze 12.10.89 1/90 Vorholzeiten 01.04.90 3/90 Schichtzulagen 25.06.90 2/95 Zeiterfassungssystem "Zepem" 01.03.95 3/95 Arbeitszeitabsenkung 01.09.95 4/95 Neuregelung der Arbeitszeit ab 01.10.95 25.09.95 5/95 Einrichtung eines Arbeitszeitkontos fur die Verteilung der regelaBigen wochentlichen Arbeitszeit 01.10.95 7/95 Gleitende Arbeitszeit 01.11.95 8/95 Arbeitszeit der Auszubildenden 01.11.95 1/96 IUK-Nutzung BDE 15.07.96 2/96 Vorholzeiten und arbeitsfreie Tage 1997 07.11.96 3/96 Einrichtung einer flexiblen Arbeitszeitregelung 01.12.96 01/97 Betriebliches Vorschlagswesen 01.09.97 Written Personnel Policies Handbuch fur Mitarbeiter, dated May 26, 1997 Retention Agreements Retention Agreements with key management (L. Hogrefe, W. Tietz, G. Jordt), aggregate contingent payment of $108,200 for all three managers (Purchaser responsibility). Labor Strikes, Slowdowns or Work Stoppages - ELAC No significant strikes have taken place in the past five years. Only two hours work stoppage in 1993-1995. Liabilities for Severance Pay - ELAG Lay off payment in 1997 DM 271.285,-- liability for 1998 DM 251,660,-- Layoffs - ELAC -------------- 1993 7 1994 15 1995 27 1996 14 1997 12 All layoffs beginning in 1994 were in accordance with the Honeywell ELAC Social Plan provided in the data room. Ocean Systems 1997 Incentive Compensation has not been paid in full. Prior years' incentive compensation was deferred at employee's request. Payments for vested, non-exercised stock options remain outstanding. Schedule 4.19(x) - Labor Relations See also Schedule 4.19. Layoffs - ELAC -------------- 1993 7 1994 15 1995 27 1996 14 1997 12 All layoffs beginning in 1994 were in accordance with the Honeywell ELAC Social Plan provided in the data room. Ocean Systems A production facility in Vista, California was closed effective June, 1997. Involuntary RIF's occurred on the following dates: June 23, 1993 November 5, 1993 March 4, 1993 March 1, 1993 July 1995 August 1995 January 1, 1996 February 1996 July 1996 October 1996 Voluntary RIF's occurred on the following dates: September 1996 November 1996 June 1997 August 1997 See also Local Agreement and Master Agreement between AlliedSignal and the UAW, Article III, Paragraph 21 & 22, Representation of the UAW Master Agreement, provided in data room. Schedule 4.21(a) - Government Contracts Sellers are presently aware of an international sales matter, which Purchaser acknowledges having had the opportunity to discuss with Sellers' counsel (voluntary disclosure #329, relating to sales to the government of Greece and the United States). A dispute relating to the Maritime Coastal Defense Vessel involving the Canadian Navy has recently been settled. There is one contractual dispute related to a German Government contract. ELAC intends to solve the dispute prior to January 21, 1998. Contract Data: Customer: BWB, Koblenz, Germany Content: Development and delivery of 4 ea. Reflexducers Date of Contract: 8/7/1995 Value: DM 712.5 k Last Shipment: Dec. 1998 Current Status: An agreement with the customer was settled on 5th November, 1997, to close the contract end of December 1997 without shipment of transducers. ELAC agreed to pay back 438 k DM of the total payment of 712.5 k DM that was received end of 1996. BWB accepts the development results. Payback has to be transferred 30 days after written approval of BWB. ELAC confirmed agreement in writing 7th of November, BWB approval expected in the last week of December, 1997, payment to be released January 1998. See also Schedules 4.9 and 4.21(b). Schedule 4.21(b) - Government Contracts See also Schedule 4.21(a). Investigations or Audits - Ocean Systems AlliedSignal Government Compliance Assurance report dated October 27, 1997. AlliedSignal Internal Audit Sell-Side Due Diligence Review of Ocean Systems in connection with the proposed sale of the Business (Summer 1997) (no written report prepared, except as reflected in Schedule 4.4.). An Estimating System Audit was performed by DCAA in November 1997 and a draft report has been delivered to Ocean Systems. The Sylmar site is subject to DCAA audits and fact finding in connection with all forward pricing rate proposals, contract proposals and contract awards with the US Government. The only unusual costs which have not yet been approved for forward pricing rate purposes for the Sylmar site include the Vista, California facility closure severance payments; the 1996 Sylmar Involuntary RIF severance payments and the 1994 earthquake expenses. ELAC Cost estimate audit of hourly pay rates and estimation rates executed by the Federal Authorities for Defense and Procurement (German Government) in Koblenz for the year 1997 Actual cost audit and audit of various cost plus contracts executed by the State Authorities for Economy, Technology and Traffic of the State of Schleswig- Holstein for the years prior to 1995. Schedule 4.21(c) - Government Contracts See Schedules 4.21(a) and 4.21(b). Schedule 4.21(d) - Government Contracts See Schedules 4.21(a) and (b). Schedule 4.21(e) - Government Contracts See Schedules 4.21(a) and (b). Schedule 4.22 - Government Furnished Equipment See following pages. PROPERTY ADMINISTRATOR WORKSHEET - -------------------------------------------------------------------------------- DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098 Prime Contracts
========================================================================================================================== Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 1 - -------------------------------------------------------------------------------------------------------------------------- Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - -------------------------------------------------------------------------------------------------------------------------- N00019-97-C-0008 821 LI 550 250 21 SDC, AWM-24B ------------------------------------------------------------------------------------------ FP $967,601 $ 148373 654284 134944 - ----------------------------------------------------------------------------------------------------------------------- N00024-84-C-6O74 352 LI 305 47 TB-23 ------------------------------------------------------------------------------------------ FP $216,167 $ 65269 150898 - ----------------------------------------------------------------------------------------------------------------------- N00024-85-C-8236 207 LI 21 186 TB-23, BQ ASA ------------------------------------------------------------------------------------------ FP $920,305 $ 39323 380982 - ----------------------------------------------------------------------------------------------------------------------- N00024-89-G-6098 2 LI 2 TARC ------------------------------------------------------------------------------------------ FP $3,775 $ 3775 - ----------------------------------------------------------------------------------------------------------------------- N00024-89-C-6066 48 LI 46 2 ADC MK3 ------------------------------------------------------------------------------------------ FP $43,551 $ 41431 2120 - ----------------------------------------------------------------------------------------------------------------------- N00383-88-G-K301 446 LI 307 139 Q13B ------------------------------------------------------------------------------------------ FP $ 84488 275242 - ----------------------------------------------------------------------------------------------------------------------- N00024-94-C-6152 LI ADC MK3 ------------------------------------------------------------------------------------------ FP $ - ----------------------------------------------------------------------------------------------------------------------- Total LI 1229 626 21 0 0 0 0 ------------------------------------------------------------------------------------------ Total $ 378,884 1,997,301 134,944 0 0 0 0 - ----------------------------------------------------------------------------------------------------------------------- GRAND TOTAL LINE ITEMS 1876 GRAND TOTAL $$ 2,511,129 ========================================================================================================================
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
========================================================================================================================== Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 2 - -------------------------------------------------------------------------------------------------------------------------- Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - -------------------------------------------------------------------------------------------------------------------------- N00019-92-G-O195 30 LI 30 Q13-F --------------------------------------------------------------------------------------------- FP $24,672 $ 24672 - -------------------------------------------------------------------------------------------------------------------------- N00024-92-C-65O1 34 LI 34 Q13-F R/M --------------------------------------------------------------------------------------------- FP $13,227 $ 13227 - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- Total LI 64 0 0 0 0 0 0 --------------------------------------------------------------------------------------------- Total $ 37,899 0 0 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL LINE ITEMS 64 GRAND TOTAL $$ 37,899 ==========================================================================================================================
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
========================================================================================================================== Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 3 - -------------------------------------------------------------------------------------------------------------------------- Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- Total LI 0 0 0 0 0 0 0 --------------------------------------------------------------------------------------------- Total $ 0 0 0 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL LINE ITEMS 0 GRAND TOTAL $$ 0 ==========================================================================================================================
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
========================================================================================================================== Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4 - -------------------------------------------------------------------------------------------------------------------------- Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- Total LI 1293 626 21 0 0 0 0 --------------------------------------------------------------------------------------------- Total $ 416783 1997301 134944 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL LINE ITEMS 1940 GRAND TOTAL $$ 2,549,028 ==========================================================================================================================
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
========================================================================================================================== Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4 - -------------------------------------------------------------------------------------------------------------------------- Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- Total LI 1357 626 21 0 0 0 0 --------------------------------------------------------------------------------------------- Total $ 454682 1997301 134944 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL LINE ITEMS 2004 GRAND TOTAL $$ 2,586,927 ==========================================================================================================================
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
========================================================================================================================== Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4 - -------------------------------------------------------------------------------------------------------------------------- Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- LI --------------------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------------------------------------------------- Total LI 2650 1252 42 0 0 0 0 --------------------------------------------------------------------------------------------- Total $ 871465 3994602 269888 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL LINE ITEMS 3944 GRAND TOTAL $$ 5,135,955 ==========================================================================================================================
4-JUN-97 TOOL MASTER Page: Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- 218510 F2A 03/07/97 07/12/96 N CABLE BOARD P7 3326505-402 2 411 822 218511 F2A 03/10/97 07/12/96 N CABLE BOARD P8 3326505-403 2 413 826 218512 F3F 02/17/92 07/15/96 N CABLE BOARD J1 3326501-401 1 729 729 3326505-401 218515 F3A 03/10/97 07/15/96 N CABLE BOARD J5 3326501-404 2 118 236 218516 F2A 03/10/97 07/12/96 N CABLE BOARD J6 3326501-405 2 155 310 218518 F2A 03/10/97 07/12/96 N CABLE BOARD J7 3326501-407 2 422 844 218520 F2F 03/10/97 07/15/96 N CABLE BOARD, A37 PWR ASSY 3326501-409 2 244 488 218527-1 C6C REPR 06/29/93 07/15/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987 3326501-801 218527-2 C6C 05/31/96 05/31/96 N FIXTURE, ENCLOSURE ASSY 3326501-801 1 987 987 8013475-1-801 218527-3 C6C 05/31/96 05/31/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987 3326501-801 218527-4 CSC REPR 08/29/93 07/09/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987 3326501-801 218527-5 CICON ENG 03/25/97 06/11/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987 3326501-801 218527-6 C6C 12/18/96 07/09/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987 3326501-801 218527-7 C6C REPR 07/09/96 07/09/96 N FIXTURE, ENCLOSURE ASSY 3326501-801 1 987 987 8013475-1-801 2186741 C58 03/09/92 07/01/95 N TEMPLATE 3822114-1 1 52 52 2186742 C5B 03/09/92 07/01/96 N TEMPLATE 3322114-2 1 52 52 218675A/B C7E5 02/24/92 07/10/96 N TEMPLATE 3320165-1 1 379 379 218676 C7E4 02/24/92 07/19/96 N ROUTER PLATE 3320165-1 1 240 240 218677 C7E9 02/26/92 07/10/96 N TEMPLATE 3320165-2 1 135 135 218678 C7E7 02/26/92 07/10/96 N ROUTER PLATE 3320165-2 1 20 20 218679 C6E22 02/24/92 07/09/96 N PANTO MASTER 3320182 1 117 117 218680 C6E22 02/24/92 07/09/96 N PANTO MASTER 3320162 1 435 435 218681 C6E22 02/24/92 07/09/96 N PANTO MASTER 3325162 1 328 328 218682 C5B 03/09/92 07/01/96 N TEMPLATE 3320184-5 1 69 69 3320184-6 218683 C6E7 02/21/92 07/09/96 N TEMPLATE 3320184-1 1 647 647 218684 C5B 03/09/92 07/01/96 N DRILL TEMPLATE 3320142 1 326 326 218685 C6E7 02/21/92 07/09/96 N DRILL TEMPLATE 3310793 1 1084 1084 218686 C5B 03/09/92 07/01/96 N DRILL TEMPLATE 3310794 1 739 739 218687-A F3F 02/10/92 07/15/96 N CABLE BOARD 3320250 1 707 707 218687-B F3F 02/10/92 07/15/96 N CABLE BOARD 3320250 1 707 707 218687-C F2B 02/10/92 07/12/96 N CABLE BOARD, XFMR REV C 3320250-403 1 707 707 218688 C5B 03/09/92 07/01/96 N DRILL PATTERN 3322013 1 1025 1025 218689 C6E14 02/24/92 07/09/96 N DRILL PATTERN 3320164-1 1 532 532 218690 C6E15 02/24/92 07/09/96 N ROUTER BLOCK 3320164-1 1 278 278 218691 C6E13 02/24/92 07/09/96 N ROUTER BLOCK 3320184-1 1 258 258 218692 C6E8 02/21/92 07/09/96 N ROUTER BLOCK 3320184-2 1 191 191 218693 C6E8 02/21/92 07/09/96 N ROUTER BLOCK 3320184-3 1 103 103 218694 C6E13 02/24/92 07/09/96 N ROUTER BLOCK 3320184-5 1 265 265 3320184-6 218695 C6E10 02/24/92 07/09/96 N ROUTER BLOCK(2 PC SET) 3322015 1 136 136 218696 C7E9 02/24/92 07/10/96 N DRILL TEMP 3320248 1 295 295
4-JUN-97 TOOL MASTER Page: Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- 218697 C7E9 02/24/92 07/10/96 N DRILL TEMP 3320249 1 244 244 218698 C5B 03/09/92 07/01/96 N SAW&DRILL TEMP 3320259 1 87 87 218699 C5B 03/09/92 07/01/96 N DRILL TEMP 3320259 1 122 122 218700 C5B 03/10/92 07/01/96 N DRILL TEMP 3320257 1 70 70 218701 C5B 03/10/92 07/01/96 N DRILL TEMP 3320255 1 267 267 218702 C7E3 02/18/92 07/10/96 N DRILL TEMP 3322033 1 848 848 218703 C6E12 02/24/92 07/09/96 N WALES TEMP 3820254-2 1 331 331 218704 C6E10 02/24/92 07/09/96 N WALES TEMP 3320254-4 1 405 405 218705 C6E16 02/24/92 07/09/96 N ROUTER PLATE 3320254-3 1 355 355 218706 C6E16 02/24/92 07/09/96 N HOLE TEMP 3320254-3 1 1190 1190 218707 C7F 07/10/96 07/10/96 N DRILL TEMP 3322039-1 1 591 591 218708 C4A 02/18/92 06/27/96 N NCL TAPE 3320254-1 1 1590 1590 218709 C6E16 02/24/92 07/09/96 N TEMPLATE 3320164-1 1 1029 1029 218710 C5B 03/10/92 07/01/96 N TEMPLATE 3320184-2 1 105 105 218711 C4A 02/18/92 06/27/98 N NCL TAPE 3322039-1 1 709 709 218712 C5B 03/10/92 07/01/96 N TEMPLATE 3322015 1 66 66 218713 C6E23 02/24/92 06/09/96 N ENGRAVE PLATE 3320254-1 1 103 103 218714 C5B 03/10/92 07/01/96 N TEMPLATE 3320184-3 1 103 103 218747 C5B 03/10/92 07/01/96 N WALES TEMP 3310763 1 202 202 218751 C6E5 05/17/93 07/09/96 N TEMPLATE 3320197-1 1 258 258 3320197-2 218752 C5E 02/24/92 07/09/96 N ROUTER 3320197-2 1 367 367 3320197-1 218753 C5B 03/10/92 07/01/96 N PMF TEMPLATE 3322093 1 540 540 218757 C7E10 02/26/92 07/10/96 N TEMPLATE 3320166-1 1 85 85 218758 C5B 03/10/92 07/01/96 N TEMPLATE 3320166-2 1 53 53 218759 C5B 03/10/92 07/01/96 N TEMPLATE 3320168 1 128 128 218760 C5B 03/10/92 07/01/96 N TEMPLATE 3320171 1 49 49 218772A/B C6E17 02/24/92 07/09/96 N TEMPLATE 3320165-4 1 192 192 3320165-3 218773 C5B 03/10/92 07/01/96 N TEMPLATE 3320165-5 1 179 179 218774 C5B 03/10/92 07/01/96 N TEMPLATE 3320165-6 1 63 63 218775 C5B 03/10/92 07/01/96 N TEMPLATE 3326104-2 1 60 60 218776 C5B 03/10/92 07/01/96 N TEMPLATE 3320184-4 1 149 149 218777 C5B 03/10/92 07/01/96 N TEMPLATE 3324814 1 66 66 218778 C5B 03/10/92 07/01/96 N TEMPLATE 3320198 1 50 50 218779 C5B 03/10/92 07/01/96 N TEMPLATE 3322037 1 119 119 218780 C5B 03/10/92 07/01/96 N TEMPLATE 3310765 1 75 75 218781 MECH-TRONICS 02/11/81 04/27/93 N CHASSIS TOOLING 3326502 1 6000 6000 218783 C6E7 02/21/92 07/09/96 N DRILL TEMP 3320242 1 75 75 218784 C6E7 02/21/92 07/09/96 N ROUTER PLATE 3320242 1 155 155 218791 C7E10 02/26/92 07/10/96 N TEMPLATE 3320167 1 99 99 218796 C5B 07/22/94 07/01/96 N ROUTER BLOCK 3310776 1 99 99 218797 C5B 03/10/92 07/01/96 N TEMPLATE 3820186 1 86 86 218199 C5B 03/10/92 07/01/96 N TEMPLATE 3320172-1 1 135 135 218800 C5B 03/11/92 07/01/96 N TEMPLATE 3320173 1 102 102 218801 F3C 02/11/92 07/15/96 N CABLE BOARD 3322050 1 511 511 218809 F2B 02/10/92 07/12/96 N CABLE BOARD, W10 3322061 1 1173 1173 218810 F2B 02/10/92 07/12/96 N CABLE BOARD, W13 3322062 1 109 109 218814 C5B 03/11/92 07/01/96 N TEMPLATE 3322039-2 1 75 75
4-JUN-97 TOOL MASTER Page: Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- 218815 C6E15 02/24/92 07/09/96 N TEMPLATE 3322039-3 1 75 75 218816 C5B 03/11/92 07/01/96 N TEMPLATE 3320254-8 1 75 75 218819 C5B 03/11/92 07/01/96 N TEMPLATE 3320254-9 1 75 75 218820 C5B 01/03/94 07/01/96 N DRILL TEMPLATE 3316024-2 1 171 171 3316024-1 218821 C6E14 02/24/92 07/09/96 N ROUTER PLATE 3316023 1 195 195 218822 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3316023 1 142 142 218823 C5B 03/11/92 07/01/96 N DRILL & ROUTER FIXTURE 3316022 1 182 182 218824 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3315902 1 145 145 218825 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3315959 1 222 222 218826 C5B 05/20/94 07/01/96 N DRILL & ROUTER FIXTURE 3315913 1 245 245 218827 C5B 03/11/92 07/01/96 N DRILL & ROUTER FIXTURE 3315929 1 436 436 218828 C5B 03/01/93 07/01/96 N DRILL TEMPLATE 3316038 1 92 92 218829 C5B 10/29/93 07/01/96 N PUNCH/DIE FIXTURE 3315896 1 519 519 218831 C5B 03/11/92 07/01/96 N TEMPLATE 3320184-3 1 0 0 218833 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3316022 1 169 169 218839 C5E6 05/20/94 01/09/96 N TEMPLATE 3326468 1 192 192 218840 C5B 09/30/92 07/01/96 N TEMPLATE 3326506-3 1 112 112 218841 C5B 10/06/92 07/01/96 N TEMPLATE 3326506-2 1 69 69 218842 C4A 10/20/92 06/27/96 N STRIPPIT TAPE, W110-1,-2 3326506-1 1 1356 1356 218843 C5B 03/11/92 07/01/96 N TEMPLATE 3320184-4 1 0 0 218844 C5B 04/14/93 07/01/96 N TEMPLATE 3326471 1 23 23 218846 C5B 01/20/93 07/01/96 N TEMPLATE 3316136 1 129 129 218847 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3316133 1 155 155 218848 C5B 03/01/93 07/01/96 N FORM DIE 3316132 1 641 641 2188531 TOWSON 04/26/94 09/13/96 N SOLDER FIXTURE 20 155 3100 218854 F2B 02/10/92 07/12/96 N HARNESS BOARD, W52 3322052 1 112 112 218856 F3F 02/17/92 07/15/96 N HARNESS BRD 3320170-405 1 2741 18 2759 218857 F3C 02/11/92 07/15/96 N HARNESS BRD 3320160-401 1 1295 1295 218858 F2B 02/10/92 07/12/96 N HARNESS BRD, J18 3320160-402 1 714 714 218859 F3F 02/18/92 07/15/96 N HARNESS BRD,PI6A,68,7A,7B 3320160-404 1 446 446 218860 F3C 02/11/92 07/15/96 N HARNESS BOARD 3320160-405 1 522 522 218881 F3C 02/11/92 07/15/96 N HARNESS BRD 3320170-402 1 4315 4315 218862 F2B 02/10/92 07/12/96 N HARNESS BRD, K1 (1/6) 3320160-406 1 657 657 218863 F2B 02/10/92 01/12/96 N HARNESS BRD, K1 (7/12) 3320160-407 1 843 843 218865 9855A 09/04/80 08/08/96 N LOUVER DIE 3326468 1 1031 1031 218870 F3F 02/17/92 07/15/96 N HARNESS BOARD 3322056 1 1737 1737 218871 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322057 1 224 224 218872 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322059 1 221 221 218873 F3C 02/11/92 07/15/96 N HARNESS BOARD 3322083-407 1 1405 1405 218874 F3C 02/11/92 07/15/96 N HARNESS BOARD 3322053 1 545 545 218875 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322054 1 450 450 218876 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322055 1 109 109 218877 C4B 03/11/92 06/28/96 N HOLDING FIXT 3320169 1 842 842 218878 C7E12 02/26/92 07/10/96 N TEMPLATE 3322089-6 1 150 150 218880 C6E11 08/03/94 07/09/96 N TEMPLATE B/P REV A 3326488-1 1 238 238 218881 C6E15 08/03/94 07/09/96 N ROUTING FIXTURE B/P REV A 3326488-1 1 248 248 218882 C6E11 03/21/94 07/09/96 N TEMPLATE B/P REV A 3326484-1 1 152 152 218883 C6E19 06/07/94 07/09/96 N TEMPLATE B/P REV A 3326484-2 1 73 73 218884 C6E11 08/19/94 07/09/96 N ROUTING FIXTURE B/P REV A 3326488-2 1 337 337
4-JUN-97 TOOL MASTER Page: Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- 218885 C6E11 08/03/94 07/09/96 N TEMPLATE B/P REV A 3326488-2 1 178 178 218887 C6E9 10/17/94 07/09/96 N SCREEN, METAL MARKING 3326500 1 170 170 3326506 218890-1 C4A 005 06/07/94 06/27/96 Y GAGE, HEIGHT, MFG REV A 3326400 1 22 22 218890-2 TOWSON 05/05/94 06/05/94 Y GAGE, HEIGHT, MFG REV A 3326400 1 22 22 218891-1 TOWSON 05/05/94 05/05/94 Y GAGE, HEIGHT, INSP REV A 3326400 1 22 22 218891-2 C4A 005 05/20/94 06/27/96 Y GAGE, HEIGHT, INSP REV A 3326400 1 22 22 218892-1 C4A 009 06/06/94 06/27/96 Y HEIGHT GAGE 3326455 1 169 169 218892-2 C4A 0O5 03/17/95 06/27/96 Y HEIGHT GAGE 3326455 1 169 169 218893-1 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326455 1 104 104 218893-2 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326455 1 104 184 218894-1 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326475 1 153 153 218894-2 C4A 005 06/06/94 06/27/96 Y HEIGKT GAGE 3326475 1 153 153 218895-1 C4A 005 06/06/94 06/27/96 Y INSP HEIGHT GAGE REV A 3326475 1 228 228 218895-2 C4A 005 06/06/94 06/27/96 Y INSP HEIGHT CAGE REV A 3326475 1 228 228 218896-1 C4A 005 11/15/94 06/27/98 Y HEIGHT GAGE 3326485 1 169 169 218896-2 C4A 005 12/05/94 06/27/96 Y HEIGHT GAGE 3326485 1 169 169 218897-1 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 1 316 316 218897-2 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326485 1 316 316 218898 C5B 10/19/93 07/01/96 N TEMPLATE 3326483-1 1 116 116 218899 C5B 06/07/94 07/01/96 N TEMPLATE 3326483-2 1 165 165 218902-1 D6F POS 02/14/97 08/23/96 Y GAGE, LEAD PROTRUSION 3326500 1 76 76 218902-2 D6F POS 02/14/97 08/23/96 Y GAGE, LEAD PROTRUSION 3326500 1 76 76 218904 C5B 03/11/92 07/01/96 N LEAD CUT PLATE 3326500 1 854 854 218905 C5B 03/11/92 07/01/96 N LEAD CUT PLATE 1 646 646 218909-1 D6F P08 02/14/97 07/15/96 N PLUGGING FIXT, P7 & P8 3326505-302 1 117 117 218909-2 D6F P03 02/14/97 07/15/96 N PLUGGING FIXT, P7 & P8 3326506-302 1 117 117 218910 F2C 02/11/92 01/12/96 N HARNESS BOARD 3320170-401 1 36 36 218919 F2C 02/11/92 07/12/96 N CABLE BOARD 3322083-405 1 1007 1007 218920 C5B 10/06/92 07/01/96 N WALES TEMPLATE 3326498-1 1 128 128 218921 D6F 08/23/96 07/15/96 N COMP PREP BRD,R29 & R30 3310775-601 1 109 109 3310775-1 218929 TOWSON 04/26/94 09/13/96 N COMP PREP FIXTURE REV A 1 255 255 219028 C6A 03/03/92 07/08/96 N DRILL FIXT 3325371-3 1 215 215 219029 C6A 03/03/92 07/08/96 N ROUTE FIXT 3325371-3 1 215 215 219030 C6A 03/03/92 07/08/98 N DRILL FIXT 3325372-4 1 215 215 219031 C6A 03/03/92 07/08/96 N ROUTE FIXT 3325372-4 1 215 215 219032 C6A 03/03/92 07/08/96 N ROUTE FIXT 3325370-2 1 215 215 219033 C6A 03/03/92 07/08/96 N DRILL FIXT 3325310-2 1 215 215 219038-1 9852B 06/17/96 06/17/96 N ESP HARNESS FIXTURE 3328601-801 1 1076 1076 219038-2 C4D 12/18/95 06/28/96 N ESP HARNESS FIXTURE 3326501-801 1 1076 1076 219051 D6F P08 02/14/97 07/10/96 N SOLDER FIXT 2 240 18 4320 219052 9852B 02/24/95 09/26/96 N NUT DRIVER 3315895 1 4 4 219117-1 C4A 005 12/04/92 06/27/96 Y QA HEIGHT GAGE 3326515 1 171 171 219117-2 C4A 005 12/04/92 06/27/96 Y QA HEIGHT GAGE 3326515 1 171 171 219135-3 9852B 06/17/96 06/17/96 N ALIGN TOOL, A33 INTERCONN 3326501 1 148 148 219135-4 9852B 06/17/96 06/17/98 N ALIGN TOOL, A33 INTERCONN 3326501 1 148 148 219135-5 9852B 06/17/96 06/11/96 N ALIGN TOOL, A33 INTERCONN 3826501 1 148 148 219135-6 9852B 06/17/96 06/17/96 N ALIGN TOOL, A33 INTERCONN 3326501 1 148 148 219136-3 9852B 06/18/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144
4-JUN-97 TOOL MASTER Page: Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- 219136-4 9852B 06/18/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144 219136-5 9852B 06/18/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144 219136-6 9852B 06/17/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144 219153-1 9852B 06/12/96 06/12/96 N ESP WIRING FIXT FRT PNL 1 179 179 219153-2 9852B 06/12/96 08/12/96 N ESP WIRING FIXT FRT PNL 1 179 179 219153-3 0852B 07/16/96 08/14/96 N ESP WIRING FIXT FRT PNL 1 179 179 219189 F3F 02/18/92 07/15/96 N PREP BOARD, REV 8 3326501-804 1 167 167 219471 C6A 03/03/92 07/08/96 N WALES TEMP 3312344-1 1 127 127 219472 C6A 03/03/92 07/08/96 N WALES TEMP 3312339-1 1 127 127 219473 C7E13 03/02/92 07/10/96 N WALES TEMP 3312345-1 1 475 475 219474 C6A 03/04/92 07/08/96 N DRILL TEMP 3312346-2 1 212 212 219475 C7E13 03/02/92 07/10/96 N WALES TEMP 3312346-1 1 410 96 506 219476 C6E24 02/24/92 07/09/96 N WALES TEMP 3312346-2 1 171 171 219477 C6A 03/03/92 07/08/96 N WALES TEMP 3312346-3 1 65 65 219478 C6A 03/03/92 07/08/96 N WALES TEMP BRKT 3312346-4 1 86 86 219479 C6A 03/03/92 07/08/96 N DRILL FIXT 3312346-5 1 271 277 219480 C6E24 02/24/92 07/09/96 N WALES TEMP 3312344-1 1 407 407 219481 C6A 03/04/92 07/08/96 N WALES TEMP 3312344-2 1 127 127 219482 C6A 03/03/92 07/08/96 N WALES TEMP 3312344-3 1 88 88 219483 C6A 03/03/92 07/08/96 N WALES TEMP 3312344-4 1 106 106 219484 C6A 03/04/92 07/08/96 N DRILL FIXT 3312344-7 1 44 44 220182A C4E 03/03/96 07/01/96 N DRILL TEMP R/S ITEM 8014431 1 266 266 220182B C4E 08/13/96 07/01/96 N DRILL TEMP R/S ITEM 8014431 1 274 140 414 220182C C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 3 8014431 1 239 239 220182D C4E 08/13/96 07/01/96 N TEMP BKSD CTOUT ITEM 1 8014431 1 265 265 220182E C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 5 8014431 1 304 304 220182F C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 6 8014431 1 183 183 220182G C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 2 8014431 1 161 41 202 220182H C4E 08/13/96 07/01/96 N TEMP CUTOUT ITEM 2 8014431 1 187 187 220182J C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 9 & 10 8014431 1 204 139 393 220182K C4E 00/13/96 07/01/96 N DRILL TEMP ITEM 2 8014431 1 135 64 199 220182L C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 3 & 7 8014431 1 174 174 220182M C4E 08/13/98 07/01/96 N DRILL TEMP ITEM 3 & 8 8014431 1 174 174 220182N C4E 08/13/96 07/01/96 N DRILL TEMP R/S ITEM 1 8014431 1 134 134 220182P C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8014431 1 136 136 220182R C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8014431 1 262 262 220182S C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8014431 1 262 262 220182T C4E 08/13/96 07/01/96 N WALES TEMP 8014431-13 1 234 234 220182U C4E 08/13/96 07/01/96 N DRILL TEIWLATE 8014431 1 234 234 220183A C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 1 8016664 1 483 483 220183B C4E 08/13/96 07/01/96 N DRILL TEMP, ITEM 1 8016664 1 136 136 220183C C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 1 8016664 1 70 70 220183E C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 3 8016664 1 392 392 220183F C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 2 8016664 1 226 104 330 220183G C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8016664-6 1 320 320 220183H C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8016664-A6 1 207 207 220184A C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 4 8016683 1 395 395 220184B C4E 08/13/96 07/01/96 N DRILL TEMP L/S ITEM 1 8016683 1 157 157 220184C C4E 08/13/96 07/01/96 N DRILL TEMP L/S ITEM 1 8016683 1 448 448 220184D C4E 08/13/96 07/01/96 N DRILL TEMP TOP ITEM 1 8016683 1 152 152
4-JUN-97 TOOL MASTER PAGE: CONTRACT NUMBER: N00019-97-G-0008 DESCRIPTION: ST/STE CUSTOMER: USN
Tool Location/ Tot. Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost - ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ---- 220191 F3B 03/10/97 05/31/96 N HARNESS BRD, PANEL MATRIX 8014470-406 1 1026 1026 220192 F3B 03/10/97 05/31/96 N HARNESS BOARD, J1 CONN 8014470-401 1 572 572 220193 F3B 03/10/97 07/10/96 N HARN BRD. J2 CONN REV B 8014470-402 1 788 223 1011 220194 F2B 03/10/97 05/31/96 N HARNESS BRD, J3 CONN REV B 8014470-403 1 808 218 1026 220195 F3C 03/10/97 05/31/96 N HARNESS BOARD, J4 CONN 8014470-404 1 2223 2223 220196 F2B 03/10/97 05/31/96 N HARNESS BOARD, J5 CONN 8014470-405 1 56 56 220198 CICON ENG 04/30/96 04/30/96 N HARNESS BRD, FACE PLATE 8016659-401 1 207 207 220199 F3C 03/10/97 05/31/96 N HARNESS BRD, P1 REV C 8016720-401 1 1190 437 1627 220200 F3C 03/10/97 05/31/96 N HARN BRD, XA1 & TB1 REV A 8016720-402 1 1305 158 1463 220201 F2B 03/10/97 07/15/96 N HARNESS BOARD, T2, REV B 8016120-403 1 567 320 887 220203 CICON ENG 04/30/96 04/30/96 N HARNESS BRD, J3 8016660-403 1 683 683 220205 F3C 03/10/97 05/31/96 N HARNESS BRD, PANEL 8016665-401 1 657 657 220206 F2B 03/10/97 07/15/96 N HARNESS BRD, S1 8016665-402 I 634 634 220207 C6A 03/04/92 07/08/96 N WALES TEMPLATE 3310737 1 704 704 220209 C6A 03/04/92 07/08/96 N PUNCH TEMPLATE 8016687 1 252 252 220214 C6A 03/04/92 07/08/96 N DRILL/ROUTING TEMPLATE 3183843 1 509 509 220221 F3C 03/10/97 07/15/96 N HARN BRD, PATCH PNL 8016600-402 1 1694 1694 220222 F3C 03/10/97 05/31/96 N HARN BRD, P16 & P17 8016600-404 1 1551 1551 220223 F3C 03/10/97 05/31/96 N HARN BRD, P14 & P15 REV B 8016600-405 1 1930 68 1998 220224 F2B 03/10/97 07/15/96 N HARN, TEST POINT PANEL 8014440-402 1 2091 282 2373 [ILLEGIBLE] [ILLEGIBLE] 220227 F3F 05/31/96 05/31/96 N HARN BRD, FRNT PNL REV B 8014470-407 1 1739 135 1874 220233 F2B 03/10/97 07/15/96 N HARN BRD, TB2 THRU TB33 8014440-401 1 1567 1567 220234 F3E 05/31/96 O5/31/96 N HARN BRD, FRONT PANEL 8014440-403 1 639 639 220235 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM FIXT REV A 3324670 1 2613 2613 3320485 220235A-1 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0 220235A-2 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0 220235B-1 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0 220235B-2 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0 220237 F3C 08/10/97 05/31/96 N HARN BRD/ P14A, P14B, P15 8014470-408 1 1998 1998 220238 F3C 03/10/97 05/31/96 N HARN BRD, P16A & P16B 8014470-412 1 1635 1635 220239 C7E22 09/09/96 06/25/96 N DRILL TEMPLATE, FRAME 8016750 1 591 591 220240 C7E23 09/09/96 06/25/96 N DRILL TEMPLATE, FRAME 8016750 1 632 632 220241 C7E18 09/09/96 06/25/96 N DRILL TEMP, RIGHT SIDE 8016750 1 413 413 220243 CICON ENG 07/16/96 05/31/96 N HARN BRD, J1 & J2 REV A 8016705-401 1 531 531 220244 CICON ENG 08/22/96 05/31/96 N HARN BRD, J3 REV B 8016705-403 1 212 155 367 220245 CICON ENG 08/22/96 05/31/96 N HARN BRD, J4 REV NC 8016705-404 1 266 266 220246 F2C 03/10/97 07/15/96 N HARN BRD, P1 8016705-402 1 207 207 220247 CICON ENG 08/22/96 05/31/96 N HARN BRD, LAY-IN REV NC 8016705-406 1 531 531 220248 C7E24 01/16/97 06/24/96 N WIRING FIXT, XDCR TEST 8016705 1 1351 486 1837 220249 F2C 03/10/97 05/31/96 N HARN BRD, CHASSIS LAYIN 8014470-415 1 322 322 220253 F2C 03/10/97 05/31/96 N HARN BRD, TB WIRES/TOP 8014440-404 1 513 513 220256 CICON ENG 04/30/96 04/30/96 N HARN BRD, CAB 2 LAY IN 8016660-401 1 419 419 220257 CICON ENG 09/06/96 05/31/96 N HARN BRD, #1 FRONT PNL 8014530-401 1 648 36 684 220258 CICON ENG 08/22/96 05/31/96 N HARN BRD, #2 FRONT PNL 8014530-405 1 513 513 220308-1 9852E 08/24/95 06/21/96 N ALIGNMENT TOOL 8016600 1 284 284 220308-2 9852E 08/24/95 06/21/96 N ALIGNMENT TOOL 8016600 1 284 284 220309-1 9852E 09/14/95 06/21/96 N ALIGNMENT TOOL 8016600 1 428 428
4-JUN-97 TOOL MASTER PAGE: CONTRACT NUMBER: N00019-97-G-0008 DESCRIPTION: ST/STE CUSTOMER: USN
Tool Location/ Tot. Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost - ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ---- 220309-2 9852E 09/14/95 06/21/96 N ALIGNMENT TOOL 8016600 1 428 428 220359 CICON ENG 03/10/93 07/10/96 N MOLD, CABLE ASSY 8017072(A) 1 441 441 E252953 9852B 06/18/96 06/18/96 TEST FIXT BD ASSY A7 3320140 1 3000 3000 3320190 E252954 9852E 09/19/95 06/21/96 N TEST FIXT, TONE DECODER A8 3320140 1 2000 2000 3320205 E252955 D6B 02/25/92 07/11/96 N TEST FIXT, TONE DECDR LOG 3320201 1 2500 2500 3320140 E252956 9852B 06/18/96 06/18/96 TEST FIXT 3320140 1 3000 3000 3320210 E252957 9852B 06/18/96 06/18/96 N TEST FIXT FREQ SEL BD A2 3320140 1 2000 2000 3320175 E252959 9852B 06/18/96 06/18/96 TEST FIXT 3820140 1 1800 1800 3322030 E252960 9852B 06/18/96 06/18/96 N TEST FIXT 3320140 1 1800 1800 3320225 E252964 9852B 06/18/96 06/18/96 TEST FIXT 3320180 1 2000 2000 E252965 9852B 06/18/96 06/18/96 TEST FIXT 3320187 1 2000 2000 E252966 9852B 09/19/95 06/21/96 TEST FIXT 3320215 1 2000 2000 E252969 9852B 09/08/92 06/14/96 N TEST FIXT 3320230 1 2000 2000 [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] E252976 D6B 07/13/92 07/11/96 N TEST FIXT A4A4 3322085 1 2000 2000 E252977-1 D5B 07/18/96 06/13/96 N TEST FIXT W-56 1 250 250 E252977-2 D5B 05/24/96 07/10/96 N TEST FIXT W-56 1 250 250 E252977-3 D5B 05/24/96 05/24/96 N TEST FIXT W-56 1 250 250 E252977-4 D5B 07/18/96 06/13/96 N TEST FIXI W-56 1 250 250 E252977-5 D5B 07/18/96 06/13/96 N TEST FIXT W-56 1 250 250 E252977-6 D5B 07/18/96 06/13/96 N TEST FIXT W-56 1 250 250 E262978 D3F P0S 02/06/97 07/10/96 N ESP FIXTURE 1 3500 3500 E252979 D5B 06/30/93 07/10/96 N TEST FIXT AB 3320178 1 1500 1500 E2629831 9852B 06/01/81 08/09/96 N CABLE ISOLATOR 3320127-2 1 100 100 E2529832 9852B 06/01/81 08/09/96 N CABLE ISOLATOR 3320127-3 1 75 75 E2529833 9862B 06/01/81 08/09/96 N CABLE ISOLATOR 3320127-4 1 90 90 E252984 D4B 07/18/96 06/13/96 N TEST FIXT A3A14-18 1 2000 2000 E263001 9852B 06/18/96 06/18/96 Y TEST STATION 1 3000 3000 E2530011 9852B 06/19/96 06/19/96 Y OSCILLOSCOPE 1 4365 4365 E25300110 9852B 06/19/96 06/19/96 Y FREQUENCY GENERATOR 1 3545 3545 E25300111 9852EL 05/01/84 08/08/96 CRT TERMINAL 1 1450 1450 E25300112 9852 EL 05/01/83 08/12/96 POWER PANEL 1 750 750 E25300114 9852EL 07/23/96 07/23/96 POWER SUPPLY 1 1532 1532 E26300115 9852B 06/19/96 06/19/96 BLOWER 1 150 150 E25300116 9852B 06/19/96 06/19/96 BLOWER 1 150 150 E25300117 9852B 06/19/96 06/19/96 TAC/NAV PANEL 1 2000 2000 E25300119 9852B 06/19/96 06/19/96 A/B CARD CAGE 1 10000 10000 E25300120 9852B 06/19/96 06/19/96 Q13B SIMULATOR PANEL 1 2000 2000 E25300121 9852EL 05/05/83 08/09/96 RANGE BEARING PANEL 1 600 600 E25300122 9852EL 07/23/96 07/23/96 SWITCH CONTROL 1 3695 3695 E25300124 9852B 06/19/96 06/19/96 400HZ POWER CONTROL 1 800 800
4-JUN-97 TOOL MASTER PAGE: CONTRACT NUMBER: N00019-97-O-0008 DESCRIPTION: ST/STE CUSTOMER: USN
