0000912057-01-535273.txt : 20011019
0000912057-01-535273.hdr.sgml : 20011019
ACCESSION NUMBER: 0000912057-01-535273
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20010928
ITEM INFORMATION: Acquisition or disposition of assets
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011012
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DRS TECHNOLOGIES INC
CENTRAL INDEX KEY: 0000028630
STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812]
IRS NUMBER: 132632319
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-08533
FILM NUMBER: 1757994
BUSINESS ADDRESS:
STREET 1: 3RD FLOOR
STREET 2: 5 SYLVAN WAY
CITY: PARSIPPANY
STATE: NJ
ZIP: 07054
BUSINESS PHONE: 9738981500
MAIL ADDRESS:
STREET 1: 16 THORNTON RD
CITY: OAKLAND
STATE: NJ
ZIP: 07436
FORMER COMPANY:
FORMER CONFORMED NAME: DIAGNOSTIC RETRIEVAL SYSTEMS INC
DATE OF NAME CHANGE: 19920703
8-K
1
a2060842z8-k.txt
FORM 8-K
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 28, 2001
DRS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-8533 13-2632319
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
5 SYLVAN WAY, PARSIPPANY, NEW JERSEY 07054
(Address of principal executive offices)
(973) 898-1500
(Registrant's telephone number, including area code)
================================================================================
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 28, 2001, DRS Technologies, Inc. (DRS or the Company)
acquired the assets and certain liabilities of the Sensors and Electronic
Systems (SES) business of The Boeing Company (Boeing) pursuant to an Asset
Purchase Agreement dated as of August 3, 2001, between DRS and Boeing (the
Acquisition). The Company paid approximately $67.0 million in cash, subject to
adjustment, for the Acquisition.
SES, located in Anaheim, California, is a leading provider of advanced
electro-optical airborne and naval surveillance and targeting systems,
high-performance military infrared cooled sensor systems, and infrared uncooled
sensor products for military and commercial applications. A worldwide supplier
of advanced electro-optical systems, subsystems and components, SES is a
national resource for infrared sensor technology. SES is a leader in helicopter
and surface ship surveillance and targeting systems and is known for technical
superiority in the development of high-performance focal plane array sensors for
space- and air-based applications. SES is now operating as DRS Sensors &
Targeting Systems, Inc., a unit of the Company's Electro-Optical Systems Group.
In connection with the Acquisition, the Company entered into a $240
million credit agreement with First Union National Bank, consisting of a term
loan in the aggregate principal amount of $140 million and a $100 million
revolving line of credit (the Credit Facility). The Credit Facility, borrowings
from which were used to finance the Acquisition, replaced the Company's
previously existing $160 million secured credit facility with Mellon Bank, N.A.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial statements of business acquired.
DRS will file the required financial statements of the Sensors
and Electronic Systems (SES) business of The Boeing Company by
amendment to Form 8-K, not later than 60 days after the date that
this Form 8-K must be filed.
(b) Pro forma financial information.
DRS will file the required pro forma financial information by
amendment to Form 8-K, not later than 60 days after the date that
this Form 8-K must be filed.
(c) Exhibits.
1. Asset Purchase Agreement, dated as of August 3, 2001,
between DRS Technologies, Inc. and The Boeing Company.
2. Credit Agreement, dated as of September 28, 2001, by and
among DRS Technologies, Inc. and First Union National Bank.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hererunto duly authorized.
DRS TECHNOLOGIES, INC.
----------------------------------------
Registrant
Date OCTOBER 12, 2001 /s/ RICHARD A. SCHNEIDER
---------------- ------------------------
Richard A. Schneider
Executive Vice President Chief Financial
Officer and Treasurer
3
EX-99.1
3
a2060842zex-99_1.txt
EXHIBIT 99.1
EXHIBIT 99.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and between
The Boeing Company
and
DRS Technologies, Inc.
-----------------------
Dated as of August 3, 2001
-----------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................1
1.1 Certain Defined Terms...................................1
1.2 Other Definitional Provisions...........................9
ARTICLE II CLOSING; PURCHASE PRICE AND ADJUSTMENT...........................9
2.1 Sale and Transfer of the Assets.........................9
2.2 Assets Not Transferred.................................11
2.3 Assumed and Excluded Liabilities.......................11
2.4 Closing; Purchase Price................................12
2.5 Purchase Price Adjustment..............................13
2.6 Lease Arrangement......................................15
2.7 Tax Allocation.........................................16
2.8 Transfer Taxes.........................................16
2.9 Certain Facts Related to the Business..................16
ARTICLE III CONDITIONS TO CLOSING..........................................17
3.1 Buyer's Obligation.....................................17
3.2 Seller's Obligation....................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER........................18
4.1 Authority; No Conflicts; Governmental Consents;
Corporate Matters......................................18
4.2 Financial Statements; Absence of Changes...............19
4.3 Taxes..................................................21
4.4 Assets Other than Real Property Interests..............21
4.5 Real Property Interests................................22
4.6 Contracts..............................................23
4.7 Litigation; Decrees....................................24
4.8 Employee Benefits......................................24
4.9 Environmental Matters..................................25
4.10 Employee and Labor Relations...........................26
4.11 Compliance With Law; Permits...........................27
4.12 Assets of the Business.................................27
4.13 Government Contracts...................................28
4.14 Business Relationships with Affiliates.................29
4.15 Insurance..............................................29
4.16 Records................................................30
4.17 Inventory..............................................30
4.18 FIRPTA.................................................30
i
PAGE
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER..........................30
5.1 Authority; No Conflicts; Governmental Consents.........30
5.2 Actions and Proceedings, Etc...........................31
5.3 Buyer's Acknowledgment.................................31
5.4 Available Funds........................................31
ARTICLE VI COVENANTS OF SELLER.............................................31
6.1 Access.................................................31
6.2 Ordinary Conduct.......................................32
6.3 Insurance; Administration of Insurance.................34
6.4 Accounts Receivable....................................34
6.5 Confidential Information...............................34
6.6 Seller's Non-Compete...................................34
6.7 No Solicitation........................................35
6.8 Seller's Cooperation for Audits........................36
6.9 Environmental and Related Matters......................36
6.10 Purchase Orders........................................37
ARTICLE VII COVENANTS OF BUYER.............................................37
7.1 Confidentiality........................................37
7.2 Waiver of Bulk Sales Law Compliance....................37
7.3 Release Guaranties.....................................37
7.4 Cost Accounting Standards..............................37
7.5 Financing Agreements...................................37
ARTICLE VIII MUTUAL COVENANTS..............................................38
8.1 HSR Filings; Permits; Novations and Consents...........38
8.2 Reasonable Efforts.....................................40
8.3 Publicity..............................................40
8.4 Cooperation After Closing..............................40
8.5 Records................................................40
8.6 Access to Former Business Records......................41
8.7 Use of Trademark and Trade Names.......................41
8.8 Government Furnished Equipments........................41
ARTICLE IX EMPLOYEE BENEFIT MATTERS........................................42
9.1 Offer of Employment....................................42
9.2 Retirement Plans and Other Benefits....................43
9.3 Recognition of Unions..................................46
9.4 Workers' Compensation..................................47
ARTICLE X INDEMNIFICATION..................................................47
10.1 Indemnification by Seller..............................47
10.2 Indemnification by Buyer...............................47
10.3 Losses Net of Insurance, Taxes, Etc....................48
10.4 Termination of Indemnification.........................49
ii
PAGE
10.5 Procedures Relating to Indemnification.................49
10.6 Survival of Representations............................51
10.7 DIRCM I Claim..........................................51
10.8 Special Indemnity Provisions...........................51
10.9 Access to Information; Cooperation.....................52
ARTICLE XI GENERAL PROVISIONS..............................................53
11.1 Assignment.............................................53
11.2 No Third-Party Beneficiaries...........................53
11.3 Termination............................................53
11.4 Expenses and Fee.......................................54
11.5 Equitable Relief.......................................55
11.6 Amendments.............................................55
11.7 Notices................................................55
11.8 Interpretation; Exhibits and Schedules.................56
11.9 Counterparts...........................................56
11.10 Entire Agreement.......................................56
11.11 Fees...................................................56
11.12 Severability...........................................57
11.13 Governing Law..........................................57
11.14 Dispute Resolution.....................................57
EXHIBITS
Intellectual Property Agreement................................Exhibit A
Transitional Services Agreement................................Exhibit B
222 Lease Agreement............................................Exhibit C-1
241 Lease Agreement............................................Exhibit C-2
Purchase Order.................................................Exhibit D
Bills of Sale..................................................Exhibit E
Assignment and Assumption Agreement............................Exhibit F
iii
LIST OF SCHEDULES
Schedule 1.1(ii) Excluded Employees
Schedule 1.1(iii) Knowledge
Schedule 2.1(a) Equipment
Schedule 2.1(d) Transferable Licenses, Permits Approval and Authorizations
Schedule 2.2(g) Assets Not Transferred
Schedule 2.3(a) Assumed Liabilities
Schedule 2.3(b) Excluded Liabilities
Schedule 2.5(a) Exceptions to Closing Statement of Assets and Liabilities
Schedule 2.9 Certain Facts Related to the Business
Schedule 3.1 Supply Arrangements with Seller
Schedule 4.1(b) Conflicts; Non-Contravention
Schedule 4.2(a) Financial Statements
Schedule 4.2(b) Certain Changes
Schedule 4.2(c) Undisclosed Liabilities
Schedule 4.3 Taxes
Schedule 4.4 Assets Other Than Real Property Interests; Liens
Schedule 4.5 Status of Structures and Equipments
Schedule 4.6 Contracts
Schedule 4.7(a) Litigation
Schedule 4.7(b) Past Claims and Settlements
Schedule 4.8 Employee Benefit Plans
Schedule 4.9 Environmental Matters
Schedule 4.10 Labor Matters
Schedule 4.11(a) Compliance with Law; Permits
Schedule 4.12 Shared Assets of the Business
Schedule 4.13 Exceptions to Government Contracts
Schedule 4.14 Contracts with Seller or its Business Units
Schedule 4.15 Insurance
Schedule 6.2 Conduct of Business
Schedule 6.10 Contracts for Purchase Orders
Schedule 8.8 Assigned Government Furnished Equipment
Schedule 9.1 Employment Offer to Business Employees
Schedule 9.1(i) Terms of Employment; Buyer Benefit Plans
Schedule 9.2 Pension Asset Transfer
iv
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of August 3, 2001,
among The Boeing Company, a Delaware corporation ("Seller"), and DRS
Technologies, Inc., a Delaware corporation ("Buyer").
Seller is engaged in the Business (as defined below). The parties hereto
desire that Seller sell, transfer, convey and assign to Buyer substantially all
of the assets, properties and rights of Seller used in the Business, and that
Buyer purchase and acquire the same, subject to the assumption by Buyer of
certain liabilities and obligations of Seller relating to the Business, upon the
terms and subject to the limitations and conditions hereinafter set forth.
Concurrently with the execution and delivery of this Agreement, the
parties have also entered into certain agreements governing their relationship
and certain matters after the Closing Date as follows:
(i) an Intellectual Property Agreement substantially in the
form of Exhibit A;
(ii) a Transition Services Agreement substantially in the form
of Exhibit B;
(iii) Lease Agreements for the Leased Premises substantially
in the form of Exhibits C-1 and C-2.
Exhibits A, B, C-1 and C-2 are sometimes referred to herein collectively
as the "Ancillary Agreements."
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"AAA Rules" has the meaning set forth in Section 11.14.
"Accounting Arbitrator" has the meaning set forth in Section 2.5(d).
1
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act by the SEC, as in effect on the date hereof;
PROVIDED, HOWEVER, that the term "affiliate" shall not include any natural
person.
"Ancillary Agreements" has the meaning set forth in the preamble.
"Assets" has the meaning set forth in Section 2.1.
"Assigned Contracts" means all Contracts to which Seller is a party
that relate to the Business, including the Contracts listed on Schedule 4.6, and
all such Contracts entered into by Seller pursuant to the activities of the
Business through the Closing Date; PROVIDED, HOWEVER, that Assigned Contracts
shall exclude: (i) Contracts and/or any portions of Contracts not performed by
the Business; and (ii) any collective bargaining agreement or other contract
with any labor union covering Business Employees.
"Assigned GFE" has the meaning set forth in Section 8.8(b).
"Assignment and Assumption Agreement" means an assignment and
assumption agreement executed by Buyer in substantially the form attached hereto
as Exhibit F.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Balance Sheet" means the unaudited pro forma statement of assets
and liabilities of the Business as of December 31, 2000, attached hereto as part
of Schedule 4.2(a).
"Bill of Sale" means the bill of sale in substantially the form
attached hereto as Exhibit E.
"Business" means certain business areas of the Seller's Sensors and
Electronic Systems ("SES") organization, headquartered in Anaheim, California,
including Surveillance and Targeting Systems, IR Cooled Sensors, and Uncooled
Sensors, but excluding any activities, programs, contracts or assets which are
conducted, or are primarily utilized, for: (i) SES's Electronic Products
programs and contracts, (ii) the Strategic Manufacturing Center supporting
Seller's electronics manufacturing requirements, (iii) the Automated Master
Events Controller programs and contracts, (iv) the Imaging Systems (U2) programs
and contracts, or (v) with respect to programs and contracts of Seller for which
the Business is providing only a portion of the services or products thereunder,
those services and products not provided by the Business.
"Business Day" means a day other than a Saturday or a Sunday or
other day on which commercial banks in New York are authorized or required by
law to close.
"Business Employee" means any individual who, at the Closing Date,
is actively employed by Seller working primarily for the Business, including any
employee who is on vacation leave or jury duty, or who is on other authorized
leave of absence, family or workers' compensation leave, military service or
lay-off with recall rights as of the Closing Date (all such inactive employees
shall be deemed to be "Business Employees" effective as of the date they return
to active employment in the Business), but shall exclude (i) any other inactive
or former
2
employee including any individual who is on long-term disability leave or
unauthorized leave of absence or who has terminated his or her employment or
retired before the Closing Date and (ii) employees listed on Schedule 1.1(ii).
For the purposes of Sections 9.1, 9.2(d), and 9.2(h), Business Employee shall
include any individual who, but for such individual's retirement prior to the
Closing Date would have been a Business Employee within the meaning of the
preceding sentence, provided that such individual's retirement is effective on
the first day of the month following the month in which the Closing Date occurs.
"Buyer" has the meaning set forth in the preamble.
"Buyer's Non-Union Pension Plans" has the meaning set forth in
Section 9.2(c).
"Buyer's Savings Plans" has the meaning set forth in Section 9.2(d).
"Buyer's Union Pension Plan" has the meaning set forth in Section
9.2(b).
"Closing Date" means the day on which the Closing occurs pursuant to
Section 2.4.
"Closing Net Assets" means the net difference between the sum of the
assets and the sum of the liabilities included in the Closing Statement of
Assets and Liabilities.
"Closing Statement of Assets and Liabilities" has the meaning set
forth in Section 2.5.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment Letter" has the meaning set forth in Section 5.4.
"Competitive Products" has the meaning set forth in Section 6.6.
"Confidential Information" has the meaning set forth in Section 6.5.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding commitment, pertaining primarily to the
Business, whether written or oral to which Seller is a party or by which any of
its properties are bound.