Tool Location/ Tot. Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost - ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ---- E25300125 9852B 06/19/96 06/19/96 POWER SUPPLY 1 1300 1300 E25300126 9852B 06/19/96 06/19/96 POWER CONTROL 1 900 900 E25300129 9852EL 05/05/83 08/02/96 T BAR RELAY PANEL 1 16000 16000 E2530013 9852B 06/19/96 06/19/96 SIMULATOR CARD CAGE 1 15000 15000 E25300130 9852EL 05/05/83 08/12/96 CABLE INTERFACE 1 2000 2000 E25300132 9852EL 05/06/82 08/02/96 COMMON BUSS 1 800 800 E25300133 9852EL 05/05/83 08/12/96 POWER INTERFACE PANEL 1 650 650 E2530014 9852B 06/19/96 06/19/96 BUOY SIMULATOR PANEL 1 6000 6000 E2530015 9852B 06/19/96 06/19/96 MULTIMETER . 1 3570 3570 E253O016 9852EL 05/06/83 08/02/96 CRT DISPLAY 1 2870 2875 E2530017 9852B 06/19/96 06/19/96 BITE CONTROL PANEL 1 8000 8000 E2530018 9852B 06/19/96 06/19/96 COMPUTOR 1 18395 18395 E2530019 TOR REP 05/27/97 08/12/96 Y COUNTER TIMER 1 3289 3289 E253002 9852B 06/19/96 06/19/96 Y TEST STATION 1 4000 4000 E2530021 9852B 06/19/96 06/19/96 N BLOWER 1 150 150 E25300210 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395 E25300211 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395 E25300212 D7E 06/30/93 07/11/96 N COMPUTER 1 10500 10500 E25300214 D7E 06/30/93 07/12/96 N TERMINAL DISPLAY 1 1241 1241 E25300215 9852B 06/19/96 06/19/96 SWITCH CONTROLLER 1 3695 3895 E25300216 9852B 04/09/80 08/12/96 MODULAR SWITCH 1 7000 7000 E25300217 9852B 06/09/80 06/09/96 SIGNAL GENERATOR 1 3545 3545 E25300218 9852B 06/19/96 06/19/96 SIGNAL GENERATOR 1 3545 3545 E25300219 D7F POS 02/06/97 08/12/96 Y COUNTER TIMER 1 3289 3289 E2530022 98628 06/19/96 06/19/96 N BLOWER 1 150 150 E25300220 9852B 06/19/96 06/19/96 PHASE METER 1 3415 3415 E25300221 9852B 06/19/96 06/19/96 Y DIGITAL MULTIMETER 1 3570 3570 E25300222 C/L IFR 08/12/96 08/12/96 Y WAVEFORM ANALYZER 1 18750 18750 E25300224 9852B 08/19/96 08/19/96 DECADE RESISTOR BOX 1 2050 2050 E25300225 9852B 06/19/96 06/19/96 DECADE RESISTOR BOX 1 2050 2050 E2530023 9852B 06/19/96 06/19/96 N BLOWER 1 150 150 E2530024 9852B 06/19/96 06/19/96 N BLOWER 1 150 150 E2530025 9852B 06/19/96 08/19/96 N POWER PANEL 1 1000 1000 E2530028 9852B 06/19/96 06/19/96 Y POWER SUPPLY ASSY 1 1612 1612 E2530027 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 4265 4265 E2530028 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395 E2530029 9952B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395 E253003 9852B 08/19/96 06/19/96 RUN-IN TEST SET 3328500 1 25000 25000 E253003-12 9852B 06/19/96 08/19/96 PANEL MANUAL OVERRIDE 1 900 900 E253003-13 9852B 06/19/96 06/19/96 PANEL MANUAL OVERRIDE 1 600 600 E2530031 9852B 08/19/96 08/19/96 CRT DISPLAY 1 2875 2875 E25300310 9852B 08/19/96 08/19/96 BLOWER 1 150 150 E25300311 9852EL 07/23/96 07/23/96 POWER SUPPLY 1 1572 1572 E25300314 9852EL 07/23/96 07/23/96 A/B CARD CAGE 1 9000 9000 E25300315 9852B 06/19/96 08/19/96 400HZ POWER 1 800 800 E25300316 VENDORRP 02/10/97 08/13/96 Y COUNTER TIMER 1 3289 3289 E25300317 9852B 06/19/96 06/17/96 AUDIO OUTPUT PANEL 1 1000 1000 E2530032 9862B 06/19/96 06/19/96 BITE CONTROL 1 8000 8000 E2530033 9852B 06/20/96 06/20/96 POWER SUPPLY 1 1532 1532 E2530034 9862B 06/20/96 06/20/96 POWER PANEL 1 750 750
4-JUN-97 TOOL MASTER Page: Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- E2530035 9852EL 08/28/80 08/13/96 BLOWER 1 150 150 E2530036 9852B 06/20/96 05/20/96 COMPUTER 1 18395 18395 E2530037 9852B 06/20/96 06/20/96 OSCILLOSCOPE 1 4365 4365 E2530038 9852EL 07/07/87 09/26/96 N CRT TERMINAL 1 1450 1450 E253004 9852EL 06/12/81 07/23/96 AGREE TEST SET 3326500 1 60000 60000 E25300410 9852EL 07/21/81 08/14/96 POWER SUPPLY 3326430 1 1532 1532 E25300411 9852EL 07/21/81 05/24/96 BLOWER 3326435 1 150 150 E25300413 VENDORRP 02/10/97 08/13/96 Y COUNTER TIMER 3326445 1 3289 3289 E25300414 9852ELOS 08/13/96 08/13/96 Y FREQUENCY GENERATOR 3326450 1 3545 3545 E25300416 9852EL 07/21/81 07/23/96 BLOWER 3326460 1 150 150 E25300417 9852EL 07/21/81 06/24/96 TAC/NAV PANEL 3326465 1 2000 2000 E25300418 9852EL 05/26/81 06/24/96 MODULAR SWITCH 3326470 1 7000 7000 E25300419 9852EL 10/10/81 06/25/96 CARD CAGE 1 10000 10000 E25300420 9852EL 06/04/81 06/24/96 Q13 SIMULATOR PANEL 1 2000 2000 E25300421 9852EL 07/21/89 06/24/96 RANGE BEARING CURSER 1 600 600 E25300422 9852EL 06/30/93 08/14/96 SWITCH CONTROL 1 3695 3695 E25300423 9852EL 07/21/80 06/24/96 POWER SUPPLY 1 1572 1572 E25300424 9852EL 07/23/81 06/24/96 480 HZ POWER 1 800 800 E25300425 9852EL 09/10/80 06/24/96 POWER SUPPLY 1 1300 1300 E25300426 9852EL 06/30/93 06/24/96 MANUAL OVER RIDE PANEL 1 900 900 E25300427 9852EL 07/23/81 06/24/96 C/B PANEL 1 1000 1000 E25300428 9852EL 07/23/81 06/24/96 PANIC 28V PANEL 1 500 50O E25300429 9852EL 06/04/81 06/24/96 RELAY RES PANEL 1 900 900 E2530043 9852EL 06/03/81 06/24/96 SIMULATOR CARD CAGE 1 15000 15000 E25300430 9852EL 06/04/81 06/24/96 400HZ DUCER PANEL 1 1000 1000 E25300431 9852EL 06/04/81 96/24/96 INTERFACE PANEL 1 6000 6000 E25300432 9852EL 06/04/81 08/13/96 POWER INTERFACE PANEL 1 650 650 E25300433 9852EL 06/04/81 08/14/96 AGREE CHAMBER INT 1 2000 2000 E25300434 9852EL 06/04/81 06/24/96 COMMON BUSS 1 800 800 E25300435 9852EL 06/04/81 06/24/96 T-BAR RELAY PANEL 1 25000 25000 E2530044 9852EL 08/03/81 06/24/96 BUOY SIMULATOR PANEL 1 6000 6000 E2530045 9852EL 06/03/81 06/24/96 60 HZ POWER PANEL 1 500 500 E2530047 9852EL 04/09/94 08/14/96 Y DIGITAL MULTIMETER 1 3570 3570 E2530048 9852EL 06/30/93 08/14/96 CRT DISPLAY 1 2875 2875 E2530049 9852EL 07/13/81 06/24/96 BITE CONTROL PANEL 1 8000 8000 E253005 9852B 05/05/88 08/13/96 N VERTICLE FRAME ADAPTER 1 10000 10000 E25300510 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1400 1400 E25300511 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1300 1300 E25300512 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 930 930 E25300513 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1250 1250 E25300514 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1200 1200 E25300515 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 940 940 E25300516 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 800 800 E25300517 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 800 800 E25300518 9852B 07/22/96 07/22/96 INTERFACE MODULE 1 900 900 E2530053 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326400 1 1500 1500 E2530054 D4C 08/14/96 08/14/96 INTERFACE MOD 10 A 38 1 1300 1300 E2530055 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326405 1 1200 1200 E2530056 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326410 1 1400 1400 E2530057 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326415 1 800 800
4-JUN-97 TOOL MASTER Page: Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- E2530058 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326420 1 940 940 E2530059 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326425 1 1000 1000 E253006 9852B 06/20/96 08/13/96 VERTICLE FRAME ADAPTER 1 10000 10000 E2530061 9852B 06/20/96 06/20/96 N IPM CARD CAGE 1 12000 12000 E25300610 98528 06/20/96 06/20/96 STATIC PERSON. MODULE 3326495 1 1450 1450 E25300612 D4A 09/26/96 09/26/96 DYNAMIC PERSON. MODULE 3326480 1 2000 2000 E25300613 D4A 09/26/96 09/26/96 DYNAMIC PERSON. MODULE 3326486 1 2000 2000 E25300614 D4A 09/26/96 09/26/96 DYNAMIC PERSON. MODULE 3326490 1 2000 2000 E25300617 9852B 06/20/96 06/20/96 N W6 CABLE 1 300 300 E25300618 9852B 08/20/96 06/20/96 N W7 CABLE 1 400 400 E2530062 D4A 09/26/96 09/26/96 DPM/SELF TEST 1 1400 1400 E2530063 9852B 07/22/96 07/22/96 N W1 CABLE 1 300 300 E2530064 9852B 05/05/88 08/13/96 N W2 CABLE 1 320 320 E2530065 9852B 04/04/81 08/12/96 N W3 CABLE 1 340 340 E2530067 9852B 03/25/81 08/13/96 N INTERFACE MODULE 3326480 1 1500 1500 E2530068 9852B 06/20/96 06/20/96 STACTIC PERSON. MODULE 3326485 1 1400 1400 E2530069 9852B 07/22/96 07/22/96 STACTIC PERSON. NODULE 3326490 1 1400 1400 E253025 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A9 3326435 1 2300 2300 E253026 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A1O 3326440 1 2300 2300 E253027 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A8 3326430 1 2300 2300 E253028 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A38 3326415 1 2400 2400 E253029 D3F POS 02/06/97 07/11/96 N TEST FIXTURE ESP 3326405 2400 2400 E253030 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A33 3326410 1 2800 2800 3326510 E253031 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A12 3326450 1 2400 2400 E253032 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A14,A17 3326460 1 2500 2500 E253033 D3F P0S 02/06/97 07/11/96 N TEST FIXTURE A26,A29 3326475 1 2900 2900 E253034 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A31 3325360 1 2500 2500 E253035 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A5 3326415 1 2500 2500 E253036 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A16 A19 3326470 1 2500 2500 E253037 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A32 3325365 1 2700 2700 E253038 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A30 3326495 1 2600 2600 E253060 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A13 3326455 1 2500 2500 E253061 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A15 3326465 1 2100 2100 E253062 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A27 3326480 1 2200 2200 E253063 D3F POS 02/06/97 06/13/96 ESP TEST FIXT BUS BAR 3315924 1 500 500 E253064 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A28 3326485 1 2800 2800 E253075 D6C 02/26/92 07/11/96 N MANUAL CONTROLLER 1 1500 1500 E253083 9852B 05/24/96 07/22/96 E PROM ERASER 1 2200 2200 E254077 D7C DOS 03/24/92 07/11/96 Y LOAD FIXT PWR SUPPLY 3326403-4 1 3000 3000 3326403-2 E254077-1 D4A 02/18/92 07/10/96 N RES LOAD BOX -2 P/S 3326403-2 1 150 150 E254077-2 D4A 02/18/92 07/10/96 N RES LOAD BOX -4 P/S 3326403-4 1 160 160 E254080-1 D7B 03/24/92 07/11/96 N BURN-IN TEST SET 3326403-2 1 4000 4000 E254080-2 D7D 03/24/92 07/11/96 N BURN-IN FIXTURE 3326403-2 1 1000 1000 E254081-1 D7B 03/24/92 07/11/96 N BURN-IN TEST SET 3326403-4 1 4000 4000 E254081-2 D6D 03/24/92 07/11/96 N BURN-IN FIXTURE 3326403-4 1 1000 1000 E254085 C/L IFR 08/13/96 08/13/96 Y BRD BURN-IN STATION 1 15000 15000 E254085-1 9852EL 04/04/84 08/24/96 Y POWER SUPPLY 1 565 565 E254085-10 D6A 02/19/92 07/11/96 N BURN-IN FIXT #4 1 1000 1000
4-JUN-97 TOOL MASTER Page: Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- TE254085-11 D6A 02/19/92 07/11/96 N BURN-IN FIXT #5 1 1000 1000 TE254085-12 D4C 02/19/92 07/10/96 N BURN-IN FIXT #6 1 1500 1500 TE254085-13 D4C 02/19/92 07/10/96 N BURN-IN FIXT #7 1 1500 1500 TE254085-14 D4C 02/19/92 07/01/96 N BURN-IN FIXT #8 1 1500 1500 TE254085-15 DAC 02/19/92 07/10/96 N BURN-IN FIXT #9 1 1500 1500 TE254085-16 9852EL 08/08/84 06/24/96 N INTERFACE CABLE 8X8 3 150 450 TE254085-17 9852EL 08/08/84 06/24/96 N INTERFACE CABLE SM BD 9 155 1395 TE254085-2 9852EL 04/04/84 06/24/96 POWER SUPPLY 1 565 565 TE254085-3 9852EL 04/04/84 06/25/96 POWER SUPPLY 1 690 690 TE254085-4 9852EL 04/04/84 06/25/96 POWER SUPPLY 1 1175 1175 TE254085-5 9852EL 04/04/84 06/25/96 CONTROL PANEL 1 2000 2000 TE254085-6 9852EL 04/04/84 06/25/96 POWER PANEL 1 500 500 TE254085-7 D6A 02/19/92 07/11/96 N BURN-IN FIXT #1 1 1000 1000 TE254085-8 D4C 02/19/92 07/10/96 N BURN-IN FIXT #2 2 1000 2000 TE254085-9 D6A 02/19/92 07/11/96 N BURN-IN FIXT #3 1 1000 1000 TE254088 D3F P0S 02/06/97 07/10/96 N ESP FIXTURE 3331630 1 2700 2700 TE254090 9852EL 04/04/84 06/25/96 INTERFACE MOD A28 BD 1 2500 2500 TE254099 9852B 06/20/96 06/20/96 SELECT LEVEL METER 1 9400 9400 TE254262 9852B 06/14/96 06/14/96 N ESP CABLE 20E 1 200 200 TE254263 9852B 06/14/96 06/14/96 N ESP CABLE 21E 1 200 200 TE254264 9852B 06/14/96 06/14/96 N ESP CABLE 22E 1 200 200 TE254266 9852B 06/14/96 06/14/96 N ESP CABLE 26H 1 80 80 TE254267 9852B 06/14/96 06/14/96 N ESP CABLE 31E 1 160 160 TE254268 9852E 10/24/95 09/25/96 N SONAR SIMULATOR T/F 8014470 1 3000 3000 TE254269 9852B 06/14/96 06/14/96 N ESP CABLE 29E 1 125 125 TE254270 9852B 06/14/96 06/14/96 N ESP CABLE 30E 1 130 130 TE254272 9852E 10/27/95 06/21/96 N TEST FIXTURE CAB #2 1 400 400 TE254272-1 9852E 10/30/95 06/21/96 N POWER RESISTOR 8014530-401 1 120 120 TE254273 9852B 06/14/96 06/14/96 N ESP CABLE 33E 1 180 180 TE254274 9852B 12/15/88 09/26/96 N ESP CABLE 34E 1 200 200 TE254275 9852 05/22/90 06/20/96 N TEST FIXTURE, A3 BRD 1 1900 1900 TE254276 9852E 10/31/95 06/21/96 N POWER SUPPLY TEST FIXT 8016720 1 1600 1600 TE254277 9852 03/31/92 06/20/96 N TEST FIXT, A2 BRD ASSY 8016620 1 2200 2200 TE254278 9852B 06/14/96 06/14/96 N ESP CABLE 35E 1 75 75 TE254281 9852E 11/03/95 06/21/96 N TEST FIXT SONOBY SIMU 8016600 1 3500 3500 TE254291 9852 05/15/90 06/20/96 N TEST FIXT,TONE DCDR A9 8016610 1 2500 2500 TE254337 9854B 04/12/94 06/20/96 N T/F DEPTH RT SIMU A1A1O 3326030 1 1800 1800 TE254338 9852B 05/18/94 06/20/96 N T/F UTILITY LP DVR A1A11 8029230 1 1900 1900 TE254339 9852E 07/13/95 06/21/96 N T/F CABLE CONTROL A1A12 3326040 2 2300 2300 TE254340 9852E 04/27/94 06/21/96 N T/F CABLE TENSION A1A13 8029195 2 2200 2200 TE254341 9852E 04/26/95 06/21/96 N T/F RELAY CO ASSY A1A14 3326050 1 1700 1700 TE254342 9852B 06/14/96 06/14/96 N T/F CBL PAYOUT DVR A1A15 8029225 1 1900 1900 TE254350 9852B 06/14/96 06/14/96 N ESP CABLE, 55 E 1 350 350 TE254351 9852B 06/14/96 06/14/96 N ESP CABLE, 56 E 1 280 280 TE254352 9852B 06/04/91 06/14/96 N ESP CABLE, 57 E 1 420 420 TE254353 9852B 06/14/96 08/14/96 N ESP CABLE, 58 E 1 250 250 TE254354 9852B 06/14/96 06/14/96 N ESP CABLE, 59 E 1 260 260 TE254355 9852B 06/14/96 06/14/96 N ESP CABLE, 60 E 1 300 300 TE2S4356 9852B 06/14/96 06/14/96 N ESP CABLE, 61 E 1 280 280 TE254357 9852B 06/14/96 06/14/96 N ESP CABLE, 62 E 1 210 210
4-JUN-97 TOOL MASTER Page: Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- TE254366 9852E 08/02/95 06/21/96 N T/F RMTS ICAS SWITCH BOX 8029170 1 800 800 TE254417 D5D 02/28/97 06/04/96 N TEST FIXTURE (CASTS) 8015029 1 2000 2000 Tooling 550 148373 Test Equip. 250 684284 Total 800 832657
5-JUN-97 TOOL MASTER Page: Contract Number: N00019--97-G-0008OPE Description: OPE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- E253080 9852EL 08/22/80 06/24/96 VIBRATION CONTROL SYS 1 1000 1000 E253080-10 9852EL 01/22/81 66/24/96 N COMPUDESK 1 506 506 E253080-11 9852EL 01/22/81 06/24/96 N CHAIR 1 123 123 E253080-2 9852EL 08/22/80 06/24/96 BLANK PANEL 1 100 100 E253080-3 9852EL 08/22/80 06/24/96 X-Y DISPLAY 1 2500 2500 E253080-4 9852EL 08/22/80 06/24/96 SYSTEM CONTROL 1 6000 6000 E253080-5 9852EL 08/22/80 06/24/96 PROCESSOR 1 22879 22879 E253080-6 9852EL 08/22/80 06/24/96 SYSTEM INTERFACE 1 8300 8300 E253080-7 9852EL 08/22/80 06/24/96 FLEX DISK DRIVE 1 3171 3171 E253080-8 9852EL 08/22/80 06/24/96 GRAPHICS TERMINAL 1 6000 6000 E253080-9 8852EL 08/22/80 06/24/96 KEYBOARD FOR 2648A 1 1000 1000 E253081 9852EL 02/28/81 06/24/96 VIBRATION TEST SYSTEM 1 48510 48510 E253081-1 9852EL 02/28/81 06/24/96 CONTROL RACK 1 23000 23000 E253081-10 9852EL 04/10/87 08/12/96 BLOWER ASSEMBLY 1 490 490 E253081-2 9852EL 05/09/81 06/24/96 CHARGE AMP/D22PMJ(0) 1 2820 2820 E253081-3 9852EL 05/09/81 06/24/96 CHARGE AMP/D22PMJ(0) 1 2820 2820 E253081-4 9852EL 05/09/81 06/24/96 VIB MON/LIMIT AM-123 1 5125 5125 E253081-5 9852EL 08/08/84 06/24/96 Y ACCELEROMETER S/N1405 1 150 150 E253081-6 CAL LAB 11/04/96 09/27/96 Y ACCELEROMETER S/N2484 1 150 150 E253081-8 CAL LAB 11/04/96 09/27/96 Y ACCELEROMETER S/N1408 1 150 150 E253081-9 9852EL 09/26/96 06/24/96 Y ACCELEROMETER S/N1704 1 150 150 Tooling 0 0 Test Equip. 21 134944 Total 21 134944
4-JUN-97 TOOL MASTER LIST Page: Contract Number: N00024--84-C-6074 Description: ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T219879 F2C 03/01/96 07/12/96 N HARNESS BRD, J1 REV B 8007248-401 1 131 113 244 T219880 F2B 03/10/97 07/12/96 N HARNESS BRD, J2 REV B 8007248-402 1 124 198 322 T219881 F2B 03/10/97 07/12/96 N HARNESS BRD, J3 REV B 8007248-403 1 687 455 1142 T219882 F3B 03/10/97 05/31/96 N HARNESS BRD, P1 REV B 8007255-401 1 1154 257 1411 T219883 F3B 03/10/97 05/31/96 N HARNESS BRD, P2 REV C 8007255-402 1 4827 244 5071 T219884 F2B 03/10/97 05/31/96 N HARNESS BRD, P3 REV C 8007255-403 1 946 153 1099 T219885 F3B 03/10/97 05/31/96 N HARNESS BRD, TB1 REV C 8007255-404 1 2003 163 2166 T219886 F3B 03/10/97 05/31/96 N HARNESS BRD, J1-J5 REV E 8007255-405 1 3279 321 3600 T220014 C5D 02/03/95 07/02/96 Y MOLD, PI W1 CBL ASSY 8007263 1 272 272 T220015-1 9852C 08/23/95 08/14/96 Y MOLD, P1 P2 W2 CBL ASSY 8007264 1 257 257 T220015-2 9852C 08/23/95 08/14/96 Y MOLD, P1 P2 W2 CBL ASSY 8007264 1 257 257 T220016-1 9232C 02/06/95 06/14/96 Y MOLD, P2 W3 W4 CBL ASSY 8007265 1 261 261 8007266 T220016-2 9232C 02/06/95 06/14/96 Y MOLD, P2 W3 W4 CBL ASSY 8007265 1 261 261 8007266 T220040-1 9852E 03/18/97 06/21/96 N ALIGN TOOL, CARD CAGE 8007248 1 195 195 T220040-2 9852E 03/18/97 06/21/96 N ALIGN TOOL, CARD CAGE 8007248 1 195 195 T220052-1 9852E 06/25/96 06/25/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136 T220052-2 C7F 04/06/95 07/10/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136 T220052-3 C7F 05/10/96 06/21/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136 T220052-4 9852E 09/25/96 07/10/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136 T220063-1 9852E 04/23/96 05/16/96 N WIRING FIXTURE 1 857 857 T220063-2 9852E 04/23/96 05/16/96 N WIRING FIXTURE 1 702 702 T220070 F3B 03/10/97 07/15/96 N HARN BRD, COUP ASSY A12 8007394 1 831 488 1319 T220075-1 C6A 01/20/92 07/08/96 N POTTING FIXT, P1 CLK MOD 8007394 1 184 184 T220075-2 C6A 01/20/92 07/08/96 N POTTING FIXT, P1 CLK MOD 8007394 1 184 184 T220075-3 C6A 01/20/92 07/08/96 N POTTING FIXT, P1 CLK MOD 8007394 1 184 184 T220078-1 9232C 06/14/96 06/14/96 N POTTING FIXT, P1 8007394 1 141 141 T220078-2 9232C 06/14/96 06/14/96 N POTTING FIXT, P1 8007394 1 141 141 T220078-3 9232C 06/14/96 06/14/96 N POTTING FIXT, P1 CLK MOD 8007394 1 141 141 T220306A/B-1 9852E 06/14/96 06/13/96 N SUPPORT BRKT, AMTS ASSY 8007300 1 270 270 T220306A/B-2 9852E 06/13/96 06/14/96 N SUPPORT BRKT, AMTS ASSY 8007300 1 270 270 T402534 SPIRATEX CO. 01/09/81 04/10/96 N REDUCING SLEEVE 3328746 1 1435 1435 T402540 C7D 03/13/92 07/10/96 N TEST FIXT WD BND HYDRO 1 1320 1320 T402542-A D5F POS 02/12/97 09/27/96 N PLUG, BOOTING ASSY 3328780 1 433 433 T402542-D D5F POS 02/12/97 09/27/96 N FITTING, HOSE JUNCTION 3328780 1 172 172 T402549 SN1 9234 04/14/93 06/14/96 N SHOCK TEST SLEEVE, XMTR 3328880 1 242 242 T402549 SN2 C6B 04/14/93 07/08/96 N SHOCK TEST SLEEVE, XMTR 3328880 1 242 242 T402549 SN3 C6B 04/14/93 07/08/96 N SHOCK TEST SLEEVE, XMTR 3328880 1 242 242 T402554-1 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-10 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-2 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-3 CL/ARA 10/15/96 06/09/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-4 C6B 01/29/96 07/08/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-5 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-6 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-7 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-8 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402554-9 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257 T402567-1 C6D 03/13/92 07/09/96 N TEST HOLD FIXT, HYBRID 1 358 358
4-JUN-97 TOOL MASTER LIST Page: 2 Contract Number: N00024-84-C-6074 Description: TB-23/BQ ST/STE Customer: USN - --------------------------------------------------------------------------------
Tool Location/ Tot. Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost - ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ---- T402567-2 9234 04/14/93 06/14/96 N TEST HOLD FIXT,HYBRID 1 358 358 T402567-3 C6D 03/13/92 07/09/96 N TEST HOLD FIXT,HYBRID 1 358 358 T402567-4 C6D 03/13/92 07/09/96 N TEST HOLD FIXT/HYBRID 1 358 358 T402567-5 C6D 07/08/92 07/09/96 N TEST HOLD FIXT/HYBRID 1 358 358 T402567-6 C6D 03/13/92 07/09/96 N TEST HOLD F1XT/HYBRID 1 358 358 T402575 C6B 03/06/92 07/08/96 N HOLD FIXT/HI-POT 3328885 1 207 207 T402629 C7D 10/25/95 07/10/96 N HOLD FIXT/XMTR 1 150 16 2400 T402644 C6B 03/09/92 07/08/96 MOLD MSTR/4 STRAND 3332993 1 219 219 T402645 C6B 10/01/96 10/01/96 N MOLD MSTR/8 STRAND 3332992 1 244 244 T402663-1 C6B 03/02/92 07/09/96 Y MOLD MSTR/RESONATOR,REV A 3332990-1 1 26 26 T402664 FREQUENCY 12/10/84 04/03/96 N MOLD/RESONATOR 1 29 29 SELECT NET T402703-1 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333155 1 58 58 T402703-10 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-11 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T462703-12 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-13 C6D 09/12/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-14 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-2 C6D 09/27/96 09/27/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-3 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-4 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-5 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-6 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-7 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-8 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T402703-9 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58 T4027041 NPO 11/12/90 09/18/96 Y THERMAL WIRE STRIPPER 1 73 73 T4027042 NPO 11/12/90 10/15/96 Y THERMAL WIRE STRIPPER 1 73 73 T4027043 NPO 11/12/90 09/18/96 Y THERMAL WIRE STRIPPER 1 73 73 T402706-1 9852E 05/16/95 06/21/96 N SPANNER WRENCH 1 174 174 T402714-1 9855E 07/01/93 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109 T402714-2 9855E 08/29/94 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109 T402714-3 9855E 07/10/93 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109 T402714-4 9855W 07/23/90 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109 T402714-6 9855W 07/01/93 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109 T402749-1&A DISP ARA 10/15/96 07/01/93 Y PRESSURE POT 1 1568 1568 T402754-1 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-10 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-11 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-12 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-2 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004880 1 628 118 746 T402754-3 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-4 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-5 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-6 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-7 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-8 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746 T402754-9 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004390 1 628 118 746 T402761-1 9855W 07/15/90 06/26/96 N HOSE WRAPPING STATION 1 1008 1008 7402761-2 9855W 07/16/90 06/26/96 N HOSE WRAPPING STATION 1 757 757 7402761-3 9855E 07/21/93 06/26/96 N HOSE WRAPPING STATION 1 757 757
4-JUN-97 TOOL MASTER LIST Page: 3 Contract Number: N00024-84-G-6074 Description: TB-23/BQ ST/STE Customer: USN - --------------------------------------------------------------------------------
Tool Location/ Tot. Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost - ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ---- T402761-4 9855E 07/21/93 06/26/96 N HOSE WRAPPING STATION 1 757 757 T402765-1 C6B 04/18/97 07/12/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-2 C6B 04/18/97 07/12/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-3 C6B 04/18/97 09/30/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-4 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-5 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-6 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-7 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402765-8 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49 T402769 CAL LAB 06/02/97 07/09/96 Y DIGITAL THERMOMETER 1 0 0 T402773-1 9855E 07/21/93 06/26/96 N SUPPORT BRACKET 1 131 131 T402773-2 9855W 07/18/90 06/26/96 N SUPPORT BRACKET 1 131 131 T402773-3 9855W 07/18/90 06/26/96 N SUPPORT BRACKET 1 131 131 T402773-4 9855E 07/21/93 06/26/96 N SUPPORT BRACKET 1 131 131 T402774-1 8002 03/13/97 07/12/96 N ACOUSTIC CHAMBER HORIZ 1 2500 2500 T402774-2 8900TL 07/18/90 08/30/96 N ACOUSTIC CHAMBER HORIZ 1 2500 2500 T402777-1 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-10 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001226 1 589 589 T402777-2 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-3 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-4 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-5 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-6 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-7 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-8 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402777-9 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589 T402798-1 TOOLCRIB 03/14/97 07/12/96 N PREP FIXT/C1 & C3 CAP 1 53 53 T402798-2 TOOLCR1B 03/17/97 07/12/96 N PREP FIXT/Cl & C3 CAP 1 53 53 T402799-1 TOOLCRIB 03/17/97 07/12/96 N PREP FIXT/C2 & C4 CAP 1 53 53 T402799-2 TOOLCRIB 03/17/97 07/12/96 N PREP FIXT/C2 a C4 CAP 1 53 53 T402803-1 C4A 03/10/97 06/30/93 N HOT STRIPPER/SPEC GRND 1 154 154 T402803-2 C6B 04/18/97 09/30/96 N HOT STRIPPER/SPEC GRND 1 154 154 T402803-3 CL/ARA 10/15/96 06/30/93 N HOT STRIPPER/SPEC GRND 1 154 154 T402803-4 C6B 04/18/97 09/30/96 N HOT STRIPPER/SPEC GRND 1 154 154 T4O2803-5 C6B 04/18/97 09/30/96 N HOT STRIPPER/SPEC GRND 1 154 154 T402803-6 CL/ARA 10/15/96 06/30/93 N HOT STRIPPER/SPEC GRND 1 154 154 T402805-1 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-10 C3C&C4C 03/21/97 05/28/96 N HANG FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-11 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-12 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-13 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-14 C3C&C4C 03/21/97 05/28/98 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-15 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REVNC 8001220 1 48 48 T402805-16 C4C&C3C 03/21/97 05/28/96 N HAND F1KT,COIL ELEM REVNC 8001220 1 48 48 T402805-2 C3C&C4C 03/21/97 05/28/96 N HAND F1KT,COIL ELEM REV A 8001220 1 48 48 T402805-3 C3C&C4C 03/21/97 05/28/98 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-4 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-5 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8011220 1 48 48 T402805-6 C3C 03/19/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-7 C4C&C3C 03/21/97 05/28/96 N HAND ELEM,COIL ELEM REV A 8001220 1 48 48
4-JUN-97 TOOL MASTER LIST Page: 4 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-84-C-6074 Description: TB-23/BQ ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- T402805-8 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402805-9 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48 T402823 C6B 03/09/92 07/08/96 N WELD FIXT/PTV 7 CLOCK 1 42 42 T402825 D5F P0S 02/12/97 07/08/96 N SHOCK TEST FIXTURE 2 60 120 T402828ABCD C4B 07/07/92 06/28/96 PRESSURE TEST FITTING 1 977 977 T402829 9855W 10/10/98 06/26/98 N HOSE GRINDER 1 1099 1099 T402839 C6B 08/19/92 07/08/96 N HOLDING FIXTURE 1 952 952 T402876A-1 C6B 09/17/96 06/26/96 Y MOLD, DROGUE TERM REV E 3333220 1 431 431 T4028768-4 C6B 07/23/96 07/23/96 Y MOLD, DROGUE TERM REV E 1 359 359 TE252990 D5C 02/20/92 07/10/96 N TEST FIXT/XMTR LGC 1/2 1 2000 2000 TE252991 D5C 02/20/92 07/10/96 N TEST FIXT/TELE/TLM LGC 1 3000 3000 TE254007 D5B 02/20/92 07/10/96 N PREAMP TEST FIXT 1 250 250 TE254018 D5F P0S 02/12/97 07/1l/96 N HI-POT TEST FIXT 2 1 250 250 TE254019 D6B 02/25/92 07/11/96 N CLOCK TEST FIXT 1 1800 1800 TE254026-1 9855N 08/20/96 06/20/96 Y TEST FIXT, CLOCK TERM 1 200 200 TE254026-2 9855N 10/15/96 06/20/96 Y TEST FIXT, CLOCK TERM 1 200 200 TE254029-1 D5B 02/19/92 07/10/96 N TEST FIXT/FRONT END 3327455 1 1800 1800 TE254029-2 D5B 02/19/92 07/19/96 N TEST FIXT/FRONT END 3327455 1 1800 1800 TE2540311 D6B 02/26/92 07/11/96 N LOGIC TEST PAN/SUBSTRT 3327465 1 3600 3600 TE2540312 D6B 02/26/92 07/11/96 N LOGIC TEST PAN/SUBSTRT 3327465 1 3600 3600 TE254036 D5C 02/20/92 07/10/96 N COAX DELAY LINE 1 1625 1625 TE254039 9234 04/14/93 05/17/96 Y ACTIVE TRIM TEST SET 1 27000 27000 TE264040 D5B 02/19/92 07/10/96 N PWR SPLITTER TEST SET 1 400 400 TE254041 D5B 02/19/92 07/10/96 Y LINEARTY PAD 1 25 25 TE254042 9234 04/14/93 06/17/96 N XMTR ADDRESS BOX 1 200 200 TE254044 D5B 02/19/92 07/10/96 N CROWBAR TEST FIXT 1 500 500 TE254045 D5A 08/09/94 07/10/96 N BURN-IN BD/CURRENT REG 1 300 300 TE254046 9234 04/14/93 06/17/96 Y CURRENT MONITOR/CLOCK 1 200 200 TE254050 CNL/ARA 10/15/96 06/22/93 Y LOW PASS FLTR TEST SET 1 500 500 TE254052 D5B 02/19/92 07/10/96 N HYDROPHONE TEST SET 1 1000 1000 TE254062 D4B 02/18/92 07/10/96 TEST FIXT/ACTV TRIM PS 1 250 250 TE254064-1 NPO 07/30/96 07/11/96 N HYDROPHONE EXCITER 1 200 200 TE254064-2 D6A 04/17/97 07/11/96 N HYDROPHONE EXCITER 1 200 200 TE254072 9234 04/14/93 06/17/96 N TEST PAN/DIODE CLAMP 1 250 250 TE254073 9234 04/14/93 06/17/98 TEST PAN/CURRENT REG 1 400 400 TE254074 9234 05/19/83 06/17/96 N PWR SUPPLY/PTV CUR REG 1 600 600 TE254079 D5A 07/06/93 07/10/96 N ACOUSTIC XMTR/CAL STD 1 5000 5000 TE254086 D7F POS 02/12/97 08/13/96 Y COUNTER/HP5328A/030 1 1550 1550 TE254089-1 FREQUENCY SELECT NET 02/24/94 04/03/96 N TEST COIL RESONATOR 3332990 1 1648 1648 TE254092-1 NPO 08/05/96 07/12/96 N HI-POT TESTER 1 1100 1100 TE254092-2 D5A 04/17/97 09/30/96 HI-POT TESTER 1 1100 1100 TE254092-3 D5A 04/17/97 07/12/96 N HI-POT TESTER 1 1100 1100 TE254100 D6C PM 09/29/95 07/11/96 N REPEATER CLOCK T/S 1 50000 50000 TE254101-1 D4D 10/25/95 07/10/96 N TEST CABLE SWITCH BOX 1 10000 10000 TE254101-2 9234 06/17/96 06/17/96 N TEST CBL SWITCH BOX 1 10000 10000 TE254101-3 9234 06/17/96 06/17/96 N TEST CBL SWITCH BOX 1 10000 10000 TE254160 9852B 06/13/96 06/13/96 Y AMTS PWR SUP TEST FIXT 2 400 800 TE254175 SN 1 9852E 11/14/94 07/11/96 N TEST FIXT, AMTS BRD 8007210 1 1900 1900 8007245 TE254175 SN 2 D6B 09/14/93 07/11/96 N TEST FIXT, AMTS BRD 8007245 1 1900 1900
4-JUN-97 TOOL MASTER LIST Page: 5 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-84-C-6074 Description: TB-23/BQ ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- 8007210 TE254296-1 9852D HS 06/26/96 06/28/96 N ADAPTOR CABLE 8018100 1 500 500 TE254296-2 9852D HS 09/27/96 09/27/96 N ADAPTOR CABLE 8018100 1 500 500 TE254296-3 9852D HS 06/26/96 06/26/96 N ADAPTOR CABLE 8018100 1 500 500 TE254296-4 9852D HS 06/27/96 06/26/96 N ADAPTOR CABLE 8018100 1 500 500 TE254297 9852E 06/26/96 06/26/96 N FWD ADAPTOR 8018100 1 325 325 TE254298 9852E 06/26/96 06/26/96 N AFT ADAPTOR 8018100 1 325 325 Tooling 305 65269 Test Equip. 47 150898 Total 352 216167
4-JUN-97 TOOL MASTER LIST Page: 1 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-85-C-6236 Description: TB-23/BQ ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- T219868 F3B 03/10/97 07/15/96 N HARNESS BRD P1 8009030-401 1 438 436 T219873 F3F 02/18/92 07/15/95 N HARNESS BRD, RCVR PNL 8007625-401 1 1652 1652 T219876 F3D 02/11/92 07/16/96 N HARNESS BRD/PWR SUPPLY 8007620-401 1 2642 177 2819 T219878 F2C POS 02/06/97 07/12/96 N HARNESS BRD,RECEIVER PNL 8007625-402 1 120 120 T219947 F2B 03/10/97 07/16/96 N HARNESS BRD P5 8007625-403 1 518 518 T219953 F3B 03/10/97 07/16/96 N HARNESS BRD P2 8009030-402 1 840 840 T219958 F3B 03/10/97 07/15/96 N HARNESS BRD/TEST POINT 8009035-402 1 1252 1252 T219982 F3F 02/18/92 07/16/96 N HARNESS BRD/LFRA REV A 8007840 1 2092 2092 T220019 C6B 03/06/92 07/08/96 N SPLIT MOLD 8011516 1 21311 21311 T220020 C6B 03/06/92 07/08/96 N SPLIT MOLD 8011516 1 0 0 T220021 C6B 03/06/92 07/08/96 N TENSILE TEST ADAPTOR 8011516 1 0 0 T220022 C6B 03/06/92 07/08/96 N SPLIT MOLD 8011516 1 0 0 T220023 C6B 03/06/92 07/06/96 N PRESSURE TEST LEAD 8011516 1 0 0 T220024 C6B 03/06/92 07/08/96 N TENSILE TEST LEAD 8011516 1 0 0 T220025 C6B 03/06/92 07/08/96 N PLUG 8011516 1 0 0 T220026 C6B 03/06/92 07/08/96 N SPACER PLATE 8011516 1 0 0 T220027 C6B 03/06/92 07/08/96 N DUMMY RETAINER 8011516 1 0 0 T220028 C6B 03/06/92 07/08/96 N SEAL BACK-UP BAR 8011516 1 0 0 T220029 C6B 03/06/92 O7/08/96 N RETAINER POSITION EXP 8011516 1 0 0 T220053 C6D 04/09/92 07/09/96 N COMP PREP FIXTURE 8007805-601 1 516 516 T402944-1 TELFRWHS 08/20/93 08/02/96 N VIB TEST FIXTURE 8007600 1 7767 7767 8007800 8008940 TE254114 D7B 03/24/92 07/11/96 N EMULATOR/T.I. CHIP 1 5000 5000 TE254116 9852B 06/20/96 06/20/96 N TEST CD/ESP RCVR/BFMR 8009040 40 400 16000 TE254116 SN 1 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 10 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 11 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 12 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 13 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 14 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 15 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 16 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 17 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 18 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 19 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 2 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 20 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 21 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 22 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 23 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 24 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 25 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 26 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 27 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 28 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 29 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 3 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 30 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 31 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
4-JUN-97 TOOL MASTER LIST Page: 2 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-84-C-0074 Description: TB-23/BQ ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- TE254116 SN 32 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 33 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 34 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 35 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 36 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 37 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 38 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 39 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 4 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 40 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 5 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 6 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 7 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 8 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254116 SN 9 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400 TE254117 9852B 06/13/96 06/13/96 N ESP CBL RCVR 79D 8007635 1 300 300 TE254118 SN 1 9852B 05/05/86 06/20/96 N ESP CABLE, RECEIVER 8007635 1 150 150 TE254118 SN 2 9852B 05/05/86 06/20/96 N ESP CABLE, RECEIVER 8007635 1 150 150 TE254118 SN 3 9852B 05/05/86 06/20/96 N ESP CABLE, RECEIVER 8007635 1 150 150 TE254119 9852B 07/22/96 07/22/96 N BRD EST FIXT FRA 8007805 1 500 500 TE254120 9852B 06/13/96 06/13/96 N ESP CBL RCVR 85D 1 300 300 TE254121 SN 1 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250 TE254121 SN 2 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250 TE254121 SN 3 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250 TE254121 SN 4 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250 TE254121 SN 5 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250 TE254135 D7E 12/07/95 07/12/96 N CLAMP, RANDOM VIB 13 80 1040 TE254137 D6C 05/06/94 07/11/96 N CKT BRD PWR TEST FIXT 1 1500 1500 TE254139 9852B 06/14/96 06/14/96 N ESP CBL DL3-30R 1OOD 1 150 150 TE254140 9852B 06/14/96 06/14/96 N ESP CBL 14 BNC'S 89D 1 125 125 TE264141 9852B 06/14/96 06/14/96 N ESP CBL DLI-156R 99D 1 250 250 TE254142 D4B 07/18/96 06/14/96 N ESP FIXT RCVR CONT PNL 1 450 450 TE254143 D4B 07/18/96 07/11/96 ESP FIXT CONT PNL BMFR 1 350 350 TE254144-1 9852B 06/14/96 06/14/96 N ESP CABLE 1E HD 78S 1 175 175 TE254144-2 9852B 06/14/96 06/14/96 N ESP CABLE 2E HD 78S 1 175 175 TE254144-3 9852B 06/14/96 06/14/96 N ESP CABLE 3E HD 78S 1 175 175 TE254144-4 9852B 06/14/96 06/14/96 N ESP CABLE 4E HD 78S 1 175 175 TE254145 9852B 06/14/96 06/14/96 N ESP CABLE 5E HD 78P 1 180 180 TE254146 9852B 06/14/96 06/14/96 N ESP CBL 84D 1 250 250 TE254148 9852B 06/14/96 06/14/96 N ESP CBL 8E MOLEX PLUGS 1 150 150 TE254149 D7A 03/17/96 07/11/96 N LFRA BD TESTER 1 2500 2500 TE254150 D5A 03/17/94 07/10/96 N ADAPTER TEST BOX 1 1500 1500 TE254150-1 D5A 03/17/94 07/10/96 N BITE LOGIC CARD 1 2000 2000 TE254150-2 D5A 03/17/94 07/10/96 N CABLE 1 200 200 TE254151 D6A 05/06/94 07/11/96 N LFRA CHANNEL BOX 1 800 800 TE254152 D4B 07/18/96 06/14/98 N ESP CBL LFRA PADL BRD 1 950 950 TE254153 D5C 02/18/92 07/10/96 N PADDLE-BD CARD GAGE 1 1250 1250 TE254153-1 D5C 02/18/92 07/10/96 N D.C. PWR CABLE 1 50 50 TE254161 9852B 06/14/96 06/14/96 N ESP CABLE 83D 1 100 100 TE254162 9852B 06/14/96 06/14/96 N ESP CABLE 86D 1 100 100
4-JUN-97 TOOL MASTER LIST Page: 3 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-85-C-6236 Description: TB-23/BQ ASA TOOL/T/E Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- TE254163 9852B 06/14/96 06/14/96 N ESP CABLE 6E 1 100 100 TE254164 9852B 06/14/96 06/14/96 N ESP CABLE 10E 50 PIN 1 300 300 TE254165 9852B 06/14/96 06/14/96 N ESP CABLE 11E 50 PIN 1 310 310 TE254168 D5F POS 07/15/96 07/11/96 N ESP CABLE 12E 1 250 250 TE254169 9852B 06/14/96 06/14/96 N ESP CABLE 13E 1 250 250 TE254170-1 SN1 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254170-1 SN2 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254170-1 SN3 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254170-1 SN4 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254170-1 SN5 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254170-1 SN6 9852B 10/29/86 06/20/96 N ESP CARD LFRA 1 250 250 TE254170-2 SN1 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254170-2 SN2 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250 TE254176 D6C 02/25/92 07/11/96 N BRKOUT BOX - ASA 1 750 750 TE254176-1 D6A 02/25/92 07/11/96 N J2 INTERFACE CABLE 1 100 100 TE254176-2 D6A 02/25/92 07/11/96 N J3 INTERFACE CABLE 1 120 120 TE254176-3 D6A 02/25/92 07/11/96 N J4 INTERFACE CABLE 1 100 100 TE254176-4 D6A 02/26/92 07/11/96 N J3 INTERFACE CABLE 1 175 175 TE254176-6 D6A 02/25/92 07/11/96 N INTERFACE CABLE 1 150 150 TE254176 D7E 03/24/92 07/12/96 N TARGET ARRAY SIMULATOR 8007800 18 80000 80000 TE254195 SN 1 D7A 10/27/95 07/11/96 N CABLE BDXW7 8009000 1 50 50 TE254195 SN 2 D7A 02/28/92 07/11/96 N CABLE BDXW7 8009000 1 50 50 TE254195 SN 3 D7A 02/28/92 07/11/96 N CABLE BDXW7 8009000 1 50 50 TE254196 SN 1 D7A 08/29/92 07/11/96 N CABLE BDXW8 8009000 1 50 50 TE254196 SN 2 D7A 08/29/92 07/11/96 N CABLE BDXW8 8009000 1 50 50 TE254196 SN 3 D7A 08/29/92 07/11/96 N CABLE BDXW8 8009000 1 50 50 TE254197 D7A 02/19/92 07/11/96 N PADDLE BOARD 8009000 1 300 300 TE254198 D7A 02/19/92 07/11/96 N ADAPTOR 8009000 1 50 50 TE254199 D7A 11/27/93 07/11/96 N LFRA PWR ADAPTOR 8009000 1 50 50 TE254201-1 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-10 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-2 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-3 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-4 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-5 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-6 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-7 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-8 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254201-9 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30 TE254300 D4B 07/18/96 06/14/96 N T/F ESP LFRA 8007735 1 200 200 TE254301 TOWSON 04/19/94 09/30/96 N T/F SUMMER MEM, PWB 8008960 1 7796 7796 8008980 TE254302 TOWSON 04/19/94 09/30/96 N T/F BMFMR SUMMER SEQ PWB 8008965 1 8135 8135 TE254303 TOWSON 04/19/94 09/30/96 N T/F ARTHMTC BRD ASSY 8007710 1 5293 5293 TE254304 TOWSON 04/19/94 09/30/96 N T/F BFA CONTROL PWB 8007705 1 5342 5342 TE254305 TOWSON 04/19/94 09/30/96 N T/F INTERPOLATOR PWB 8008995-4 1 7349 7349 8008995-3 8008995 8008995-2
4-JUN-97 TOOL MASTER LIST Page: 4 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-85-C-6263 Description: TB-23/BQ ASA TOOL/T/E Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- 8008995-1 TE54306 TOWSON 04/19/94 09/30/96 N T/F LFRA DAC PWB ASSY 8007805 1 6867 6867 Tooling 21 39323 Test Equip. 186 880982 Total 207 920305
4-JUN-97 TOOL MASTER LIST Page: 1 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00024-89-C-6086 Description: ADC/MK-3 ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- T220333 MODERN PATTERN & FOU 08/02/93 10/14/96 N CASTING MOLD,PROPELLER 6667375 1 350 350 T220464 9820 06/05/97 09/17/96 Y TORQUING FIXTURE, VISE 1 1500 1500 T220465-1 9820 06/05/97 09/17/96 Y TORQ WRENCH 75" LB BC50577 1 100 100 T220465-2 C5C 06/05/97 07/18/96 Y TORQ WRENCH 75" LB BC50576 1 100 100 T220466-2 C5C 06/05/97 06/02/97 Y TORQ WRENCH 75" LB BC50578 1 100 100 T220466-3 9820 06/05/97 06/02/97 Y TORQ WRENCH BC51507 1 106 106 T220467ABC-1 9820 06/05/97 09/17/96 N VAC ENCAP CHAMBER UPR STK 1 3000 3000 T220468ABC-1 9820 06/05/97 09/17/96 N VAC ENCAP CHAMBER TOP/LWR 1 3000 3000 T220469A 9820 06/05/97 09/17/96 N VACUUM SYSTEM PUMP 1 2500 2500 6620469B 9820 06/05/97 09/17/96 N VACUUM SYSTEM MANIFOLD 1 350 350 T220470-1 CAL LAB 05/29/97 09/17/96 Y TORQ WRENCH 48' LB BC50581 1 100 100 T220470-2 CAL LAB 05/29/97 09/17/96 Y TORQ WRENCH 48' LB BC50580 1 100 100 T220461 9820 06/05/97 09/17/96 N FEED THRU ASSY BOND FIXT 1 100 100 T220472 C5C 06/04/97 09/17/96 N ULTRASONIC CLEANER 1 1200 1200 T220473 9820 06/05/97 09/17/96 N RING PAD CNTRING/BOND FIX 1 350 350 T220474-1 9820 06/05/97 09/17/96 N BONDING FIXTURE 1 1250 1250 T220474-2 9820 06/05/97 09/17/96 N BONDING FIXTURE 1 1250 1250 T220475-1 9820 06/05/97 09/17/96 N LOWER STACK ASSY FIXTURE 1 250 250 T220475-1 9820 06/05/97 09/17/96 N LOWER STACK ASSY FIXTURE 1 250 250 T220476-1 CAL LAB 06/29/97 09/17/96 N CRIMP TOOL 1 138 138 T220476-2 CAL LAB 06/29/97 09/17/96 Y CRIMP TOOL BC50620 1 138 138 T220477-1 NPO WA 03/10/94 09/17/96 N MOLD, LWR CLAM SHELL 1 3100 3100 T220477-2 9820 06/05/97 09/17/96 N MOLD, LWR CLAM SHELL REV C 8028900 1 1062 1062 8028925-2 T220478-1 C5C 05/30/97 09/17/96 N MOLD, UPPER CLAM SHELL 1 2750 2750 T220478-2 C5C 05/30/97 09/17/96 N MOLD, UPR CLAM SHELL REV C 8028900 1 965 965 T220479 9820 06/05/97 09/17/96 N LATHE 1 5500 5500 T220480-1 9820 06/05/97 09/17/96 N STACK WIRING ASSY 1 750 750 T220480-2 9820 06/05/97 09/17/96 N STACK WIRING ASSY 1 750 750 T220481 NPO W/A 03/10/94 09/17/96 N UPPER STACK WIRING FIXT 1 150 150 T220482-1 NPO W/A 03/10/94 09/17/96 Y TORQ WRENCH, 25 LBS 1 125 125 T220482-2 9820 06/05/97 06/02/97 Y TORQ WRENCH 25" LB BC50631 1 125 125 T220483-1 9820 06/05/97 09/17/96 N BUS WIRE FORMING FIXTURE 1 400 400 T220483-2 9820 06/05/97 09/17/96 N BUS WIRE FORMING FIXTURE 1 400 400 T220506 9820 06/05/97 09/17/96 N 30 GAL POLYETHYLENE TANK 1 300 300 T220533 9820 06/05/97 N MOLD, MID COUPLING 1 250 250 T220534-1 9820 06/05/97 N MOLD, COIL BOARD 1 500 500 T220523 9820 06/05/97 09/17/96 Y MOLD 8132888-2 1 3000 3600 T220524 9820 06/05/97 09/17/96 Y MOLD 8132887-2 1 3000 3000 T404001-1 C5D 01/14/92 07/02/96 N HOLD FIXT, HOVER CONT 4709300 1 125 125 T404001-2 C5D 06/23/93 07/02/96 N HOLD FIXT, HOVER CONT 4709300 1 125 125 T404002 C5D 01/23/93 07/02/96 N PANEL, HOVER CONTROLT 4709300 1 275 275 T404003 C5D 00S 01/14/92 07/02/96 Y PANEL ASSY, HOVER ASSY 4709300 1 275 275 T404004-1 C5D 01/14/92 07/02/96 N END CAP, RDT POOL TEST 4709300 1 175 175 T404004-2 C5D 01/14/92 07/02/96 N END CAP, RDT POOL TEST 4709300 1 175 175 T404006-1 C5D 10/21/92 10/16/96 N ADAPT HOLD FIXT, RDT 4709300 1 421 421 T404006-2 C5D 01/14/92 07/02/96 N ADAPT HOLD FIXT, RDT 4709300 1 421 421 TE254416 9820 06/05/97 09/17/96 N COIL ASSY TEST FIXTURE 1 1170 1170 TE256000-3 C5D OOS 01/23/92 07/02/96 Y CAGE, HELICOID PRESSUR 4709300 1 950 950 Tooling 46 41431 Test Equip. 2 2126 Total 48 43551
4-JUN-97 TOOL MASTER LIST Page: 1 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00383-88-G-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- T207231 C5E 06/17/93 07/02/96 N DRILL JIG 10672184567 1 321 321 T207232 C5E 06/17/93 01/02/96 N DRILL JIG 1067218 1 478 478 1207233 C5E 06/17/93 07/02/96 N DRILL JIG 1067218-2 1 196 198 1067218-1 T207234 C5E 06/17/93 07/02/96 N ALIGNMENT FIXTURE 1067218-3 1 78 78 T207385-ABCD C5D 09/30/93 07/02/96 N PRESSURE TEST FIXTURE 1060394 1 322 322 T207396&A C4D 08/05/96 08/05/96 N PRESSURE TEST FIXTURE 1049920 1 494 494 1207397 C5D 09/30/93 07/02/96 N TEST PLATE 1067248 1 170 170 1207611 C3F 02/28/92 06/27/96 N DRILL JIG 1043165 1 212 212 T207631 C3F 03/03/92 06/27/96 N MOLD 1067269 1 590 590 T207650 SONFARRELL, INC. 12/04/72 07/12/96 N MOLD 1067222 1 2219 2219 1207664-1 C2B 06/02/93 06/27/96 N BOND & LOCATE FIXTURE 1049927 1 57 57 T207664-2 C2B 06/02/93 06/27/96 N BOND A LOCATE FIXTURE 1049927 1 57 57 T207664-3 C2B 06/02/93 06/27/96 N BOND & LOCATE FIXTURE 1049927 1 57 57 T207664-4 C2B 08/23/94 06/27/96 N LOCATING FIXTURE 1049927 1 57 57 T207727-1 C7A 05/14/96 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63 1049928 T207727-2 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 1049928 1 63 63 3187780 T207727-3 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63 1049928 T207727-4 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63 1049928 T207727-5 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63 1049928 T207727-6 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63 1049928 T207727-7 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63 1049928 T207776 9852B 01/10/78 08/09/96 N TANK TEST FIXTURE 1049930 1 159 159 T207965 LINMOLD CO. 03/08/73 07/12/96 N MOLD 1067248-998 1 724 724 T208013 TELFWHSE 08/01/93 08/02/96 N ALUMINUM DIE, FWD EMD 1060364 1 2970 2970 T208014 TELFWHSE 08/01/93 08/02/96 N ALUMINUMM DIE 1060384 1 2309 2309 1208015 TELFWHSE 08/01/93 08/02/96 N PUSHOFF RING 1060354 1 31 31 T208016 TELFWHSE 08/01/93 08/02/96 N STEEL MANDREL 1060364 1 1082 1082 T208118 RUBBERCRAFT 11/11/85 07/17/96 H MOLD, COVER FLANGE 1070522 1 417 417 T208355 C7B 01/30/97 07/10/96 N SHAKE TEST FIXTURE(1 SET) 1049201 1 25 25 T208556 BLOOMERS METAL STAMP 09/21/77 07/10/96 H FORM DIE 1048364 1 662 682 T208557 BLOOMERS METAL STAMP 09/21/77 07/10/96 N FORM DIE 1048364 1 285 285 T208682A/B 0 & D INDUSTRIES 02/26/87 07/23/96 N DRILL JIG & GAGE 1047180 1 834 834 T209075 J4D 02/20/96 02/20/96 N TANK TEST FIXT 1049928 1 0 0 T209151 C4B 03/11/92 06/28/96 N HYDRO STD ADAPTER 1049928 1 167 167 T211537 C4F 02/27/92 07/01/96 N DRILL JIG 3134269 1 93 93 T211538 C5F 11/02/94 07/02/96 N PERM MOLD 3153771 1 246 246 T211600 C5A 03/05/92 07/01/96 N TEMPLATE 3134276 1 28 28 T211601 C5A 03/05/92 07/01/96 N TEMPLATE 3134272-1 1 16 16 T211602 C5A 03/05/92 07/01/96 N TEMPLATE 3134272-2 1 16 16 T211603 C5A 03/05/92 07/01/96 N TEMPLATE 1 33 33 T211619 C5A 03/05/92 07/01/96 N TEMPLATE 3134263-1 1 97 97 T211626 C6E1 02/28/92 07/09/96 N ROUTER FIXTURE 3134263-1 1 81 81
4-JUN-97 TOOL MASTER LIST Page: 2 - ------------------------------------------------------------------------------------------------------------------------------------ Contract Number: N00383-84-G-K301 Description: Q18B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ --------- T211623 TURNER CASTING CORP. 07/25/91 07/12/96 N WOOD PATTERN 3153759 1 331 331 T211624 C6F 02/27/92 07/09/96 N WOOD PATTERN 3153766 1 329 329 T211648 C5A 03/05/92 07/01/96 N TEMPLATE 3152116-1 1 45 45 T211664 C5A 03/05/92 07/01/96 N TEMPLATE 3134317 1 41 41 T211665 C5A 03/05/92 07/0l/96 N TEMPLATE 3164333-1 1 45 45 T211666 C5A 03/05/92 07/01/96 N TEMPLATE 3154333-2 1 37 37 T211667 C5A 03/05/92 07/01/96 N TEMPLATE 3154271 1 33 33 T211670 ACE RUBBER CO. 04/19/72 07/10/96 N CAVITY MOLD 1080397 1 971 971 T211672 C3F 02/28/92 06/27/96 N CAVITY MOLD 3153878 1 229 229 T211779 C5A 03/05/92 07/01/96 N TEMPLATE 3154340-1 1 113 113 T211780 C5A 03/05/92 07/01/96 N WELD FIXTURE 3154340-1 1 64 64 T211781 C5A 03/05/92 07/01/96 N TEMPLATE 3154340-2 1 33 33 T211782 C5A 11/O3/94 07/01/96 N TEMPLATE 3154342 1 28 28 T211812 C5E 06/24/93 07/02/96 N PERMANENT MOLD 3153765 1 487 487 T211813ABCD TEMPCO 09/11/90 07/10/96 N CASTING MOLD 3144273 1 608 608 T211847A/B G & D INDUSTRIES 02/26/87 07/23/96 N FABRIC MODELS 2 639 1278 T211849 G & D INDUSTRIES 02/26/87 07/23/96 N HI-TEMP DIE 3165890 1 749 749 T211850A/B G & D INDUSTRIES 02/26/87 07/23/96 N DRILL/TRIM FIXTURE 3165890 1 555 555 T211851 G & D INDUSTRIES 02/26/87 07/23/96 N FABRIC MODELS 3165890 1 933 933 T211852 G & D INDUSTRIES 02/27/87 07/23/96 N HI TEMP DIE 3165890 1 360 360 T211911 TELFWHSE 08/01/93 08/02/96 N COMPRESSION MOLD 3149684 1 3892 3892 T212172 F2A 07/31/95 07/12/96 N CABLE HARNESS BRD REV A 3134270 1 43 43 T213144 C3F 03/03/92 06/27/96 N SINGLE CAVITY MOLD 3152810-1 1 322 322 T213322 TELFWHSE 08/01/93 08/02/96 N CHECK FIXTURE 1060365 1 643 643 T213537-1 C5C 09/30/93 07/01/96 N LOCATING TOOL 3167589 1 50 50 T213537-2 C5C 08/09/96 08/09/96 N LOCATING TOOL 3167589 1 50 50 T213537-3 C5C 09/30/93 07/01/96 N LOCATING TOOL 3167589 1 50 50 T213537-4 C5C 08/09/96 08/09/96 N LOCATING TOOL 3167589 1 50 50 T213537-5 C5C 09/30/93 07/01/96 N LOCATING TOOL 3167589 1 50 50 T213677&A C5E 06/17/93 07/02/96 N DRILL FIXTURE 3153208 1 498 498 T215486 C5E 03/05/92 07/01/96 N TEMPLATE 3188495 1 385 385 T216029-1 C5A 03/05/92 07/01/96 N SPANNER WRENCH 3183186 1 54 54 T216029-2 C5A 03/05/92 07/01/96 N SPANNER WRENCH 3183186 1 54 54 T216238 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 147 147 T216239 C5A 08/21/98 07/01/96 N WALES TEMPLATE 1 49 49 T216240 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 134 134 T216241 C6E4 02/20/92 07/09/96 N ROUTER PLATE 1 206 206 T216242 C5A 03/05/92 07/01/96 N ROUTER PLATE 1 79 79 T216243 C5A 03/05/92 07/01/96 N ROUTER PLATE 1 60 60 T216351 C5A 03/05/92 07/01/96 N P. C. TEMPLATE 1 30 30 T216352 C6E4 02/20/92 07/09/96 N ROUTER PLATE 1 243 243 T216354 C5A 03/05/92 07/01/96 N ROUTER PLATE 1 57 57 T216355 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 79 79 T216357 C6E3 02/20/92 07/09/96 N P. C. TEMPLATE 1 42 42 T216358 C5A 10/19/93 07/01/96 N WALES TEMPLATE 1 49 49 T216359 C5A 03/01/93 07/01/96 N WALES TEMPLATE 1 42 42 T216360 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 42 42 T216361 C5A 09/09/96 07/01/96 N WALES TEMPLATE 1 91 91 T216362 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 42 42 T216378 C5A 03/05/92 07/01/96 N DRILL FIXTURE 1 246 246
4-JUN-97 TOOL MASTER LIST Page: 3
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T216403 C5A 10/29/93 07/01/96 N WALES TEMPLATE 1 60 60 T216406 C5A 03/05/92 07/01/96 N PANTO MASTER 1 198 198 T216415 C5A 05/03/93 07/01/96 N WALES TEMPLATE 1 122 122 T216416 C5A 03/05/92 07/01/96 N DRILL FIXTURE 1 290 290 T216417 C6E3 04/13/94 07/09/96 N WALES TEMPLATE 1 129 129 T216418 C5A 03/09/93 07/01/96 N WALES TEMPLATE 1 122 122 T216419 C6E3 03/09/93 07/09/96 N WALES TEMPLATE 1 202 202 T216420 C6E1 03/09/93 07/09/96 N WALES TEMPLATE 1 246 246 T216421 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 77 77 T216422 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 8 80 T216423 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 180 160 T216439 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 48 48 T216440 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 91 91 T216441 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 142 142 T216443 C5A 03/06/92 07/01/96 N WALES TEMPLATE 1 99 99 T216445 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 114 114 T216447 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 83 83 T216448 C6E2 02/20/92 07/09/96 N ROUTER PLATE 1 122 122 T216449 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 152 152 T216451 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 236 236 T216452 C6E2 02/20/92 07/09/96 N ROUTER PLATE 1 137 137 T216453 C5A 03/06/92 07/01/96 N WALES TEMPLATE 1 293 293 T216454 C6E1 02/20/92 07/09/96 N WALES TEMPLATE 1 129 129 T216455 C6E2 02/28/92 07/09/96 N ROUTER PLATE 1 214 214 T216456 C6E1 02/20/92 07/09/96 N P. C. TEMPLATE 1 297 297 T216457 C6E1 02/20/92 07/09/96 N P. C. TEMPLATE 1 103 103 T216458 C6E1 02/20/92 07/09/96 N P. C. TEMPLATE 1 103 103 T216459 C6E3 09/30/92 07/09/96 N P. C. TEMPLATE 1 73 73 T216460 C6E3 12/08/93 07/09/96 N P. C. TEMPLATE P/H REV C 1 80 80 T216461 C6E3 12/08/93 07/09/96 N P. C. TEMPLATE 1 72 72 T216462&A C6E1 06/07/95 07/09/96 N P. C. TEMPLATE 1 90 90 T216465 C5A 06/10/92 07/01/96 N SPDO WELD FIXTURE 1 77 77 T216466&-A C6E4 04/13/94 07/09/96 N SHEAR & ROUTER TEMP REV A 3184045-2 1 171 171 T216478 C5A 03/05/92 07/01/96 N PREP FIXTURE 1 19 19 T216485 C5A 03/01/93 07/01/96 N WALES TEMPLATE 1 42 42 T216488 TOWSON 04/26/94 09/30/96 N PREP FIXTURE 1 31 31 T216491 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 49 49 T216500-1 C5A 09/27/96 07/01/96 N PREP BLOCK 1 10 10 T216500-2 C5A 07/01/96 09/27/96 N PREP BLOCK 1 10 10 T216505 C5A 03/21/94 07/01/96 N WALES TEMPLATE 1 54 54 T216522&-A C5A 03/05/92 07/01/96 N PREP FIXTURE 1 245 245 T216567-1 9852B 06/17/96 06/17/96 N ALIGNMENT FIXTURE 3183305-801 1 74 74 T216567-2 9852B 06/17/96 06/17/96 N ALIGNMENT FIXTURE 3183305-801 1 74 74 T217147 C5A 03/06/92 07/01/96 N TEMPLATE 3188469-4 1 127 127 T217828 C5A 03/06/92 07/01/96 N MOLD FIXTURE 1049920 1 201 201 T217829 C4C 03/12/92 06/28/96 N STRAIGHTENING TOOL 1049920 1 440 440 T217835 C5A 03/06/92 07/01/96 N DRILL FIXTURE 405 405 T217838-1 C4B 03/11/92 06/28/96 N HOLD FIXT, PRE AMP 3135110 1 137 137 T217838-2 C4B 03/11/92 06/28/96 N HOLD FIXT, PRE AMP 3135110 1 137 137 T217846 C5A 08/24/94 07/01/96 Y STATION HEADER FIXTURE 1 500 500
4-JUN-97 TOOL MASTER LIST Page: 4
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T217913 C5A 03/06/92 07/01/96 N WALES TEMPLATE 3183111 1 30 30 3183111-1&2 T217966 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183204-801 1 65 65 T217967 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183504-801 1 65 65 T217968 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183680-801 1 65 65 T217969 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183304-801 1 65 65 T218121 C5B 03/09/92 07/01/96 N TEMPLATE 3198341-2 1 45 45 3198341-1 T218247 C5B 03/09/92 07/01/96 N SHEAR TEMPLATE 3310718-5 1 41 41 3310718-6 T218248-1 CAL LAB 06/04/97 06/14/96 Y CRIMPER 3310700 1 0 0 T218248-2 C4A 03/18/97 07/10/96 Y CRIMP TOOL 3310700 1 70 70 T218248-3 9852E 03/05/96 06/21/96 Y HAND CRIMP TOOL 3310700 1 70 70 T218249-1 9852E 03/18/97 07/01/96 Y HAND CRIMP TOOL 3310700 1 140 140 T218249-2 CAL LAB 06/04/97 05/10/96 Y CRIMP TOOL 3310700 1 70 70 T218249-3 9852E 03/05/96 07/10/96 Y HAND CRIMP TOOL 3310700 1 70 70 T218257 F3A 03/07/97 07/15/96 N CABLE BOARD 3310674-101 1 216 216 T218258 F2A 02/10/92 07/12/96 N CABLE BOARD 3310749 1 104 104 T218259 F3A 03/07/97 07/15/96 N CABLE BOARD 3310748 1 620 620 T218271 F3A 03/07/92 08/09/96 N CABLE BOARD 3310660-402 1 6350 6350 T218287 C7E6 02/28/92 07/10/96 N TEMPLATE 3310669-1 74 74 T218288 C6E17 02/20/92 07/09/96 N TEMPLATE 3310669-2 1 61 61 T218296 C6E21 02/21/92 07/09/96 N PANTO MASTER 3310662-1 1 158 158 T218297 C5B 01/03/94 07/01/96 N TEMPLATE 3183406 1 99 99 T218298 C6E18 02/20/92 07/09/96 N TEMPLATE 3310662-2 1 87 87 T218299 C6E18 02/21/92 07/09/96 N TEMPLATE 3310662-3 1 87 87 T218300 C5B 03/09/92 07/01/96 N DRILL FIXTURE 3195284 1 125 125 T218302 C5B 02/20/92 07/01/96 N SPOT WELDING FIXTURE 3192493 1 136 136 T218303 C5B 03/09/92 07/01/96 N TEMPLATE 3192493-3 1 52 52 T218304 C5B 03/09/92 07/01/96 N TEMPLATE 3192493-2 1 52 52 T218305 C5B 03/09/92 07/01/96 N TEMPLATE 3192493-1 1 52 52 T218306 C5B 03/09/92 07/01/96 N TEMPLATE 3195407-9 1 26 26 T218307 C6E14 02/20/92 07/09/96 N TEMPLATE 3194984 1 86 86 T218308 C5B 03/09/92 07/01/96 N TEMPLATE 3194984-2 1 139 139 T218309 C8E6 02/20/92 07/09/96 N WALES TEMPLATE 3310694-1 1 136 136 T218310 C5B 03/09/92 07/01/96 N FORM TEMPLATE 3183778-4 1 61 61 T218311 C5B 03/09/92 07/01/96 N TEMPLATE 3183778-7 1 87 87 T218312 C5B 03/09/92 07/01/96 N TEMPLATE,BRCKT CLMP REV B 3195926 1 71 71 T218313 C6E6 02/20/92 07/09/96 N TEMPLATE 3310693-1 1 184 184 T218314 C5B 03/09/92 07/01/96 N TEMPLATE 3310693-2 1 187 187 T218315 C6E7 02/20/92 07/09/96 N TEMPLATE, REV C 3310772-1 1 124 124 T218316 C5B 03/09/92 07/01/96 N TEMPLATE 3310772-2 1 112 112 T218317 C5B 03/09/92 07/01/96 N TEMPLATE 3310772-3 1 112 112 T218318 C6E19 02/21/92 07/09/96 N TEMPLATE 3310655-1 1 74 74 T218320 C6E6 02/20/92 07/09/96 N TEMPLATE 3310679 1 61 61 T218321 C6E6 02/21/92 07/09/96 N PANTO MASTER 3310679 1 100 100 T218326 C6E9 02/20/92 07/09/96 N TEMPLATE 3310661 1 126 126 T218327 C5B 03/09/92 07/01/96 N TEMPLATE 3310826 1 48 48 T218328 C5B 03/09/92 07/01/96 N TEMPLATE 3310827 1 48 48 T218329 C6E15 02/20/92 07/09/96 N TEMPLATE 3310648-1 1 113 113
4-JUN-97 TOOL MASTER LIST Page: 5
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T218330 C6E12 02/20/92 07/09/96 N TEMPLATE 3310648-2 1 113 113 T218331 C5B 03/09/92 07/01/96 N TEMPLATE 3310648-3 1 26 26 T218332 C6E6 02/21/92 07/09/96 N TEMPLATE, REV D 3310659 1 74 74 T218333 C6E5 02/20/92 07/09/96 N TEMPLATE 3310699 1 74 74 T218334 C5B 03/09/92 07/01/96 N TEMPLATE 3310698 1 61 61 T218335 C5B 03/09/92 07/01/96 N TEMPLATE 3310733 1 61 61 T218336 C6E18 02/21/92 07/09/96 N TEMPLATE 3310708 1 87 87 T218338 C5B 03/09/92 07/01/96 N TEMPLATE, P/N REV 0 3310656 1 149 149 T218339 C6E9 02/20/92 07/09/96 N ROUTER PLATE 3310656 1 174 174 T218340 C6E12 02/20/92 07/09/96 N TEMPLATE 3310649-1 1 113 113 T218341 C6E19 02/21/92 07/09/96 N TEMPLATE 3318649-2 1 48 48 T218343 C5B 05/05/93 07/01/96 N TEMPLATE 3310683-2 1 13 13 T218344 C6E5 02/20/92 07/09/96 N TEMPLATE 3310648-7 1 139 139 T218345 C6E12 02/20/92 07/09/96 N TEMPLATE 3310648-10 1 168 168 T218346 C6E5 02/20/92 07/09/96 N TEMPLATE 3310646-11 1 126 126 T218347 C5B 03/09/92 07/01/96 N TEMPLATE 3310652 1 74 74 T218348 C6E7 02/20/92 07/09/96 N TEMPLATE 3310646-1 1 100 100 T218349 C6E5 02/20/92 07/09/96 N TEMPLATE 3310646-9 1 139 139 T218350 C6E7 02/21/92 07/09/96 N TEMPLATE 3310646-20 1 74 74 T2183510A C7E10 03/02/92 07/10/96 N DRILL TEMPLATE 3310650 1 180 180 3319246 3310646 3319245 T218352A C7E8 03/02/92 07/10/96 N DRILL FIXTURE 3310646 1 180 180 3310246 T218356 C6E9 02/24/92 07/09/96 N TEMPLATE 3310683-1 1 400 400 T218357 C5B 03/09/92 07/01/96 N TEMPLATE,P/N REV F 3310688-1 1 126 126 T218358 C5B 03/09/92 07/01/96 N TEMPLATE 3310688-2 1 21 21 T218359 C5B 03/09/92 07/01/96 N TEMPLATE 3310688-3 1 48 48 T218360 C5B 03/09/92 07/01/96 N TEMPLATE 3310688-4 1 26 26 T218361 C5B 03/09/92 07/01/96 N TEMPLATE 3310714-1 1 100 100 T218362 C6E21 02/24/92 07/09/96 N TEMPLATE 3310714-2 1 129 129 T218363 C5B 03/09/92 07/01/96 N TEMPLATE 3310731 1 48 48 T218364 C5B 12/21/93 07/01/96 N TEMPLATE 3310815 1 74 74 T218365 C5B 03/09/92 07/01/96 N TEMPLATE 3310814 1 65 65 T218366 C5B 03/09/92 07/01/96 N TEMPLATE 3310713 1 48 48 T218367 C6E5 02/21/92 07/09/96 N TEMPLATE 3310817 1 113 113 T218368 C5B 03/09/92 07/01/96 N TEMPLATE, P/N REV C 3310833 1 48 48 T218369 C5B 05/05/93 07/01/96 N TEMPLATE,P/N REV B 3310739 1 48 48 T218370 C6E8 02/21/92 07/09/96 N ROUTER PLATE,P/N REV B 3310739 1 100 100 T218371 C7E4 02/24/92 07/10/96 N TEMPLATE 3310654-1 1 300 300 T218372 C6E18 02/24/92 07/09/96 N TEMPLATE 3310654-2 1 74 74 T218373 C5B 03/09/92 07/01/96 N TEMPLATE, P/N REV F 3310654-3 1 65 65 T218374 C6E9 02/24/92 07/09/96 N TEMPLATE 3310654-4 1 200 200 T218375 C6E19 02/24/92 07/09/96 N TEMPLATE 3310654-5 1 78 78 T218376 C6E18 02/24/92 07/09/96 N TEMPLATE 3310654-6 1 26 26 T218377 C5B 03/09/92 07/01/96 N TEMPLATE 3310654-8 1 252 252 T218378 C5B 03/09/92 07/01/96 N TEMPLATE 3310654-9 1 103 103 T218379 C6E6 02/21/92 07/09/96 N TEMPLATE 3310654-10 1 74 74 T218380 C6E19 02/24/92 07/09/96 N TEMPLATE 3310737 1 39 39
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Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T218381 C6E19 02/24/92 07/09/96 N TEMPLATE 3314162-1 1 87 87 T218382 C5B 03/09/92 07/01/96 N TEMPLATE 3310819 1 96 96 T218383 C7E6 02/24/92 07/10/96 N TEMPLATE 3310736 1 274 274 T218384 C7F 07/10/96 07/10/96 N ROUTER FIXTURE 3310736 1 329 329 T218385 C7E9 03/02/92 07/10/96 N TEMPLATE 3310686 1 213 213 T218386 C5B 05/11/93 07/01/96 N TEMPLATE 3310712-1 1 74 74 T218387 C7E8 03/02/92 07/10/96 N ROUTER PLATE 3310689-1 1 352 352 T218388 C7E8 03/02/92 07/10/96 N TEMPLATE, P/N REV C 3310689-1 1 352 352 T218389 C6E12 02/24/92 07/09/96 N PANTO MASTER 3310689-1 1 74 74 T218390 C5B 03/09/92 07/01/96 N TEMPLATE 3310732 1 61 61 T218399 F2A 02/10/92 07/12/96 N CABLE BOARD 3310760 1 110 110 T218401 F3B 02/10/92 07/15/96 N CABLE BOARD 3310744 1 223 223 T218404 C5B 03/09/92 07/01/96 N LAYOUT TEMPLATE 3310689 1 87 87 T218417 C6E21 02/24/92 07/09/96 N PANTO MASTER 3310686 1 320 320 T218422ABC C7E11 02/26/92 07/10/96 N PANTO MASTER 1 213 213 T218423 C7E6 02/24/92 07/10/96 N TEMPLATE 3310647-1 1 275 275 T218428 C6E9 02/24/92 07/09/96 N TEMPLATE 3310662-1 1 232 232 T218429 C6E21 02/24/92 07/09/96 N PANTO MASTER 3310662-1 1 91 91 T2l8432 C5B 03/09/92 07/01/96 N TEMPLATE 3314157-1 1 126 126 T2l8443 C5B 03/09/93 07/01/96 N SHEAR & BRAKE FIXTURE 3310646-6 1 39 39 T218444 C5B 03/09/92 07/01/96 N SHEAR & BRAKE FIXTURE 3310646-4 1 48 48 T218445 C5B 03/09/92 07/01/96 N TEMP/SH/BR/FIXTURE 3310246-4 1 39 39 T218447 C6E14 02/24/92 07/09/96 N SHEAR & FORM TEMPLATE 3310646-5 1 61 61 T218458 F2A 08/08/94 07/11/96 N HARNESS BOARD 3310770-401 1 315 315 T218459 C5B 03/09/92 07/01/96 N TEMPLATE 3190033-3 1 48 48 3190033-4 T218478 F3A 03/10/97 07/15/96 N HARNESS BOARD, AZA1 P1 3310685-401 1 65 65 T218480 F2A 02/10/92 07/12/96 N HARNESS BOARD 3310685-403 1 65 65 T218498 F3A 03/10/97 07/15/96 N HARNESS BOARD J2 3310680-402 1 101 101 T228621 C5B 03/09/92 07/01/96 N DRILL FIXTURE 3310834-1 1 50 50 T218622 F5C 02/12/92 07/15/96 N HOLD FIXTURE 3196099 1 75 75 T218625 C5B 03/09/92 07/01/96 N DRILL FIXTURE 3310688-5 1 60 60 T218632 9234 07/06/87 08/08/96 N MASK ALIGN FIXT 1 708 708 T218748 C5B 03/10/92 07/01/96 N FORM TEMP 3190082-2 1 75 75 T218754 C5B 03/10/92 07/01/96 N TEMPLATE 3310783 1 135 135 T400300 TELFWHSE 08/01/93 08/02/96 N LAY-UP MOLD 1060364 1 28 28 T400301 TELFWHSE 08/01/93 08/02/96 N FOAM MOLD 1060364-1 1 419 419 T400302 TELFWHSE 08/01/93 08/02/96 N FOAM MOLD 1060364-2 1 335 335 T400303 TELFWHSE 08/01/93 08/02/96 N LAYUP MOLD 1060364-4 1 54 54 T400304 TELFWHSE 08/01/93 08/02/96 N MANDREL 1060364-3 1 431 431 T400306ABC TELFWHSE 08/01/93 08/02/96 N DRILL JIG 1060364 1 620 620 T400312 KLUNE 11/22/72 07/12/96 N BLANK DIE 1049920-6 1 110 110 T400411 TELFWHSE 08/01/93 08/02/96 N DRILL JIG 2069401 1 324 324 T400447 ACE RUBBER CO. 07/28/71 07/10/96 N CAVITY MOLD 1060381 1 260 260 T401132 C3F 02/28/92 06/27/96 N SINGLE CAVITY MOLD 3051072 1 185 185 T401133 C3F 02/28/92 06/27/96 N SINGLE CAVITY MOLD 3051073 1 180 180 T401143AB C6F 02/28/92 07/09/96 N PATTERN & CORE BOX 3151156 1 1386 1385 T401144ABC C2F 02/28/92 06/26/96 N PATTERN & 2 CORE BOXES 3151157 1 985 985 T401145ABCD C5F 02/28/92 07/08/96 N PLASTIC PATTERN 3151158 1 795 795 T401421 INDUSTRIAL TUBE 07/02/71 07/17/96 N FORMING TOOL 3165871 1 740 740
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Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T401599 G & D INDUSTRIES 02/26/87 07/23/96 N PLASTER MOCKUP 3185355 1 2670 2670 T401600 G & D INDUSTRIES 02/26/87 07/23/96 N MOLD 3185355 1 2636 2636 T401601 G & D INDUSTRIES 02/26/87 07/23/96 N FORMING TOOL A 3185355 1 1115 1115 T401602 G & D INDUSTRIES 02/26/87 07/23/96 N FORMING TOOL B 3185355 0 0 0 T401603 G & D INDUSTRIES 02/26/87 07/23/96 N TRIM DRILL FIXTURE 3185355 1 676 676 T401605 G & D INDUSTRIES 02/26/87 07/23/96 N EPOXY MOLD 3185350 1 1960 1960 T401606 G & D INDUSTRIES 02/26/87 07/23/96 N EPOXY MOLD A 3185350 1 860 860 T401607 G & D INDUSTRIES 02/26/87 07/23/96 N FORMING TOOL B 3185350 0 0 0 T401608 G & D INDUSTRIES 02/26/87 07/23/96 N TRIM DRILL FIXTURE 3186350 1 510 510 T401609 G & D INDUSTRIES 02/26/87 07/23/96 N APPLY ROUTING FIXTURE 3185350 1 150 150 T401611 G & D INDUSTRIES 02/26/87 07/23/96 N EPOXY MOLD 3185350 1 795 795 T402404 D5F POS 02/11/97 06/26/96 N PROTRACTOR, REEL MACHINE 3323471 1 250 250 T402421 G & D INDUSTRIES 02/26/87 07/23/96 N MOLD LOW FUNNEL 3318695 1 3500 3500 T402463 G & D INDUSTRIES 02/26/87 07/23/96 N LAYUP MOLD 3165890 1 2500 2500 T603660-1 CIC0N 01/28/97 07/10/96 N HARNESS HOLDING FIXTURE 1 258 258 T603660-2 CICON 01/28/97 09/27/96 N HARNESS HOLDING FIXTURE 1 258 258 T603766 C6B 03/11/92 07/08/96 N ROUTER PLATE 3310646 1 120 120 3319246 T603767 C6B 03/11/92 07/08/96 N SAW TEMPLATE 3319246 1 45 45 3310646 T603768 C6B 03/11/92 07/07/96 N SAW TEMPLATE 3310646 1 45 45 3319246 T603769 C6B 03/11/92 07/09/96 N SAW TEMPLATE 3319246 1 45 45 3310646 T603770 C6B 03/11/92 07/09/96 N SAW TEMPLATE 3319246 1 45 45 3310646 T603771 C6B 03/11/92 07/09/96 N SAW TEMPLATE 3310646 1 45 45 3319246 T603777 C68 03/11/92 07/09/96 N DRILL JIG 3310834-2 1 180 180 T603780 C6B 03/11/92 07/09/96 N ROUTER PLATE 3310646 1 120 120 3319246 TE251006 D5A 09/27/96 09/27/96 N POLAR & RES. HYDRO T/F 1 110 110 TE251008 9852D 06/25/96 06/25/96 REEL MACK PANEL 1 344 344 TE251008-4 D4B 06/25/96 06/25/96 N TEST C0NNECTOR P5657 1 100 100 TE251008-5 D4B 06/25/96 06/25/96 N TEST CONNECTOR P6019 1 100 100 TE251008-6 D4B 05/25/96 06/25/96 CONTINUITY TEST FIXTURE 1 100 100 TE251010 9852AR/0 05/10/89 08/09/96 N JIFF--LIFF T/F 1 175 175 TE251696 9234 04/14/93 06/17/96 T/F NAFI-4 & HYBRID 4F 3185210 1 875 875 TE251698 9234 04/14/93 06/17/96 T/F NAFI-3& HYBRID 3F 3185205 1 767 767 TE251705 D6C 02/26/92 07/11/96 N TEST FIXT, HYBRID 1021 3185240 1 324 324 TE251710 9762 06/20/90 09/27/96 T/F CURSOR POSITION CONT 3184674 1 511 511 TE251712 D6A 05/25/92 07/11/96 N TEST FIXTURE 3183370 1 347 347 TE251714 D5F POS 02/10/97 07/12/96 N TEST FIXTURE 1 316 316 TE251748 9234 04/13/93 06/17/96 TEST FIXTURE 3185220 1 300 300 TE251754 D7E 07/02/92 07/11/96 N SONAR CABLE, SUPER TESTER 1 439 439 TE251757 9234 04/14/93 06/17/96 TEST FIXTURE 3185075 1 363 363 TE251760 9852B00S 08/18/96 06/18/96 SYST ATP TEST STATION 1 8450 8450 TE251760-1 9852B00S 06/18/96 06/18/96 PANEL, METER 1 1000 1000 TE251760-10 D7F POS 02/10/97 07/10/96 Y OSCILLOSCOPE 1 3600 3600 TE251760-12 9852B00S 06/18/96 06/18/96 PANEL, POWER CONTROL 1 800 800
4-JUN-97 TOOL MASTER LIST Page: 8
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- TE251760-13 9852B 06/18/96 06/18/96 PANEL, 60 HS POWER 1 700 700 TE251760-14 9852B 06/18/96 06/18/96 PANEL, 400 HS POWER 1 1500 1500 TE251760-2 9852B 08/18/96 08/18/96 TIMER, COUNTER 1 3500 3500 TE251760-3 9852B00S 06/18/96 06/18/96 BURST GEN DRANETZ 206A 1 5000 5000 TE251760-4 D7F P0S 02/10/97 06/18/96 WAVEFORM SYNTHESIZER 1 3000 3000 TE251760-5 9852B 05/18/96 06/18/96 CONTROL PANEL, MARTIX 1 30000 80000 TE251760-6 9852B 06/18/96 06/18/96 CONTROL PANEL 1 28761 28761 TE251760-7 9852B 06/18/96 06/18/96 BLOWER 1 150 150 TE251760-8 9852B00S 06/18/96 06/18/96 PANEL, METER 1 1500 1500 TE252142 9762 05/24/82 07/22/96 N T/F I.C. TESTER D/A CONV 3184649 1 355 355 TE252143 D5F P0S 02/10/97 07/11/96 N SUPER TEST CABLE SA 1 200 200 TE252144 98528 12/12/80 06/13/96 N TEST CABLE SB 1 200 200 TE252146 D5F P0S 02/10/97 09/27/96 N TEST CABLE 1 200 200 TE252147 D5F POS 02/10/97 06/13/96 N SUPER TEST CABLE TG 1 200 200 TE252162 9852B 07/22/96 07/22/96 N TEST CABLE 1 200 200 TE252167 D5F P0S 02/10/97 07/12/96 N SUPER TEST CABLE TF 1 200 200 TE252168 D5F P0S 02/10/97 07/11/96 N SUPER TEST CABLE TG 1 200 200 TE252170 9852B 06/13/96 06/13/96 N TEST CABLE 1 200 200 TE252171 9852B 06/13/96 06/13/96 N TEST CABLE 1 200 200 TE252181 9234 04/19/93 06/17/96 TEST FIXTURE 3185110 1 511 511 TE252182 9234 04/14/93 06/17/96 TEST FIXTURE 3185180 1 402 402 TE252184 9234 04/14/93 06/17/96 TEST FIXTURE 3185100 1 411 411 TE252185 9234 04/14/93 06/17/96 TEST FIXTURE 3185065 1 411 411 TE252186 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185230 1 411 411 TE252187 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185190 1 411 411 TE252188 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185235 1 411 411 TE252189 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185060 1 377 377 TE252230 9234 04/14/93 06/17/96 I.F. HYBRID TEST FIXT 3185100 1 753 753 TE252236-1 D7C P0S 02/10/97 09/27/96 Y POWER SUPPLY 1 550 550 TE252237 D5C 02/20/92 07/10/96 N TEST FIXTURE, 1026 1 700 700 TE252242 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183370 1 225 225 TE252250 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183450 1 225 225 TE252251 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183355 1 250 250 TE252263 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183226 1 183 183 TE252300 D4B 02/18/92 07/10/96 TEST FIXTURE 1 653 653 TE252301 D5B 02/19/92 07/10/96 N TEST FIXTURE 3185110 1 214 214 TE252304 9234 07/21/88 06/17/96 HYBRID TRIM FIXTURE 1 214 214 TE252406 D3F POS 02/10/97 07/10/96 N ADAPT MULTILAYER BOARD 3194811 1 1500 1500 TE252475 8900XDCR 10/30/79 08/09/96 NULLMETER 1 3566 3566 TE252483 9852B 05/14/82 08/09/96 TEST FIXTURE 3183225 1 540 540 TE252484-1 D6B 02/26/92 07/11/96 N T/F MAD GATING 2A11 3188483 1 1147 1147 TE252493 9852B 06/18/96 06/18/96 SONAR BITE CNTL A11 3196615 1 1500 1500 TE252494 9852B 08/18/96 06/18/96 DOME CONTROL T/F A2 1 750 750 TE252652 9852B 06/18/96 06/18/96 TEST FIXTURE 3198360 1 500 500 TE252656-1 D4A 02/18/92 07/10/95 N TEST FIXTURE A2A12 3188486 1 2703 2703 TE252657 9852B 06/18/96 06/18/96 TEST FIXTURE 3183420 1 3000 3000 TE252659 9852B 06/18/96 06/18/96 TEST FIKTURE 3198205 1 3200 3200 TE252672 9852B 06/18/96 06/18/96 TEST FIXTURE 3183630 1 1721 1721 TE252674 9852B 06/18/96 06/18/96 TEST FIXTURE 3310480 1 2256 2256 TE252676 9852B 06/18/96 06/18/96 TEST FIXTURE 3198740 1 2805 2805
4-JUN-97 TOOL MASTER LIST Page: 9
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- TE252677 9852B 06/18/96 06/18/96 TEST FIXTURE 3183404 1 1721 1721 TE2S2678 9852B 06/18/96 06/18/96 TEST FIXTURE 3185460 1 1721 1721 TE252679 9852B 06/18/96 06/18/96 TEST FIXTURE 3185445 1 2233 2233 TE252738 D4B 07/18/96 06/13/96 TEST FIXTURE 3163630 1 1900 1900 TE252739 D4A 02/18/92 07/10/96 N TEST FIXTURE 3187820 1 1921 1921 TE252740 D5B 02/19/92 07/10/96 N TEST FIXTURE 3315780 1 2256 2256 TE252747 9852B 06/18/96 06/18/96 TEST FIXTURE 3185435 1 2776 2776 TE252748 9852B 06/18/96 06/18/96 N TEST FIXTURE, AMP DRIVER 3198209 1 1577 1577 TE252749 D5C 00S 02/20/92 07/10/96 Y TEST FIXTURE 3315775 1 2050 2050 TE252765 9852B 06/18/96 06/18/96 TEST FIXTURE 3196610 1 2000 2000 TE252778 9852B 06/18/96 06/18/96 TEST FIXTURE 3198270 1 596 595 TE252803 9852B 06/18/96 06/18/96 TEST FIXTURE 3183465 1 1705 1705 TE252815 9852B 06/18/96 06/18/96 TEST FIXTURE 3198010 1 1700 1700 TE252816 9852B 06/18/96 06/18/96 TEST FIXTURE 3196565 1 2138 2138 TE252836 9852B 06/18/96 06/18/96 TEST FIXTURE 3199831 1 743 743 TE252836 9852B 06/18/96 06/18/96 TEST FIXTURE 3196575 1 2132 2132 TE252837 9852B 06/18/96 06/18/96 TEST FIXTURE 3310500 1 1642 1642 TE252846 9852B 06/18/96 06/18/96 TEST FIXTURE 3185430 1 2200 2200 TE252847 9852B 06/18/96 06/18/96 TEST FIXTURE 3183485 1 2200 2200 TE252848 9852B 06/18/96 06/18/96 TEST FIXTURE 3315750 1 2200 2200 TE252849 9852B 06/18/96 06/18/96 TEST FIXTURE 3315730 1 1700 1700 TE252850 9852B 06/18/96 06/18/96 TEST FIXTURE 3185290 1 2200 2200 TE252851 9852B 06/18/96 06/18/96 TEST FIXTURE 3183885 1 1700 1700 TE252853 9852B 06/18/96 06/18/96 TEST FIXTURE 3196605 1 2336 2336 TE252855 9852B 06/18/96 08/18/96 TEST FIXTURE 3183270 1 1710 1710 TE252857 9852B 06/18/96 06/18/96 TEST FIXTURE 3183390 1 1100 1100 TE252864 98528 06/18/96 06/18/96 TEST FIXTURE 3315760 1 2330 2330 TE252866 D3A 11/18/94 07/10/96 N TEST FIXT,SERVOMECHANISM 1 2118 2118 TE252873 9852B 06/18/96 06/18/96 TEST FIXTURE 3183230 1 1502 1502 TE252876 9852B 06/28/96 06/18/96 TEST FIXTURE 3198365 1 2688 2688 TE252881 9852B 06/18/96 06/18/96 TEST FIXTURE 3198255 1 2115 2115 TE252882 9852B 06/18/96 06/18/96 TEST FIXTURE 3183610 1 1542 1542 TE252888-1 TELFWHSE 08/01/93 08/02/96 END BELL TEST FIXTURE 3149684 1 2400 2400 TE252888-2 TELFWHSE 08/01/93 08/02/96 END BELL TEST FIXTURE 3149684 1 2400 2400 TE252896 9852B 06/18/96 06/18/96 TEST FIXTURE A2AB 3310695 1 2000 2000 TE252897 9852B 06/18/96 06/18/96 TEST FIXT SPEECH AMP A4 3190065 1 1800 1800 TE252898 9852B 06/18/96 08/18/96 TEST FIXT FUNCT GEN A4A1 3310715 1 2200 2200 TE252899 9852B 06/18/96 06/18/96 TEST FIXT LOG FILTR A4A2 3310720 1 2200 2200 TE252900 9852B 06/18/96 06/18/96 TEST FIXT MONITOR A5 3190280 1 2000 2000 TE252901 9852B 06/18/96 06/18/96 TEST FIXT MOD CAR GEN A6 3190015 1 2000 2000 TE252903 9852B 06/18/96 08/18/96 TEST FIXT METER SEAL A8 3190085 1 2200 2200 TE252904 9862B 06/18/95 06/18/96 TEST FIXT PHASE DET A9 3190270 1 2000 2000 TE252905 9852B 06/18/96 06/18/96 TEST FIXT/SIG COND A 10 3190095 1 1800 1800 TE252916 9852B 06/18/96 08/18/96 TEST FIXT PHASE SHFTR A11 3190095 1 1800 1800 3190275 TE252917 9852B 06/18/96 06/18/96 T/F PREAMP ATTEN A12 A13 3190023 1 2000 2000 TE252918 9862B 06/18/96 06/18/96 TEST FIXT ECHO PROC A 14 3190045 1 2000 2000 TE252919 9862B 06/18/96 06/18/96 TEST FIXT RANGE DELAY A15 3190026 1 2000 2000 TE252920 9852B 06/18/96 06/18/96 T/F PULSE WIDTH/MSTR TIMR 3190075 1 2200 2200 TE252921 9852B 06/18/96 06/18/96 T/F HI VOL REG A2A7 3310705 1 2000 2000
4-JUN-97 TOOL MASTER LIST Page: 10
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- TE252923 9852B 06/18/96 06/18/96 T/F MAD & SAD OSC A1A1A2 3310675 1 1800 1800 TE252924 9852E 09/19/95 06/21/96 T/F INTERFC BUFFER A1A1A1 3310725 1 2500 2500 TE252930 D6B 04/30/92 07/11/96 N TEST FIXTURE OP 3190055 1 240 240 TE252931 D5B 02/19/92 07/10/96 N TEST FIXT 3162393 1 2350 2350 TE252932 9852B 06/18/96 06/18/96 CAL FIXT A2A8 LOW VOL REQ 3310695 1 1800 1800 TE252938 9852B 06/19/96 06/18/96 N T/F COS SHAPER 4A14 3316150 1 2000 2000 TE252939 9852B 06/18/96 06/18/96 T/F MULTIPLEXER 4A16 3316155 1 2000 2000 TE254182 9234 04/14/93 06/17/96 N TEST FIXT,ALC & LEVEL 3325690 1 1500 1500 TE254183 9234 64/14/93 06/17/96 N TEST FIXT, D/A CONVERTER 3318663 1 1200 1200 TE254185 9234 04/14/93 06/17/96 N TEST FIXT,AUDIO FILTER 3190431 1 800 800 3188110 TE254186 9234 04/14/93 06/17/96 N TEST FIXT,BANDPASS FILTER 1 1200 1200 TE254187 9234 04/14/93 06/17/96 N TEST FIXT,#1 CONTINUITY 1 1500 1500 TE254189 9234 04/14/93 06/17/96 N TEST FIXT,#2 CONTINUITY 3322393 1 1500 1560 8013841 3326598 8013840 8013845 3326590 TE254246 9234 04/14/93 06/17/96 N TEST FIXTURE 3322394 1 2000 2000 TE254247 9234 04/06/93 08/17/96 N TEST FIXT DCP PRO #2 3310440 1 4300 4300 TE265146 TELFWHSE 08/01/93 08/02/96 N HYDROPHONE 1 10151 10151 TE265151 D7C 06/25/95 07/11/96 N SONAR CABLE 1 1174 1174 TE265155 D7D 03/24/92 07/11/96 Y RECORD TEST SET 1 5000 5000 TE270001 9852DP0S 10/28/96 06/25/96 Y TENSIONING MACHINE 3162388 1 5416 5416 TE425192-1 9234 07/09/87 07/15/96 BURN IN RACK S/N 1 1 851 851 TE45105 C/L IFR 08/12/96 08/12/96 VAR 0 SHIFT GENERATOR 1046912 1 2722 2722 Tooling 307 84488 Test Equip. 139 275242 Total 446 359730
4-JUN-97 TOOL MASTER LIST Page: 11