"Contractual Obligation" means, as to any Person, any provision of
any note, bond or security issued by such Person or of any mortgage, indenture,
deed of trust, lease, license, franchise, contract, agreement, instrument or
undertaking to which such Person is a party or to which it or any of its
property or assets is subject.
"Demand" has the meaning set forth in Section 11.14.
"DIRCM I Claim" means any claims by BAE SYSTEMS Avionics Limited
based upon Subcontracts AVC173235-83 and Q301398.
3
"Disagreement" has the meaning set forth in Section 2.5(c).
"Dispute Notice" has the meaning set forth in Section 11.14.
"Disputes" has the meaning set forth in Section 11.14.
"EACs" has the meaning set forth in Section 2.4(b).
"Effective Time" has the meaning set forth in Section 2.4(a).
"Employee Benefit Arrangements" means each and all pension,
supplemental pension, deferred compensation, option or other equity-based
program, accidental death and dismemberment, life and health insurance and
benefits (including medical, dental, vision and hospitalization), fringe
benefit, flexible spending account programs and other employee benefit
arrangements, plans, contracts, policies or practices providing employee or
executive compensation or benefits to any Business Employee or Former Business
Employee, other than the Employee Benefit Plans.
"Employee Benefit Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained or contributed to by
Seller, or any ERISA Affiliate or in which Seller or ERISA Affiliate
participates or participated and which provides benefits to Business Employees
and Former Business Employees.
"Environmental Law" means any and all federal, state, local laws,
statutes (including without limitation the statutes referred to in the
definition of "Hazardous Material"), ordinances, rules, regulations and/or
common law relating to environmental protection, contamination, the release,
generation, production, transport, treatment, processing, use, disposal, or
storage of Hazardous Materials, and the regulations promulgated by regulatory
agencies pursuant to these laws, and any applicable federal, state, and/or local
regulatory agency-initiated orders, requirements, obligations, directives,
notices, approvals, licenses, or permits, including but not limited to those for
the reporting, investigation, cleaning, or remediation of any Hazardous
Materials.
"Environmental Permits" has the meaning set forth in Section 4.9(b).
"Equipment" has the meaning set forth in Section 2.1(a).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that, together with Seller would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
"Estimated Closing Net Assets" has the meaning set forth in Section
2.4(b).
4
"Estimated Sold Business Asset Share" has the meaning set forth in
Schedule 9.2 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated from
time to time thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Environmental Liabilities" has the meaning set forth in
Section 2.3.
"Excluded Liabilities" has the meaning set forth in Section 2.3.
"Financial Statements" has the meaning set forth in Section 4.2.
"Former Business Employee" means any individual who was at any time
prior to the Closing Date employed by the Seller working primarily for the
Business but who is not a Business Employee.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GFE" has the meaning set forth in Section 8.8(a).
"Government Contract" means any Contract or other commitment listed
on Schedule 4.6 that relates to the Business with (i) the United States
Government, (ii) any prime contractor to the United States Government, or any
subcontractor with respect to any contract described in clauses (i) or (ii).
"Governmental 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.
"Hazardous Material" means any hazardous, toxic, chemical, or
dangerous substance, pollutant, contaminant, waste or material, including
petroleum, which is regulated under any and all federal, state, or local
statute, ordinance, rule, regulation, or common law relating to chemical
management, environmental protection, contamination, or cleanup including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 as amended (42 U.S.C. ss. 9601 et seq.), the Resource
Conservation and Recovery Act as amended (42 U.S.C. ss. 6901 et seq.) or any
other federal, state, county, or city law, regulation or ordinance relating to
the protection of the environment or of human health.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" has the meaning set forth in the
Intellectual Property Agreement.
5
"Intellectual Property Agreement" means an agreement substantially
in the form of Exhibit A executed by Buyer and Seller.
"Indemnified Person" means, with respect to any Loss, the Person
seeking indemnification hereunder.
"Indemnifying Person" means, with respect to any Loss, the Person
from whom indemnification is being sought hereunder.
"Knowledge of Seller" refers to facts which are actually or should
reasonably be known by the Persons listed on Schedule 1.1(iii).
"Law" means any law, statute, treaty, rule, regulation, ordinance,
order, decree, consent decree or similar instrument or determination or award of
an arbitrator or a court or other Governmental Authority.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any kind
or nature whatsoever.
"Lease Agreements" means the 222 Lease Agreement substantially in
the form of Exhibit C-1 and the 241 Lease Agreement substantially in the form of
Exhibit C-2 with respect to the Leased Premises executed by Buyer, as lessee,
and Seller, as lessor.
"Leased Premises" means the following real property, collectively,
in each case as described on Exhibits C-1 and C-2 hereto: (i) 106,512 square
feet (exclusive of shared areas) comprising a portion of the building commonly
known as Building 222 (together with 19,115 square feet of yard space); and (ii)
61,219 square feet (exclusive of shared areas) comprising a portion of Building
241 (together with 14,565 square feet of yard space).
"Loss" means any loss, liability, claim, damage or expense
(including reasonable attorneys' fees and disbursements and the costs of
investigation).
"Material Adverse Effect" means any circumstance, change or effect
that is materially adverse to the business, assets, financial condition, or
results of operations of the Business, including the termination of VISUAL and
the options associated therewith (unless VISUAL is replaced by a successor
contract of substantially the same scope), but excluding the effects of changes
that are generally applicable to the industries and markets in which the
Business operates (including general reductions in United States military
planning and spending), changes in the United States or world financial markets
or general economic conditions, or effects arising out of this Agreement or the
transactions contemplated hereby or the public announcement thereof.
"Non-Union Employees" means all Business Employees not subject to a
Collective Bargaining Agreement.
"Notice of Disagreement" has the meaning set forth in Section
2.5(c).
6
"Panel" has the meaning set forth in Section 11.14.
"Party" has the meaning set forth in Section 11.14.
"PBGC" has the meaning set forth in Section 4.8(b).
"Permits" has the meaning set forth in Section 4.11(b).
"Permitted Liens" has the meaning set forth in Section 4.4.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" has the meaning set forth in Section 4.8(a).
"Purchase Price" has the meaning set forth in Section 2.4(b)
"RECLAIM Trading Credit" or "RTC" means a limited authorization to
emit oxides of nitrogen (NOx) or oxides of sulfur (SOx) in accordance with the
South Coast Air Quality Management District's Regional Clean Air Incentives
Market regulations. Each RTC has a denomination of one pound of NOx or SOx (as
the case may be) and a term of one year.
"Records" has the meaning set forth in Section 2.1(f).
"Release" means any discharge, emission, spilling, leaking, pumping,
pouring, injecting, dumping, leaching, migrating, or disposing into or through
the environment.
"Representatives" has the meaning set forth in Section 6.5.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, statute, treaty, rule, regulation, ordinance, order,
decree, consent decree or similar instrument or determination or award 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.
"Rockwell" has the meaning set forth in Section 8.1(e).
"SEC" means the Securities and Exchange Commission.
"Seller" has the meaning set forth in the preamble hereto.
"Seller GFE" has the meaning set forth in Section 8.8(a).
"Seller Material Contracts" has the meaning set forth in Section
4.6.
7
"Seller Plans" means each and all Employee Benefit Plans and
Employee Benefit Arrangements sponsored or maintained by Seller under which
Business Employees or Former Business Employees participate or are entitled to
receive benefits.
"Seller's Non-Union Pension Plans" has the meaning set forth in
Section 9.2(c).
"Seller's Savings Plans" has the meaning set forth in Section
9.2(d).
"Seller's Union Pension Plan" has the meaning set forth in Section
9.2(b).
"Sold Business Asset Share" has the meaning set forth in Schedule
9.2 of this Agreement.
"Subsidiary" means any Person of which a majority of the outstanding
equity interests or voting securities are owned, directly or indirectly by
another person.