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- 403012-1 NAS FLA 02/02/95 10/16/96 N DRILL JIG DOME CONT 1 RVA 8030640 1 1342 1342 403012-2 9855A 05/03/95 06/25/96 N DRILL JIG DOME CONT 1 RVA 8030640 1 1342 1342 403012-3 NAS CA 02/02/95 09/16/96 N DRILL JIG DOME CONT 1 RVA 8030640 1 1342 1342 403013-1 NAS FLA 02/02/95 10/15/96 N DRILL JIG DOME CONT 2 RVA 8030640 1 1342 1342 403013-2 9855A 05/03/95 06/25/96 N DRILL JIG DOME CONT 2 RVA 8030640 1 1342 1342 403013-3 NAS CA 02/02/95 09/16/96 N DRILL JIG DOME CONT 2 RVA 8830640 1 1342 1342 403016-1 NAS FLA 02/02/95 10/15/96 N HOLE TEMP CBL RETNR REV A 8030640 1 898 898 403016-2 C5B 12/17/96 06/25/96 N HOLE TEMP CBL RETNR REV A 8030640 1 898 898 403016-3 NAS CA 02/02/95 09/16/96 N HOLE TEMP CBL RETNR REV A 8030640 1 898 898 403017-1 NAS CA 02/02/96 09/16/96 N TOOL,DRIP PAN BRCKT REV A 8030640 1 500 500 403017-2 C5B 06/26/96 08/25/96 N TOOL,DRIP PAN BRCKT REV A 8030640 1 500 500 403017-3 NAS FLA 02/02/95 10/15/96 N TOOL,DRIP PAN BRCKT REV A 8030640 1 500 500 403018-1 NAS CA 02/02/95 09/16/96 N CUTOUT GUIDE UPR PAN RV A 8030640 1 500 500 403018-2 C5B 06/25/90 06/26/96 N CUTOUT WIDE UPR PAN RV A 8030640 1 500 500 403018-3 NAS FLA 02/02/95 10/15/96 N CUTOUT WIDE UPR PAN RV A 8030640 1 500 500 403019-1 NAS CA 02/02/95 09/16/96 N TOOL,UPPER DRIP PAN REV A 8030640 1 371 371 403019-2 C5B 08/25/96 06/25/96 N TOOL,UPPER DRIP PAN REV A 8030640 1 371 371 403019-3 NAS FLA 02/02/95 10/15/96 N TOOL UPPER DRIP PAN REV A 8030640 1 371 371 403020-1 NAS CA 02/02/95 09/16/96 N TOOL,MID DRIP PAN REV A 8036640 1 335 335 403020-2 C5B 08/25/96 06/25/96 N TOOL,MID DRIP PAN REV A 8030640 1 335 335 403020-3 NAS FLA 02/02/95 10/15/96 N TOOL,MID DRIP PAN REV A 8030640 1 335 335 403021-1 NAS CA 02/02/95 09/16/95 N TEMPLATE CBL GUIDE REV A 8030640 1 273 273 403022-2 C5B 12/17/96 06/25/96 N TEMPLATE CBL GUIDE REV A 8030640 1 273 273 403021-3 NAS FLA 02/02/95 10/15/96 N TEMPLATE CBL GUIDE REV A 8030640 1 273 273 403022-1 C6B 05/03/95 07/08/96 N TEMPLATE CDL GUIDE REV A 8030840 1 644 644 403022-2 NAS CA 02/02/95 09/16/96 N TEMPLATE CBL GUIDE REV A 8030640 1 644 644 403022-3 NAS FLA 02/02/95 10/15/96 N TEMPLATE CBL GUIDE REV A 8030640 1 644 644 403023-1 NAS CA 02/02/95 09/16/96 N ALIGN TOOL CBL RETNR REVA 8030848 1 2019 2019 403023-2 9852D 05/03/95 08/25/96 N ALIGN TOOL CBL RETNR REVA 8030640 1 2019 2019 403023-3 NAS FLA 02/02/95 10/15/96 N ALIGN TOOL CBL RETNR REVA 8030640 1 2019 2019 Tooling 30 24672 Test Equip. 0 0 Total 30 24672
4-JUN-97 TOOL MASTER LIST Page: 12
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ --------- T403048 C7B 10/17/96 10/17/96 N TERMINATION TOOL REV B 1 1364 1364 T403050-1 C7B 08/05/96 08/05/96 N MARKING BRACKET 1 174 131 305 T403050-2 C7B 06/26/96 06/26/96 N MARKING BRACKET 1 174 131 305 T403050-3 C7B 06/26/96 06/26/96 N MARKING BRACKET 1 174 131 305 T403050-4 C7B 06/26/96 06/26/96 N MARKING BRACKET 1 174 131 305 T403054-1 C7B ABC 06/18/96 06/18/96 N MOLD, MASTER 1 192 192 T403054-2 C7B ABC 10/17/96 10/17/96 N MOLD, MASTER 1 192 192 T403055-1 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44 T403055-2 C7B 10/11/96 07/09/96 N CENTERING PIN 1 44 44 T403055-3 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44 T403055-4 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44 T403055-5 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44 T403055-6 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44 T403056-1 C7B 10/17/96 07/15/96 N TENSION ADAPTER 1 220 220 T403056-2 C7B 10/17/96 07/15/96 N TENSION ADAPTER 1 220 220 T403058A/B C7B 10/17/96 07/09/96 N MARKING BRACKET 1 435 435 T403060 C7B 06/13/96 06/14/96 N MANDREL, HOSE GRINDER 1 237 237 T403061 C7B 10/17/96 10/17/96 N SLEEVE,COLLET,HOSE TERM 1 208 208 T403062 C7B 10/17/96 10/17/96 N COLLET, HOSE TERM 1 385 385 T403063 C7B 07/10/96 07/10/96 N MOLD,LRH HOSE TERM 1 534 534 T403064 C7B 07/10/96 07/10/96 Y MOLD, HOSE TERM BOND STA 1 534 534 T403068 C7B 12/17/96 06/04/96 N GAGE, ASSEMBY 1 801 801 T403070 8600 ENG 09/25/95 09/14/95 N COUPLER, HOSE 1 237 237 T403071 8600 ENG 09/25/95 09/15/95 N ADAPTER 1 359 359 T403072 8600 ENG 09/25/95 09/14/95 N ADAPTER 1 292 292 T403073 C7B 06/13/96 06/14/96 N ADAPTER 1 267 267 T403074A-1 8600 09/27/95 09/27/95 N FITTING 1 148 148 T403074A-2 8600 09/27/95 09/27/95 N FITTING 1 148 148 T403075 C7B 10/17/96 10/17/96 N PULL PIG 1 208 208 T403078-1 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878 T403078-2 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878 T403078-3 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878 T403078-4 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878 T403082 C7B 02/26/97 06/04/96 Y GAGE ASSY REV A 1 1250 1250 Tooling 34 13227 Test Equip. 0 0 Total 34 13227
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098 - ------------------------------------------------------------------------------------------------------------------------------------ Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 1 - ------------------------------------------------------------------------------------------------------------------------------------ Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - ------------------------------------------------------------------------------------------------------------------------------------ N00019-85-C-0148 54 LI 3 51 Sikorsky ---------------------------------------------------------------------------------------------------------- $127,527 $ 7239 120288 AQS-13F - ------------------------------------------------------------------------------------------------------------------------------------ N00024-90-C-6013 364 LI 62 302 Northrop-Grumman ---------------------------------------------------------------------------------------------------------- $2,932,360 $ 394768 2537592 SQR-19 - ------------------------------------------------------------------------------------------------------------------------------------ N00024-90-C-6031 2 LI 1 1 ---------------------------------------------------------------------------------------------------------- $837 $ 437 400 TARC ---------------------------------------------------------------------------------------------------------- N00024-[ILLEGIBLE] 5 LI 1 4 - ------------------------------------------------------------------------------------------------------------------------------------ $12,040 $ 425 11615 TARC ---------------------------------------------------------------------------------------------------------- N00024-92-C-6225 5 LI 1 4 Northrop-Grumman ---------------------------------------------------------------------------------------------------------- FP $12,040 $ 425 11615 NSIS - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $0 $ - ------------------------------------------------------------------------------------------------------------------------------------ Total LI 68 382 0 0 0 0 0 ---------------------------------------------------------------------------------------------------------- Total $ 403,294 2,681,510 0 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL LINE ITEMS 430 GRAND TOTAL $$ 3,084,804 - ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098 - ------------------------------------------------------------------------------------------------------------------------------------ Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 2 - ------------------------------------------------------------------------------------------------------------------------------------ Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ Total LI 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------------------------- Total $ 0 0 0 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL LINE ITEMS 0 GRAND TOTAL $$ 0 - ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098 - ------------------------------------------------------------------------------------------------------------------------------------ Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 3 - ------------------------------------------------------------------------------------------------------------------------------------ Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ 0 LI ---------------------------------------------------------------------------------------------------------- $ 0 $ - ------------------------------------------------------------------------------------------------------------------------------------ Total LI 0 0 0 0 0 0 0 ---------------------------------------------------------------------------------------------------------- Total $ 0 0 0 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL LINE ITEMS 0 GRAND TOTAL $$ 0 - ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY ADMINISTRATOR WORKSHEET DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098 - ------------------------------------------------------------------------------------------------------------------------------------ Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4 - ------------------------------------------------------------------------------------------------------------------------------------ Estimated Total Value Special Other Agency Indust Material Control Number Completion Government Special Test Plant Peculiar Plant Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks - ------------------------------------------------------------------------------------------------------------------------------------ LI ---------------------------------------------------------------------------------------------------------- $ - ------------------------------------------------------------------------------------------------------------------------------------ LI ---------------------------------------------------------------------------------------------------------- $ - ------------------------------------------------------------------------------------------------------------------------------------ LI ---------------------------------------------------------------------------------------------------------- $ - ------------------------------------------------------------------------------------------------------------------------------------ LI $ - ------------------------------------------------------------------------------------------------------------------------------------ LI ---------------------------------------------------------------------------------------------------------- $ - ------------------------------------------------------------------------------------------------------------------------------------ LI ---------------------------------------------------------------------------------------------------------- $ - ------------------------------------------------------------------------------------------------------------------------------------ LI ---------------------------------------------------------------------------------------------------------- $ - ------------------------------------------------------------------------------------------------------------------------------------ Total LI 68 362 0 0 0 0 0 ---------------------------------------------------------------------------------------------------------- Total $ 403294 2681510 0 0 0 0 0 - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL LINE ITEMS 430 GRAND TOTAL $$ 3,084,804 - ------------------------------------------------------------------------------------------------------------------------------------
4-JUN-97 TOOL MASTER LIST Page:
Contract Number: N00019-85-C-148 Descriptions AQS-13F ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ---------------- 402843 STILLMAN SEAL 08/07/92 07/17/96 N MOLD, SOL CAV, ELEMENT 3328838 1 3639 3639 3328838 402898A/B C4B 03/09/92 06/28/96 N U-JOINT TENSILE FIXT 1 300 300 402963 STILLMAN SEAL 02/16/93 07/17/96 N MOLD, BOOT BLADDER 8002763 1 3300 3300 8002763 E254178 9234 04/14/93 06/17/96 N BURN-IN BOARD 8013841 1 1500 1500 E254179 9234 04/14/93 06/17/96 N BURN-IN BOARD 8013845 1 1500 1500 E254203 D4F P0S 02/06/97 07/10/96 N ESP TEST FIXT A3 BRD 8011756 1 1613 1613 E254204 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A4 BRD 8011766 1 2419 2419 E254205 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A8 BRD 8009331 1 1723 1723 E254206 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A9 BRD 8011796 1 2266 2266 E254207 D4F P0S 02/06/97 07/10/96 N ESP TEST FIXT A12 BRD 8011806 1 2472 2472 E254208 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A13 BRD 8011816 1 1648 1648 E254209 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A7 BRD 8013555 1 2418 2418 E254210 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A14 BRD 8014086 1 1723 1723 E254211 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A27 BRD 8011826 1 5152 5152 E254212 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A28 BRD 8011831 1 4048 4048 E254213 9852B 06/20/96 06/20/96 N AUTO BRD T/S FIXT 4A29 8009235 1 1600 1600 E254214 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A40 BRD 8011841 1 1880 1880 E254215 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A38 BRD 8011836 1 2773 2776 E254216 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A6 BRD 8013956 1 1526 1526 E254217 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A40 BRD 8183972 1 1890 1890 E254218 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A1 BRD 8013966 1 1890 1890 E2S4219 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A4 BRD 8013946 1 1890 1890 E254220 D4F P0S 02/06/97 07/11/96 N ESP FIXT DOPPLER PROC 8013876 1 1000 1000 E254222 9852B 06/20/96 08/20/96 N AUTO BRD T/S FIXT 10A3 8011755 1 2500 2500 E254223 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A5 BRD 8013961 1 1820 1820 E254224 D4F P0S 02/06/97 07/11/96 N ESP TEST F1XT A7 BRD 8011786 1 2220 2220 E254225 D4F P0S 02/06/97 07/11/96 N ESP T/F A1 CKT CD 8011381 1 1190 1190 E254226 D4F P0S 02/06/97 07/11/96 N ESP T/F I/0-A2 CKT CD 8011386 1 1240 1240 E254227 D4F P0S 02/06/97 07/11/96 N ESP T/F LED-A3 CKT CD 8011391 1 1080 1080 E254230 9852B 07/01/88 06/20/96 N IEEE-488 BUS S/N 753 1 5899 5899 E254231 9852EL 07/28/88 07/15/96 N IEEE-488 BUS S/N 759 8013965 1 5899 5899 E254232 9852EL 12/03/92 07/15/96 N IEEE-488 BUS S/N 767 1 5899 5899 E254233 9852EL 10/02/88 08/02/96 N IEEE-488 BUS S/N 769 1 5899 5899 E254234 D4E 07/18/96 06/14/96 N TEST FIXT/ESP DOME CON 8014005 1 2610 2610 E254235 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A3 BRD 8013951 1 1990 1990 E254239 9852 06/30/88 06/20/96 N INTERFACE MOD PM (A28) 8011830 1 8000 8000 E254242 9852 06/16/88 06/20/96 N AUTO BRD T/F 10A9 BRD 8011795 1 1500 1500 E254243 9852 06/24/88 06/20/96 N AUTO BRD T/F PM 10A12 8011805 1 2000 2000 E254244 9852 06/28/88 06/20/96 N AUTO BRD T/F A40 FRT 8011840 1 1800 1800 E254245 9852 07/05/88 06/20/96 N AUTO BRD T/F DOME A10 8013970 1 2000 2000 E264248 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A24 BRD 8014026 1 2074 2074 E254250 9852 07/19/88 08/20/96 N AUTO BRD T/F DOME A1 8013965 1 1800 1800 E254251 9852 07/20/88 06/20/96 N AUTO BRD T/F MUX A10 8000390 1 1500 1500 8011890 E254252 9852B 06/14/96 06/14/06 N ESP CABLE 23E 1 250 250 E254253 9852B 06/14/96 06/14/96 N ESP CABLE 24E 1 250 250 E254254 9852B 06/14/96 06/14/96 N ESP CABLE 26E 1 250 250 E254255 9852B 06/14/96 06/14/96 N ESP CABLE 27E 1 100 100
4-JUN--97 TOOL MASTER LIST Page:
Contract Number: N00019-85-C-148 Descriptions AQS-13F ST/STE Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ---------------- E254257 9852 09/12/88 06/20/96 N TEST FIXT/PC BRD 3A24 8014530-401 1 600 600 8014025 E254258 9852 08/26/88 06/20/96 N TEST FIXT A27 BRD 8011825 1 1500 1500 8013990 E254258-1 9852 08/26/88 06/20/96 N TEST CABLE A27 BRD 8011825 1 300 300 8013990 E254259 D4F P0S 02/06/97 07/11/96 N ESP CARD HOLD IND BRD 1 365 365 E254279 9852 01/17/89 06/20/96 N INTERFACE MOD PM (A37) 1 1800 1800 E254280 9852 04/05/89 08/20/96 N AUTO T/F A38 BRD ASSY 8011835 1 2500 2500 E54365 TOWSON 04/19/94 09/13/96 N T/F HP 3065 MUX A10,A17 8014075 1 10522 10522 Tooling 3 7239 Test Equip. 51 120288 Total 54 127527
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- 0030983.00 1 FITS SUBASSY STE X 0030983.01 TE254358-1 AFT DATA #1 TEST FIXTURE X 0030983.02 TE254358-2 VOLTAGE MONITOR 1213D3903 X 0030983.03 TE254358-3 P/S ITA 1213D3891 X 0030983.04 TE254358-4 AFT DATA #2 1213D3899 X 0030983.05 TE254358-5 CONTROL BOARD ITA PART 1 X 0030983.06 TE254358-6 CONTROL BOARD ITA PART 2 X 0030983.07 TE254358-7 LINE DRIVER #1 1215A3914 X 0030983.08 TE254358-8 LINE DRIVER #2 X 0030983.09 TE254358-9 CABLES 0030984.00 2 T/A PWA FIXTURES X X 0030984.01 TE254659-1 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.02 TE254659-2 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.03 TE254659-3 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.04 TE254659-4 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.05 TE254659-5 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.06 TE254659-6 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.07 TE254659-7 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.08 TE254659-8 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.09 TE254659-9 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.10 TE254659-10 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.11 TE254659-11 ZEHNTEL IN CIRCUIT TEST FIX. X X 0030984.12 TE254659-12 ZEHNTEL IN CIRCUIT TEST FIX. 0031037.00 3 T/A CAN FIXTURES X X 0031037.01 TE254360-1 SN1 VIBRATION TEST FIXTURE X X 0031037.02 TE254360-1 SN2 SOLID DELRIN VIBRATION FIXTURE QTY 1 X X 0031037.03 TE254360-1 SN3 SOLID DELRIN VIBRATION FIXTURE QTY 1 X X 0031037.04 TE254360-2 SN1 (2PCS) SOLID DELRIN VIBRATION FIXTURE QTY 1 X X 0031037.05 TE254360-2 SN2 (2PCS) SOLID DELRIN VIBRATION FIXTURE QTY 1 X X 0031037.06 TE254361-1 TDM A11 CAL/CGA COMM RECV X X 0031037.07 TE254361-2 TDM A4 OVERVOLTAGE PROTECTOR X X 0031037.08 TE254361-3 TDM A3 SHUNT REGULATOR X X 0031037.09 TE254361-4 TDM A27 CALIBRATOR X X 0031037.10 TE254361-5 HDTM A7 AFT VOLTAGE MONITOR X X 0031037.11 TE254361-6 TDM A13 XMT D/D X X 0031037.12 TE254361-7 TDM A7 NAD/VLF VOLTAGE REG X X 0031037.13 TE254361-8 TDM A9 FORWARD POWER SUPPLY X X 0031037.14 TE254361-9 TDM A21, A22, A23 GCA/SAMPLE HOLD X X 0031037.15 TE254361-10 TDM A18 A/D CONVERTER X X 0031037.16 TE254361-11 HDTM A13 HEADING SENSOR X X 0031037.17 TE254361-12 TDM A24 INVERSE GCA/OOB FILTER X X 0031037.18 TE254361-13 VLFM A5 3.1 ACOUSTIC MUX X X 0031037.19 TE254361-14 CABLE LINE DRIVER X X 0031037.20 TE254361-15 TDM A5 A6 + 39V ACOUSTIC REG Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- 0030983.00 $ 38,507.00 X 0030983.01 BENDIX NSP X 0030983.02 BENDIX NSP X 0030983.03 BENDIX NSP X 0030983.04 BENDIX NSP X 0030983.05 BENDIX NSP X 0030983.06 BENDIX NSP X 0030983.07 BENDIX NSP X 0030983.08 BENDIX NSP X 0030983.09 BENDIX SN-17 NSP 0030984.00 X X 0030984.01 MGB 1418Z 962 $ 6,095.00 X X 0030984.02 MGB 1418Z 969 $ 6,095.00 X X 0030984.03 MGB 1418Z 965 $ 6,095.00 X X 0030984.04 MGB 1418Z 964 $ 6,095.00 X X 0030984.05 MGB 1418Z 967 $ 6,095.00 X X 0030984.06 MGB 1418Z 961 $ 6,095.00 X X 0030984.07 MGB 1418Z 966 $ 6,095.00 X X 0030984.08 MGB 1418Z 959 $ 6,095.00 X X 0030984.09 MGB 1418Z 970 $ 6,095.00 X X 0030984.10 MGB 1418Z 963 $ 6,095.00 X X 0030984.11 MGB 1418Z 960 $ 6,095.00 X X 0030984.12 MGB 1418Z 968 $ 6,095.00 0031037.00 $214,592.00 X X 0031037.01 NSP X X 0031037.02 S/N 1 NSP X X 0031037.03 S/N 2 NSP X X 0031037.04 S/N 3 NSP X X 0031037.05 NSP X X 0031037.06 BENDIX 1213D0368 NSP X X 0031037.07 BENDIX 1213D3546 NSP X X 0031037.08 BENDIX 1213D0338 NSP X X 0031037.09 BENDIX 1213D3683 NSP X X 0031037.10 BENDIX 1213D3380 NSP X X 0031037.11 BENDIX 1213D3779 NSP X X 0031037.12 BENDIX 1213D3651 NSP X X 0031037.13 BENDIX 1213D3657 NSP X X 0031037.14 BENDIX 1213D0357 NSP X X 0031037.15 BENDIX 1213D0359 NSP X X 0031037.16 BENDIX 1213D0369 NSP X X 0031037.17 BENDIX 1213D0920 NSP X X 0031037.18 BENDIX 1213D3482 NSP X X 0031037.19 BENDIX 1213D0362 NSP X X 0031037.20 BENDIX 1213D0689 NSP
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- X X 0031037.21 TE254361-16 HDTM A2 AFT/A/D CONVERTER X X 0031037.22 TE254361-17 HDTM A6 AFT P/S X X 0031037.23 TE254361-18 LFAM ACOUSTIC MUX LINE DRIVE A2 X X 0031037.24 TE254361-19 LFAM A6 ACOUSTIC LINE DRIVER X X 0031037.25 TE254361-20 HDTM A4 AFT TIMING X X 0031037.26 TE254361-21 HDTM A1 8:1 MUX/GCA X 0031037.28 TE254361-23 WORK STATION X 0031037.29 TE254361-24 COMPUTER SYSTEM CONSISTING OF: X 0031037.30 PART OF 24 SEAGATE ST-01 DRIVE CONTROLLER QTY 2 X 0031037.31 PART OF 24 40MB REMOVABLE HARD DRIVE DISK X 0031037.32 PART OF 24 IEEE INTERFACE CARD 778092-01 X 0031037.33 PART OF 24 FLOPPY CONTROL X 0031037.34 TE254361-25 COLOR MONITOR X 0031037.35 TE254361-26 KEYBOARD X 0031037.36 TE254361-27 MOUSE X 0031037.37 TE254361-28 PRINTER X 0031037.38 TE254361-29 FREQUENCY RESPONSE ANALYZER X X 0031037.39 TE254361-30 SWITCH CONTROL UNIT AND BELOW X X 0031037.40 PART OF 30 RELAY MULTIPLEXER X X 0031037.41 PART OF 30 MATRIX SWITCH X X 0031037.42 PART OF 30 RACK FLANGE KIT X X 0031037.43 PART OF 30 RACK FLANGE KIT X X 0031037.44 PART OF 30 RACK FLANGE KIT X X 0031037.45 TE254361-31 POWER SUPPLY X X 0031037.46 TE254361-32 40 DB AMPL X X 0031037.47 TE254361-33 PROG DIG MULTIMETER X 0031037.48 TE254361-34A DIGITAL THERMOMETER X X 0031037.67 TE254361-34B DIGITAL THERMOMETER X X 0031037.49 TE254361-35 RAPID COOL REFRIG. CIRCULATOR X X 0031037.50 TE254361-36 PROM A14 TDM X X 0031037.51 TE254361-37 DATA DECODE STATUS A12 TDM X X 0031037.52 TE254361-38 DIGITAL MULTIPLEXER TDM A15 X X 0031037.53 TE254361-39 PM/FL CAL TONE GEN A28 TDM X X 0031037.54 TE254361-40 12:1 ACOUSTIC MUX A10 X 0031037.55 TE254361-41 AC COUPLER - FITS X X 0031037.56 TE254361-42 ACOUSTIC CAN INTERFACE FIXTURES X 0031037.57 TE254361-43 SPECIAL PNEUMATIC FITTINGS X 0031037.58 PRESSURE CALIBRATOR 5000 BAAB X 0031037.59 TE254361-45 OSCILLATOR TEST BOX X 0031037.60 TE254361-46 HDTM TEXT FIXTURE X 0031037.61 TE254361-47 CABLE X 0031037.62 TE254361-48 MODULE/CAN INTERFACE BOX X X 0031037.63 TE254361-49 DYNAMIC SIGNAL ANALYZER X X 0031037.64 PART OF 49 RACK MOUNT KIT X 0031037.65 TE254361-50 MODULE/CAN INTERFACE BOX X X 0031037.66 TE254361-51 LFAM A7 6:1 ACOUSTIC MUX Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- X X 0031037.21 BENDIX 1213D4608 NSP X X 0031037.22 BENDIX 1213D3641 NSP X X 0031037.23 BENDIX 1213D0138 NSP X X 0031037.24 BENDIX 1213D1451 NSP X X 0031037.25 BENDIX 1213D3592 NSP X X 0031037.26 BENDIX 1213D3551 NSP X 0031037.28 NSP X 0031037.29 NSP X 0031037.30 NSP X 0031037.31 NSP X 0031037.32 NSP X 0031037.33 650210 NSP X 0031037.34 SAMTRON 900504848 NSP X 0031037.35 FUJITSU F6033649 NSP X 0031037.36 LU5190C0655 NSP X 0031037.37 PANASONIC 1624 PI624-001 NSP X 0031037.38 SCHLUMBERGER 302803 NSP X X 0031037.39 HP HP3488A NSP X X 0031037.40 HP HP44470A NSP X X 0031037.41 HP HP44470A NSP X X 0031037.42 HP 50623973 NSP X X 0031037.43 HP 50623972 NSP X X 0031037.44 HP 50623974 NSP X X 0031037.45 HP HP6633A S/N 3004A-02631 NSP X X 0031037.46 HP (INSIDE) HP465A S/N 530-01146 NSP X X 0031037.47 HP HP3478A S/N 291 1A63677 NSP X 0031037.48 FLUKE 2180A S/N 5130002 NSP X X 0031037.67 FLUKE NSP X X 0031037.49 S/N 910411 MDL 9500 NSP X X 0031037.50 BENDIX 1213D3612 NSP X X 0031037.51 BENDIX 1213D3673 NSP X X 0031037.52 BENDIX 1213D3664 NSP X X 0031037.53 BENDIX 1213D3584 NSP X X 0031037.54 BENDIX 1213D1449/1450 NSP X 0031037.55 BENDIX NSP X X 0031037.56 BENDIX NSP X 0031037.57 BENDIX S/N 1-5 NSP X 0031037.58 EATON A1239 NSP X 0031037.59 BENDIX NSP X 0031037.60 BENDIX NSP X 0031037.61 BENDIX NSP X 0031037.62 BENDIX NSP X X 0031037.63 HP HP3561A NSP X X 0031037.64 NSP X 0031037.65 BENDIX NSP X X 0031037.66 BENDIX 1213D1448 NSP
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- 0030986.00 4 HARNESS TESTER X 0030986.01 TE254362-1 MONITOR CTX 14" X 0030986.02 TE254362-2 PRINTER X 0030986.03 TE254362-3 COMPUTER X 0030986.04 TE254362-4 TESTER X 0030986.05 TE254362-5 RACK X 0030986.06 TE254362-6 INTERFACE FIXTURE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.07 TE254362-7 INTERFACE CABLE X 0030986.08 TE254362-8 INTERFACE CABLE Loss Report filed 4/29/97 0030986.09 TE254362-9 ECL CAL ADAPTOR 0030987.00 5 PRESSURE TESTER CABLES X 0030987.01 TE254399-1 BLIND FLANGE PENETRATION CABLE AFT X 0030987.02 TE254399-1 BLIND FLANGE PENETRATION CABLE AFT X 0030987.03 TE254399-2 BLIND FLANGE PENETRATION CABLE FWD X 0030987.04 TE254399-2 BLIND FLANGE PENETRATION CABLE FWD X 0030987.05 TE254399-3 PRESSURE BALANCE OIL FILL PENANT CABLE AFT X 0030987.06 TE254399-3 PRESSURE BALANCE OIL FILL PENANT CABLE AFT X 0030987.07 TE254399-4 PRESSURE BALANCE OIL FILL PENANT CABLE FW X 0030987.08 TE254399-4 PRESSURE BALANCE OIL FILL PENANT CABLE FW X X 0030987.09 TE254399-5 BLIND FLANGE PENETRATION CABLE X X 0030987.10 TE254399-5 BLIND FLANGE PENETRATION CABLE X X 0030987.11 TE254399-6 PBOF PENDANT CABLE FWD X X 0030987.12 TE254399-7 PBOF PENDANT CABLE FFT 0030988.00 6 MISC TEST FIXTURE X 0030988.01 TE254401 SN1 MODULE DRUM REEL X 0030988.02 TE254401 SN2 MODULE DRUM REEL X 0030988.03 TE254401-2 MODULE CART X 0030988.04 TE254346 EXTENSION CABLE 50 FT CONTINUITY TEST SET-UP X 0030988.05 TE254349 COMPASS (IN GREEN BAG) X 0030988.06 TE254363 TEST FIXTURE HEADING BENCH (WOODEN) X 0030988.07 TE254367 TOW CABLE IF CABLE PO X 0030988.08 TE254406 LINE DRIVER INTERFACE BOX X X 0030988.09 TE254368 SAMPLE AND HOLD TEST BOX X 0030988.10 TE254381 NPN XSTR PULSE T/F X 0030988.11 TE254385 CABLE FITS BOX X 0030988.12 TE254400 PENDANT CABLE FOWARD Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- 0030986.00 $ 74,859.00 X 0030986.01 CVG5439 DBLCVG5431 NSP X 0030986.02 PANASONIC KX-P1180 PCJ5Z6KX-P1180 NSP X 0030986.03 POWER FLEX AIR 0264621 NSP X 0030986.04 ECLYPSE 501 5011010 NSP X 0030986.05 NSP X 0030986.06 BENDIX NSP X 0030986.07 BENDIX SN 1 NSP X 0030986.07 BENDIX SN 2 NSP X 0030986.07 BENDIX SN 3 NSP X 0030986.07 BENDIX SN 4 NSP X 0030986.07 BENDIX SN 5 NSP X 0030986.07 BENDIX SN 6 NSP X 0030986.07 BENDIX SN 7 NSP X 0030986.07 BENDIX SN 8 NSP X 0030986.08 BENDIX SN 1 & 2 NSP Loss Report filed 4/29/97 0030986.09 BENDIX NSP 0030987.00 $[ILLEGIBLE] X 0030987.01 BENDIX SN 1 NSP X 0030987.02 BENDIX SN 2 NSP X 0030987.03 BENDIX SN 1 NSP X 0030987.04 BENDIX SN 2 NSP X 0030987.05 BENDIX SN 1 NSP X 0030987.06 BENDIX SN 2 NSP X 0030987.07 BENDIX SN 1 NSP X 0030987.08 BENDIX SN 2 NSP X X 0030987.09 SN 1 NSP X X 0030987.10 SN 2 NSP X X 0030987.11 NSP X X 0030987.12 NSP 0030988.00 $ 71,912.00 X 0030988.01 NSP X 0030988.02 NSP X 0030988.03 NSP X 0030988.04 NSP X 0030988.05 STOCKER/YALE DAAK01-89-C-0125 NSP X 0030988.06 NSP X 0030988.07 BENDIX (ON CART) NSP X 0030988.08 BENDIX NSP X X 0030988.09 BENDIX NSP X 0030988.10 BENDIX NSP X 0030988.11 BENDIX NSP X 0030988.12 BENDIX NSP
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- X X 0030988.13 TE254405-2 CABLE LINE DRIVER Loss Report filed 4/2/97. 0030988.14 TE254344 FUNCTIONAL GAIN TEST BOX 0030989.00 7 MISC TEST ADAPTORS X X 0030989.01 T220396 HDLG FIX. CAROUSEL MODULE TRANSPORT REEL X X 0030989.02 T220397 CART ATTACHED TO T220396 X X 0030989.03 T220398 FWD TENSION ADAPTER X X 0030989.04 T220399 AFT TENSION ADAPTER X 0030989.05 TE254325 SN 1 BREAKOUT BOX AFT X 0030989.06 TE254325 SN 2 BREAKOUT BOX AFT X 0030989.07 TE254326 SN 1 BREAKOUT BOX FWD X 0030989.08 TE254326 SN 2 BREAKOUT BOX FWD X 0030989.09 TE254331 HANGING SCALE HS-264 X 0053415.00 TE254408 CAL T BOX X 0 TE254409 REFERENCE PREAMP/POSTAMP X 0 TE254410 TDM D/A FILTER X 0 TE254345 ADAPTER PENDANT, AFT X 0030989.12 TE254418 MSC CHAMBER X 0030989.13 TE254412 INTERFACE CABLE X 0 TE254412 INTERFACE CABLE X [ILLEGIBLE] [ILLEGIBLE] INTERFACE CABLE X 0030989.15 TE254414 INTERFACE CABLE X 0030989.16 TE254415 INTERFACE CABLE X 0 TE254415 INTERFACE CABLE X 0 TE254415 INTERFACE CABLE X 0 TE254415 INTERFACE CABLE X 0031016.01 TE254332 ADAPTER CABLE FWD X 0031016.02 TE254332 ADAPTER CABLE FWD X 0031016.03 TE254332 ADAPTER CABLE FWD X 0031016.04 TE254332 ADAPTER CABLE FWD X 0031016.05 TE254333 ADAPTER CABLE AFT X 0031016.06 TE254333 ADAPTER CABLE AFT Loss Report filed 4/29/97 0031016.07 TE254333 ADAPTER CABLE AFT X 0031016.08 TE254333 ADAPTER CABLE AFT X 0031016.09 TE254389 SN 3 CABLE X 0031016.10 TE254388 SN 3 CABLE 0030960.00 8 ACOUSTIC TEST SET #1 X 0030960.01 TE254321 ACOUSTIC MODULE TEST SET #1 X 0030960.02 TE254321-1 CONTROL PANEL (AMTS) X 0030960.03 TE254321-2 AC POWER PANEL X 0030960.04 TE254310 DIGITAL STORAGE O'SCOPE X 0030960.05 TE254311 DIGITAL MULTIMETER X 0030960.06 TE254318 FREQ RESPONSE ANALYZER X 0030960.07 TE254388 CABLE INTERFACE FWD (S/N 1) X 0030960.08 TE254389 CABLE INTERFACE AFT (S/N 1) Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- X X 0030968.13 BENDIX NSP Loss Report filed 4/2/97. 0030968.14 BENDIX NSP 0030989.00 $ 12,378.00 X X 0030989.01 NSP X X 0030989.02 BENDIX NSP X X 0030989.03 BENDIX TENSIONING SYSTEM NSP X X 0030989.04 BENDIX TENSIONING SYSTEM NSP X 0030989.05 BENDIX SN 1 NSP X 0030989.06 BENDIX SN 2 NSP X 0030989.07 BENDIX SN 1 NSP X 0030989.08 BENDIX SN 2 NSP X 0030989.09 NSP X 0053415.00 BENDIX NSP X 0 BENDIX NSP X 0 BENDIX NSP X 0 BENDIX NSP X 0030989.12 BENDIX NSP X 0030989.13 BENDIX SN 1 NSP X 0 BENDIX SN 2 NSP X [ILLEGIBLE] BENDIX SN 1 TO 15 NSP X 0030989.15 BENDIX SN 1 TO 15 NSP X 0030989.16 BENDIX SN 1 NSP X 0 BENDIX SN 2 NSP X 0 BENDIX SN 3 NSP X 0 BENDIX SN 4 NSP X 0031016.01 BENDIX S/N 1 NSP X 0031016.02 BENDIX S/N 2 NSP X 0031016.03 BENDIX S/N 3 NSP X 0031016.04 BENDIX S/N 4 NSP X 0031016.05 BENDIX S/N 1 NSP X 0031016.06 BENDIX S/N 2 NSP Loss Report filed 4/29/97 0031016.07 BENDIX S/N 3 NSP X 0031016.08 BENDIX S/N 4 NSP X 0031016.09 BENDIX S/N 3 NSP X 0031016.10 BENDIX S/N 3 NSP 0030960.00 X 0030960.01 BENDIX NSP X 0030960.02 BENDIX NSP X 0030960.03 BENDIX NSP X 0030960.04 PHILIPS PM3367A DQ02003 NSP X 0030960.05 FLUKE 8842A 6068303 NSP X 0030960.06 SCHLUMBERGER SI 1250 303063 NSP X 0030960.07 BENDIX NSP X 0030960.08 BENDIX NSP
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- 0030991.00 9 ACOUSTIC TEST SET #2 X 0030991.01 TE254322 ACOUSTIC MODULE TEST SET #2 X 0030991.02 TE254322-1 CONTROL PANEL (AMTS) X 0030991.03 TE254322-2 AC POWER PANEL X 0030991.04 TE254314 DIGITAL STORAGE OSCILLOSCOPE X 0030991.05 TE254318 DIGITAL MULTIMETER X 0030991.06 TE254378 FREQ RESPONSE ANALYZER X 0030991.07 TE254388 CABEL INTERFACE FWD (S/N 2) X 0030991.08 TE254389 CABEL INTERFACE AFT (S/N 2) 0031006.00 10 HDTM TEST SET X 0031006.01 TE254324 HDTM TEST SET X 0031006.02 TE254324-1 CONTROL PLANEL HDTM X 0031006.03 TE254324-2 AC POWER PANEL X 0031006.04 TE254324-3 POWER SUPPLY PANEL HDTM X 0031006.05 TE254324-4 CABLE FRONT PANEL/ADAPTER CBL X 0031006.06 TE254372 DIGITAL MULTIMETER X 0031006.07 TE254377 DIGITAL STORAGE OSCILLOSCOPE 11 SYSTEM TEST FIXTURES 0031007.00 BURN-IN TEST SET X 0031007.01 TE254375 BURN-IN TEST SET X 0031007.02 TE254375-1 POWER SUPPLY X 0031007.03 TE254375-2 UNIVERSAL MODULE POWER X 0031007.04 TE254375-3 TDM POWER AND LOAD X 0031007.05 TE254375-4 AC POWER PANEL X 0031007.06 TE254375-5 RESISTIVE LOAD BOX X 0031007.07 TE254375-7 W4 CABLE ASSY X 0031007.08 TE254375-8 W5 CABLE ASSY X 0031007.09 TE254309 SIGNAL ANALYZER X X 0031007.10 TE254404 MONITOR/CAL TEST BOX X X 0031007.11 TE254405 LINE DRIVER TEST BOX X X 0031007.12 TE254405-1 INTERFACE CABLE LINE DRIVER 0031008.00 12 COMPUTER SETUP X 0031008.01 TE254390 COMPUTER X 0031008.02 TE254390-1 MONITOR X 0031008.03 TE254390-2 KEYBOARD X 0031008.04 TE254390-3 SURGE PROTECTOR X 0031008.05 TE254390-4 MOUSE X 0031008.06 TE254391 LASER JET PRINTER X 0031008.07 TE254392 COMPUTER WORKSTAND 0031009.00 COMPUTER SET-UP X X 0031009.00 TE254393 COMPUTER Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- 0030991.00 X 0030991.01 BENDIX NSP X 0030991.02 BENDIX NSP X 0030991.03 BENDIX NSP X 0030991.04 PHILIPS PM3367A DQ002007 NSP X 0030991.05 FLUKE 8842A 5071303 NSP X 0030991.06 SCHLUMBERGER Sl1250 303216 NSP X 0030991.07 BENDIX NSP X 0030991.08 BENDIX NSP 0031006.00 $335,097.00 X 0031006.01 BENDIX NSP X 0031006.02 BENDIX NSP X 0031006.03 BENDIX NSP X 0031006.04 BENDIX NSP X 0031006.05 BENDIX NSP X 0031006.06 FLUKE 8842A 5311282 NSP X 0031006.07 PHILIPS 3387A DM531001 NSP $[ILLEGIBLE] 0031007.00 NSP X 0031007.01 BENDIX NSP X 0031007.02 EM TCR15054-1-0D 91J-7572 NSP X 0031007.03 BENDIX NSP X 0031007.04 BENDIX NSP X 0031007.05 BENDIX NSP X 0031007.06 BENDIX NSP X 0031007.07 BENDIX NSP X 0031007.08 BENDIX NSP X 0031007.09 HP 35680A X X 0031007.10 BENDIX X X 0031007.11 BENDIX X X 0031007.12 BENDIX 0031008.00 $ 24,806.00 X 0031008.01 EVEREX 386/25 EBS10920066 NSP X 0031008.02 NEC MULTISYNC 3D 11C03786 NSP X 0031008.03 EVEREX 116920-001 13046080 NSP X 0031008.04 KENSINGTON NSP X 0031008.05 LOGITECH NSP X 0031008.06 HP 33461A 3103JG0800 NSP X 0031008.07 NSP 0031009.00 $ 24,806.00 X X 0031009.00 EVEREX 386/25 EBS10920075 NSP
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- X X 0031009.02 TE254393-1 MONITOR X X 0031009.03 TE254393-2 KEYBOARD X X 0031009.04 TE254393-3 SURGE PROTECTOR X X 0031009.05 TE254393-4 MOUSE X X 0031009.06 TE254394 PRINTER X X 0031009.07 TE254395 COMPUTER TABLE 0031010.00 COMPUTER SET-UP X 0031010.01 TE254396 COMPUTER X 0031010.02 TE254396-1 MONITOR X 0031010.03 TE254396-2 KEYBOARD X 0031010.04 TE254396-3 SURGE PROTECTOR X 0031010.05 TE254396-4 MOUSE X 0031010.06 TE254397 PRINTER X 0031010.07 TE254398 COMPUTER STAND 13 MODULE WIRING TESTERS X 0031011.00 TE254327 TEST FIXT VLF MODULE CONTINUITY/SHORT X 0031012.00 TE254328 LF CONTINUITY TEST FIXTURE X 0031013.01 TE254329 MF CONTINUITY TEST FIXTURE X 0031014.01 TE254330 TEST FIXTURE MODULE CONTINUITY/SHORT 0031015.00 14 ACOUSTIC SOUND SOURCE X 0031015.01 TE254335 MOBILE ELECT SOUND SOURCE X 0031015.02 TE254335-1 CABLE MESS X 0031015.03 TE254335-2 SPEAKER ENCLOSURE 0031018.00 15 TDM TEST SET X 0031018.01 TE254323 TDM TEST SET X 0031018.02 TE254315 MULTIMETER X 0031018.03 TE254370 PHILLIPS PM 6662 X 0031018.04 TE254319 DIGITAL STORAGE O'SCOPE X 0031018.05 TE254323-1 TDMT PANEL X 0031018.06 TE254312 POWER SUPPLY X 0031018.07 TE254323-3 TEST SET PWR PNC X 0031018.08 TE254323-2 RACK PWR SUPPLY X 0031018.09 TE254323-4 CABLE X 0031018.10 TE254323-5 BLOWER X 0031018.11 TE254376 ADABPTER CABLE 0031019.00 16 ACOUSTIC MODULE TEST SET X 0031019.01 TE254374 ACOUSTIC MODEL TEST SET X 0031019.02 TE254313 DIGITAL STORAGE OSCOPE X 0031019.03 TE254320 DIGITAL MULTIMETER X 0031019.04 TE254374-1 CONTROL PANEL X 0031019.05 TE254374-2 P/S AC CONTROL Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- X X 0031009.02 NEC MULTISYNC 3D 11C03805 NSP X X 0031009.03 NSP X X 0031009.04 KENSINGTON NSP X X 0031009.05 NSP X X 0031009.06 HP LASER JET 3P 3103JG1HCC NSP X X 0031009.07 NSP 0031010.00 $ 24,806.00 X 0031010.01 EVEREX 388 EBS10920084 NSP X 0031010.02 NEC MULTISYNC 04M14708 NSP X 0031010.03 EVEREX 05756230 NSP X 0031010.04 KENSINGTON 8012088 NSP X 0031010.05 LOGITECH LT099122475 NSP X 0031010.06 HP LASER JET 3P 3103JG1HH1 NSP X 0031010.07 NSP X 0031011.00 $ 28,883.00 X 0031012.00 BENDIX $ 28,883.00 X 0031013.01 BENDIX $ 28,883.00 X 0031014.01 $ 28,883.00 0031015.00 $ 38,608.00 X 0031015.01 BENDIX NSP X 0031015.02 BENDIX NSP X 0031015.03 BENDIX NSP 0031018.00 $490,709.00 X 0031018.01 NSP X 0031018.02 FLUKE 8842A 5071309 NSP X 0031018.03 PHILLIPS PM6662 628798 NSP X 0031018.04 PHILLIPS 3307A DQ002006 NSP X 0031018.05 NSP X 0031018.06 KEPCOATE ATE 150-7M NSP X 0031018.07 NSP X 0031018.08 NSP X 0031018.09 NSP X 0031018.10 NSP X 0031018.11 NSP 0031019.00 $212,493.00 X 0031019.01 BENDIX NSP X 0031019.02 PHILLIPS PM3367A DQ002006 NSP X 0031019.03 FLUKE 8842A NSP X 0031019.04 BENDIX NSP X 0031019.05 BENDIX NSP
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code CATEGORY 03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- X X 0031019.06 TE254317 FREQUENCY RESPONSE ANALYZER X 0031020.00 17 TE254386 CROSSOVER MODULE #1 X 0031021.00 TE254387 CROSSOVER MODULE #2 X 0031022.00 18 TE254407 ESS TEST STATION X 0031022.01 TE254407-1 EMI POWER SUPPLY X 0031022.02 TE254407-2 CONTROL PANEL X 0031022.03 TE254407-3 PATCH PANEL X 0031022.04 TE254407-4 POWER SUPPLY PANEL X 0031022.05 TE254407-5 AC CONTROL PANEL X 0031022.06 TE254407-6 UNIVERSAL MODULE CABLE SN 1-4 X 0031022.07 TE254407-7 TDM CABLE X 0031022.08 TE254407-8 VLF TEST ADAPTER AN 1 & 2 & 3 X 0031022.09 TE254407-9 LF TEST ADAPTER SN 1 & 2 X 0031022.10 TE254407-10 MF TEST ADAPTER SN 1 & 2 X 0031022.11 TE254407-11 HF TEST ADAPTER SN 1 & 2 X 0031022.12 TE254407-12 HDTM TEST ADAPTER SN 1 & 2 X 0031022.13 TE254407-13 CABLE X 0031017.00 TE254334 [ILLEGIBLE] TEST SET X 0031017.01 TE254334-1 COMPUTER CABLE MSC TEST X 0031017.02 TE254334-2 CABLE X 0031017.03 TE254334-3 CABLE X 0031017.04 TE254334-4 CABLE X 0 TE254334-5 BATTERY CHARGE CABLE Total Count 263 Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- X X 0031019.06 SCHLUMBER S11250 303059 NSP X 0031020.00 BENDIX $ 34,703.50 X 0031021.00 BENDIX $ 34,703.50 X 0031022.00 BENDIX $ 30,000.00 X 0031022.01 BENDIX X 0031022.02 BENDIX X 0031022.03 BENDIX X 0031022.04 BENDIX X 0031022.05 BENDIX X 0031022.06 BENDIX X 0031022.07 BENDIX X 0031022.08 BENDIX X 0031022.09 BENDIX X 0031022.10 BENDIX X 0031022.11 BENDIX X 0031022.12 BENDIX X 0031022.13 BENDIX X 0031017.00 BENDIX $ 92,100.00 X 0031017.01 BENDIX NSP X 0031017.02 BENDIX NSP X 0031017.03 BENDIX NSP X 0031017.04 BENDIX NSP X 0 BENDIX NSP Total Count 263 Total Value: $ 2,046,145.00
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TOOLING Phy. Inv. REQUEST TO KEEP FOR: - ----------------------------------------------------------------------------------------------------------------------- Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number CATEGORY TOOL NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- X 0030729.00 1 SWAGE BUTTON SWAGER T220368A SWAGER X 0053374.00 T220368B PUMP X 0053372.00 T220368C METER X 0053376.00 T220368D REGULATOR X 0030722.00 2 TENSIONING SYSTEM T220369 TENSIONING SYSTEM X 0030731.00 3 TENSION FIXTURE T220370-1 TENSIONING FIXTURE X 0030732.00 T220370-2 TENSIONING FIXTURE X 0053401.00 4 HOSE TEMPERING SYSTEM T220371A TROUGH Loss Report Filed 5/28/97. T220371B BOILER X 0053405.00 T220371C-1 AIR PURGER X 0053406.00 T220371C-2 AIR PURGER ARMSTRONG X 0030734.00 5 HOSE DRYING RECK T220372 HOSE DRYING RACK (ON WALL) X 0030735.00 6 HOSE GRINDING SYSTEM T220373-1 HOSING GRINDING SYSTEM (2) X 0030736.00 T220373-2 X 0030737.00 7 SKOVIL SWAGER T220374 SKOVIL SWAGER X X [ILLEGIBLE] 8 HEIGHT GUAGE T220376-1 HEIGHT GUAGE X X [ILLEGIBLE] T220376-1A FIXTURE X X [ILLEGIBLE] T220376-1B FIXTURE X X 0053386.00 T220376-1C FIXTURE X X 0053388.00 T220376-1D FIXTURE X X 0053389.00 T220376-1E FIXTURE X X 0053390.00 T220376-1F FIXTURE X X 0053391.00 T220376-1G FIXTURE X 0030739.00 9 MODULE BOOTING SYSTEM T220379 AIR REGULATOR X 0053412.00 T220366-1 CLAMP X 0053403.00 T220366-2 CLAMP X 0053410.00 T220403-B TUBES X 0053415.00 T220403-B1 TUBES X 0030740.00 10 ISOPAR FILLING SYSTEM T220380 ISOPAR FILLING SYSTEM X 0030741.00 11 ISOPAR FILLING FIXTURE T220381 ISOPAR FILLING FIXTURE X 0053407.00 T220384-1 VACUUM CHAMBER FILL FIXTURE X 0053408.00 T220384-2 VACUUM CHAMBER FILL FIXTURE X 0030742.00 12 REELING HANDLER T220383 REELING HANDLER X X 0030743.00 13 RF LOAD COIL T220386A RF LOAD COIL X X 0030744.00 T220386B RF LOAD COIL X X 0030763.00 14 CAN HLDG/HEAT SINK FIX. T220387 CAN HOLDING/HEAT SINK FIXTURE X X 0030768.00 15 HEADER HOLDING/HEAT SINK T220388 HEADER HOLDING/HEAT SINK FIXTURE Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- X 0030729.00 $13,713.00 X 0053374.00 NSP X 0053372.00 NSP X 0053376.00 NSP X 0030722.00 $68,545.00 X 0030731.00 $ 833.00 X 0030732.00 $ 833.00 X 0053401.00 $53,735.00 Loss Report Filed 5/28/97. NSP X 0053405.00 NSP X 0053406.00 NSP X 0030734.00 $ 6,155.00 X 0030735.00 $12,872.00 X 0030736.00 X 0030737.00 $ 8,327.00 X X [ILLEGIBLE] [ILLEGIBLE] X X [ILLEGIBLE] NSP X X [ILLEGIBLE] NSP X X 0053386.00 NSP X X 0053388.00 NSP X X 0053389.00 NSP X X 0053390.00 NSP X X 0053391.00 NSP X 0030739.00 $ 5,052.00 X 0053412.00 NSP X 0053403.00 NSP X 0053410.00 NSP X 0053415.00 NSP X 0030740.00 $ 5,998.00 X 0030741.00 $ 1,144.00 X 0053407.00 NSP X 0053408.00 NSP X 0030742.00 $47,413.00 X X 0030743.00 $ 2,192.00 X X 0030744.00 $ 2,192.00 X X 0030763.00 $ 700.00 X X 0030768.00 $ 700.00
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ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO CONTRACT N00024-90-C-6013 SQQ SPECIAL TOOLING - ----------------------------------------------------------------------------------------------------------------------- Phy. Inv. REQUEST TO KEEP FOR: Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number CATEGORY TOOL NUMBER DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------- X X 0030747.00 16 HELIUM LEAK TESTER T220389 HELIUM LEAK TESTER Loss Report Filed 4/28/97 0030748.00 17 TOW ASSY FIXTURES T220390 TORSION TEST ADAPTER X X 0053400.00 18 DESSICATOR SYSTEM T220375 DESSICATOR SYSTEM X X 0030750.00 19 CAN ASSY VACUUM CHAMBER T220377 X X 0053411.00 T220377A VACUUM OVEN X X 0053400.00 T220377B DIRECT DRIVE VACUUM PUMP X 0030753.00 20 EXTRACT/INSERTION TOOLS T220378 X 0030751.00 T220378A HYDRAULIC CRIMPER X 0030752.00 T220378B HYDRAULIC CRIMPER X 0053414.00 T220378C AUTOMATIC CRIMPER X 0 T220378D AUTOMATIC CRIMPER X 0030754.00 21 BOOTING SYSTEM WINCH T220385 BOOTING SYSTEM WINCH X Only keep 04-9-97 X 0030766.00 22 TAKE-UP REEL T220453 TAKE-UP REEL X 0030754.00 23 BOUYANCY TEST SYSTEM T220454 BOUYANCY TEST SYSTEM X [ILLEGIBLE] T220454A CARDINAL SCALE X [ILLEGIBLE] T220454B LOAD CELLS X [ILLEGIBLE] T220454C LOAD CELLS X 0053400.00 T220454D LOAD CELLS X 0053401.00 T220454E LOAD CELLS X 0053402.00 T220454F SUMMING BOX X 0030757.00 24 STRINGING ASSY TENSION T220455 STRINGING ASSY TENSION SYSTEM X 0030757.00 SYSTEM T220455A MOTOR X 0030758.00 25 DROP TEST PLATFORM T220456 DROP TEST PLATFORM X Only keep 04-9-97 X [ILLEGIBLE] 26 VACUUM PUMP T220522 VACUUM PUMP BARBEE VALVE Found Trans. Bar Code 03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE - ----------------------------------------------------------------------------------------------------------------------- X X 0030747.00 $23,877.00 Loss Report Filed 4/28/97 0030748.00 $ 2,868.00 X X 0053400.00 $ 3,641.00 X X 0030750.00 $ 4,545.00 X X 0053411.00 COLE PALMER INS ND5053-10 NSP X X 0053400.00 COLE PALMER INS SA55KFL-5517 NSP X 0030753.00 $20,479.00 X 0030751.00 NSP X 0030752.00 NSP X 0053414.00 NSP X 0 NSP X 0030754.00 $ 7,364.00 X Only keep 04-9-97 X 0030766.00 $45,444.00 X 0030754.00 $ 8,205.00 X [ILLEGIBLE] 738 NSP X [ILLEGIBLE] NSP X [ILLEGIBLE] NSP X 0053400.00 NSP X 0053401.00 NSP X 0053402.00 NSP X 0030757.00 $ 6,779.00 X 0030757.00 NSP X 0030758.00 $ 3,556.00 X Only keep 04-9-97 X [ILLEGIBLE] $21,000.00
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CONTRACT N00024-90-C-6013 LOCATION: NPO SQQ AGENCY PECULIAR Items on this listing are required for further CAN work. Requesting keep. - ------------------------------------------------------------------------------------------------------------------------------------ PART NUMBER OR TE Serial Found BARCODE No. NUMBER Number DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ X 0021843.00 1213D0338 133 CAN ASSEMBLY X 0021844.00 1213D0357 720 CAN ASSEMBLY, GCA SAMPLE AND HOLD X 0021657.00 1213D0358 136 CAN ASSEMBLY, CAL/GCA COMMAND RECEIVER X 0021666.00 1213D0359 085 CAN ASSEMBLY, A/D CONVERTER X 0021845.00 1213D0359 218 CAN ASSEMBLY, A/D CONVERTER X 0021846.00 1213D0369 043 CAN ASSEMBLY, HEADING SENSOR ELECTRONICS X 0021653.00 1213D0689 549 CAN ASSEMBLY, +39V ACST, VOLTAGE REGULATOR X 0021847.00 1213D0920 137 CAN ASSEMBLY, INVERSE GCA/OUT-OF-BAND FILTER X 0021848.00 1213D1057 273 CAN ASSEMBLY, DEPTH SENSOR ELECTRONICS X 0021861.00 1213D1448 160 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (12 TO 1) LF X 0021849.00 1213D1449 186 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (12 TO 1) MF X 0021862.00 1213D1450 385 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (12 TO 1) HF X 0021850.00 1213D1451 2552 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER LINE DRIVER X 0021851.00 1213D3482 742 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (3 TO 1) VLF X 0021852.00 1213D3528 2047 CAN ASSEMBLY, PRE-AMPLIFIER (LF) X 0021853.00 1213D3529 2735 CAN ASSEMBLY, PRE-AMPLIFIER (MF) X 0021854.00 1213D3530 5361 CAN ASSEMBLY, PRE-AMPLIFIER (HF) X 0021855.00 1213D3531 189 CAN ASSEMBLY, PRE-AMPLIFIER (HF) X 0021652.00 1213D3546 258 CAN ASSEMBLY, OVER VOLTAGE PROTECTION X 0022238.00 1213D3559 0034 CAN ASSEMBLY, X 0021656.00 1213D3584 071 CAN ASSEMBLY, PM/FC & CAL SQUARE WAVE GENERA X 0021856.00 1213D3602 033 CAN ASSEMBLY, OSCILLATOR X 0021660.00 1213D3612 268 CAN ASSEMBLY, PROM X 0021661.00 1213D3612 270 CAN ASSEMBLY, PROM X 0021654.00 1213D3651 264 CAN ASSEMBLY, NAD/VLF VOLTAGE REGULATOR X 0021655.00 1213D3657 071 CAN ASSEMBLY, FORWARD POWER SUPPLY X 0021662.00 1213D3664 048 CAN ASSEMBLY, DIGITAL MULTIPLEXOR X 0021663.00 1213D3664 125 CAN ASSEMBLY, DIGITAL MULTIPLEXOR PART NUMBER OR TE USED Found BARCODE No. NUMBER ON VALUE PHYSICAL LOCATION - ------------------------------------------------------------------------------------------------------------------------------------ X 0021843.00 1213D0338 CAN $2,470.00 TDM Test X 0021844.00 1213D0357 CAN $3,700.00 TDM Test X 0021657.00 1213D0358 CAN $3,090.00 TDM Test X 0021666.00 1213D0359 CAN $4,940.00 GFE LOCK UP X 0021845.00 1213D0359 CAN $4,940.00 TDM Test X 0021846.00 1213D0369 CAN GFE LOCK UP X 0021653.00 1213D0689 CAN $2,470.00 TDM Test X 0021847.00 1213D0920 CAN $2,470.00 TDM Test X 0021848.00 1213D1057 CAN $3,700.00 GFE LOCK UP X 0021861.00 1213D1448 CAN $1,240.00 GFE LOCK UP X 0021849.00 1213D1449 CAN $1,240.00 GFE LOCK UP X 0021862.00 1213D1450 CAN $1,240.00 GFE LOCK UP X 0021850.00 1213D1451 CAN $1,240.00 GFE LOCK UP X 0021851.00 1213D3482 CAN $2,470.00 GFE LOCK UP X 0021852.00 1213D3528 CAN $2,470.00 GFE LOCK UP X 0021853.00 1213D3529 CAN $2,470.00 GFE LOCK UP X 0021854.00 1213D3530 CAN $2,470.00 GFE LOCK UP X 0021855.00 1213D3531 CAN $2,470.00 GFE LOCK UP X 0021652.00 1213D3546 CAN $2,470.00 TDM Test X 0022238.00 1213D3559 CAN $28,930.00 STRING ASSY DAMAGED X 0021656.00 1213D3584 CAN $3,210.00 TDM Test X 0021856.00 1213D3602 CAN $324.00 GFE LOCK UP X 0021660.00 1213D3612 CAN $3,090.00 GFE LOCK UP X 0021661.00 1213D3612 CAN $3,090.00 GFE LOCK UP X 0021654.00 1213D3651 CAN $2,470.00 TDM Test X 0021655.00 1213D3657 CAN $2,470.00 TDM Test X 0021662.00 1213D3664 CAN $2,470.00 TDM Test X 0021663.00 1213D3664 CAN $2,470.00 GFE LOCK UP
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CONTRACT N00024-90-C-6013 LOCATION: NPO SQQ AGENCY PECULIAR Items on this listing are required for further CAN work. Requesting keep. - ------------------------------------------------------------------------------------------------------------------------------------ PART NUMBER OR TE Serial Found BARCODE No. NUMBER Number DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ X 0021659.00 1213D3673 253 CAN ASSEMBLY, DATA/DECODER/STATUS X 0021664.00 1213D3683 266 CAN ASSEMBLY, CALIBRATION X 0021857.00 1213D3714 669 CAN ASSEMBLY, PRE-AMPLIFIER (LF) X 0021858.00 1213D3715 557 PRE-AMPLIFIER (MF) X 0022237.00 1213D3759 167 TDM (W/O HOSE ASSEMBLY, STRINGING ASSEMBLY) X 0021859.00 1213D3766 2255 CAN ASSEMBLY, PRE-AMPLIFIER (VLF) X 0021860.00 1213D3826 558 CAN ASSEMBLY, PRE-AMPLIFIER (HF) Total Count: 35 PART NUMBER OR TE USED Found BARCODE No. NUMBER ON VALUE PHYSICAL LOCATION - ------------------------------------------------------------------------------------------------------------------------------------ X 0021659.00 1213D3673 CAN $4,270.00 TDM Test X 0021664.00 1213D3683 CAN $2,470.00 TDM Test X 0021857.00 1213D3714 CAN $2,470.00 GFE LOCK UP X 0021858.00 1213D3715 CAN $2,470.00 GFE LOCK UP X 0022237.00 1213D3759 MOD $76,340.00 TDM Test X 0021859.00 1213D3766 CAN $1,240.00 GFE LOCK UP X 0021860.00 1213D3826 CAN $1,240.00 GFE LOCK UP Total Count: 35 Total Value: $186,584.00
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CONTRACT N00024-90-C-6013 LOCATION: NPO SQQ AGENCY PECULIAR Items on this list are to be return to USN. - ------------------------------------------------------------------------------------------------------------------------------------ PART NUMBER OR TE Serial Found BARCODE No. NUMBER Number DESCRIPTION - ------------------------------------------------------------------------------------------------------------------------------------ X 0022239.00 0411C0042 3282-021 SHIPPING CONTAINER X 0022240.00 0411C0042 3282-023 SHIPPING CONTAINER X 0022241.00 0411C0042 3282-024 SHIPPING CONTAINER X 0022242.00 0411C0042 3282-022 SHIPPING CONTAINER 0028385.00 0411C0042 None SHIPPING CONTAINER 0022236.00 1213D3533 0003 ACOUSTIC MODULE, VLF 0022234.00 1213D2161 0117 VIBRATION ISOLATION MODULE, FORWARD X 0021665.00 1213D3779 043(0022) CAN ASSEMBLY, TRANSMIT/DRIVE/DECODE 0022236.00 1213D4065 0021 ACOUSTIC MODULE MF X [ILLEGIBLE] [ILLEGIBLE] 0005 TOW CABLE ASSEMBLY Total Count: 10 PART NUMBER OR TE USED Found BARCODE No. NUMBER ON VALUE PHYSICAL LOCATION - ------------------------------------------------------------------------------------------------------------------------------------ X 0022239.00 0411C0042 MOD $1,500.00 SHIPPED X 0022240.00 0411C0042 MOD $1,500.00 SHIPPED X 0022241.00 0411C0042 MOD $1,500.00 SHIPPED X 0022242.00 0411C0042 MOD $1,500.00 SHIPPED 0028385.00 0411C0042 MOD $1,850.00 SHIPPED 0022236.00 1213D3533 CAN $49,840.00 SHIPPED 0022234.00 1213D2161 $10,530.00 SHIPPED X 0021665.00 1213D3779 CAN $3,700.00 SOLDER TRAINING LAB 0022236.00 1213D4065 $65,240.00 SHIPPED X [ILLEGIBLE] [ILLEGIBLE] $8,000.00 SHIPPED Total Count: 10 Total Value: $145,160.00
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4-JUN-97 TOOL MASTER LIST Page: 1 Contract Number: N00024-90-C-6031 Description: ST/STE P.O. 644594 Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ --------- T220181 9752RINS 07/17/96 07/09/96 Y HOLE PSOITION GAGE REV B 8006905 1 437 437 TE254158-5 D7A 03/18/92 07/11/96 N CABLE, W5-2 SIGNAL 1 406 400 Tooling 1 437 Test Equip. 1 400 Total 2 837
4-JUN-97 TOOL MASTER LIST Page: 1 Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ --------- T219954-1 C4A OOS 03/12/96 06/27/96 Y COMP HGT GAGE .030 8006925 1 69 69 T219954-2 C4A OOS 05/26/94 06/27/96 Y COMP HGT GAGE .030 8006925 1 69 69 T219955-1 C4A 06/25/96 05/28/96 Y COMP HGT GAGE .025 8006925 1 58 58 T219955-2 C4A OOS 10/01/96 06/27/96 Y COMP HGT GAGE .025 8006925 1 58 58 T219955-3 D6F POS 02/14/97 06/27/96 Y COMP HGT GAGE .025 8006925 1 58 58 T219955-4 D6F POS 02/14/97 06/27/96 Y COMP HGT GAGE .025 8006925 1 58 58 T219956ABC C7C 01/13/97 08/19/96 N BONDING FIXTURE REV B 8006925 1 1320 1320 T219961 TOWSON 04/27/94 09/30/96 N COMP PREP FIXTURE 8005880 1 609 609 8006940 8006950 8006950 8006955 8006925 8006935 8006930 8006945 T219978A/B1 C6A 10/23/95 07/08/96 N BONDING FIXTURE 8006850 1 398 398 T219978A/B2 C6A 10/23/95 07/08/96 N BONDING FIXTURE 8006850 1 398 398 T219980-1 C6A 09/27/96 06/27/96 Y HGT GAGE .275 x 1.9 8006925 1 96 96 8006960 8006930 T219980-2 C4A OOS 02/17/97 06/28/96 Y HGT GAGE .275 x 1.9 8006925 1 96 96 8006930 8006960 T219980-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .275 x 1.9 8006930 1 96 96 8006925 8006960 T219980-4 D6F POS 02/14/97 06/27/96 Y HGT GAGE .275 x 1.9 8006925 1 96 96 8006930 8006960 T219981-1 C4A OOS 05/26/94 06/28/96 Y HGT GAGE .275 x 2.1 8006925 1 54 54 8006960 8006930 T219981-2 C4A 09/27/96 06/27/96 Y HGT GAGE .275 x 2.1 8006960 1 54 54 8006925 8006930 T219981-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .275 x 2.1 8006925 1 54 54 8006960 8006930 T219981-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .275 x 2.1 8006925 1 54 54 8006960 8006930 T219982-1 C4A OOS 05/31/94 06/27/96 Y HGT GAGE .345 x 1.92 8006935 1 17 17 8006955 T219982-2 C4A OOS 05/27/94 06/27/96 Y HGT GAGE .345 x 1.92 8006935 1 17 17 8006955 T219982-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .345 x 1.92 8006955 1 17 17 8006935 T219982-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .345 x 1.92 8006935 1 17 17 8006955
4-JUN-97 TOOL MASTER LIST Page: 2 Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ --------- T219983-1 C4A 03/12/96 06/26/96 Y HGT GAGE .345 X 2.17 8006955 1 102 102 8006935 T219983-2 C4A OOS 10/19/95 06/27/96 Y HGT GAGE .345 X 2.17 8006955 1 102 102 8006935 T219983-3 D6F POS 02/14/97 06/27/96 Y HGT GAGE .345 X 2.17 8006955 1 102 102 8006935 T219983-4 D6F POS 02/14/97 06/26/96 Y HGT GAGE .345 X 2.17 8006935 1 102 102 8006955 T219984-1 C4A OOS 05/27/94 06/27/96 Y HGT GAGE .380 X 2.17 8006945 1 9 9 8006950 8006940 T219984-2 C4A OOS 05/27/94 06/27/96 Y HGT GAGE .380 X 2.17 8006950 1 9 9 8006945 8006940 T219984-3 D6F POS 02/14/97 06/20/96 Y HGT GAGE .380 X 2.17 8006940 1 9 9 8006945 8006950 T219984-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .380 X 2.17 8006940 1 9 9 8006950 8006945 T219985-1 C4A OOS 05/31/94 06/28/96 Y HGT GAGE .380 X 1.92 8006950 1 87 87 8006940 8006945 T219985-2 C4A 04/10/96 06/21/96 Y HGT GAGE .380 X 1.92 8006945 1 87 87 8006950 8006940 T219985-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .380 X 1.92 8006940 1 87 87 8006950 8006945 T219985-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .380 X 1.92 8006945 1 87 87 8006950 8006940 T219986-1 C4A OOS 03/03/95 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22 T219986-2 C4A OOS 03/03/95 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22 T219986-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22 T219986-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22 T219997-1 C4A 09/24/96 06/28/96 Y HGT GAGE .045 8006880 1 49 49 8006930 8006925 8006880 8006950 8006950 8006945 8006940 T219997-2 C4A 12/17/96 06/28/96 Y HGT GAGE .045 8006940 1 49 49 8006880 8006925 8006950 8006960 8006945 8006930
4-JUN-97 TOOL MASTER LIST Page: 3 Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ --------- T219998-1 C4A 09/27/96 06/21/96 Y HGT GAGE .040 8006880 1 49 49 8006950 8006925 8006930 8006940 8006945 8006950 T219998-2 C4A OOS 04/10/96 06/21/96 Y HGT GAGE .040 8006880 1 49 49 8006930 8006950 8006945 8006940 8006950 8006925 T219998-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .040 8006880 1 49 49 8006925 8006950 8006960 8006940 8006930 8006945 T219998-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .040 8006960 1 49 49 8006950 8006880 8006940 8006925 8006930 8006945 T219999-1 C4A OOS 05/31/94 06/28/96 Y HGT GAGE .325 X 2.17 8006925 1 71 71 T219999-2 C4A OOS 05/31/94 06/28/96 Y HGT GAGE .325 X 2.17 8006925 1 71 71 T219999-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .325 X 2.17 8006925 1 71 71 T219999-4 D6F POS 02/14/97 06/28/96 Y HEIGHT GAGE 8006925 1 71 71 T220000-1 C4A OOS 06/06/94 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65 T220000-2 C4A OOS 06/29/94 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65 T220000-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65 T220000-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65 T220008 C6A 02/26/92 07/08/96 N ROUTER DRILL FIXT REV D 8006900 1 649 648 8006898 T220033-1 9232C 06/14/96 06/14/96 Y MOLD MASTER PATTERN 8006900 1 422 422 T220033-2 9232C 06/14/96 06/14/96 Y MOLD MASTER PATTERN 8006900 1 422 422 T220043 C6A 10/25/96 10/25/96 N CABLE BRD, W4 EXTERNAL 8006965 1 365 365 T402918-1 C6B 03/09/92 07/08/96 N SPANNER WRENCH 1 75 75 T402918-2 C6B 03/09/92 07/08/96 N SPANNER WRENCH 1 73 73 T402918-3 C6B 03/09/92 07/08/96 N SPANNER WRENCH 1 73 73 T402922 9852E 04/30/97 06/28/96 Y CRIMP TOOL 8006917-301 1 158 158 T402931 C4A OOS 11/28/94 06/28/96 Y CRIMP TOOL 1 158 158 TE254115 D3F POS 02/11/97 07/10/96 N T/F MOTHER BOARD 8006910 1 650 650 TE254122 9852B 06/20/96 06/20/96 N TEXT FIXT A1&A2 BOARD 8006955 1 1000 1000 TE254123 9852B 06/20/96 06/20/96 N TEXT FIXT A3 BOARD 8006935 1 950 950 TE254124 9852B 06/20/96 06/20/96 N TEXT FIXT A4 BOARD 8006940 1 950 950
4-JUN-97 TOOL MASTER LIST Page: 4 Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ --------- TE254125 9852B 06/20/96 06/20/96 N TEST FIXT A5 BOARD 8006930 1 975 975 TE254126 9852B 06/20/96 06/20/96 N TEST FIXT A6 BOARD 8006945 1 950 950 TE254127 9852B 06/20/96 06/20/96 N A7/A8 BRD, TEST FIXT 8006950 1 5000 5000 TE254128 9852B 06/20/96 06/20/96 N TEST FIXT A8 BOARD 8006950 1 1000 1000 TE254129 9852E 05/18/90 06/21/96 N T/F A9 BD/XFMR HV COUP 8006880 1 900 1200 2100 TE254130 9852B 06/20/96 06/20/96 PMFL WORD GEN A1/A2BD 1 1500 1500 TE254131 9852E 06/13/96 06/13/96 Y SYSTEM T/S STIMULATOR 1 20000 22000 42000 TE254131-2 9852EHK 06/13/96 06/13/96 Y POWER SUPPLY 1 500 500 TE254131-3 9852B 06/14/96 06/14/96 N CABLE, W4 TARC PWR 1 400 400 TE254131-4 9852E 06/13/96 06/13/96 N CABLE, W5 TARC SIQ 1 400 400 TE254131-5 9852E 06/13/96 06/13/96 N CABLE, W6 STIM JUMPER 1 400 400 TE254131-6 9852E 06/13/96 06/13/96 N CABLE, W7 HV/LV P/S 1 400 400 TE254131-7 D7A 03/24/92 07/11/96 N CABLE, W8 HVPS/STIM 1 400 400 TE254131-8 9852E 06/13/96 06/13/96 N CABLE, W10 HVPS/HV FLT 1 400 400 TE254132 9852B 06/13/96 06/13/96 N ESP CABLE 95D 1 150 150 TE254133 9852B 06/14/96 06/14/96 N ESP CABLE 96D 1 170 170 TE254134 9852B 06/14/96 06/14/96 N ESP CABLE 97D 1 175 175 TE254138-1 9852B 06/14/96 06/14/96 N ESP CABLE J1, 1 CONN 8006910 1 150 150 TE254138-2 9852B 06/14/96 06/14/96 N ESP CABLE J2, 2 CON 8006910 1 150 150 TE254138-3 9852B 06/14/96 06/14/96 N ESP CABLE J3, 12 CONN 8006910 1 150 150 TE254138-4 9852B 06/14/96 06/14/96 N ESP CABLE J4, 13 CONN 8006910 1 150 150 TE254138-5 9852B 06/14/96 06/14/96 N ESP CABLE J5, 17 CONN 8006910 1 150 150 TE254138-6 9852B 06/14/96 06/14/96 N ESP CABLE J6, 22 CONN 8006910 1 150 150 TE254138-7 9852B 06/14/96 06/14/96 N ESP CABLE J7, 27 CONN 8006910 1 150 150 TE254138-8 9852B 06/14/96 06/14/96 N ESP CABLE J8, 32 CONN 8006910 1 150 150 TE254155 D6B 02/28/92 07/11/96 N TEST FIXTURE-A4, A5 UNIT #5 8006930 1 5000 5000 8006940 TE254156 9852B 06/20/96 06/20/96 TEST FIXTURE A6 8006945 1 6000 6000 TE254157 D6B 02/26/92 07/11/96 N TEST FIXTURE A9 8006880 1 4000 4000 TE254158 D7A 03/24/92 07/11/96 SYSTEM TEST SET STIM 1 1 140000 140000 TE254158-1 D6D 02/04/94 07/11/96 N BREAKOUT BOX 1 400 400 TE254158-3 D7A 03/18/92 07/11/96 N CABLE, W4 LOW VOLT P/S 1 300 300 TE254158-4 D7A 03/18/92 07/11/96 N CABLE, W5-1 SIGNAL 1 300 300 TE254158-6 D7A 03/18/92 07/11/96 N CABLE, W7 HV/LV P/S 1 400 400 TE254158-7 9852E 05/13/96 06/13/96 N CABLE, W5-3 SIGNAL 1 200 200 TE254158-8 D7A 03/18/92 07/11/96 N CABLE, INTERFACE W3 1 75 75 TE254159 9852E 04/06/95 06/21/96 Y SYSTEM TEST SET STIM 2 1 37500 37500 TE254159-1 9852E 04/06/95 06/21/96 Z LOAD 1 500 500 TE254171 9852BESP 06/14/96 06/14/96 N ESP CABLE 9E 1 200 200 TE254228-1 TELFWHSE 08/01/93 06/02/96 Y CABLE SIMULATOR (ENG) 1 8500 8500 TE254228-2 9852E 06/13/96 06/13/96 Y CABLE SIMULATOR (PROD) 1 8000 375 8375 TE254241 9855 E/L 10/04/95 07/23/96 N POWER SUPPLY, LOW VOLT 1 600 600 TE254255 D6B 08/12/96 08/12/96 N CABLE, STIMULATOR TEST 1 180 180 TE254265 D6D 02/04/94 07/11/96 N BURN-IN T/F A4 BRD 1 1900 1900 TE254271 9852E 06/13/96 06/13/96 N FILTER, HIGH VOLTAGE P/S 8016543 1 250 250 Tooling 61 7875 Test Equip. 48 276350 Total 109 284225
4-JUN-97 TOOL MASTER LIST Page: 1 Contract Number: N00024-92-C-6225 Description: NSIS (NORDEN) Customer: USN Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost - ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ --------- T220598 D6F POS 02/11/97 07/12/96 N HOLDING FIXTURE 1 425 425 TE254411-1 8002 06/29/93 08/06/96 P.C. S/M 9207054 1 4525 4525 TE254411-2 8002 06/29/93 08/06/96 COLOR MONITOR, ARCUS 1 0 0 TE254411-3 D5D 08/15/96 08/15/96 N DIGITAL TAPE RECORDER 1 3695 3695 TE254411-4 8002 06/29/93 08/05/96 DATA TRANSLATION BOARD 1 3395 3395 Tooling 1 425 Test Equip. 4 11615 Total 5 12040
Schedule 4.23 - Entire Business No items to schedule. Schedule 4.25 - Insurance See following pages. See also Schedule 4.11. ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk AUTOMOBILE LIABILITY Management DOMESTIC Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- AUTOMOBILE LIABILITY INSURANCE - U.S. Insurance Company The Travelers Indemnity Company Policy No. TC2EE-CAP-173T4473-TCT-97 Texas Bond 470J1965 Massachusetts TC2J-CAP-201T485-A-TIL-97 Virginia TC2J-CAP-173T445-5-TIL-97 All Others (excluding Texas, Virginia, Massachusetts) TJEAP-225T169-8-97 Massachusetts Excess Coverage This policy covers the legal liability of AlliedSignal Inc. which may result from the ownership, maintenance, or use of any automobile (hired, non-owned, long-term leased, or owned). Coverage includes bodily injury liability, property damage liability, medical payments coverage, no fault coverage and uninsured/underinsured motorists protection. There is no coverage under this policy for physical damage to AlliedSignal Inc. units. This policy will pay first dollar coverage for damages to third parties for which we are legally liable, notwithstanding a $2,000,000 deductible each occurrence, bodily injury and property damage combined, including expense. Travelers is reimbursed via a daily cash transfer system for claims within the deductible area. Policy Period 4/1/97 - 4/1/98 Limits of Liability COVERAGE LIMITS OF LIABIlITY - -------- ------------------- Bodily Injury and $2,000,000 per occurrence Property Damage Liability Combined Single Limit Medical Payments $5,000 Each Person Uninsured/Underinsured Motorists Statutory Limits Statutory No-Fault coverage in states where applicable Basis of Premium Charge 1 of 2 Prior to renewal each year, the Risk Management Department sends each operation a form to be completed. The form indicates the number of vehicles by category. Premium is then charged on the number of vehicles in each of five classes (automobiles, vans, trucks, tractors and buses) as well as three experience rate levels relating to the operation's past losses. Short-Term Leased Vehicles (Less than one year) For automobiles rented/leased with the Corporate American Express Card within the United States, no matter which leasing company is used to lease a short-term vehicle, the insurance waiver for the collision deductible should be accepted. If not rented/leased with the Corporate American Express Card, it will be up to the individual operating unit's management to decide whether or not the employee waives or accepts the waiver for collision deductible. This decision should be based on the costs/benefits of the operating unit's rental experience. Use of Personal Automobile on Company Business The AlliedSignal Inc. Corporate Risk Management Program does not provide coverage for physical damage to an employee's vehicle or for the employee's liability to third parties. An employee using their own automobile on company business must look to their own personal insurance carrier for coverage. At the discretion of Corporate Management the Corporate Automobile Liability Policy will provide liability insurance in excess of the employee's personal automobile liability limits while an employee is using his personal car on company business. Notice and Handling of Claims A. Litigation If you receive a copy of a Summons, Complaint, Petition or other legal paper indicating that AlliedSignal Inc., one of its subsidiaries, divisions or employees is involved in a lawsuit, immediately contact your Regional Counsel. Forward legal papers to your counsel with copies to the Corporate Risk Management Department. B. Other Claims The following Motor Vehicle Accident Reporting Form is to be completed in full and returned to the Corporate Risk Management Department. The information is necessary to attempt recovery from the adverse driver and also enable proper credit of any recovery. 2 of 2 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk BLANKET CRIME Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 2/96 2/97 - -------------------------------------------------------------------------------- BLANKET CRIME INSURANCE Insurance Company National Union Fire Insurance Co. Federal Insurance Company Coverage This policy will reimburse AlliedSignal for loss of money, securities and other property resulting from perils insured, i.e., employee dishonesty, safe burglary, robbery, hold up, and forgery, subject to the limits of liability stated below. Policy Period 12/31/95 - 12/31/98 Limits of Liability - -------------------------------------------------------------------------------- TYPE OF LOSS LIMIT DEDUCTIBLE - -------------------------------------------------------------------------------- Employee Dishonesty Loss Inside Premises Loss Outside Premises Depositors Forgery Coverage $50,000,000 $1,000,000 Loss of Precious Metals Money Orders, Counterfeit Paper & Credit Card Forgery* - -------------------------------------------------------------------------------- * $1,000,000. Limitation on credit card forgery Basis of Premium Charge Premium is based on census and precious metals exposure. Notice an Handling of Claims Report losses to the Risk Management Department, Corporate Controller, the Director of Corporate Services and the Director of Corporate Auditing in accordance with Vol. I Section 1.6 of the AlliedSignal Controller's Manual. 1 of 1 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk DIRECTORS & OFFICERS Management LIABILITY Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 2/96 2/97 - -------------------------------------------------------------------------------- DIRECTORS & OFFICERS LIABILITY For information on this coverage contact Lois Fuchs at (973) 455-5916. 1 of 1 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk FIDUCIARY LIABILITY Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 2/96 2/97 - -------------------------------------------------------------------------------- FIDUCIARY LIABILITY Insurance Company a) National Union b) CNA Insurance c) Reliance Insurance d) ACE Insurance Coverage This coverage will pay on behalf of any individual construed to be a fiduciary under ERISA and AlliedSignal Inc. and its subsidiaries, claims made during the policy period for breach of fiduciary duty in the administration of Employee Benefit Plans as governed under ERISA or similar Canadian, U.K. or other foreign laws. Policy Period 12/31/95 - 12/31/98 Limits of Liability Contact the Risk Management Department for specific limit information. Deductible The Corporate deductible is $250,000 per loss (incl. defense). First dollar coverage is provided to individual fiduciaries. 1 of 1 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk GENERAL & AUTO LIABILITY Management FOREIGN Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- COMPREHENSIVE GENERAL & AUTOMOBILE LIABILITY - FOREIGN Insurance Company Zurich-American Insurance Company Policy No. CGL 68-63-617-04 Coverage - General Liability This policy pays on behalf of or indemnifies AlliedSignal Inc. for all sums which they shall become obligated to pay by reason of third party liability imposed by law for damages because of bodily injury, sickness or disease, and/or injury to or destruction of property, including the loss of use thereof, caused by an occurrence. Coverage under this policy also includes (but is not limited to) the following types of liability claims: products (excluding aircraft products), completed operations and contractual liability. Policy Period 4/1/97 to 4/1/98 Limits of Liability (In US dollars) General Liability $2,000,000 combined single limit, per occurrence/$20,000,000 in the aggregate $2,000,000 Products Liability and Completed Operations per occurrence/$4,000,000 in the aggregate Automobile Liability Bodily Injury/Property Damage $2,000,000 combined single limit Hired car and non-ownership coverage is included. Deductibles General Liability None Automobile Liability 1 of 3 For owned automobiles, this coverage is excess and difference in conditions over local statutory limits or $25,000 SIR, whichever is greater. Local Automobile Insurance Guidelines Automobile insurance is broken down into 2 main categories: 1. Automobile Liability for bodily injury and property damage to others 2. Physical damage to the vehicle to include collision, theft, etc. The purchase of physical damage insurance is prohibited by Corporate policy. As respects automobile liability, this subject can be broken down into two more categories: A. Liability arising out of the use of owned or leased vehicles B. Liability arising out of the use of vehicles not owned, hired or leased by AlliedSignal. This category includes vehicles that are owned by AlliedSignal employees and used on company business with the permission of the company. In item "A" above, the owned or leased vehicles must carry local automobile liability insurance. In most countries, the local vehicle registration laws require that the operating unit maintain automobile liability insurance for those vehicles. Non-owned vehicle coverage is provided as an adjunct to our general liability program. Such coverage wilt also normally be provided on an admitted basis as part of the locally issued general or automobile liability policies. It is important to note, however, that this coverage does not extend to personal use of employees' vehicles. It is intended to protect AlliedSignal and may, depending on the discretion of the Risk Management Department, be extended as excess coverage to its employees as respects liability arising from employees using personal cars on company business. Therefore, it is imperative that all employees continue to maintain their own personal automobile insurance. With respect to the Zurich-American USA policy, it extends on a broader and excess basis to all categories of automobile liability indicated above, over a minimum primary limit of $25,000 or the local statutory limit, whichever is greater. On the subject of rented automobiles, the major rental firms with whom we deal provide liability insurance as part of the rental agreement. Our international program provides insurance protection for both AlliedSignal and the employee, while on company business, for coverage in excess of that offered by the automobile contract. The Zurich-American program does not mandate that the local admitted automobile insurance be placed with the Zurich-American network facility in the various countries. However, with all other factors being equal, we strongly encourage the use of the Zurich-American for the admitted automobile liability program. Whether or not the Zurich-American is used, the J&H local facility is to be the broker for the automobile insurances. Basis of Premium Charge - General & Automobile Liability 2 of 3 Premium is based on non-aircraft sales and number of vehicles. Notice and Handling of Claims The original of each report and of supporting papers are to be submitted to the local Zurich representative servicing the area where the accident occurred, with copies sent to the Risk Management Department at 201 Columbia Road Morristown, New Jersey 07962 3 of 3 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk GENERAL LIABILITY - DOMESTIC Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- GENERAL LIABILITY INSURANCE Insurance Company The Travelers Indemnity Company U.S. Policy No. TC2J-GLSA-199T573-A-TIL-97 Coverage This policy will pay on behalf of AlliedSignal Inc. & subsidiaries all sums the insured is legally liable to pay, for damages arising from bodily injury and property damage liability, resulting from a product or activity of the insured and caused by an occurrence. Coverage under this policy includes (but is not limited to) the following types of liability claims products (excluding aircraft products), completed operations, contractual liability. This policy will pay first dollar coverage for damages to third parties for which we are legally liable, notwithstanding our current deductible of $3,000,000 each occurrence, bodily injury and property damage combined, including expenses. Travelers is reimbursed via a daily cash transfer system for claims within the deductible area. Policy Period 4/1/97 - 4/1/98 Limits of Liability (1) A. General Liability (excl. products) -$3,000,000 each occurrence combined limit for bodily injury, sickness, disease or death or physical injury to or destruction of tangible property. B. Product Liability (excl. aircraft products) and Completed Operations Liability - $3,000,000 each occurrence combined limit for bodily injury and property damage subject to an aggregate(2) of $10,000,000. (1) Defense costs are paid in addition to the limits of liability. (2) Aggregate is eroded by indemnity payment within both the deductible & pure insurance areas. Basis of Premium 8% is based on wages - this covers premises type exposure 60% is based on historical loss experience. 32% is based on non-aircraft sales. 1 of 2 NOTICE AND HANDLING OF CLAIMS A. Litigation If you receive a copy of a Summons, Complaint, Petition or other legal paper indicating that AlliedSignal Inc., one of its subsidiaries, divisions, operating units or employees is involved in a lawsuit, immediately contact the Law Department. Forward legal papers to your assigned company Counsel with copies to the Risk Management Department B. Other Claims and Incidents Report all other claims and incidents under this coverage by submitting a comprehensive narrative report to the Risk Management Department and The Travelers Insurance Company. For serious claims telephone the Risk Management Department and provide all available information. Your written report should include all relevant aspects of the claim, especially the following items: 1. Date of accident or loss 2. Persons involved and extent of their injuries 3. Extent of Property Damage 4. Short narrative of what took place 5. Copies of available accident reports and witness statements The Risk Management Department and the local Travelers office will work with you in every aspect of a claim under this coverage, so that final disposition is made in the most beneficial and expeditious manner. C. Environmental Claims See Excess Liability Section. GENERAL LIABILITY INSURANCE- CANADA Insurance Company The Guardian Insurance Company Policy No. 1412000 Policy Period 4/1/97 - 4/1/98 Coverage Coverage is the same as provided in the United States. 