"Target Amount" shall equal Fifty-Eight Million Seventy Thousand
Three Hundred Forty-Four Dollars ($58,070,344).
"Tax" or "Taxes" means, with respect to any Person, any federal,
state, local or foreign net income, gross income, gross receipts, sales, use, ad
valorem, value-added, capital, unitary, intangible, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, transfer,
occupation, premium, property or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any jurisdiction or other taxing authority, on such Person.
"Tax Return" shall mean any return, statement, report or form
(including, without limitation, estimated tax returns and reports, withholding
tax returns and reports).
"Transaction Documents" means (i) this Agreement, (ii) the Bill of
Sale, (iii) the Assignment and Assumption Agreement and (iv) the Ancillary
Agreements.
"Transactions" means the transactions contemplated by the
Transaction Documents.
"Transfer Date" has the meaning set forth in Section 9.2(d).
"Transferred Employees" means Business Employees who accept an offer
of employment from Buyer as provided in Section 9.1.
"Transferred Non-Union Employees" means Non-Union Employees who
accept an offer of employment from Buyer as provided in Section 9.1.
"Transferred Union Employees" means Business Employees subject to a
collective bargaining agreement who accept an offer of employment from Buyer as
provided in Section 9.1.
8
"Transition Services Agreement" means an agreement substantially in
the form of Exhibit B executed by Buyer and Seller.
"VISUAL" means the Virtual Imaging System for Approach and Landing
Contract, Contract number N68335-00-C-0372, Phase 1 - Basic Award - Development
Items 0001 through 0011.
"Warranty and Latent Defect Claims" has the meaning set forth in
Section 10.8(c).
"222 Lease Agreement" has the meaning set forth in Section 2.6.
"241 Lease Agreement" has the meaning set forth in Section 2.6.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) As used herein, accounting terms not defined or to the extent
not defined, shall have the respective meanings given to them under GAAP.
(b) Unless express reference is made to Business Days, references
to days shall be to calendar days.
ARTICLE II
CLOSING; PURCHASE PRICE AND ADJUSTMENT
2.1 SALE AND TRANSFER OF THE ASSETS. Subject to the terms and conditions
of this Agreement, on the Closing Date Seller will sell, convey, transfer,
assign and deliver (or cause to be sold, conveyed, transferred assigned and
delivered) to Buyer all of Seller's right, title and interest in and to all of
the business, properties, rights, claims and assets (except the Excluded Assets)
of Seller used in the operations of the Business, as the same shall exist on the
Closing Date (collectively, the "Assets"), except: (i) that the transfer and
license of Intellectual Property shall be governed solely by the Intellectual
Property Agreement and not by this Section 2.1; (ii) certain assets used jointly
in the Business and in other business activities of Seller shall not be
transferred to Buyer and (iii) no interest in real estate shall be transferred
except as provided herein and in the Lease Agreement. Subject to the terms and
conditions of this Agreement, on the Closing Date, Purchaser will purchase,
acquire and accept from Seller all of Seller's right, title and interest in and
to the Assets. The Assets include, but are not limited to, the following:
(a) all tangible personal property, including, without limitation,
the fixtures, furnishings, furniture, office supplies, vehicles, rolling stock,
tools, machinery, equipment and computer equipment, set forth on Schedule 2.1(a)
(collectively, the "Equipment");
(b) all inventory, including without limitation, production stock,
raw materials, work-in-process, finished goods, spare parts and supplies
relating to the Business, including (in the case of any of the foregoing
purchased in common for the Business and other operations of Seller) a pro rata
allocation of such items based on requirements at the time of
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procurement of the Business and Seller's other business operations, including
but not limited to requirements to support: (i) on-going production; (ii)
anticipated manufacturing usage or mortality; (iii) advance purchases to protect
contract delivery schedule; or (iv) product line production and market
strategies;
(c) all Assigned Contracts, including but not limited to all
Contracts listed on Schedule 4.6, but not including any employee collective
bargaining agreement or other contract with any labor union covering Business
Employees;
(d) all transferable licenses, permits, approvals and
authorizations by any Governmental Authority listed on Schedule 2.1(d);
(e) all bids, quotations and proposals for Contracts, whether oral
or written, to the extent such bids, quotations and proposals, or portions
thereof, relate to the Business; PROVIDED, HOWEVER, there shall be excluded any
bids, quotations and proposals for Contracts and any portions of such Contracts
not to be performed by the Business;
(f) all books and records (other than Tax records) or portions
thereof relating to and necessary for the operation of the Business, sales
literature, product information, employment records related to the period of
time in which Transferred Employees were employed by Seller, and such other
records files and all other information and/or data related to or used by Seller
in connection with the Assets and the operation of the Business (the "Records")
reasonably required by Buyer;
(g) all insurance proceeds paid or payable by any insurance
provider, other than Seller or any Affiliate of Seller, for any Asset that is
destroyed or damaged after the date hereof and prior to the Closing;
(h) all notes, drafts and accounts receivable, or portions
thereof, arising out of the Business;
(i) all causes of action, claims, demands, rights and privileges
against third parties or portions thereof that relate to the Assets or the
Business, including, without limitation, all warranties and guaranties received
from vendors, suppliers or manufacturers with respect to the Assets or the
Business and subject to Section 6.3, causes of action, claims and rights under
insurance policies relating to the Assets or the Business; and
(j) all other intangible rights of Seller that relate to the
Business and all goodwill appurtenant to the foregoing.
Notwithstanding the foregoing, Seller may retain copies of any
contracts or Records: (1) which relate to properties or activities of Seller
other than the Business, (2) which are required to be retained pursuant to any
legal requirement, for financial reporting purposes, for tax purposes, or
otherwise in connection with the Excluded Liabilities.
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2.2 ASSETS NOT TRANSFERRED. Notwithstanding anything herein to the
contrary, the following assets are not included in the Assets and shall be
retained by Seller (the "Excluded Assets"):
(a) all cash and cash equivalent items including, without
limitation, checking accounts, bank accounts, lock box numbers, certificates of
deposit, time deposits, securities, and the proceeds of accounts receivable,
including uncashed checks in payment thereof, received by Seller on or prior to
12:01 A.M. on the Closing Date;
(b) proprietary or confidential business or technical information,
records and policies or portions thereof that relate generally to Seller and are
not used in the Business, including, without limitation, organization manuals,
strategic plans and Tax records and related information;
(c) all notes, drafts and accounts receivable or other obligations
for the payment of money made or owed by any Affiliate of Seller;
(d) all causes of action, claims, demands, rights and privileges
against third parties that relate to any of the Excluded Assets or Excluded
Liabilities, including causes of actions, claims and rights under insurance
policies relating thereto;
(e) except as set forth in Section 2.1(f), all other assets
(excluding Intellectual Property assets, which shall be governed by the
Intellectual Property Agreement) used primarily in connection with Seller's
corporate functions (including but not limited to the corporate charter,
taxpayer and other identification numbers, seals, minute books and stock
transfer books), whether or not used for the benefit of the Business;
(f) any life insurance policy owned by Seller and any proceeds
payable thereunder; PROVIDED HOWEVER, such policies shall be transferred to
Buyer if such policies fund any of Seller's pension plans for which assets are
transferred to Buyer pursuant to Section 9.2 hereof;
(g) the assets listed on Schedule 2.2(g); and
(h) all RECLAIM Trading Credit (RTC) used in or relating to the
Business.
2.3 ASSUMED AND EXCLUDED LIABILITIES. (a) On the Closing Date, Buyer
shall execute and deliver to Seller the Assignment and Assumption Agreement
pursuant to which Buyer shall assume and agree to pay, perform and discharge
when due, and indemnify, subject to the indemnification obligations of Seller
set forth in Article X hereof, Seller and its Affiliates against and hold them
harmless from and after the Closing the liabilities and obligations
(collectively, the "Assumed Liabilities"):
(1) subject to Section 2.3(b)(8), arising out of any Assigned
Contract;
(2) included, or for which identifiable reserves are reflected, on
the Closing Statement of Assets and Liabilities;
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(3) subject to Section 2.3(b)(8), Warranty and Latent Defect
Claims as defined in Section 10.8(c); or
(4) subject to Section 2.3(b)(8), listed on Schedule 2.3(a).
(b) Notwithstanding the foregoing clause (a) of this Section 2.3, the
Assumed Liabilities shall not include those liabilities set forth in Schedule
2.3(b) and the following liabilities (the "Excluded Liabilities"):
(1) any liability not described in (a)(1) - (a)(4) of this Section
2.3;
(2) any liability, responsibility or obligation with respect to
any Seller Plan, except as provided in ARTICLE IX below;
(3) any liability for Taxes for any period or portion thereof
ending on or prior to the Closing Date;
(4) any liability arising from or related to the Excluded Assets;
(5) all notes, drafts and accounts payable or other obligations
for the payment of money made or owed to Seller or any Affiliate of Seller
except as provided in Section 2.3(a);
(6) any Loss related to, the investigation, cleanup, remediation,
contamination, monitoring or removal of any Hazardous Materials, or for death or
injury to person, property or natural resource, as a result of the generation,
use, transportation, disposal, storage, release, emission or discharge of any
Hazardous Materials on-site or off-site and in, on, under, from or onto any
Leased Premises, solely to the extent that such liability arises out of any
matter or circumstances that occurred or existed on or before the Closing Date
and to the extent it is not the result of negligence or willful misconduct on
the part of Buyer; and
(7) any Loss and penalties for violations of or non-compliance
with Environmental Laws, whether governmental or third party, to the extent that
such non-compliance or violations of Environmental Laws occurred or existed on
or before the Closing Date, to the extent that non-compliance or penalty is not
the result of negligence or willful misconduct on the part of Buyer (with the
obligations and liabilities referred to in clause (6) and this clause (7)
collectively referred to as the "EXCLUDED ENVIRONMENTAL LIABILITIES").
(8) any liabilities arising out of Seller's violations of or
non-compliance with Law and any non-contractual liabilities not expressly
assumed in Section 2.3(a) above.
2.4 CLOSING; PURCHASE PRICE.
(a) The closing (the "Closing") of the purchase and sale of the
Assets and the assumption of the Assumed Liabilities shall be held at the
offices of Gibson, Dunn & Crutcher LLP at 333 South Grand Avenue, Los Angeles,
California 90071, at 9:00 a.m., Pacific Standard Time, on the third Business Day
following satisfaction of the condition set forth in Section 3.1(c), or on each
other date as the parties may agree; provided that if the conditions to
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Closing set forth in Article III shall not have been satisfied or waived by such
date, subject to Section 11.3, the Closing shall be postponed until such
conditions shall have been satisfied or waived. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date." The Closing will
be deemed effective at 12:01 a.m. on the Closing Date (the "Effective Time").
(b) The aggregate purchase price for the Assets shall be
Eighty-Four Million One Hundred Twenty-Five Thousand Dollars ($84,125,000),
payable on the Closing Date by wire transfer in immediately available funds to
an account designated by Seller, subject to adjustment pursuant to this Section
and Section 2.5 (the "Purchase Price"). Five days prior to the Closing, Seller
will deliver in writing to Buyer a good faith estimate of the Closing Net
Assets, which shall be the net assets as of the end of the most recent
accounting month for which internal financial statements are available,
determined on a basis consistent with the methodology to be employed in the
calculation of the Closing Net Assets as set forth below (the "Estimated Closing
Net Assets"). The Estimated Closing Net Assets shall specify, in reasonable
detail, any changes made to estimates at completion ("EACs"). To the extent that
the Estimated Closing Net Assets are greater than the Target Amount, the
Purchase Price to be remitted at Closing will be increased by such excess. To
the extent that the Estimated Closing Net Assets are less than the Target
Amount, the Purchase Price to be remitted at Closing will be decreased by such
shortfall. Subsequent to Closing, the provisions of Section 2.5 will be applied.
(c) At the Closing, Seller shall deliver or cause to be delivered
to Buyer (i) the Bill of Sale in the form set forth on Exhibit E and (ii) such
other instruments of transfer and documents (including assignments of the
Intellectual Property) as Buyer may reasonably request, and Buyer shall deliver
to Seller (i) the Assignment and Assumption Agreement in the form set forth on
Exhibit F and (ii) such other instruments of assumption and documents as Seller
may reasonably request.
2.5 PURCHASE PRICE ADJUSTMENT.
(a) Within sixty (60) days after the Closing Date, Seller shall
prepare and deliver to Buyer a statement of assets and liabilities of the
Business (including only the Assets transferred to Buyer pursuant hereto and the
Assumed Liabilities) as of the close of business on the Business Day immediately
preceding the Closing Date (the "Closing Statement of Assets and Liabilities").
The Closing Statement of Assets and Liabilities will be in a format comparable
to the Balance Sheet. Buyer shall cooperate with Seller in connection with, and
shall furnish to Seller all such information as Seller may reasonably require,
in the preparation of the Closing Statement of Assets and Liabilities. Except as
set forth in Schedule 2.5(a), the Closing Statement of Assets and Liabilities:
(i) shall be prepared in accordance with the books and records
of Seller;
(ii) shall fairly present the financial position of the
Business;
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(iii) shall utilize the same methodologies for determining
foreign currency exchange rates as were used in the preparation of the
Balance Sheet;
(iv) shall utilize the same estimation methodologies used for
determining EACs as were used in the preparation of the Balance Sheet,
with EACs updated to reflect changes in facts and circumstances (including
the matters set forth in Schedule 4.7) occurring subsequent to the EACs
referred to in Schedule 2.5(a) and prior to the date of the Closing
Statement of Assets and Liabilities;
(v) shall not include any assets held in trust for the benefit
of any participants in any of Seller's pension plans; and
(vi) except as may be otherwise specified in Schedule 2.5(a),
shall be prepared in accordance with GAAP consistently applied using the
same accounting methods, policies, practices and procedures, with
consistent classifications and estimation methodologies as were used in
the preparation of the Financial Statements, and will not include any
changes in assets or liabilities as a result of purchase accounting
adjustments arising from or resulting as a consequence of the transactions
contemplated hereby.
In the event that the Closing Date does not occur at a financial
week or month end for accounting purposes, the parties shall agree on mutually
acceptable roll forward or roll back procedures. Buyer shall cause the employees
of the Business to assist Seller in the preparation of the Closing Statement of
Assets and Liabilities.
(b) Each party shall provide the other party and its
representatives with reasonable access to books and records and relevant
personnel during the preparation of the Estimated Closing Net Assets and the
Closing Statement of Assets and Liabilities and the resolution of any disputes
that may arise under this Section 2.5.
(c) Within sixty (60) days after delivery of the Closing Statement
of Assets and Liabilities, Buyer may dispute all or any portion Seller's
calculation of the Closing Net Assets or as described on the Closing Statement
of Assets and Liabilities by giving written notice (a "Notice of Disagreement")
to the Seller setting forth in reasonable detail the basis for any such dispute
(any such dispute being hereinafter called a "Disagreement"), identify the
specific items involved and the dollar amount of each such disagreement and
provide reasonable supporting documentation for each such Disagreement. The
parties shall promptly commence good faith negotiations with a view to resolving
all such Disagreements. If Buyer does not provide a Notice of Disagreement to
Seller within the sixty (60) day period as set forth in this subsection (d),
Buyer shall be deemed to have accepted as final such Closing Statement of Assets
and Liabilities in the form delivered to it by Seller. Additionally, after the
sixty (60) day period referred to above, Buyer may not introduce any new
Disagreement with respect to an item in the Closing Statement of Assets and
Liabilities or increase the amount of a Disagreement. Similarly, a Disagreement
by Buyer does not provide Seller any right to introduce any changes to the
calculation of Closing Net Assets; provided that nothing herein shall prevent
Seller from asserting or Buyer from opposing any offset that may result from an
item in Buyer's Notice of Disagreement. During the sixty (60) day period of its
review, Buyer shall have reasonable
14
access to any documents, schedules or workpapers used in the preparation of the
Closing Statement of Assets and Liabilities.