2 of 2 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk EMPLOYEE TRIP TRANSIT Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- EMPLOYEE TRIP TRANSIT Insurance Company Fireman's Fund Insurance Company Policy No. OP-18530 Coverage Provides worldwide coverage on household goods and personal effects of AlliedSignal's officers and employees while in transit by any mode of conveyance, including risks while on docks, platforms, wharves, sidings, awaiting transshipments or being transshipped, and held covered while in warehouses. Insured against "All Risks" of physical loss and/or damage from any external cause exclusions considered uninsurable, such as nuclear, wear and tear, insects, inherent vice and gradual deterioration. Coverage does not apply to loss of accounts, bills, currency, deed, evidences of debt, money, notes or securities. Jewelry and watches require prior Risk Management Department approval at rates to be agreed upon. Coverage attaches from the time goods are being packed for shipment and covering continuously until same are safely delivered and unpacked at the final destination, but only at and between the places as reported on AlliedSignal's monthly report required to be made under the policy. For questions on Monthly Reporting, please contact Fran Watkins in Morristown. Policy Period 5/1/97-4/30/98 Limit of Liability $400,000 any one shipment at any one time. Deductible None Notice of Handling of Claims Report to the AlliedSignal Risk Management Department who shall report prompt notice to the Fireman's Fund Insurance Company. All potential claims in excess of $500 shall be reported to: Mr. Tom Lynch Fireman's Fund Insurance Company 1 of 2 Ocean Marine Claims One Liberty Plaza New York, NY 10006 2 of 2 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk MARINE CARGO Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- OCEAN CARGO INSURANCE INCLUDING WAR RISK Insurance Company Fireman's Fund Insurance Company Policy No. OP-18529 - Ocean Cargo Policy No. OP-18530 - Household and Personal Effects Coverage This policy covers 100% interest in shipments worldwide (excluding shipments within the US & Canada), by vessel and air freight for account of AlliedSignal Inc. and its overseas customers on merchandise incidental to the business of the insured. Valuation of goods normally includes prepaid or advanced or guaranteed freight or other charges incurred prior to shipment, plus 10%. Policy provides for certain alternative valuation clauses. Limits of Liability 1. $15,000,000 per any one vessel or conveyance including aircraft. $400,000 per any one household effects shipment $50,000 per package shipped by mail or parcel post and $50,000 in any one package and/or baggage while in the custody of a messenger whether an employee of AlliedSignal Inc. or otherwise. 2. Shipments originating within the United States and Canada are excluded if the destination is also within the US or Canada. 3. War Risk applies only while goods are carried on overseas vessels or aircraft. It does not apply prior to being on-board or after arrival at intended port of discharge. 4. War Risk does not cover loss or damage caused by or resulting from commandeering, preemption, requisition, nationalization or seizure or destruction under quarantine or customs regulations. 5. Geographical Limits - coverage is on the basis known as "World to World", i.e., from ports and places in the world to ports and places in the world. 6. All merchandise with exception of Dry Bulk Cargo and Liquid Bulk Cargo is insured for "All Risks" conditions. Intracompany shipments are subject to a $5,000 deductible. Note, in view of the sensitive nature of our products, under deck stowage should always be requested from the Steamship Companies. 1 of 6 Dry Bulk Cargo is insured for "All Risks". However, claims for leakage and/or shortage and/or loss in weight are subject to a one-half (.5%) deductible applied to the insured value of the entire shipment. Bulk Liquid Products are insured: "All Risks" excluding shortage, leakage, and/or contamination unless caused by or arising out of the vessel being stranded, sunk, burnt, or in collision. Contamination resulting from stress of weather is covered. Claims are payable subject to deductible for normal shortage. Options are given to cover Bulk Liquid Cargo for: a. "All Risks" excluding unexplained shortage and/or loss in weight. Claims for differences between shipped and outturn weights are subject to a .5% deductible applied to contents of each tank. b. "All Risks" including coverage for all shortage and/or loss in weight subject to deductible of .5% applied to contents of each tank. Warranties are in effect with respect to tank cleanliness, loading and survey requirements. 7. Temporary detention coverage is provided for goods during interruption of transit and in temporary storage for repacking, consolidation, inspection, storage or allocation for up to 60 days. 8. Duty coverage on imports included where required. 9. Sixty (60) days notice of cancellation. 10. Foreign storage coverage is provided for goods in storage up to $500,000 each unnamed location. The risks of Earthquake and Flood are excluded at unnamed locations; but these risks may be restored if location is named within thirty (30) days of receipt of merchandise. A specific endorsement must be secured to name the location and respective limit. Prompt notice must be given when goods are placed in storage indicating location, amount and goods at risk. 11. Contingency - For Exports Only Depending on the Contracts of Sale, the buyer will arrange their own Marine insurance, thus AlliedSignal will not insure the shipment on behalf of the buyer under the Corporation's Ocean Marine Insurance Policy. For one reason or another, title in the goods may revert to the seller, i.e., by exercise of rights of stoppage in transit or rejection of the goods by the buyer. Or the buyer might refuse to pay for the merchandise because of loss and/or damage. In order to protect AlliedSignal's interest in the preceding, AlliedSignal has the option provided such option is exercised prior to any known or reported loss to insure all goods and/or merchandise sold to others whereby AlliedSignal is not obligated to provide Ocean Cargo insurance for the Contingency Interest of AlliedSignal Inc. 2 of 6 This coverage will indemnify AlliedSignal for loss incurred due to perils insured against under the Corporation's Ocean Marine Insurance Policy. 12. Exhibitions All goods and/or merchandise property of AlliedSignal Inc. while on tour and/or display in exhibitions, showrooms and/or trade shows or otherwise including all incidental transit are covered under the Marine Insurance Program. Excluding exhibitions, showrooms and/or trade shows, etc., in the United States. The limit of this coverage is $100,000. Excess coverage provided under foreign property program. 13. Increased Value/Difference in Conditions - For Imports Only Depending on the Contracts of Sale, AlliedSignal will purchase various merchandise from vendors located outside the United States in which the Seller will arrange the Ocean Marine Insurance. Thus in the event of loss or damage, AlliedSignal will have to rely on the Sellers insurance to be reimbursed for the loss. In order to fully protect AlliedSignal's interest, AlliedSignal has the option, provided such option is exercised prior to any known or reported loss, to insure all goods and/or merchandise purchased by AlliedSignal on Cost, Insurance, Freight (C.I.F.) or other terms of purchase whereby the Marine insurance is provided by the seller or others for Difference in Conditions and Increased Value as stated in the Corporation's Ocean Marine Insurance Policy. Policy Period 5/1/94 until cancelled. Notice and Handling of Claims In the event of loss: - - Make every reasonable effort to minimize the loss. Act as a prudent uninsured cargo owner would. Reasonable expenses incurred in minimizing a loss are recoverable. - - Take proper delivery exceptions and file claim against the transportation carrier. Do the necessary to preserve insurer's recovery rights against the carrier. - - Promptly report the loss to AlliedSignal's Risk Management Department (domestic shipment and imports) or insurer's settling agent (exports). INTERNATIONAL SHIPMENTS Import Shipments (From Foreign to U.S.) Inspect Cargo Before accepting your shipment from the carrier, carefully inspect the cargo. If damages or shortages are observed, make the appropriate notation on the delivery receipt. If damage is 3 of 6 suspected but not readily apparent, note on the delivery receipt "Subject to Inspection." At this time, take any practical steps to minimize the loss. File Claim on Carrier Promptly file written claim against the transportation carrier. (See sample claim letter). Prompt notice is very important as claims can be disallowed within a short period. For example, a claim for damage to an air shipment must be filed within seven days. FAILURE TO FILE PROMPTLY AGAINST THE CARRIER MAY PREJUDICE YOUR INSURANCE CLAIM. File Insurance Claim Promptly report the loss to AlliedSignal's Risk Management Department who will in turn notify insurer. If the loss exceeds $5,000 or involves unusual circumstances, the initial report should be made by telephone, so that insurer might arrange to have a surveyor inspect the damages promptly. The surveyor issues his report to insurer relating the nature, cause and extent of loss. Regardless of the amount of the loss, do not dispose of any damaged cargo until settlement is agreed or advised to do so by the surveyor. Claims Documentation Cargo claims are essentially adjusted on the basis of documentation. It is your obligation to demonstrate your claim by providing the Risk Management Department with documentation which shows the loss was incurred during transit and which substantiates the values being claimed. The following documents are required for claims on imports: - - File an itemized statement as to the amount claimed - - Bills of Lading (Ocean, Air and Inland). If claim is for non-delivery of an entire shipment all original ocean bills of lading are required. - - Commercial Invoice - - Packing List - - Consumption Entry Report (if duty is insured). - - Copy of claim against the carrier and reply, if any. - - Delivery Receipt showing exceptions. - - Trailer Interchange Receipt (for containerized shipments). - - Carrier's confirmation of non-delivery (when claiming non-delivery of an entire shipping package). - - Repair/reconditioning invoices or estimates. This list includes the documents commonly needed to demonstrate a cargo claim. Be sure to submit any other documentation which would substantiate your claim. General Average In case a General Average is reported, the Average Adjusters require either a cash deposit or a General Average Guarantee from an Underwriter authorized to do business in the country where security is 4 of 6 taken. The cargo generally will not be released until the Average Adjusters receive the Average Bond or Average Agreement and the General Average Guarantee. Be prepared to furnish identification of the Average Adjuster, details of the casualty, description and value of cargo, the Bill of Lading number and date, and identification of the insurance declaration. Alexander & Alexander will then arrange for the Underwriter to issue a General Average Guarantee or to post a cash deposit. The documentation required is as follows: a. Invoice b. Bill of Lading c. Copy of the signed Average Bond or Average Agreement d. Insurance Certificate or Insurance Declaration After the cargo is released for delivery and the documentary requirements fulfilled all subsequent claim negotiations will be between the Average Adjuster and Underwriter. Export (U.S. to Foreign) and Foreign (Foreign to Foreign) Shipments On shipments terminating in foreign countries, the consignee basically follows the same claim procedure as you do for imports. Instead of reporting the loss to AlliedSignal's Risk Management Department, however, the consignee contacts the insurer's survey agent as listed on the Special Marine Policy which he receives with the shipping documentation. The consignee pays the survey fee and submits his claim (including the survey fee) to the nearest insurer settling agent shown on the Special Marine Policy. He submits the Special Marine Policy and the survey report in addition to those documents listed above for import shipments. This claim procedure is clearly outlined on the reverse of the Special Marine Policy. HOUSEHOLD AND PERSONAL EFFECTS SHIPMENTS Employees household goods and personal effects moves are insured against all risks of physical loss or damage from an external cause up to the value declared on AlliedSignal's relocation forms. Domestic and Foreign to U.S. Moves Inspect Cargo Before accepting delivery, inspect your goods and note any apparent damages on the delivery receipt. If you do not have an opportunity to make a thorough inspection, sign the receipt with the notation "Subject to further inspection." File Claim Against the Moving Company In the event of damage or shortage, promptly notify the moving company by telephone and then follow-up with a written notice of claim. Under a special arrangement with the insurer, the moving 5 of 6 company will inspect the damages and settle the claim directly with you. Claims Documentation The following documents should usually be submitted to the moving company: - Bill of Lading - Valued Inventory - Packing List/Inventory - Delivery Receipt - Repair Bill or Estimates - Completed Claim Form (supplied by the moving company) Foreign Moves In the event of loss or damage to your goods when delivered to a foreign destination, secure the above claim documentation (Household and Personal Effects Shipments) and forward to the Risk Management Department. GENERAL REMARKS These procedures will serve as a guideline for everyday cargo claims handling. If you encounter any difficulties in handling a particular claim, contact the Risk Management Department for assistance. You should also be sure to promptly notify the Risk Management Department of any serious cargo loss. SAMPLE LETTER FORM FOR NOTICE OF LOSS TO CARRIER TO BE WRITTEN ON YOUR LETTERHEAD Vessel or Carrier's Name Bill of Lading No.- Date Description of Shipment Estimate of Loss Your own Reference No. Gentlemen: The captioned shipment was received short and/or damaged. We hold you fully responsible for an estimated amount of $_______. Please forward a copy of your delivery records covering this shipment so we may file claim under our insurance. A formal claim with supporting documents will be submitted when the exact amount of loss has been determined. Very truly yours, 6 of 6 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk EXCESS LIABILITY Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- WORLDWIDE MARINE LIABILITIES Insurance Company European, US, Swiss & Bermudian Companies Coverage This insurance will pay on behalf of the Assured all sums for bodily injury and property damage which the Assured shall become legally liable to pay or be liable to pay by reason of contract or agreement including but not limited to Protection and Indemnity Risks, including War Protection and Indemnity Risks for AlliedSignal's barge fleet, collision, towers, removal of wreck, charterers, charterers' demurrage, terminal or wharf owners or operators' liability. Includes seepage and pollution coverage in accordance with Federal Water Quality Improvement Act requirements. Policy Period 4/1/97 - 4/1/98 Limits of Liability* $200,000,000 any one occurrence and in the aggregate's excess of $3,000,000 (insured and/or self-insured) any one occurrence. * Payment of Loss for joint ventures is determined as follows: Total loss of joint venture times AlliedSignal's percentage of interest, unless otherwise requested and endorsed on the policy. ** Additional limits respond on a "claims-made" excess basis. - -------------------------------------------------------------------------------- BROAD FORM UMBRELLA LIABILITIES - WORLDWIDE Insurance Company Alchem Insurance Ltd., Bermudian, European, Swiss & American Companies Coverage Excess Liability Insurance is designed to add an additional amount of coverage over and above some specific limit. Our excess liability policies provide coverage over various primary underlying limits. Underwriters shall indemnify the Assured for all sums which the Assured shall be obligated to pay by 1 of 4 reason of the liability: a. imposed upon the Assured by law, or b. assumed under contract or agreement by the Named Assured and/or any officer, director, stockholder, partner or employee of the Named Assured, while acting in his capacity as such, for damages on account of: i. Personal Injuries ii. Property Damage iii. Advertising Liability iv. Marine Liability caused by or arising out of each occurrence happening anywhere in the world. Policy Period 4/1/97 - 4/1/98 Limits of Liability* $200,000,000 combined single limit attaching excess of the following: US$3,000,000 any one occurrence Ultimate Net Loss whether insured or self-insured as respects general and non-aircraft products liability. US$2,000,000 any one occurrence Ultimate Net Loss whether insured or self-insured as respects Automobile Liability US$2,000,000 any one occurrence Ultimate Net Loss whether insured or self-insured as respects Foreign Liability US$1,000,000 Ultimate Net Loss per person as respects Employer's Liability Occupational Disease (domestic). Excess of non-U.S. and Canada programs declared to Risk Management Department. Basis of Premium Allocation 50% is based on non-aircraft sales. 50% is based on historical loss experience. * Payment of Loss for joint ventures is determined as follows: Total loss of joint venture times AlliedSignal's percentage interest, unless otherwise requested and endorsed on the policy. NOTE: Additional limits respond on a "claims-made" excess basis. - -------------------------------------------------------------------------------- SEE PAGE AND POLLUTION LIABILITY 2 of 4 Insurance Company European, US, & Bermudian Companies Coverage To cover the Assured for all liabilities, costs and expenses for which they may be held liable arising from seepage, pollution, contamination, containment, confinement and cleanup expenses, (unless deliberate or resulting directly from willful or conscious violation or non-compliance with rules, regulations or law). Coverage is limited to accidental, unintended and unexpected occurrences. All policies require that the occurrence can be identified as commencing at a specific time and date during the term of the policies, that we learn of the occurrence within a specified time soon after commencement and report same to underwriters within a specified time*. Excludes coverage for claims involving waste sites. Policy Period 4/1/97 - 4/l/98 Limits of Liability** Contact the Risk Management Department for specific limit information. NOTICE AND HANDLING OF CLAIMS Notice of Loss First Notice of Loss should immediately be phoned to the Risk Management Department. All losses must be reported to the Risk Management Department in time for them to report the loss to the insurers within 20 days of commencement of the loss. * Time element wording varies by policy as shown on next page. ** Limits of liability for joint ventures are determined as follows: policy limits times AlliedSignal's percentage of interest in the joint venture unless otherwise arranged. Pollution - Time Element Reporting Provisions Discovery Within Reporting Within 7 days 40 days Litigation If you receive a copy of a Summons, Complaint, Petition or other legal paper indicating that AlliedSignal Inc., one of its subsidiaries, divisions, operating units or employees is involved in a lawsuit, immediately contact the Law Department. Forward legal papers to your assigned company Counsel with copies to the Risk Management Department. 3 of 4 Other Claims and Incidents Involving Pollution Report to the Risk Management Department all claims, lawsuits, and incidents relating to waste disposal or plant manufacturing operations and which involve alleged contamination of the environment. All claims are to be reported irrespective of the date upon which the disposal or spillage occurred. Claims and lawsuits that must be reported include the following: o demands from any private party or governmental entity that action be taken to remedy the alleged contamination o information requests from any governmental agency or private party o demands for reimbursement of costs expended and/or damages incurred by any governmental agency or private party o circumstances that involve negotiations with a governmental agency where a written demand has not been made but where a consent order is expected. Reports of these claims to Risk Management should include a copy of the claim or lawsuit, a synopsis of the events, if known, associated with the claim along with an outside counsel recommendation or selection if the Law Department determines that outside counsel is necessary. 4 of 4 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk GLOBAL PROPERTY DAMAGE & Management BUSINESS INTERRUPTION Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 10/95 10/96 - -------------------------------------------------------------------------------- GLOBAL PROPERTY DAMAGE AND BUSINESS INTERRUPTION Insurance Company The insurance company is American International Underwriters for Allied's International locations. In North America the primary insurers are Reliance, Houston Casualty, National Union and Protection Mutual. These same insurers, plus other U.S. & European insurers participate both in the primary layer, as well as the excess layers. Coverage This is a blanket policy* covering the Corporation against loss or damage, on a replacement cost basis**, to real and personal property, or the property of others for which the Corporation is responsible at locations worldwide (including while in transit). The policy insures against all risk of direct physical loss or damage from any external cause, including boiler and machinery breakdown and is subject to normal exclusions such as wear and tear, gradual deterioration, extremes of temperature, war, nuclear and other exclusions commonly considered uninsurable or the subject of other insurance such as employee dishonesty. The Policy covers Boiler and Machinery up to the full limit per occurrence. This policy also provides business interruption insurance and contingent business interruption insurance which is designed to pay for loss of profits and continuing costs which result from damage to insured property and/or to those of a supplier or receiver by an insured peril. The policy has been extended to cover damage to electronic data processing equipment; and for costs of reproducing media from duplicates or originals only. Some limited amount of full reproduction expenses is provided. Included therein is business interruption and/or extra expense coverage which provide for reimbursement for loss of income and/or the assurance of funds to meet the additional expenses incurred in returning to normal operations following an Insured incident. The policy automatically (subject to reporting to underwriters in a certain time frame) covers new and acquired property and the interest of any company or corporation which during the period of the policy is merged with, becomes a subsidiary of, or becomes controlled by Allied or any subsidiary of Allied. * This policy covers all Allied Signal's locations on a blanket basis (except certain EMS locations, which are covered for $1.2 Billion each occurrence) which means the entire amount of insurance can be applied to a single location. ** In the event of loss or damage to real and/or personal property which is not repaired, rebuilt or replaced, such property will be valued at Actual Cash Value. Policy Period 1 of 6 10/1/96 - 10/1/97 Renewed 10/1/97 - 10/1/98 Limits of Liability Blanket limit combined on Real and Personal Property Insurance and Business Interruption. $350,000,000 for earthquake per occurrence and in the aggregate except Critical Zone earthquake where it is $200 million per occurrence and in the aggregate for ISO Critical Zone 1 (areas of the states include portions of California, Nevada, Alaska and the Country of Canada) and $150 million per occurrence and in the aggregate for one other Zone 1 equivalent International locations. In Japan Zones 4, 5 or 6 there is a 60% indemnity provision. For Flood the per occurrence and annual aggregate is $350,000,000, except in The Netherlands where the occurrence/aggregate limit is $25,000,000. $150,000,000 per occurrence for the following: a) Extra Expense b) Contingent Extra Expense c) Rental Insurance d) Transit e) Contingent Business Interruption f) Fine Arts g) Valuable Papers and Records (including reproduction cost of media) h) Leasehold Interest i) Off Premises Power - Property Damage and Time Element - excluding losses resulting from flood and earthquake. j) Accounts Receivable k) Debris Removal (except windblown debris) l) Vessel impact damage to piers, wharves and docks m) Expediting Expense n) Installment Sales o) Miscellaneous Unnamed Locations p) Newly acquired property subject to reporting within 180 day of acquisition. q) Precious metals r) Fire Department/Brigade Charges s) Electronic Data Processing Equipment t) Property in the course of construction (including testing) Deductible All claims for damage, loss of income, profit or expense arising out of any one occurrence shall be adjusted as one loss and from the amount of such adjusted loss, there shall be deducted the sum of $100,000 combined any one occurrence at all locations, anywhere in the world except $250,000 combined any one occurrence at all locations in the U.S., its territories and possessions, Puerto Rico and Canada. Earthquake Deductibles* $10,000,000 for each loss Insured against the peril of earthquake involving all locations situated within designated critical ISO Zone No. 1 (areas of the states include portions of California, Nevada, Alaska and the Country of Canada). Deductibles: 2 of 6 1. $5,000,000 for each loss at the following locations: Frankford Hopewell Orange 2. $2,500,000 for each loss at the following locations: Chesterfield Columbia Moncure 3. $2,500,000 for each loss at the following locations: Detroit (Tar Plant) Ironton (Tar Plant) Pottsville, PA Longlaville, FR Riedel-de-Haen, German Rudolstadt, Germany 4. $100,000 for each loss involving property in transit. * One carrier (Protection Mutual) has an earthquake deductible of 5% of the maximum of $500,000 any one occurrence in Japan or Mexico and a deductible of 5% to a maximum of $1,500,000 any one occurrence in Taiwan 5.a. 2% for each Property Damage loss insured against by the peril of windstorm in the USA. at each location within designated areas (as defined in Windstorm Endorsement Designated Areas), the amount to be deducted shall be stated percentage of the one hundred percent reported property damage values for each and every location (see Attachment A). b. 5 days for each Time Element loss insured against by the peril of windstorm in the U.S.A. at each location within the designated areas (as defined in Windstorm Endorsement Designated Areas), the amount to be deducted shall be the dollar equivalent of the stated number of days times the daily plant value - computed by dividing the reported annual time element values by the actual number of working days. Notwithstanding 5 a and b above, the minimum amount to be deducted from the total loss arising out of one windstorm occurrence shall in no event be less than $250,000, while the maximum amount to be deducted shall in no event be greater than $5,000,000. Territory Worldwide except Afghanistan, Albania, Angola, Bosnia-Herzegovina, Croatia, Cuba, El Salvador, Iran, Iraq, Kampuchea (Cambodia), Laos, Lebanon, Libya, Macedonia, North Korea, Outer Mongolia, Serbia, Syria, Tibet and Montenegro. Those with a $10,000,000 per occurrence limit include Armenia, Azerbaijan, Bulgaria, Belarus, Georgia, Kazakhstan, Kyrgystan, Moldava, Romania, Tajikistan, Tibet, Turkmenistan, Uzbekistan and Russia. Basis of Premium Charge 3 of 6 Values for property damage and business interruption are completed and submitted to the Risk Management Department annually. Premium is determined on the basis of trended building, machinery and equipment replacement values, together with inventory and estimated business interruption values as of December 31 each year. In addition, loss experience is considered in expensing the cost of the Insurance based upon each business area's proportion of total values. Notice of Loss The proper reporting of claims is important as it effects: o The speed of loss settlement o The prejudicing of your rights against the insurance company caused by reporting delays, thereby violating the insurance policy conditions. o The proper adjusting of the claim amount.. For all losses that may result in an insurable claim you should notify the Corporate Risk Management Department and if the loss occurs outside North America, you should immediately notify your local insurance broker when: o The claims could exceed $10,000 o There is a possibility that the claim will be denied by the local insurance company o There is a dispute as to the settlement amount of the claim All losses should be reported to the local broker and the Corporate Risk Manager. Those claims insured by the Corporate Ocean Maine Cargo program should be reported in accordance with the procedures set forth by the Corporate Risk Management Department and reported to the Corporate ocean marine cargo broker in New York. The claims specialist are: AlliedSignal Inc. Mr. Tim Cummings Morristown, NJ Office Manager, Risk Management Services Telephone: (973) 455-4527 AON NYO Mr. John Rhodes Property/Business Vice President Interruption Claims Telephone: (212) 441-2298 AON NYO Mr. Dante Petrizzo Marine Claims Vice President Telephone: (212) 441-1340 ================================================================================ WINDSTORM ENDORSEMENT DESIGNATED AREAS 4 of 6 ALABAMA: Counties of Baldwin and Mobile FLORIDA: Seacoast Zone I Seacoast Zone 2 Seacoast Zone 3 All Other Counties (Inland) AlliedSignal: Fort Lauderdale, Lynn Haven GEORGIA: Counties in Brantley, Bryan, Camden, Charlton, Chatham, Effingham, Glynn, Liberty, Long, McIntosh, Pierce and Wayne. HAWAII: Entire State LOUISIANA: Parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipanoa, Terrebonne, Vermillion, Washington, West Baton Rouge and West Feliciana. AlliedSignal: Geismar, Darrow - Ascension Baton Rouge - W and E Baton Rouge MISSISSIPPI: Counties of George, Hancock, Harrison, Jackson, Pearl River and Stone. N. CAROLINA: Counties of Besufort, Bertie, Bladen, Brunswick, Camden, Carteret, Chowan, Columbus, Craven, Currituck, Dare, Duplin, Gates, Greene, Hartford, Hude, Jones, Lenior, Martin, New Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Pitt, Tyrell, and Washington. PUERTO RICO: Entire Island including all Caribbean Islands. S. CAROLINA: Counties of Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Hampton, Horry, Jasper and Williamsburg. AlliedSignal: Conway, Charleston TEXAS: Counties of Aransas, Bea, Brazoria, Brooks, Calhoun, Cameron, Chambers, Fort Bend, Galveston, Goliad, Hardin, Harris, Hidalgo, Jackson, Jefferson, Jim Wells, Kenedy, Kleberg, Liberty, Live Oak, Matagorda, Nueces, Orange, Refuglo, San Patricio, Victoria, Wharton and Willacy. AlliedSignal: Orange, Brownsville 5 of 6 VIRGINIA: Counties of Accomac, Charles City, Chesapeake, Gloucester, Isle of Wright, James City, Lancaster, Mathews, Middlesex, Nansemond, New Kent, Norfolk, Northampton, Northumberland, Prince George, Princess Ann, Southampton, Surry, Sussex, Virginia Beach, Warwich and York. AlliedSignal: Hopewell - Chesterfield County Not in designated areas Petersburg - Grant County 6 of 6 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk WORKERS' COMPENSATION - DOMESTIC Management Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 7/96 5/97 - -------------------------------------------------------------------------------- WORKERS' COMPENSATION - DOMESTIC Insurance Company The Travelers Insurance Company Policy No. Applicable State - ---------- ---------------- TC2EEUB-196T365-l-97 Texas TC2JUB-204T578-2-97 Minnesota TDRJ-UB-196T362-6-97 Hawaii, Massachusetts, Oregon, Wisconsin TC2J-UB-202T831-8-97 All Others States Self-insured Excess Policies Policy #: 4155588 Arizona, California, Louisiana, New Jersey, Ohio, Rhode Island, South Carolina, Washington Insurer: National Union Insurance Co. Limits of Liability; Statutory 181000532 Maine - Insured by Maine Employers Insurance Co. Coverage The Travelers Insurance Company will provide coverage for statutory benefits in all states in the United States, except Maine and monopolistic State Fund jurisdictions (Nevada, North Dakota, Ohio, Washington, West Virginia and Wyoming) and self-insured states. Allied is legally self-insured for workers' compensation in Ohio, Arizona, Louisiana, Rhode Island, New Jersey, Florida, California, South Carolina and Washington. Travelers Insurance Company (CSSC) is our claims administrator in Ohio, Louisiana, Rhode Island, California, South Carolina and Washington. Kemper Insurance (NATLSCO) is our claims administrator in New Jersey, Florida and Arizona for claims with a date of occurrence after April 1, 1996. Travelers was the claims administrator for these three states prior to April 1, 1996. Kemper will provide Employer's Liability coverage, as well as coverage for Longshoremen's and Harbor Workers Act Benefits for New Jersey, Florida and Arizona. Travelers will provide those coverages for all other states. Limits of Liability 1 of 8 1. Workers' Compensation - Statutory limits in all insured states of the United States 2. Employees Liability - $1,000,000 by accident, $1,000,000 by disease 3. Longshoremen's & Harbor Workers' Act including masters and members of crew for all operations worldwide. The Jones Act, Defense Base Act and Outer Continental Shelf Act are also covered subject to terms and conditions of these acts. Location Retained Limits Per Occurrence Except for Nevada, North Dakota, West Virginia and Wyoming, AlliedSignal is financially self-insured in all states. We retain the first $1 million of each occurrence. Each location is responsible for the first $250,000 per occurrence. Losses from $250,000 to $1 million are retained at Corporate. Policy Period 4/1/97 - 4/1/98 Basis of Premium Charge Workers' compensation premium is allocated in two segments. Payroll and estimated claims costs are the base used in determining administrative cost which is allocated annually. Included in the administrative cost are Travelers' engineering services (inspections, schools, etc.), state taxes, special fund assessments, cost of excess insurance and expense and profit of Travelers. Secondly, there is a quarterly charge that includes claim losses based upon total incurred liability, up to a maximum of $250,000 per occurrence and a claims administration fee. Claim losses include all new claims filed during the current period plus increase and/or decrease in the incurred liability for prior periods. Claims and the incurred liability appear on the quarterly loss run. The claims administration fee is 11% for accidents occurring prior to April 1, 1986, and 8% after April 1, 1986. Locations in State Funds (Wyoming, West Virginia, Nevada, North Dakota) pay premium directly to a division of the respective State Governments. The State Agency is responsible for payment of statutory benefits and administration of the claims. The cost of this premium is allocated based upon payroll and estimated claims costs. For accidents that occur on or after April 1, 1996, Kemper Insurance Company is the workers' compensation claims administrator for locations in Arizona, Florida and New Jersey. Travelers Insurance retains responsibility for claims that occurred in these states before April 1, 1996. Travelers also retains responsibility for claims in all other states. The following Claims Service Requirements (CSR) will be followed by both the Travelers Insurance Company and Kemper Insurance Company in administering our claim files. Travelers refers to these instructions as Special Account Communication (SAC). Kemper uses the title National Account Claim Bulletin. ALLIEDSIGNAL CLAIM SERVICE REQUIREMENTS (CSR) Acknowledgement - Workers' Compensation 2 of 8 The Workers' Compensation system has been programmed to produce a claim acknowledgment printout. All claim acknowledgments will be mailed to: The location submitting the loss. Adjuster Notes - Workers' Compensation Instant access to your claim information is available through our adjuster notes facility. The customer will see the development of the specific claim especially in the two key areas of reserve rationale and action plan for resolution. Sharing of information is the key. Quarterly Contact - Workers' Compensation We have agreed with both AlliedSignal officials and the producer that Workers' Compensation supervisory personnel will maintain a program of open communications between Travelers, Kemper and AlliedSignal personnel in conjunction with our handling of Workers' Compensation cases. Each AlliedSignal location will have a Workers' Compensation coordinator, designated by the plant manager, who will be our contact. The Claim Supervisor file handler handling Workers' Compensation claims should maintain at least quarterly contact with the Workers' Compensation coordinator designated at each location, so that cases of interest may be reviewed, or any other topics can be discussed. File Review Meetings - Workers' Compensation AlliedSignal Inc. has agreed to hold file review meetings as needed. If requested by AlliedSignal, these file review meetings will be held to discuss open claim files designated by the customer or recommended by Travelers/Kemper as cases significant in nature. After each file is discussed, a joint action plan should be agreed to and made part of the file. These meetings should take place in our office or the AlliedSignal location. Requests for Special Reports or Services Occasionally, the AlliedSignal Workers' Compensation Coordinator will ask for special reports or implementation of a program/service that is beyond the services outlined in these instructions. While close local communications are encouraged, any such arrangement (to be performed on a routine basis) should be submitted to the Claim Account Executive for discussion with AlliedSignal Risk Management. This will assure continuity in the services provided AlliedSignal Inc. Annual Visitations On an annual basis, a personal visit will be made to the AlliedSignal location to review the CSR instructions, application of best practices, communications and any problem areas. During these meetings a detailed review of the CSR instructions should be completed to insure we are in compliance. This visitation should be completed during the first quarter and may be part of a regular quarterly meeting. The AlliedSignal Inc. annual visitation form must be completed and sent to the Claim Account Executive. "Red Flag" Claims - Workers' Compensation There will be occasions when the field office will receive notification from the customer expressing special interest in a claim. This will be termed a "Red Flag" claim by AlliedSignal. This special interest may be expressed at the time of first notice, or at any other time while the claim remains open. When a claim is submitted by the AlliedSignal location and a form letter is attached to the first report identifying 3 of 8 the claim as a "RED FLAG" case, we have agreed to the following special handling guidelines: o Acknowledge receipt of the case to the AlliedSignal representative who submitted it. o The claim handler will initiate a telephone call to the AlliedSignal representative to establish a game plan for investigation and management of the case. The claim handler will outline in a letter to AlliedSignal location the proposed investigation and action to be completed. o As the case develops, we will maintain communications with the AlliedSignal location. o After completion of the investigation, we will discuss the case by telephone with the AlliedSignal location and explain our decision on compensability. If there is a difference of opinion on compensability and agreement cannot be reached, the AlliedSignal location will contact Tim Cummings and Travelers offices should contact the Claim Account Executive. If any problems or disagreements arise, notify the Claim Account Executive. Employer's Liability Claims - Workers' Compensation Any time an employer's liability claim is established, acknowledgment of the claim should be sent to: (I-1). Independent Medical Exams and Medical Consultation Referrals After 60 Days of Disability - Workers' Compensation When an employee has been disabled or is anticipated to be disabled for 60 days or more an independent medical examination or medical consultation referral should be considered. The supervisor managing the claims should discuss the feasibility of an independent exam or consultation with the location submitting the claim. If the location submitting the claim AGREES NOT to schedule IME or refer the employee for a medical consultation the claim file should be documented accordingly. Medical Services Department AlliedSignal Inc. has an in house Medical Services Department which is available for consultation on any claim. This medical staff is a valuable resource and we should take advantage of their service. Members of this department may contact you directly on selected cases. If you or our medical vendor require the assistance of AlliedSignal's medical staff, contact (I-1). Some of the locations, especially the larger ones with a medical representative are interested in receiving copies of the medical reports. We should attempt to accommodate the customers needs for this medical information. Alternative and Modified Work - Workers' Compensation AlliedSignal Inc. has put in place an aggressive alternative and modified work program in all their locations. Before making any lost time benefit payments you should discuss with the AlliedSignal location whether the injured worker has returned or will return to alternative or modified work. Continuous contact with the AlliedSignal Workers' Compensation coordinator should be maintained on any employee who is receiving lost time benefits to return these employees to work. 4 of 8 The process for returning employees to Alternative Work at AlliedSignal is to determine the capabilities of the employee. The AlliedSignal location will determine what restrictions they can accommodate. It is most important the AlliedSignal location know the current capabilities of every disabled employee. The AlliedSignal location representative is to be kept current on the medical status of disabled employees. Every effort should be made to set target dates for return to regular or alternative work. o The purpose of this process is to aggressively track for return to work, employees on temporary total disability. If the nature of the claim allows for a more rapid assessment and finalization of the claim, we would certainly encourage you to identify your recommendations to AlliedSignal. If an employee is paid Temporary Total benefits, we will provide the following: After 90 and 180 days on temporary total disability, identify in a report to the location Workers' Compensation Coordinator, copy T. Cummings the following information. Send a copy of the 90 day report to the Plant Manager. 90 Days of Temporary Total - Basis for disability - Why is the employee out of work? - What efforts have been made to find alternative work? - When will the employee be returning to work? - Identify the chances of the employee ever returning to alternative work, regular job or permanent modified job at AlliedSignal. What can the locations do to provide temporary or permanent job modified job at AlliedSignal. What can the locations do to provide temporary or permanent job modification? - Should we consider Rehabilitation/Retraining? - Provide an action plan to return the employee to work or to resolve the claim. - If the location has determined that they cannot take this employee back to work, we need to identify to the locations the possible cost of this claim. What are the alternatives for resolving this claim and the cost structure of each? 180 of Temporary Total - Same information as in 90 day report. - At this time, the report must identify the specific action with a time table and the financial consequence that will be taken to resolve this claim. - Subsequent reports as determined by the claim and the time table for resolution. Vocational Rehabilitation - Workers' Compensation Before assigning a case for vocational rehabilitation we will discuss the reason(s) for the vocational rehabilitation with the location submitting the loss. The AlliedSignal location may have other pertinent information concerning the injured party that will assist in the vocational rehabilitation process. 5 of 8 Claim Checks - Temporary Total, Permanent Partial & Temporary Partial Workers' Compensation All checks issued in payment of Temporary Total, Permanent Partial and Temporary Partial disability benefits are to be made payable to the injured employee and mailed to the customer at the customer's location reporting the loss. If that practice is not permitted in the state involved, mail the check to the employee and furnish the insured's location the Workers' Compensation payment summary. Serious Catastrophic Injuries - Workers' Compensation When we learn that a claim involves a serious or catastrophic injury, the AlliedSignal Risk Management Department should be notified immediately. The following injuries are examples, but are not intended to be all encompassing. Fatalities. Amputation Of One Or More Extremities. Severe Brain Or Brain Stem Injury. Second Or Third Degree Burns. Heart Cases. Disability Of 60 Days. Occupational Disease. Notify (I-1) by telephone and direct a detailed letter to the insured outlining the diagnosis, facts of the accident and plans for future handling. The letter should be sent to: Reporting Location, Copies to (I-1) and (B). Actuarial Reserve - Workers' Compensation When you are recommending a file for actuarial reserve, send a copy of your recommendation to: Reporting Location, Copies to (I-1) and (B). Reserve/Estimate Advisory Report - Workers' Compensation In all cases wherein claim reserve/estimate of $20,000 or more is established, or at the time of any claim reserve/estimate change of $20,000 or more, immediately direct a letter outlining the factors affecting the reserve amount, including facts of the accident, nature and extent of injuries as well as pertinent investigation details to: The location submitting the loss, copies to (I-1) and (B). Selection of Counsel - Workers' Compensation The insured has agreed to utilize our regular panel and staff attorneys in defense of law suits. However, on certain cases the customer may prefer to use their own outside counsel for cases in litigation. We have agreed to accommodate these exception requests. If you feel that working with the law firm chosen by the customer will prove to be a problem, contact the Claim Account Executive. If a decision is made to change and assigned Defense Attorney, concurrence must be received from AlliedSignal's Risk Management Department. Direct a letter outlining the facts for the basis of the proposed change to: (I-1), copy to the Claim Account Executive. 6 of 8 Legal Correspondence - Workers' Compensation You should instruct the defense attorney to send copies of all legal correspondence to: The location submitting the loss. Pre-Settlement Review - Workers' Compensation In any case which may have a settlement value of $1.00 to $24,999 we have agreed to review the case with the customer, before settlement negotiations are initiated. This is to be accomplished by letter, setting forth details of the case, and explaining our intentions for handling. This letter is to be directed to: The location submitting the loss. We will make every effort to consult with the customer prior to settling any Workers' Compensation claim of $25,000 or greater. This review should be accomplished in a letter which outlines the claim in detail, including our rationale for settlement. This letter is to be directed to: The location reporting the loss and (I-1). If a mutually acceptable resolution regarding the settlement value cannot be reached, then contact the Claim Account Executive. Settlements - Workers' Compensation Before entering into settlement negotiations where the claimant is represented by an attorney to settle a Workers' Compensation claim for any former AlliedSignal employee (no longer working at AlliedSignal) or any active employee that is currently disabled and has indicated he or she is going to file or has filed a separate action against AlliedSignal for wrongful termination, ADA violations, etc., contact Patrick McGovern (973) 455-5069 or Lisa Parlato (East Coast) (973) 455-2150 or Joseph Gore (West Coast) (310) 512-2959. If there are any questions on this procedure please contact (I-1), Tim Cummings at (973) 455-4527. Surveillance - Workers' Compensation If a request is made by AlliedSignal for immediate or emergency surveillance or if the claims handler feels there is a need our office will give the assignment to the best surveillance company available that can handle immediate surveillance. There should not be any delay in making the assignment. The surveillance company should confirm the assignment with the AlliedSignal location that made the request. The Workers' Compensation system has been programmed to produce a closing notice printout. All closing notices will be mailed to: The location submitting the loss. Closing Notices - Workers' Compensation The Workers' Compensation system has been programmed to produce a closing notice printout. All closing notices will be mailed to: The location submitting the loss. Lines of Communication 7 of 8 (I-1) Mr. Tim W. Cummings Manager, Risk Management Services AlliedSignal Inc. 101 Columbia Road Morristown, NJ 07962-1219 (973) 455-4527 (973) 455-3866 - FAX (B) Mr. Richard Catarelli J&H/Marsh & McLennan 125 Broad Street New York, NY l0004 (212) 574-8261 (212) 574-8985 - FAX 8 of 8 ================================================================================ [ALLIED SIGNAL LOGO] Title: Risk WORKERS' COMPENSATION - Management FOREIGN Manual - ----------------------- ---------------- Supersedes: Date: Page: 1 5/96 5/97 - -------------------------------------------------------------------------------- WORKERS' COMPENSATION/EMPLOYER'S LIABILITY - FOREIGN Insurance Company Zurich-American Insurance Company Policy No. WC68-63-618-04 - Voluntary Foreign Policy No. WC79-74-372-04 - Defense Base Act Coverage Workers' Compensation - Coverage A 1. Voluntary Foreign Workers' Compensation master US policy coverage provides benefits according to the state statute where the employee was hired on claims filed for all US Nationals and those Foreign Nationals on US dollar payroll anywhere in the world excluding the United States of America, its territories or possessions, Canada, Cuba; Cambodia, Laos, Albania, North Korea, and Viet Nam. 2. Defense Base Act, US Code (1946) Title 42, Sections 1651-54, (Public Law 208, 77th Congress, as amended) and the provisions applicable thereto of the Longshoremens' and Harbor Workers' Compensation Acts. Please contact the Risk Management Department and your Regional Counsel prior to entering into any contract requiring Defense Base Act coverage. Employer's Liability - Coverage B All covered employees, United States and Foreign Nationals, anywhere in the world except excluded countries as mentioned above to a limit of $2,000,000 (US dollars) under the master policy in the US. Excess limits covered under Foreign General Liability and Broad Form Umbrella Liabilities. Policy Period 4/1/97 - 4/1/98 Basis of Premium Payroll is the base used in determining the premium. Loss Limit The losses used in computing the retrospective premium shall be limited to a maximum of $150,000 per occurrence. 1 of 2 Notice and Handling of Claims Claims filed under this policy should be mailed to: Risk Management Department Attn: Tim Cummings 101 Columbia Road Morristown, NJ 07962 973-455-4527 973-455-3866 (FAX) Supporting data, i.e., physician's statement, medical bills, etc. should accompany first notice. Please contact the Risk Management Department for assistance. Local Workers' Compensation/Employer's Liability Insurance Guidelines As Workers' Compensation/Employer's Liability Laws vary by country, AlliedSignal operating units must arrange local Employer's Liability and/or Workers' Compensation coverage, as required by statute, through their local J&H/Unison representative. 2 of 2 - -------------------------------------------------------------------------------- 1 All-Gefahren-(Sach- AIG Europe F11171.3914008 JIA und BU-)Versicherung - -------------------------------------------------------------------------------- 2 Gebaude-Feuerversicherung Sun Alliance F42.92.099969-A Uber HON - -------------------------------------------------------------------------------- 3 Industrie-(Betriebs- Zurich 3/H/7.850.796 J&H und Produkt-)Haftpflicht - -------------------------------------------------------------------------------- 4 Umwelt-Industrie-Haftpflicht Zurich 3/H/7.850.797 J&H - -------------------------------------------------------------------------------- 5 Auslandsreise- Europa 7889 JIA Krankenversicherung - -------------------------------------------------------------------------------- 6 Gruppen-Unfall INA 53GE001880 JIA - -------------------------------------------------------------------------------- 7 Reisegepack Victoria 74380/1/111 JIA - -------------------------------------------------------------------------------- 8 Sportboot-Kasko Victoria 129390-111-953 JIA - -------------------------------------------------------------------------------- 9 Kraftfahrzeuge HDI diverse JIA - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Versicherung Versicherer Versicharungs- von / bis Deckungs- Pramie DM dauer summe incl. Vers.-Steuer - ------------------------------------------------------------------------------------------------------------------------------------ All-Gefahren-(Sach- und BU-) AIG Europe jahrweise 01.10.-30.09. 50.600.000,- 51.069,00 Versicherung - ------------------------------------------------------------------------------------------------------------------------------------ Gebaude-Feuerversicherung Sun Alliance jahrweise 01.07.-01.07. 19.150.000,- 14.968,90 - ------------------------------------------------------------------------------------------------------------------------------------ Industrie-(Betriebs- und Zurich International jahrweise 01.04.-31.03. 1.372.307,- 20.079,50 Produkt-)Haftpflicht - ------------------------------------------------------------------------------------------------------------------------------------ Umwelt-Industrie- Zurich International jahrweise 01.04.-31.04. 1.372.307,- 1.894,10 Haftpflichtversicherung - ------------------------------------------------------------------------------------------------------------------------------------ Auslandsreise- EUROPA jahrweise 01.01.-31.12. gem. ss. 4+5 AVB 450,00 Krankenversicherung - ------------------------------------------------------------------------------------------------------------------------------------ Gruppen-Unfallversicherung CIGNA jahrweise 01.01.-31.12. Gr.I 100/280 3.841,10 Gr.II+IV 50/100 Gr.V 100/200 Gr.III+VI 25/50 - ------------------------------------------------------------------------------------------------------------------------------------ Reisegepack-Versicherung VICTORIA jahrweise 01.01.-31.12. 7.500,- / 10.000,- 1.466,30 - ------------------------------------------------------------------------------------------------------------------------------------ Sportboot-Kasko VICTORIA jahrweise 31.12.-31.12. 290.000,- 3.001,50 - ------------------------------------------------------------------------------------------------------------------------------------ Kfz: KI - DC 409 HDI jahrweise 01.01.-01.01. Haftpflicht: 1.524,90 11.337,40 - -------------------------------- ---------- Kfz: KI - AS 554 7,5 Mio pro Person 997,60 - -------------------------------- ---------- Kfz: KI - AS 908 779,60 - -------------------------------- ---------- Kfz: KI - AS 885 Kasko: 1.416,10 - -------------------------------- ---------- Kfz: KI - DA 605 VK mit 1.000,-SB 990,40 - -------------------------------- ---------- Kfz: KI - AS 760 TK mit 300,-SB 1.552,50 - -------------------------------- ---------- Kfz: KI - AS 403 1.038,50 - -------------------------------- ---------- Kfz: KI - AS 105 990,10 - -------------------------------- ---------- Kfz: KI - AS 121 2.047,70 - ------------------------------------------------------------------------------------------------------------------------------------
[LOGO] ZURICH INTERNATIONAL DEUTSCHLAND V e r t r a g Uber eine Industrie-Haftpflichtversicherung Nr. 3/H/7850 796/97 zwischen Allied Signal Elac Nautic GmbH NeufeldstraBe 24118 Kiel als Versicherungsnehmer und Zurich International (Deutschland) Versicherungs-Aktiengesellschaft Bockenheimer LandstraBe 2-4 60323 Frankfurt am Main als Versicherer. Fur die Vertragsverwaltung, Schadenmeldung und sonstige Betreuung ist zustandig die Landesdirektion Frankfurt Jaspers Industrie Assekuranz Bockenheimer LandstraBe 2-4 GmbH & Co. KG Opernplatz 2 60323 Frankfurt am Main Tel.-Nr. (069) 97116-0 60313 Frankfurt am Main Willenserklarungen, Anzeigen und Zahlungen einer Vertragspartei gelten der anderen Partei mit Zugang bei der genannten Maklerfirma. als unmittelbar zugegangen. Der Makler hat die Willenserklarung etc. unverzuglich weiterzuleiten. - -------------------------------------------------------------------------------- R e c h n u n g (Erlauterung siehe Ziff. 1.2.4) Beitrag fur die Zeit vom 31.03.1994 bis 31.03.1996 Der Beitrag wurde bereits mit separater Rechnung erhoben. - -------------------------------------------------------------------------------- Kiel, den 18.7.96 Frankfurt am Main, den 16.01.1996 [LOGO] Allied Signal Zurich International ELAC Nautik GmbH (Deutschland) NeufledtstraBe Tel. 0431/883-0 Versicherungs-Aktiengesellschaft D-24118 Kiel /s/ [Illegible] /s/ [Illegible] - ----------------------------------------------------------------------------------------------- 1 All-Gefahren-(Sach- und BU-)Versicherung AIG Europe F11171.3914008 JIA - ----------------------------------------------------------------------------------------------- 2 Gebaude-Feuerversicherung Sun Alliance F42.92.099969-A uber HON - ----------------------------------------------------------------------------------------------- 3 Industrie-(Betriebs- und Produkt-)Haftpflicht Zurich 3/H/7.850.796 J&H - ----------------------------------------------------------------------------------------------- 4 Umwelt-Industrie-Haftpflicht Zurich 3/H/7.850.797 J&H - ----------------------------------------------------------------------------------------------- 5 Auslandsreise-Krankenversicherung Europa 7889 JIA - ----------------------------------------------------------------------------------------------- 6 Gruppen-Unfall INA 53GE001880 JIA - ----------------------------------------------------------------------------------------------- 7 Reisegepack Victoria 74380/1/111 JIA - ----------------------------------------------------------------------------------------------- 8 Sportboot-Kasko Victoria 129390-111-953 JIA - ----------------------------------------------------------------------------------------------- 9 Kraftfahrzeuge HDI diverse JIA - -----------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Versicherung Versicherer Versicharungs- von / bis Deckungs- Pramie DM dauer summe incl. Vers.-Sieuer - ------------------------------------------------------------------------------------------------------------------------------------ All-Gefahren-(Sach- und BU-) AIG Europe jahrweise 01.10.-30.09. 50.600.000,- 51.069,00 Versicherung - ------------------------------------------------------------------------------------------------------------------------------------ Gebaude-Feuerversicherung Sun Alliance jahrweise 01.07.-01.07. 19.150.000,- 14.968,90 - ------------------------------------------------------------------------------------------------------------------------------------ Industrie-(Betriebs- und Zurich International jahrweise 01.04.-31.03. 1.372.307,- 20.079,50 Produkt-)Haftpflicht - ------------------------------------------------------------------------------------------------------------------------------------ Umwelt-Industrie- Zurich International jahrweise 01.04.-31.04. 1.372.307,- 1.894,10 Haftpflichtversicherung - ------------------------------------------------------------------------------------------------------------------------------------ Auslandsreise- EUROPA jahrweise 01.01.-31.12. gem. ss. 4+5 AVB 450,00 Krankenversicherung - ------------------------------------------------------------------------------------------------------------------------------------ Gruppen-Unfaltversicherung CIGNA jahrweise 01.01.-31.12. Gr.I 100/280 3.841,10 Gr.II+IV 50/100 Gr.V 100/200 Gr.III+VI 25/50 - ------------------------------------------------------------------------------------------------------------------------------------ Reisegepack-Versicherung VICTORIA jahrweise 01.01.-31.12. 7.500,- / 10.000,- 1.466,30 - ------------------------------------------------------------------------------------------------------------------------------------ Sportboot-Kasko VICTORIA jahrweise 31.12.-31.12. 290.000,- 3.001,50 - ------------------------------------------------------------------------------------------------------------------------------------ Kfz: KI - DC 409 HDI jahrweise 01.01.-01.01. Haftpflicht: 1.524,90 11.337,40 - -------------------------------- ---------- Kfz: KI - AS 554 7,5 Mio pro Person 997,60 - -------------------------------- ---------- Kfz: KI - AS 908 779,60 - -------------------------------- ---------- Kfz: KI - AS 885 Kasko: 1.416,10 - -------------------------------- ---------- Kfz: KI - DA 605 VK mit 1.000,-SB 990,40 - -------------------------------- ---------- Kfz: KI - AS 760 TK mit 300,-SB 1.552,50 - -------------------------------- ---------- Kfz: KI - AS 403 1.038,50 - -------------------------------- ---------- Kfz: KI - AS 105 990,10 - -------------------------------- ---------- Kfz: KI - AS 121 2.047,70 - ------------------------------------------------------------------------------------------------------------------------------------
[INA LOGO] INSURANCE COMPANY OF NORTH AMERICA Akttiengesellschaft - Gegrundet 1792 - Philadelphia Pa., USA Direktion fur Deutschland Reuterweg 47, 8 Frankfurt/M.1 Tel.: 0611/720831 GRUPPEN-UNFALLVERSICHERUNGSSCHEIN NR. 53 GE 001880 Versicherungsnehmer: Firma HONEYWELL ELAC NAUTIK GmbH Westring 425-429 2300 Kiel 1 Versicherer: Insurance Company of North America Direktion fur Deutschland Reuterweg 47, 6000 Frankfurt/Main Versicherte Personen / Versicherungssummen: Siehe Abschnitt I - Deklaration - Versicherungsdauer: 22. Mai 1978 bis 1. Januar 1980 - je mittage 12 Uhr - Der Vertrag verlangert sich stillschwei- gend mit dem Ablauf der Vertragszeit um ein Jahr und weiter von Jahr zu Jahr, wenn nicht drei Monate vor dem jeweili- gen Ablauf der anderen Partei eine schriftliche Kundigung zugegangen ist. Versicherungsbedingungen: Allgemeine Unfallversicherungs- Bedingungen (AUB) Zusatzbedingungen fur die Kinder- Unfallversicherung Zusatzbedingungen fur die Gruppen- Unfallversicherung Besondere Vereinbarungen und Bestim- mungen; diese gehen den gedruckten voran. Jahresbeitrag: DM 3.313,50 fallig am 1. Januar jeden Jahres zuzuglich 5% Versicherungssteuer. R E C H N U N G : - ----------------- Beitrag 22.5.1978-1.1.1979 DM 1.002,50 Beitrag 1.1.1979/80 DM 2.901,60 ----------- DM 3.904,10 5% Versicherungssteuer DM 195,20 ----------- Einlosungsbetrag DM 4.099,30 =========== - ----------------------------------------------------------------------------------------------- 1 All-Gefahren-(Sach- und BU-)Versicherung AIG Europe F11171.3914008 JIA - ----------------------------------------------------------------------------------------------- 2 Gebaude-Feuerversicherung Sun Alliance F42.92.099969-A uber HON - ----------------------------------------------------------------------------------------------- 3 Industrie-(Betriebs- und Produkt-)Haftpflicht Zurich 3/H/7.850.796 J&H - ----------------------------------------------------------------------------------------------- 4 Umwelt-Industrie-Haftpflicht Zurich 3/H/7.850.797 J&H - ----------------------------------------------------------------------------------------------- 5 Auslandsreise-Krankenversicherung Europa 7889 JIA - ----------------------------------------------------------------------------------------------- 6 Gruppen-Unfall INA 53GE001880 JIA - ----------------------------------------------------------------------------------------------- 7 Reisegepack Victoria 74380/1/111 JIA - ----------------------------------------------------------------------------------------------- 8 Sportboot-Kasko Victoria 129390-111-953 JIA - ----------------------------------------------------------------------------------------------- 9 Kraftfahrzeuge HDI diverse JIA - -----------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Versicherung Versicherer Versicharungs- von / bis Deckungs- Pramie DM dauer summe incl. Vers.-Steuer - ------------------------------------------------------------------------------------------------------------------------------------ All-Gefahren-(Sach- und BU-) AIG Europe jahrweise 01.10.-30.09. 50.600.000,- 51.069,00 Versicherung - ------------------------------------------------------------------------------------------------------------------------------------ Gebaude-Feuerversicherung Sun Alliance jahrweise 01.07.-01.07. 19.150.000,- 14.968,90 - ------------------------------------------------------------------------------------------------------------------------------------ Industrie-(Betriebs- und Zurich International jahrweise 01.04.-31.03. 1.372.307,- 20.079,50 Produkt-)Haftpflicht - ------------------------------------------------------------------------------------------------------------------------------------ Umwelt-Industrie- Zurich International jahrweise 01.04.-31.04. 1.372.307,- 1.894,10 Haftpflichtversicherung - ------------------------------------------------------------------------------------------------------------------------------------ Auslandsrelse- EUROPA jahrweise 01.01.-31.12. gem. ss. 4+5 AVB 450,00 Krankenversicherung - ------------------------------------------------------------------------------------------------------------------------------------ Gruppen-Unfaltversicherung CIGNA jahrweise 01.01.-31.12. Gr.I 100/280 3.841,10 Gr.II+IV 50/100 Gr.V 100/200 Gr.III+VI 25/50 - ------------------------------------------------------------------------------------------------------------------------------------ Reisegepack-Versicherung VICTORIA jahrweise 01.01.-31.12. 7.500,- / 10.000,- 1.466,30 - ------------------------------------------------------------------------------------------------------------------------------------ Sportboot-Kasko VICTORIA jahrweise 31.12.-31.12. 290.000,- 3.001,50 - ------------------------------------------------------------------------------------------------------------------------------------ Kfz: KI - DC 409 HDI jahrweise 01.01.-01.01. Haftpflicht: 1.524,90 11.337,40 - -------------------------------- ---------- Kfz: KI - AS 554 7,5 Mio pro Person 997,60 - -------------------------------- ---------- Kfz: KI - AS 908 779,60 - -------------------------------- ---------- Kfz: KI - AS 885 Kasko: 1.416,10 - -------------------------------- ---------- Kfz: KI - DA 605 VK mit 1.000,-SB 990,40 - -------------------------------- ---------- Kfz: KI - AS 760 TK mit 300,-SB 1.552,50 - -------------------------------- ---------- Kfz: KI - AS 403 1.038,50 - -------------------------------- ---------- Kfz: KI - AS 105 990,10 - -------------------------------- ---------- Kfz: KI - AS 121 2.047,70 - ------------------------------------------------------------------------------------------------------------------------------------
EUROPA [LOGO] VERSICHERUNGEN Krankenversicherung AG - -------------------------------------------------------------------------------- Gurppenversicherungsvertrag fur die Krankheitskostenversicherung im Ausland nach dem Tarif GK1 Vertrags-Nr. Zwischen HONEYWELL Regelsysteme GmbH KaiserleistraBe 39 6050 Offenbach/Main im folgenden "Versicherungsnehmer" genannt und der EUROPA Krankenversicherung AG PiusstraBe 137,5000 Koln 41 im folgenden "EUROPA Kranken" genannt wird folgender Versicherungsvertrag geschlossen: SCHEDULE 4.26 - AFFILIATE TRANSACTIONS --------------------------------------- ELAC - ---- o Manufacturing Licence and Technical Assistance Agreememtn with Ocean Systems for Dipping Sonar Repair o Tax organic unit with AS Deutchland GmbH o Profit & Loss carry over with AS Deutchland GmbH o Cash pool with AS Deutchland GmbH o Long term agreement for cable repair with AS Aerospace GmbH OCEAN SYSTEMS See Schedule 1.3(j). OS manufactures hybrids for other AlliedSignal operations. SCHEDULE 6.2(a) - Retention Agreements -------------------------------------- See Schedule 4.11. SCHEDULE 6.5(b) - Actuarial Methods and Assumptions --------------------------------------------------- See following pages. Schedule 6.5(b) Actuarial Methods and Assumptions ================================================================================ Actuarial Valuation for Accounting Purposes Actuarial Cost Method Projected Unit Credit Cost Method*. Market-Related Value of Assets Market-related value equals fair market value adjusted for investment earnings and losses. Such investment experience is reflected in market-related value as follows: o Actual earnings on fixed-income investments are reflected immediately; o Expected earnings on other assets are reflected immediately; o Actual earnings on other assets less expected earnings on other assets are reflected ratably over three years--one-third in the year folowing the gain or loss, two-thirds in the second year following, and 100% in all subsequent years. The Company reported that fixed income investments represented 28.3% and 29.3% of total trust assets as of December 31, 1996 and December 31, 1995, respectively. The Company also reported 1996 rates of return of 8.2% for the fixed income segment and 16.6% for the total trust. Based on this information,a 1996 rate of return of 19.9% was calculated for the other assets of the trust. Actuarial Assumptions (1) Discount Rate: 7.00% compounded annually. (2) Expected Long-Term Rate of Return on Assets: 10% per year. (3) Compensation Increases**: Present compensation is assumed to increase 5% per year to retirement. (4) Retirement: For Salaried plan, an average retirement age of approximately 61, with incidence at specific ages as follows: ======================================================= Age Probability Age Probability ======================================================= 55 5% 61 20% 56 6% 62 30% 57 7% 63 20% 58 8% 64 30% 59 9% 65 100% 60 10% *Standard Unit Credit for non-pay-related plan. **Pay-related plan only. Schedule 6.5(b) Actuarial Methods and Assumptions (continued) ================================================================================ For Bendix Hourly: The assumed retirement age is based upon the early retirement provisions of the particular location according to the following: (a) For units providing "30-and-out" retirements, the retirement age is the later of age 56 or the completion of 30 years of service but not later than age 62 with ten years of service; (b) Age 64 for units providing unreduced benefits at age 62; (c) Otherwise, age 65. All early retirements are assumed to be voluntary. No involuntary retirements or plant shutdowns are assumed. (5) Mortality: Nondisabled Lives 1971 Group Annuity Disabled Lives 1977 Railroad Board (6) Withdrawal: (a) Salaried Plan: Table B-1 (See Page 3). (b) Hourly Plan: Table B-2 (See Page 3). (7) Disability: Table B-3 (See Page 3). (8) Social Security: Future wage indices are based on an increase of 4.5% per year. Past wages are estimated on the basis of Social Security Index Factors. Future cost of living increases are assumed to be 4% per year. (9) Marital Status: With regard to any preretirement surviving spouse annuity provisions of the plan, the assumption is made that the male of the couple is three years older than the female and that 85% of male participants and 65% of female participants are married. (10) IRC Section 415 Limits: Reflect the single and dual plan limits based on estimated, defined contribution account balances, and percentage of employees electing joint and survivor payment forms. This limit is projected at an assumed 4% annual cost-of-living incrase rate. (11) IRC Section 401(a)(17) Pay Limit: $160,000 for 1997. This limit is projected at an assumed 4% annual cost-of-living increase rate. Schedule 6.5(b) Actuarial Methods and Assumptions (continued) ================================================================================ Table B-1 Probability of Withdrawal ========================== Age Rate ========================== 25 12.0% 35 7.5% 45 5.0% 55 0.0% 60 0.0% Table B-2 Probability of Withdrawal ============================================== Age Male Female ============================================== 25 .099 .149 35 .048 .069 45 .016 .028 55 .000 .000 60 .000 .000 Table B-3 Probability of Disability =============================================== Percentage of Participants at Indicated Age Assumed to Become Disabled in the Next Year --------------------------- Age Male Female =============================================== 25 .0855% .0490% 35 .1506% .1340% 45 .3305% .2975% 55 .9410% .7615% 60 1.9600% .9300% All participants assumed to become disabled are assumed to become eligible for social security disability benefits and, if applicable, for long-term disability benefits. SCHEDULE 7.15 LETTERS OF CREDIT ----------------- RETAINED L/Cs (ALLIEDSIGNAL to remain as account party): --------------------------------------------------------
Bank Ref. Beneficiary Bank Amount* Issue Date Expiry Date - --------- ----------- ---- ------- ---------- ----------- PG634585/ DPA-Korea Chase $87,400 6/19/96 10/30/98 P259525 P 386605 DPA-Korea Chase $1,485,000 6/27/97 7/31/01 P 386610* DPA-Korea Chase $2,970,000* 6/27/97 12/31/00 T 388424 Min. Def. Spain CIBC $818.00 11/12/97 6/30/99 94-NED- MacDonald CIBC Cdn$7,947,595 1/25/94 7/20/99 116441 Dettwiler & Associates 94-NED- MacDonald CIBC Cdn$500,000 1/25/94 7/20/00 116442 Dettwiler & Associates Intercompany Wahnbachtalsperrenverband DM 3,067,150 (re ELAC Watertech.)