(d) Buyer and Seller agree to negotiate in good faith to resolve
any such Disagreement. If Buyer and Seller are unable to resolve all
Disagreements properly identified by Buyer pursuant to Section 2.5(c) within
sixty (60) days after delivery to Seller of written notice of such Disagreement,
then, within thirty (30) days thereafter, Buyer and Seller shall jointly select
an arbiter from one of the "Big 5" accounting firms that is not the independent
auditor of either Buyer or Seller; if Buyer and Seller are unable to select such
an arbiter within such time period, the American Arbitration Association shall
make such selection (the person so selected shall be referred to herein as the
"Accounting Arbitrator"). The Disagreement shall be submitted for final and
binding arbitration to the Accounting Arbitrator so selected for a resolution of
such Disagreement in accordance with the terms of this Agreement. The Accounting
Arbitrator will only consider those items and amounts set forth in the Closing
Statement of Assets and Liabilities as to which Buyer and Seller have disagreed
within the time periods and on the terms specified above and must resolve the
matter in accordance with the terms and provisions of the Agreement. The
Accounting Arbitrator shall deliver to Buyer and Seller, as promptly as
practicable and in any event within one hundred and twenty (120) days after its
appointment, a written report setting forth the resolution of any such
disagreement determined in accordance with the terms of the Agreement. The
Accounting Arbitrator shall select as a resolution the position of either Buyer
or Seller for each item of disagreement and may not impose an alternative
resolution. The Accounting Arbitrator shall make its determination based solely
on presentations and supporting material provided by the parties and not
pursuant to any independent review. The determination of the Accounting
Arbitrator shall be final and binding upon Buyer and Seller. The fees, expenses
and costs of the Accounting Arbitrator shall be borne one-half by Buyer and
one-half by Seller.
(e) If the Closing Net Assets as finally determined in accordance
with this Section 2.5 are less than the Estimated Closing Net Assets, the
Purchase Price shall be decreased on a dollar-for-dollar basis by the amount of
such shortfall, and if the Closing Net Assets are greater than the Estimated
Closing Net Assets, the Purchase Price shall be increased on a dollar-for-dollar
basis by the amount of such excess. If any adjustment under this Section 2.5
results in a reduction in the Purchase Price, Seller shall pay to Buyer the
amount of such reduction, and if any adjustment results in an increase in the
Purchase Price, Buyer shall pay to Seller the amount of such increase, in each
case, by wire transfer of immediately available funds to an account designated
by the party receiving payment within five (5) Business Days after the final
determination of the amount of such reduction or increase in Purchase Price,
plus interest on the amount of such reduction or increase from the Closing Date
to the date of such payment thereof at the per annum rate equal to the rate
announced by Citibank, N.A. in the City of New York as its base rate in effect
on the Closing Date.
2.6 LEASE ARRANGEMENTS. Seller shall lease, demise and let unto Buyer a
portion of Building 222 pursuant to a lease in the form attached hereto as
Exhibit C-1 (the "222 Lease Agreement") and a portion of Building 241 pursuant
to a lease in the form attached hereto as Exhibit C-2 (the "241 Lease
Agreement").
15
2.7 TAX ALLOCATION. Within thirty (30) days following Buyer's receipt of
the Closing Statement of Assets and Liabilities, representatives of Buyer and
Seller shall meet and discuss the allocation of the amount of the Purchase Price
(to the extent identifiable or reasonably estimable and taken into account for
federal tax purposes) to broad categories constituting components of the Assets
and the agreement provided in Section 6.6 that each party believes is
appropriate. Within one hundred twenty (120) days following Buyer's receipt of
the Closing Statement of Assets and Liabilities, Buyer shall deliver to Seller
Buyer's reasonable determination, taking into account in good faith the
discussion between the representatives of Buyer and Seller, of such allocation,
which determination shall be subject to Seller's consent, which consent shall
not be unreasonably withheld. If Buyer and Seller are unable to agree on such
allocation, then the Accounting Arbitrator will be retained to determine such
allocation (the cost of which shall be borne equally by Buyer and Seller). Buyer
and Seller shall report the purchase and sale of the Assets in accordance with
such allocation (as finally determined) for all Tax purposes (including the
filing of the forms prescribed under Section 1060 of the Code and the Treasury
Regulations promulgated thereunder).
2.8 TRANSFER TAXES. Buyer and Seller shall cooperate in preparing,
executing and filing use, sales, real estate, transfer and similar Tax Returns
relating to the purchase and sale of the Assets and shall cooperate in providing
or obtaining any certification reasonably necessary to exempt or reduce the
amount of transfer Taxes or other Taxes payable by either Buyer or Seller
relating to the purchase and sale of the Assets. Buyer and Seller shall each pay
and indemnify the other against 50% of all such transfer Taxes, including any
penalties, interest and additions to tax, incurred in connection with the
purchase and sale of the Assets, and Buyer shall reimburse Seller for any
transfer Taxes for which Buyer is responsible and which are paid by Seller
within five (5) days of Seller's written request. Under no circumstances shall
Buyer's obligation hereunder or the Taxes giving rise thereto be reflected as a
liability on the Closing Statement of Assets and Liabilities. The transfer Tax
Returns shall be prepared in a manner that is consistent with the allocation of
the Purchase Price and Assumed Liabilities contemplated by Section 2.7.
2.9 CERTAIN FACTS RELATED TO THE BUSINESS. Buyer and Seller acknowledge
that they have considered each of the items set forth in Schedule 2.9 in light
of the facts as they exist as of the date hereof and have taken them into
account in determining the Purchase Price set forth in Section 2.4(b). Buyer and
Seller hereby agree that such items shall be considered for the purposes of
establishing the EACs in determining the Estimated Closing Net Assets and the
Closing Net Assets. Notwithstanding anything to the contrary in this Agreement,
the items set forth in Schedule 2.9 shall be excluded for purposes of
determining whether any changes in the assets, liabilities, earnings, factual
basis for EACs or financial condition of the Business or any developments have
had or are reasonably likely to result in a Material Adverse Effect as of the
Closing Date; PROVIDED, HOWEVER, changes or developments not described therein
may be so considered.
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ARTICLE III
CONDITIONS TO CLOSING
3.1 BUYER'S OBLIGATION. The obligations of Buyer to purchase and pay for
the Assets and assume the Assumed Liabilities are subject to the satisfaction
(or waiver by Buyer) as of the Closing of the following conditions:
(a) The representations and warranties of Seller made in this
Agreement shall be true and correct: (i) in all material respects as of the date
hereof; and (ii) on and as of the Closing Date, as though made on such date, (x)
except for those representations and warranties which refer to facts existing at
a specific date, (y) except as specifically contemplated by this Agreement, and
(z) except changes resulting from the operation of the Business in the ordinary
course in accordance with the provisions of this Agreement, none of which
individually or in the aggregate has a Material Adverse Effect. Seller shall
have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by Seller
by the time of the Closing; and Seller shall have delivered to Buyer a
certificate dated the Closing Date and signed by an authorized officer of Seller
confirming the foregoing.
(b) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction which, in the opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, involves a reasonable likelihood of an injunction,
order, decree, ruling or charge that could reasonably be expected to (w) prevent
consummation of any of the transactions contemplated by this Agreement or any
related instruments and agreements; (x) cause any of the transactions
contemplated by this Agreement or related instruments and agreements to be
rescinded following consummation; (y) affect adversely the right of Buyer to own
the Assets or to operate the Business; or (z) cause Buyer to owe significant
damages to any governmental entity or third party (and no such injunction,
judgment, order, decree, ruling or charge shall be in effect).
(c) The waiting period under the HSR Act shall have expired or
been terminated.
(d) Since the date hereof, there shall not have occurred any
changes in the assets, liabilities, earnings, factual basis for EACs or
financial condition of the Business or any developments that have had or are
reasonably likely to result in a Material Adverse Effect.
(e) Buyer shall have received sufficient funds to enable it to pay
the Purchase Price and otherwise consummate the transactions contemplated by
this Agreement.
The foregoing conditions are for the sole benefit of Buyer and may be
waived by Buyer, in whole or in part, at any time and from time to time in the
sole discretion of Buyer. The failure by Buyer at any time to exercise any of
the foregoing rights shall not be deemed a wavier of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time prior to the Closing Date.
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3.2 SELLER'S OBLIGATION. The obligation of Seller to sell and deliver
the Assets to Buyer is subject to the satisfaction (or waiver by Seller) as of
the Closing of the following conditions:
(a) The representations and warranties of Buyer made in this
Agreement shall be true and correct: (i) in all material respects as of the date
hereof; and (ii) on and as of the Closing Date, as though made on such date, (x)
except for those representations and warranties which refer to facts existing at
a specific date, (y) except as specifically contemplated by this Agreement, and
(z) except changes in the Schedules hereto, which do not individually or in the
aggregate have a Material Adverse Effect. Buyer shall have performed or complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Buyer by the time of the Closing;
and Buyer shall have delivered to Seller a certificate dated the Closing Date
and signed by an authorized officer of Buyer confirming the foregoing.
(b) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign which, in the opinion of Gibson, Dunn & Crutcher,
involves a reasonable likelihood of an injunction, order, decree, or ruling that
would (w) prevent consummation of any of the transactions contemplated by this
Agreement or any related instruments and agreements; (x) cause any of the
transactions contemplated by this Agreement or related instruments and
agreements to be rescinded following consummation; (y) affect adversely the
right of Seller to sell or transfer the Assets; or (z) cause Seller to owe
significant damages to any governmental entity or third party (and no such
injunction, judgment, order, decree, ruling or charge shall be in effect).
(c) The waiting period under the HSR Act shall have expired or
been terminated.
The foregoing conditions are for the sole benefit of Seller and may
be waived by Seller, in whole or in part, at any time and from time to time in
the sole discretion of Seller. The failure by Seller at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time prior to the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS; CORPORATE MATTERS.
(a) Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Seller is duly
qualified or licensed to do business in each jurisdiction in which the property
relating to the Business is owned, leased or operated by Seller or the nature of
the Business makes such qualification necessary, except for
18
those jurisdictions where the failure to be so qualified or licensed do not
individually or in the aggregate have a Material Adverse Effect. Seller has the
requisite corporate power and authority to enter into the Transaction Documents
and to consummate the Transactions. All corporate acts and other proceedings
required to be taken by Seller to authorize the execution, delivery and
performance of the Transaction Documents and the consummation of the
Transactions have been duly and properly taken. This Agreement has been, and
each of the Transaction Documents, when executed, will be, duly executed and
delivered by Seller and constitute a valid and binding obligation of Seller,
enforceable against Seller in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) The execution and delivery of this Agreement does not and of
the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will not
conflict with the Certificate of Incorporation or By-Laws or other
organizational or governing documents of Seller, or require the consent of any
Person, result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation, or to loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Business or
Seller, under, (i) subject to the matters disclosed in Schedule 4.1(b), any
material Contract, or (ii) any judgment, order or decree or, subject to the
matters described in clauses (A)-(E) of paragraph (c) below, Requirement of Law
applicable to the Business.
(c) No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Seller in connection with
the execution and delivery of the Transaction Documents or the consummation of
the Transactions contemplated hereby, other than (A) compliance with and filings
under the Exchange Act, (B) compliance with and filings and notifications under
applicable Environmental Laws, (C) those that may be required solely by reason
of Buyer's participation in the transactions contemplated hereby, (D) compliance
with and filings under the HSR Act and (E) those that, if not made or obtained,
individually or in the aggregate, would not have a Material Adverse Effect.
4.2 FINANCIAL STATEMENTS; ABSENCE OF CHANGES.
(a) Schedule 4.2(a) contains a true and complete copy of the
unaudited pro forma statements of assets and liabilities of the Business as of
December 31, 2000 and the related unaudited pro forma statements of revenues,
costs and expenses of the Business for the years ended December 31, 1999 and
December 31, 2000 (the "Financial Statements"). Except as set forth on Schedule
4.2(a), the Financial Statements: (A) were prepared in accordance with the books
and records of Seller, (B) fairly present the financial position of the Business
in each case at and as of the dates indicated, and the results of operations, of
the Business for the periods indicated and (C) except as otherwise set forth on
Schedule 4.2(a), were prepared in accordance with GAAP, consistently applied
throughout the periods covered thereby.
19
(b) ABSENCE OF CHANGES. Except as expressly contemplated by this
Agreement or as set forth on Schedule 4.2(b), since December 31, 2000, the
Business has been operated in the ordinary course and consistent with past
practice, and with respect to the Business there have not been any:
(i) Liens on or against any Asset or any interest therein
other than Permitted Liens;
(ii) waiver of any right except in the ordinary course of
business;
(iii) termination of or amendment to any Contract, Permit or
real property lease except in the ordinary course of business;
(iv) any loans, advances (other than in the ordinary course of
business) or capital contributions by Seller to, or investments by Seller
in, any other Person;
(v) any increase in the compensation or benefits of any of the
officers or other key employees of the Business, except for such increases
as are granted in the ordinary course of business in accordance with its
customary practices (which shall include normal periodic performance
reviews and related compensation and benefit increases) or in accordance
with the terms of any employment contract or collective bargaining
agreement as currently in effect;
(vi) any indemnification agreement, non-compete covenant or
nondisclosure agreement entered into by the Seller related to the Business
other than in the ordinary course of business consistent with past
practice;
(vii) any failure to: (1) pay the accounts payable and collect
the accounts receivable of the Business in a manner and at the times which
are consistent with past practices; (2) use its reasonable commercial
efforts to preserve the goodwill of the suppliers, distributors, customers
and contractors dealing with the Business;
(viii) changes in the assets, liabilities, earnings, factual
basis for EACs or financial condition of the Business that have had or are
reasonably likely to result in a Material Adverse Effect;
(ix) occurrences resulting in the damage, destruction or loss
(whether or not covered by insurance) affecting any tangible asset or
property of the Business in excess of $500,000 for any single loss or
$2,000,000 for all such losses;
(x) changes in the accounting methods or practices followed by
or with respect to the Business, or any changes in depreciation or
amortization policies or rates theretofore adopted;
(xi) agreements or commitments to merge or consolidate with or
otherwise acquire any other Person, or any part or division thereof;
20
(xii) other material transactions relating to the Business,
other than in the ordinary course of the Business and consistent with past
practice;
(xiii) Seller has not sold, transferred, or otherwise disposed
of any of its properties or assets (real, personal or mixed, tangible or
intangible), except in the ordinary course of business and consistent with
past practice; or
(xiv) agreements or understandings, whether in writing or
otherwise, for Seller to take any of the actions specified in items (i)
through (xiii) above.