Any other L/C or similar obligation not listed below as an Assumed L/C shall be a Retained L/C. Assumed L/Cs (purchaser to become account party): ------------------------------------------------- Bank Ref. Beneficiary Bank Amount* Issue Date Expiry Date - --------- ----------- ---- ------- ---------- ----------- P 386610* DPA-Korea Chase $8,910,000* 6/27/97 12/31/00 P 348778 SSM/Turkey Chase $3,107,490.92 12/22/97 3/23/01 P 348779 SSM/Turkey Chase $932,247.28 12/22/97 3/23/04 P 348780 SSM/Turkey Chase $11,433,827.00 12/23/97 3/23/01 The ELAC Guarantees and Bank Bonds set forth in Schedule 4.7 shall be Assumed L/Cs. * Note: L/C P-386610 is a retained L/C as to $2,970,000 and an Assumed L/C as to the remainder of its face amount. SCHEDULE 4.4 - TITLE The items set forth on Schedule B to the title report prepared by Chicago Title Insurance Company dated October 2, 1997, order no. 007135632 X52, which is hereby incorporated by reference. SCHEDULE 4.5 No items to schedule. SCHEDULE 4.6 - ENVIRONMENTAL DISCLOSURE The following documents, which have been delivered to Purchaser, are incorporated herein by reference: 1. Environmental, Health and Safety Disclosure Document AlliedSignal Ocean Systems, Sylmar, CA Prepared for AlliedSignal Electronic Systems June 30 to July 2, 1997 2. Phase I Environmental Site Assessment 15825 Roxford Street, Sylmar, CA July 1997 OCEAN SYSTEMS PERMITS City of Los Angeles, Department of Building and Safety, Certificates of Occupancy Permit No.'s: LA76447/60 VN00435/73 VN50140/76 LA76448/60 LA64337/73 VN39348/76 VN92138/66 LA77430/73 VN89736/79 VN98941/66 VN16035/74 VN93597/79 LA72477/68 LA16583/75 VN40476/82 LA72479/68 LA16584/75 LA20231/85 VN87685/72 VN44208/76 VN98937/86 VN83102/72 VN41832/76 VN15222/62 VN81765/72 VN43697/76 VN13124-62 VN968742/73 VN39986/76 City of Los Angeles, Department of Building and Safety Water Conservation Program Certificate of Compliance No. 310437 City of Los Angeles Fire Permit Permit No.'s 777456-33/F/701 777456-33/F/828 City of Los Angeles Office of the City Clerk, Tax and Permit Division Hazardous Material Certificate Renewal No. 587720-23/F/803 City of Los Angeles Certificates of Disclosure of Hazardous Substances Account No. 587720-23/F/206 City of Los Angeles, Department of Building and Safety and Division of Occupational Safety and Health of the State of California, Certificates of Inspection and Permit to Operate Steam Boiler or Pressure Vessel Permit No.'s AC09411 AC09412 AC4018 AC4019 AC4020 City of Los Angeles, Department of Public Works and Bureau of Sanitation, Industrial Wastewater Permit User No. IU000068 Permit No. W482195 City of Los Angeles, Department of Public Works and Bureau of Sanitation, Industrial Waste Permit No. 482195 County of Los Angeles, Hazardous Waste License No. 103 453285 County of Los Angeles, Public Health License, SIC# 3699 13 South Coast Air Quality Management District Permit No.'s M35231 Spray Booth M09716 Spray Booth P19724 Bake Oven D29049 Surface Prep. Tank Application No.'s 327865 Spray Booth/UV Cure 327866 Degreaser Schedule 4.7 - Material Changes No items to schedule. Schedule 4.9 - Compliance With Law No items to schedule. Schedule 4.10 - Consents Certain of the permits and licenses referenced in Schedule 4.6 may require action by the Purchaser in the form of notification, reapplication or otherwise, upon a change in ownership. 4.12 Permits and Licenses See schedule 4.6. Schedule 4.14 - Insurance See following pages. ================================================================================ A[LOGO]lliedSignal [Illegible] Risk GLOBAL PROPERTY DAMAGE & Management BUSINESS INTERRUPTION Manual - -------------------------------------------------------------------------------- Supersedes: Date: Page: 1 10/95 10/98 - -------------------------------------------------------------------------------- GLOBAL PROPERTY DAMAGE AND BUSINESS INTERRUPTION Insurance Company The insurance company is American International Underwriters for Allied's International locations. In North America the primary insurers are Reliance, Houston Casualty, National Union and Protection Mutual. These same insurers, plus other U.S. & European insurers participate both in the primary layer, as well as the excess layers. Coverage This is a blanket policy * covering the Corporation against Loss or damage, on a replacement cost basis **, to real and personal property, or the property of others for which the Corporation is responsible at locations worldwide (including while in transit). The policy insures against all risk of direct physical loss or damage from any external cause, including boiler and machinery breakdown and is subject to normal exclusions such as wear and tear, gradual deterioration, extremes of temperature, war, nuclear, and other exclusions commonly considered uninsurable or the subject off other insurance such as employee dishonesty. The Policy covers Boiler and Machinery up to the full limit per occurrence. This policy also provides business interruption insurance and contingent business interruption insurance which is designed to pay for loss of pro fits and continuing costs which result from damage to insured property and/or to those of a supplier or receiver by an insured peril. The policy has been extended to cover damage to electronic data processing equipment; and for costs of reproducing media from duplicates or originals only. Some limited amount of full reproduction expenses is provided. Included therein is business interruption and/or extra expense coverage which provide for reimbursement for loss of income and/or the assurance of funds to meet the additional expenses incurred in returning to normal operations following an Insured incident. The policy automatically (subject to reporting to underwriters in a certain time frame) coven new and acquired property and the interest of any company or corporation which during the period of the policy is merged with, becomes a subsidiary of, or becomes controlled by Allied or any subsidiary of Allied. *This policy covers all Allied Signal's locations on a blanket basis (except certain EMS locations, which are covered (or $1.2 Billion each occurrence) which means the entire amount of insurance can be applied to a single location. ** In the event of loss or damage to real and/or personal property which is not repaired, rebuilt or replaced, such property will be valued at Actual Cash Value. Policy Period 1 of 6 10/1/96 - 10/1/97 RENEWED 10/1/97 - 10/1/98 Limits of Liability Blanket limit combined on Real and Personal Property Insurance and Business Interruption. $350,000,000 for earthquake per occurrence and in the aggregate except Critical Zone earthquake where it is $200 million per occurrence and in the aggregate for ISO Critical Zone 1 (areas of the states include portions of California, Nevada, Alaska and the Country of Canada) and $150 million per occurrence and in the aggregate for one other Zone I equivalent International locations. In Japan Zones 4, 5 or 6 there is a 60% indemnity provision. For Flood the per occurrence and annual aggregate is $350,000,000, except in The Netherlands where the occurrence/aggregate limit is $25,000,000. $150,000,000 per occurrence for the following: a) Extra Expense b) Contingent Extra Expense c) Rental Insurance d) Transit e) Contingent Business Interruption f) Fine Arts g) Valuable Papers and Records (including reproduction cost of media) h) Leasehold Interest i) Off Premises Power - Property Damage and Time Element - excluding losses resulting from flood and earthquake. j) Accounts Receivable k) Debris Removal (except windblown debris) 1) Vessel impact damage to piers, wharves and docks m) Expediting Expense n) Installment Sales o) Miscellaneous Unnamed Locations p) Newly acquired property subject to reporting within 180 day of acquisition. q) Precious metals r) Fire Department/Brigade Charges s) Electronic Data Processing Equipment t) Property in the course of construction (including testing) Deductible All claims for damage, loss of income, profit or expense arising out of any one occurrence shall be adjusted as one loss and from the amount of such adjusted loss, there shall be deducted the sum of $100,000 combined any one occurrence at all locations, anywhere in the world except $250,000 combined any one occurrence at all locations In the U.S., its territories and possessions, Puerto Rico and Canada. Earthquake Deductibles* $10,000,000 for each loss Insured against the peril of earthquake involving all locations situated within designated critical ISO Zone No. 1 (areas of the states include portions of California, Nevada, Alaska and the Country of Canada) Deductibles: 2 of 6 1. $5,000,000 for each loss at the following locations: Frankford Hopewell Orange 2. $2,500,000 for each loss at the following locations: Chesterfield Columbia Moncure 3. $2,500,000 for each loss at the following locations: Detroit (Tar Plant) Ironton (Tar Plant) Pottsville, PA Longlaviile, FR Riedel-de-Haen, German Rudolstadt, Germany 4. $100,000 for each loss involving property in transit. *One carrier (Protection Mutual) has an earthquake deductible of 5% of the maximum of $500,000 any one occurrence in Japan or Mexico and a deductible of 5% to a maximum of $1,500,000 any one occurrence in Taiwan. 5. a. 2% for each Property Damage loss insured against by the peril of windstorm in the U.S.A. at each location within designated areas (as defined in Windstorm Endorsement Designated Areas), the amount to be deducted shall be stated percentage of the one hundred percent reported property damage values for each and every location (see Attachment A). b. 5 days for each Time Element loss insured against by the peril of windstorm in the U.S.A. at each location within the designated areas (as defined in Windstorm Endorsement Designated Areas), the amount to be deducted shall be the dollar equivalent of the stated number of days times the daily plant value - computed by dividing the reported annual time element values by the actual number of working days. Notwithstanding 5 a and b above, the minimum amount to be deducted from the total loss arising out of one windstorm occurrence shall in no event be less than $250,000, while the maximum amount to be deducted shall in no event be greater than $5,000,000. Territory Worldwide except Afghanistan, Albania, Angola, Bosnia-Herzegovina, Croatia, Cuba, El Salvador, Iran, Iraq, Kampuchea (Cambodia), Laos, Lebanon, Libya, Macedonia, North Korea, Outer Mongolia, Serbia, Syria, Tibet and Montenegro. Those with a $10,000,000 per occurrence limit include Armenia, Azerbaijan, Bulgaria, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldava, Romania, Tajikistan, Tibet, Turkmenistan, Uzbekistan and Russia. Basis of Premium Charge 3 of 6 Values for property damage and business interruption are completed and submitted to the Risk Management Department annually. Premium is determined on the basis of trended building, machinery and equipment replacement values, together with inventory and estimated business interruption values as of December 31 each year. In addition, loss experience is considered in expensing the cost of the Insurance based upon each business area's proportion of total values. Notice of Loss The proper reporting of claims is important as it effects: o The speed of loss settlement o The prejudicing of your rights against the insurance company caused by reporting delays, thereby violating the insurance policy conditions. o The proper adjusting of the claim amount. For all losses that may result in an insurable claim you should notify the Corporate Risk Management Department and if the loss occurs outside North America, you should immediately notify local insurance brook when: o The claims could exceed $10,000 o There is a possibility that the claim will be denied by the local insurance company o There is a dispute as to the settlement amount of the claim All losses should be reported to the local broker and the Corporate Risk Manager. Those claims insured by the Corporate Ocean Maine Cargo program should be reported in accordance with the procedures set forth by the Corporate Risk Management Department and reported to the Corporate ocean marine cargo broker in New York. The claims specialists are: AlliedSignal Inc. Mr. Tim Cummings Morristown, NJ Office Manager Risk Management Services Telephone: (972) 455-4527 AON NYO Mr. John Rhodes Property/Business Interruption Claims Vice President Telephone: (212) 441-2298 AON NYO Mr. Dante Petrizzo Marine Claims Vice President Telephone: (212) 441-1340 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WINDSTORM ENDORSEMENT DESIGNATED AREAS 4 of 6 ALABAMA: Counties of Baldwin and Mobile FLORIDA: Seacoast Zone 1 Seacoast Zone 2 Seacoast Zone 3 All Other Counties (Inland) AlliedSignal: Fort Lauderdale, Lynn Haven GEORGIA: Counties in Brantley, Bryan, Camden, Charlton, Chatham, Effingham, Glynn, Liberty, Long, McIntosh, Pierce and Wayne. HAWAII: Entire State Louisiana: Parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St Mary, St Tammany, Tangipanos, Terrebonne, Vermilion, Washington, West Baron Rouge and West Feliciana. AlliedSignal: Geismar, Darrow - Ascension Baton Rouge - W and E Baton Rouge MISSISSIPPI: Counties of George, Hancock, Harrison, Jackson, Pearl River and Stone. N. CAROLINA: Counties of Besufort, Bertie, Bladen, Brunswick, Camden, Carteret, Chowan, Columbus, Craven, Currituck, Dare, Duplin, Gates, Greene; Hartford, Hude, Jones, Lenior, Martin, New Hanover, Onslow, Pamlico, Pasquotank, Bender, Perquimans, Pitt, Tyrell, and Washington. PUERTO RICO: Entire Island including all Caribbean Islands, S. CAROLINA: Counties Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Hampton, Horry, Jasper and Williamsburg. AlliedSignal: Conway, Charleston TEXAS: Counties of Aransas, Bea, Brazoria, Brooks, Calhoun, Cameron, Chambers, Port fluid, Galveston, Goliad, Hardin, Harris, Hidalgo, Jackson, Jefferson, Jim Wells, Kenedy, Kleberg, Liberty, live Oak, Matagorda, Nueces, Orange, Refugio, San Patricio, Victoria, Wharton and Willacy. AlliedSignal Orange, Brownsville 5 of 6 VIRGINIA: Counties of Accomao, Charles City, Chesapeake, Gloucester, Isle of Wright, James City, Lancaster, Mathews, Middlesex, Nansemond, New Kent, Norfolk, Northampton, Northumberland, Prince George, Princess Ann, Southampton, Surry, Sussex, Virginia Beach, Warwich and York. AlliedSignal: Hopewell - Chesterfield County Not in designated areas Petersburg - Grant County 6 of 6 EXHIBIT VIII.2 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by and between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation ("Assignee"), and FAP TRUST, a Connecticut trust ("Assignor"). WITNESSETH WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller intends to acquire all of the outstanding capital stock of Ilex Systems, Inc. (the "Company"); and WHEREAS, pursuant to the Stock Purchase Agreement, Assignor, the Company, all of the stockholders of the Company (the "Sellers") and The First National Bank of Chicago, a national banking association ("Escrow Agent"), have entered into that certain Escrow Agreement dated as of February __, 1998 (the "Escrow Agreement") for the purpose of establishing a fund to satisfy certain indemnification obligations of the Sellers that may arise under the Stock Purchase Agreement and to facilitate the payment of the cash purchase price adjustment contemplated thereby; and WHEREAS, Assignor and Assignee have entered into an Asset Purchase Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement") pursuant to which Assignee will acquire substantially all of the assets and assume substantially all of the liabilities of the Company; and WHEREAS, in connection with the Asset Purchase Agreement and the transactions contemplated thereby, Assignor desires to assign to Assignee its entire right, title and interest in, under and to the Escrow Agreement, and Assignee desires to take such assignment from Assignor, all upon the terms and conditions set forth below: NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Assignment of the Escrow Agreement. Assignor hereby assigns to Assignee all of Assignor's right, title and interest in, under and to the Escrow Agreement, and Assignee hereby assumes all of Assignor's duties and obligations under the Escrow Agreement. 2. Assertion of Claims Under the Escrow Agreement. Assignor and Assignee understand that any and all claims which Assignee may have under the Escrow Agreement will in most instances, but not in all, be based on facts and circumstances that constitute both breaches of certain representations, warranties and covenants of Assignor contained in the Asset Purchase Agreement and breaches of similar representations, warranties and covenants of the Company and the Sellers contained in the Stock Purchase Agreement. Accordingly, Assignor and Assignee agree as follows: (i) For purposes of this Section 2, capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Escrow Agreement. (ii) Assignor shall promptly provide written notice to Assignee upon its becoming aware of any facts or circumstances that give rise to a breach of representation, warranty or covenant under the Stock Purchase Agreement. Assignee shall promptly provide written notice to Assignor upon its becoming aware of any facts or circumstances that give rise to a breach of representation, warranty or covenant under the Asset Purchase Agreement. (iii) Assignee agrees that it will promptly provide Escrow Agent with a Notice of Claim in all instances where Assignee's claims pursuant to the Asset Purchase Agreement may also be asserted by Assignor pursuant to the Stock Purchase Agreement (a "Matching Claim"). The following procedure shall be followed by Assignor and Assignee in connection with each Matching Claim: (a) Upon submission by Assignee to Escrow Agent of a Notice of Claim with respect to any Matching Claim, Assignee shall direct Escrow Agent in writing to make any disbursements required in respect thereof directly to Assignee; and (b) Upon the determination of the amount, if any, payable to Assignee with respect to such Matching Claim, whether by negotiation or litigation, and disbursement by Escrow Agent to Assignee of such amount out of the Escrow Fund in respect of any Matching Claim, Assignee agrees that such Matching Claim shall be deemed fully paid and satisfied and neither Assignor nor Escrow Agent shall have any further liability to Assignee with respect to such Matching Claim, nor shall Assignee have any right to seek any additional payments out of the Escrow Fund pursuant to the Asset Purchase Agreement with respect to such Matching Claim. (iv) In consideration of the mutual promises contained in this Agreement, Assignee agrees that it will, if known, provide Escrow Agent with a Notice of Claim in respect of any and all claims that may be asserted by Assignor pursuant to the Stock Purchase Agreement but may not be asserted by Assignee pursuant to the Asset Purchase Agreement (an "Assignor Claim"). The following procedure shall be followed by Assignor and Assignee in connection with each Assignor Claim: (a) Upon submission by Assignee to Escrow Agent of a Notice of Claim with respect to any Assignor Claim, Assignee shall direct Escrow Agent in writing to make any disbursements required in respect thereof directly to Assignee; and -2- (b) Upon determination of the amount, if any, payable to Assignee with respect to such Assignor Claim, whether by negotiation or litigation, and disbursement by Escrow Agent to Assignee of such amount out of the Escrow Fund in respect of any Assignor Claim, Assignee shall within two business days thereafter remit to Assignor by certified check or wire transfer to an account designated by Assignor in writing an amount equal to the amounts disbursed to Assignee with respect to such Assignor Claim, and Assignor agrees that its claim shall be deemed fully paid and satisfied upon receipt of such certified check or wire transfer and that neither Assignee nor Escrow Agent shall have any further liability to Assignor with respect to that claim, nor shall Assignor have any right to seek any additional payments out of the Escrow Fund pursuant to the Stock Purchase Agreement with respect to that claim. Assignee shall not in any way be responsible to Assignor with respect to any such claim except for the requirement to deliver to Assignor amounts disbursed to Assignee with respect to such claim from the Escrow Fund. (v) Assignee agrees to pursue any Matching Claim only under the claims procedures set forth in this Agreement and the Escrow Agreement. (vi) Assignee shall promptly deliver to Assignor copies of any and all Award Notices, Notices of Claims, Notices of Releases, Objections and Withdrawal Notices received by it pursuant to Section 5 of the Escrow Agreement. (vii) Assignor and Assignee shall cooperate with each other regarding the submission of any and all Notices of Claims to Escrow Agent in connection with the Escrow Agreement, and each of them agree to take any and all such reasonable actions that either of them deem necessary or appropriate to otherwise effectuate the purpose and intent of this Section 2. 3. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 5. Arbitration. Any dispute under this Agreement which is not settled by mutual agreement among the parties hereto, shall be finally settled by binding arbitration in New York, New York, conducted by and in accordance with the rules then in effect of the Judicial Arbitration and Mediation Service. Each party shall bear its own costs and attorneys' and witness' fees. The prevailing party in any arbitration, as determined by the arbitration panel, shall be entitled to an award against the other party in the amount of the prevailing party's costs and reasonable attorneys' fees. In making any such award, the arbitration panel shall take into consideration the outcome of the proceeding and the reasonableness of the conduct of each such party in connection with the dispute, in light of -3- the facts known to such party at the time such party engaged in such conduct. The arbitrator shall not have authority to award punitive damages hereunder. 6. Entire Agreement. This Agreement and the Asset Purchase Agreement constitute the entire agreement between Assignor and Assignee with respect to the subject matter hereof. This Agreement cancels and supersedes all prior agreements, understandings and negotiations between the parties to this Agreement with respect to the subject matter of this Agreement. This Agreement may only be varied or modified by a written document executed by each of the parties hereto. 7. Assignment. The rights and benefits of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of such parties. Neither this Agreement nor any rights or benefits hereunder may be assigned or transferred by any party hereto without the prior written consent of all other parties hereto. 8. Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to Assignee: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Telecopier Number: (212) 805-5494 Attention: Christopher C. Cambria With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telecopier Number: (212) 455-2502 Attention: William E. Curbow And if to Assignor: FAP Trust c/o First Union National Bank 10 State House Square Hartford, CT 06103-3698 Telecopier Number: (860) 247-1356 Attention: W. Jeffrey Kramer -4- With copies to: Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, CA 94104 Telecopier Number: (415) 983-1200 Attention: Graham Taylor and Bingham Dana LLP 100 Pearl Street Hartford, CT 06103 Telecopier Number: (860) 527-5188 Attention: James G. Scantling Any party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. 9. Further Assurances. Each of the parties to this Agreement shall execute such other documents and instruments and take such further actions as may be reasonably required or desirable to carry out the provisions hereof. 10. No Recourse. It is expressly understood and agreed that this Agreement is executed and delivered on behalf of Assignor by First Union National Bank ("First Union"), not in its individual capacity but solely as Trustee under the trust agreement under which Assignor is organized, in the exercise of the powers and authority conferred and vested in it as the Trustee thereunder, and each of the representations, warranties, undertakings and agreements herein made on the part of Assignor is made and intended not as a personal representation, warranty, undertaking or agreement by First Union but is made and intended for the purpose of binding only the trust estate created by the trust agreement under which Assignor is organized (the "Trust Estate"), and all persons having any claim against First Union or Assignor by reason of the transactions contemplated by this Agreement shall for payment or satisfaction thereof not seek recourse against First Union except in its capacity as trustee and then only to the extent of the Trust Estate. -5- IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: /s/ Christopher Cambria ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President Consented to by: THE FIRST NATIONAL BANK OF CHICAGO as Escrow Agent under the Escrow Agreement By: ------------------------------- Name: Title: 6 IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: ------------------------------- Name: Title: ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: /s/ W. Jeffrey Kramer ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President Consented to by: THE FIRST NATIONAL BANK OF CHICAGO as Escrow Agent under the Escrow Agreement By: ------------------------------- Name: Title: 6 IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: ------------------------------- Name: Title: ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President Consented to by: THE FIRST NATIONAL BANK OF CHICAGO as Escrow Agent under the Escrow Agreement By: /s/ John R. Prenolville ------------------------------- Name: John R. Prenolville Title: Vice President 6 EXHIBIT VIII.7 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by and between L-3 COMMUNICATIONS CORPORATION a Delaware corporation, ("Assignee") and FAP TRUST, a Connecticut trust ("Assignor"). WITNESSETH WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller intends to acquire all of the outstanding capital stock of Ilex Systems, Inc. (the "Company"); and WHEREAS, pursuant to the Stock Purchase Agreement, Assignor and Joseph Lopez ("Seller") have entered into that certain Confidentiality and Non-Competition Agreement dated as of February __, 1998 (the "Non-Competition Agreement"); and WHEREAS, Assignor and Assignee have entered into an Asset Purchase Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement") pursuant to which Assignee will acquire substantially all of the assets and assume substantially all of the liabilities of the Company; and WHEREAS, in connection with the Asset Purchase Agreement and the transactions contemplated thereby, Assignor desires to assign to Assignee its entire right, title and interest in, under and to the Non-Competition Agreement, and Assignee desires to take such assignment from Assignor, all upon the terms and conditions set forth below: NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Assignment of the Non-Competition Agreement. Pursuant to and in accordance with terms of Section 8 of the Non-Competition Agreement, Assignor hereby assigns to Assignee all of Assignor's right, title and interest in, under and to the Non-Competition Agreement, and Assignee hereby assumes all of Assignor's duties and obligations under the Non-Competition Agreement. 2. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 4. Entire Agreement. This Agreement and the Asset Purchase Agreement constitute the entire agreement between Assignor and Assignee with respect to the subject matter hereof. This Agreement cancels and supersedes all prior agreements, understandings and negotiations between the parties to this Agreement with respect to the subject matter of this Agreement. This Agreement may only be varied or modified by a written document executed by each of the parties hereto. 5. Assignment. The rights and benefits of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of such parties. Neither this Agreement nor any rights or benefits hereunder may be assigned or transferred by any party hereto without the prior written consent of all other parties hereto. 6. Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to Assignee: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Telecopier Number: (212) 805-5494 Attention: Christopher C. Cambria With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telecopier Number: (212) 455-2502 Attention: William E. Curbow And if to Assignor: FAP Trust c/o First Union National Bank 10 State House Square Hartford, CT 06103-3698 Telecopier Number: (860) 247-1356 Attention: W. Jeffrey Kramer -2- With copies to: Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, CA 94104 Telecopier Number: (415) 983-1200 Attention: Graham Taylor and Bingham Dana LLP 100 Pearl Street Hartford, CT 06103 Telecopier Number: (860) 527-5188 Attention: James G. Scantling Any party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. 7. Further Assurances. Each of the parties to this Agreement shall execute such other documents and instruments and take such further actions as may be reasonably required or desirable to carry out the provisions hereof. 8. No Recourse. It is expressly understood and agreed that this Agreement is executed and delivered on behalf of Assignor by First Union National Bank ("First Union"), not in its individual capacity but solely as Trustee under the trust agreement under which Assignor is organized, in the exercise of the powers and authority conferred and vested in it as the Trustee thereunder, and each of the representations, warranties, undertakings and agreements herein made on the part of Assignor is made and intended not as a personal representation, warranty, undertaking or agreement by First Union but is made and intended for the purpose of binding only the trust estate created by the trust agreement under which Assignor is organized (the "Trust Estate"), and all persons having any claim against First Union or Assignor by reason of the transactions contemplated by this Agreement shall for payment or satisfaction thereof not seek recourse against First Union except in its capacity as trustee and then only to the extent of the Trust Estate. -3- IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: /s/ Christopher Cambria ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President 4 IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: /s/ W. Jeffrey Kramer ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President 5 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by and between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation, ("Assignee") and FAP TRUST, a Connecticut trust ("Assignor"). WITNESSETH WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller intends to acquire all of the outstanding capital stock of Ilex Systems, Inc. (the "Company"); and WHEREAS, pursuant to the Stock Purchase Agreement, Assignor and Donald Potter ("Seller") have entered into that certain Confidentiality and Non-Competition Agreement dated as of February __, 1998 (the "Non-Competition Agreement"); and WHEREAS, Assignor and Assignee have entered into an Asset Purchase Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement") pursuant to which Assignee will acquire substantially all of the assets and assume substantially all of the liabilities of the Company; and WHEREAS, in connection with the Asset Purchase Agreement and the transactions contemplated thereby, Assignor desires to assign to Assignee its entire right, title and interest in, under and to the Non-Competition Agreement, and Assignee desires to take such assignment from Assignor, all upon the terms and conditions set forth below: NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Assignment of the Non-Competition Agreement. Pursuant to and in accordance with terms of Section 8 of the Non-Competition Agreement, Assignor hereby assigns to Assignee all of Assignor's right, title and interest in, under and to the Non-Competition Agreement, and Assignee hereby assumes all of Assignor's duties and obligations under the Non-Competition Agreement. 2. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 4. Entire Agreement. This Agreement and the Asset Purchase Agreement constitute the entire agreement between Assignor and Assignee with respect to the subject matter hereof. This Agreement cancels and supersedes all prior agreements, understandings and negotiations between the parties to this Agreement with respect to the subject matter of this Agreement. This Agreement may only be varied or modified by a written document executed by each of the parties hereto. 5. Assignment. The rights and benefits of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of such parties. Neither this Agreement nor any rights or benefits hereunder may be assigned or transferred by any party hereto without the prior written consent of all other parties hereto. 6. Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to Assignee: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Telecopier Number: (212) 805-5494 Attention: Christopher C. Cambria With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telecopier Number: (212) 455-2502 Attention: William E. Curbow And if to Assignor: FAP Trust c/o First Union National Bank 10 State House Square Hartford, CT 06103-3698 Telecopier Number: (860) 247-1356 Attention: W. Jeffrey Kramer -2- With copies to: Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, CA 94104 Telecopier Number: (415) 983-1200 Attention: Graham Taylor and Bingham Dana LLP 100 Pearl Street Hartford, CT 06103 Telecopier Number: (860) 527-5188 Attention: James G. Scantling Any party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. 7. Further Assurances. Each of the parties to this Agreement shall execute such other documents and instruments and take such further actions as may be reasonably required or desirable to carry out the provisions hereof. 8. No Recourse. It is expressly understood and agreed that this Agreement is executed and delivered on behalf of Assignor by First Union National Bank ("First Union"), not in its individual capacity but solely as Trustee under the trust agreement under which Assignor is organized, in the exercise of the powers and authority conferred and vested in it as the Trustee thereunder, and each of the representations, warranties, undertakings and agreements herein made on the part of Assignor is made and intended not as a personal representation, warranty, undertaking or agreement by First Union but is made and intended for the purpose of binding only the trust estate created by the trust agreement under which Assignor is organized (the "Trust Estate"), and all persons having any claim against First Union or Assignor by reason of the transactions contemplated by this Agreement shall for payment or satisfaction thereof not seek recourse against First Union except in its capacity as trustee and then only to the extent of the Trust Estate. -3- IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: /s/ Christopher Cambria ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President 4 IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: /s/ W. Jeffrey Kramer ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President 4 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by and between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation, ("Assignee") and FAP TRUST, a Connecticut trust ("Assignor"). WITNESSETH WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller intends to acquire all of the outstanding capital stock of Ilex Systems, Inc. (the "Company"); and WHEREAS, pursuant to the Stock Purchase Agreement, Assignor and Erwin P. Frech, Jr. ("Seller") have entered into that certain Confidentiality and Non-Competition Agreement dated as of February __, 1998 (the "Non-Competition Agreement"); and WHEREAS, Assignor and Assignee have entered into an Asset Purchase Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement") pursuant to which Assignee will acquire substantially all of the assets and assume substantially all of the liabilities of the Company; and WHEREAS, in connection with the Asset Purchase Agreement and the transactions contemplated thereby, Assignor desires to assign to Assignee its entire right, title and interest in, under and to the Non-Competition Agreement, and Assignee desires to take such assignment from Assignor, all upon the terms and conditions set forth below: NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Assignment of the Non-Competition Agreement. Pursuant to and in accordance with terms of Section 8 of the Non-Competition Agreement, Assignor hereby assigns to Assignee all of Assignor's right, title and interest in, under and to the Non-Competition Agreement, and Assignee hereby assumes all of Assignor's duties and obligations under the Non-Competition Agreement. 2. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 4. Entire Agreement. This Agreement and the Asset Purchase Agreement constitute the entire agreement between Assignor and Assignee with respect to the subject matter hereof. This Agreement cancels and supersedes all prior agreements, understandings and negotiations between the parties to this Agreement with respect to the subject matter of this Agreement. This Agreement may only be varied or modified by a written document executed by each of the parties hereto. 5. Assignment. The rights and benefits of the parties under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of such parties. Neither this Agreement nor any rights or benefits hereunder may be assigned or transferred by any party hereto without the prior written consent of all other parties hereto. 6. Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to Assignee: L-3 Communications Corporation 600 Third Avenue New York, NY 10016 Telecopier Number: (212) 805-5494 Attention: Christopher C. Cambria With a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Telecopier Number: (212) 455-2502 Attention: William E. Curbow And if to Assignor: FAP Trust c/o First Union National Bank 10 State House Square Hartford, CT 06103-3698 Telecopier Number: (860) 247-1356 Attention: W. Jeffrey Kramer -2- With copies to: Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, CA 94104 Telecopier Number: (415) 983-1200 Attention: Graham Taylor and Bingham Dana LLP 100 Pearl Street Hartford, CT 06103 Telecopier Number: (860) 527-5188 Attention: James G. Scantling Any party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. 7. Further Assurances. Each of the parties to this Agreement shall execute such other documents and instruments and take such further actions as may be reasonably required or desirable to carry out the provisions hereof. 8. No Recourse. It is expressly understood and agreed that this Agreement is executed and delivered on behalf of Assignor by First Union National Bank ("First Union"), not in its individual capacity but solely as Trustee under the trust agreement under which Assignor is organized, in the exercise of the powers and authority conferred and vested in it as the Trustee thereunder, and each of the representations, warranties, undertakings and agreements herein made on the part of Assignor is made and intended not as a personal representation, warranty, undertaking or agreement by First Union but is made and intended for the purpose of binding only the trust estate created by the trust agreement under which Assignor is organized (the "Trust Estate"), and all persons having any claim against First Union or Assignor by reason of the transactions contemplated by this Agreement shall for payment or satisfaction thereof not seek recourse against First Union except in its capacity as trustee and then only to the extent of the Trust Estate. -3- IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: /s/ Christopher Cambria ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President 4 IN WITNESS WHEREOF, each of the parties has caused this Assignment Agreement to be executed and delivered as of the date first above written. ASSIGNEE L-3 COMMUNICATIONS CORPORATION By: ------------------------------- Name: Christopher Cambria Title: Vice President ASSIGNOR: FAP TRUST By: FIRST UNION NATIONAL BANK, not in its individual capacity but solely as trustee By: /s/ W. Jeffrey Kramer ------------------------------- Name: W. Jeffrey Kramer Title: Vice-President 4 EX-12 11 COMPUTATION OF RATION OF EARNINGS TO FIXED CHARGES EXHIBIT 12 L-3 COMMUNICATIONS CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (In thousands, except for ratio data)
COMPANY COMPANY -------------- -------------- PRO FORMA PRO FORMA THREE MONTHS THREE MONTHS YEAR NINE MONTHS ENDED ENDED ENDED ENDED MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, 1998 1998 1997 1997 -------------- -------------- -------------- -------------- Earnings: Income before income taxes..... $ 500 $ 4,284 $15,900 $27,402 Add: Interest expense......... 10,600 10,605 42,400 29,884 Interest component of rent expense.... 1,283 1,148 5,133 3,445 -------------- -------------- -------------- -------------- Earnings.......... $12,383 $16,037 $63,433 $60,731 ============== ============== ============== ============== Fixed Charges: Interest expense......... $10,600 $10,605 $42,400 $29,884 Interest component of rent expense.... 1,283 1,148 5,133 3,445 -------------- -------------- -------------- -------------- Fixed Charges..... $11,883 $11,753 $47,533 $33,329 ============== ============== ============== ============== Ratio of earnings to fixed charges.......... 1.0x 1.4x 1.3x 1.8x ============== ============== ============== ==============
(RESTUBBED TABLE CONTINUED FROM ABOVE)
PREDECESSOR COMPANY ---------------------------------------------------------------------------- THREE MONTHS NINE MONTHS THREE MONTHS YEARS ENDED DECEMBER 31, ENDED ENDED ENDED MARCH 31, ------------------------------ DECEMBER 31, MARCH 31, 1997 1996 1995 1994 1993 1993 -------------- --------- -------- --------- -------------- -------------- EARNINGS: INCOME BEFORE INCOME TAXES $(505) $19,494 $174 $2,929 $8,300 $5,100 Add: Interest expense......... 8,441 24,197 4,475 5,450 4,100 -- Interest component of rent expense.... 851 2,832 1,591 1,866 1,400 467 -------------- --------- -------- --------- -------------- -------------- Earnings.......... $8,787 $46,523 $6,240 $10,245 $13,800 $5,567 ============== ========= ======== ========= ============== ============== Fixed Charges: Interest expense......... $8,441 $24,197 $4,475 $ 5,450 $ 4,100 -- Interest component of rent expense.... 851 2,832 1,591 1,866 1,400 467 -------------- --------- -------- --------- -------------- -------------- Fixed Charges..... $9,292 $27,029 $6,066 $ 7,316 $ 5,500 $ 467 ============== ========= ======== ========= ============== ============== Ratio of earnings to fixed charges.......... N/A(a) 1.7x 1.0x 1.4x 2.5x N/A(b) ============== ========= ======== ========= ============== ==============
- ------------ (a) For the three months ended March 31, 1997, earnings were insufficient to cover fixed charges by $0.5 million. (b) For the three months ended March 31, 1993, no interest expense was incurred. EX-23.2 12 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the inclusion in this registration statement on Form S-1 of (i) our report dated February 2, 1998 on our audits of the consolidated financial statements of L-3 Communications Corporation and subsidiaries as of December 31, 1997 and for the nine months then ended, the combined financial statements of the Predecessor Company for the three months ended March 31, 1997, and as of December 31, 1996 and for the year then ended, and (ii) our report, dated March 20, 1997, on our audits of the combined financial statements of the Loral Acquired Businesses for the three months ended March 31, 1996 and for the year ended December 31, 1995, and (iii) our report, dated February 23, 1998, on our audit of the combined financial statements of AlliedSignal Ocean Systems (a wholly owned operation of AlliedSignal, Inc.) as of and for the year ended December 31, 1997. Our report on the combined financial statements of the Predecessor Company as of and for the year ended December 31, 1996 indicates that our opinion, insofar as it relates to the financial statements of the Lockheed Martin Communications Systems Division as of December 31, 1996 included in such combined financial statements, is based solely on the report of other auditors. We also consent to the reference to our Firm under the caption "Experts". Coopers & Lybrand L.L.P. New York, New York April 23, 1998 EX-23.3 13 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 7, 1997, with respect to the combined financial statements of Lockheed Martin Communications Systems Division as of and for the years ended December 31, 1996 (not presented separately herein) and 1995, included in the Company's Amendment No. 2 to the Registration Statement (Form S-1 Nos. 333-46983, 333-46983-01, 333-46983-02 and 333-46983-03) and the related Prospectus for the registration of $150,000,000 of Senior Subordinated Notes due 2008. Ernst & Young LLP Washington, D.C. April 22, 1998 EX-23.31 14 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.31 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated January 27, 1998, with respect to the financial statements of Satellite Transmission Systems Division of California Microwave, Inc., included in the Company's Amendment No. 2 to the Registration Statement (Form S-1 Nos. 333-46983, 333-46983-01, 333-46983-02 and 333-46983-03) and the related Prospectus for the registration of $150,000,000 of Senior Subordinated Notes due 2008. Ernst & Young LLP Melville, New York April 24, 1998 EX-23.4 15 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.4 CONSENT OF INDEPENDENT AUDITORS The Board of Directors ILEX Systems, Inc: We consent to the use of our report included herein and to the reference to our firm under the heading "Experts" in the Prospectus. KPMG Peat Marwick LLP San Jose, California April 23, 1998 -----END PRIVACY-ENHANCED MESSAGE-----