(c) ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the
extent reflected on the Balance Sheet, or on Schedule 4.2(c) to this Agreement,
Seller does not have any liabilities relating to the Business required to be
reflected on a Balance Sheet prepared in accordance with GAAP other than
liabilities and obligations incurred since the date of the Balance Sheet in the
ordinary course of business and consistent with past practice and which have not
had or will not have, individually or in the aggregate, a Material Adverse
Effect. Seller does not have any contingent liabilities with respect to the
Business which are not required to be reflected on a balance sheet prepared in
accordance with GAAP, other than contingent liabilities incurred in the ordinary
course of business consistent with past practice and which have not had or will
not have individually or in the aggregate a Material Adverse Effect.
4.3 TAXES.
(a) Except as disclosed on Schedule 4.3, there are no outstanding
Tax Liens (other than for taxes not yet due and payable) that have been filed by
any Tax authority against any property or assets of the Business.
(b) Except as set forth in Schedule 4.3, none of the Assets
comprises "tax exempt use property" within the meaning of Section 168(h) of the
Code.
(c) Seller has not received a material adverse ruling from any
taxing authority or entered into any materially adverse agreement regarding
Taxes with any taxing authority that could, individually or in the aggregate,
apply to the Business or the Assets after the Closing Date.
4.4 ASSETS OTHER THAN REAL PROPERTY INTERESTS. Except as disclosed on
Schedule 4.4, Seller has good and marketable title to all assets reflected on
the Balance Sheet other than real property or interests in real property
thereafter acquired, except those sold or otherwise disposed of since the date
of the Balance Sheet in the ordinary course of business consistent with past
practice, in each case free and clear of all Liens other than: (i) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred in the
ordinary course of business, (ii) Liens arising under conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business, (iii) Liens for Taxes and other governmental charges which
are not due and payable or which may thereafter be paid without penalty, and
(iv) Liens on work-in-progress assets under any customer finance facility, and
(v) other imperfections of title, restrictions or encumbrances, if any, which
Liens, imperfections of title, restrictions or other
21
encumbrances do not, individually or in the aggregate, materially impair the
continued use, operation, value or marketability of the specific assets to which
they relate or the operation of the Business (the Liens described in the
preceding clauses (i)-(v) are hereinafter referred to collectively as "Permitted
Liens").
4.5 REAL PROPERTY INTERESTS. There is no leased real property utilized
in the Business. Except as set forth in Schedule 4.5:
(a) Seller has received no notification that it is in material violation
of any applicable building, zoning, health or other law, ordinance or regulation
in respect of its plants or structures of their operations, except as disclosed
in Schedule 4.9.
(b) To the Knowledge of the Seller, there is no condition currently or
previously existing on any Leased Premises or any portion thereof which may give
rise to any violation of any applicable law. There are no proceedings or, to the
Knowledge of Seller, claims, disputes or conditions, affecting any Leased
Premises that might curtail or interfere with the use of such property in any
material respect.
(c) To the Knowledge of Seller, the plants, structures and equipment
used in connection with the Business are structurally sound with no known
defects and are in good operating condition and repair, normal wear and tear
excepted, and are adequate for the uses to which they are being put. None of
such plants, structures or equipment are in need of maintenance or repairs
except for ordinary, routine maintenance and repairs.
(d) Other than Environmental Permits, true and complete copies of all
certificates, permits and licenses held by Seller in connection with the
ownership, use, operation, leasing and maintenance of the Leased Premises have
heretofore been made available to Buyer. To the Knowledge of Seller, other than
Environmental Permits, Seller has obtained, or will have obtained on or before
the Closing Date, all appropriate certificates of occupancy, permits, licenses,
easements and rights of way, including proofs of dedication, required to use and
operate the Leased Premises in all respects in the same manner in which the
Leased Premises are currently being used and operated. To the Knowledge of
Seller, the current use and occupation of any portion of the Leased Premises
does not violate any of such certificates, permits or licenses. Other than
Environmental Permits and Permits pertaining to the national security of the
United States, no such approvals, permits, licenses will be required, as a
result of the transactions contemplated by this Agreements, to be issued after
the date hereof in order to permit Buyer to operate the Leased Premises in all
material respects in the same manner as heretofore owned or operated, other than
such approvals, permits of licenses that are ministerial in nature and are
normally issued in due course upon application therefore without any further
action by the applicant.
(e) All utilities presently serving the Leased Premises are presently
adequate to service the existing normal operations of Seller.
(f) Neither the whole nor any portion of the Leased Premises is subject
to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken
22
by any public authority with or without payment of compensation therefor, and to
the Knowledge of Seller, no such action has been proposed.
4.6 CONTRACTS. Schedule 4.6 sets forth a list of each of the following
types of Assigned Contracts:
(a) any employment or severance agreement that has an aggregate
future liability in excess of $100,000;
(b) any employee collective bargaining agreement or other contract
with any labor union covering Business Employees;
(c) any Contract (including purchase orders) involving the
obligation of Seller to purchase products or services pursuant to which the
aggregate of payments to become due from Seller is equal to or exceeds $250,000,
and which is not terminable on 60 days' or less notice or as to which the cost
to terminate such Contract equals or exceeds $100,000;
(d) (i) any distributor, dealer, sales, advertising, agency,
manufacturer's representative, franchise or similar Contract currently in
effect, regardless of the amount of commissions payable thereunder, or (ii) any
other contract requiring the payment of any commissions in excess of $100,000
per year;
(e) any option or other agreement to purchase or otherwise acquire
or sell or otherwise dispose of any interest in real property;
(f) any contract under which Seller has agreed to indemnify any
third party with respect to, or to share, the Tax liability of any third party;
(g) any commitment of Seller relating to the Business to make a
capital expenditure or to purchase a capital asset, not contemplated by the
capital expenditure budget of Seller for the Business, copies of which have been
provided or made available to Buyer;
(h) any agreement or commitment relating to the location of
employees or minimum number of employees to be employed with respect to the
Business;
(i) any power of attorney pertaining to the Business;
(j) any covenant not to compete pertaining to the Business; or
(k) any lease or similar agreement pertaining to the Business
under which (i) Seller is the lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by any third Person
for an annual rent in excess of $250,000 or (ii) Seller is the lessor of, or
makes available for use by any third Person, any tangible personal property
owned by it for an annual rent in excess of $250,000. Except as could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, Seller is in compliance with the terms of all leases of tangible
properties to which they are a party and under which they are in occupancy, and
all such leases are in full force and effect.
23
The contracts described in clauses (a)-(k) above are referred to
herein as the "Seller Material Contracts").
Seller has delivered or made available to Buyer complete and correct
copies of all written Seller Material Contracts, and accurate descriptions of
all material terms of all oral Seller Material Contracts, set forth or required
to be set forth on Schedule 4.6.
Except as disclosed on Schedule 4.6, each Contract listed on Schedule 4.6
is, to the best of the Knowledge of Seller, valid, binding and in full force and
effect. Except as disclosed in Schedule 4.6, Seller has performed all material
obligations required to be performed by it to date under each such Contract and
is not in breach or default in any material respect thereunder and, to the
Knowledge of Seller, no other party to any of such Contracts is in breach or
default in any material respect thereunder.
4.7 LITIGATION; DECREES. Schedule 4.7(a) sets forth a list of all
pending and, to the Knowledge of Seller, threatened lawsuits or claims against
Seller or any of its properties, assets and business operations, by or before
any court, governmental or regulatory authority, private arbitration or brought
by any third party, in each case relating to the Business which (a) has or can
be reasonably expected to have an adverse effect on the Business in excess of
$100,000, (b) seeks any injunctive relief or (c) seeks to prevent the
Transactions. Seller is not in default under any judgment, order or decree of
any court, administrative agency or commission or other Governmental Authority
applicable to the Business. Schedule 4.7(b) sets forth a list of (i) all
lawsuits or claims against Seller or any of its properties, assets, and business
operations by or before any court, governmental or regulatory authority, private
arbitration or brought by any third party, in each case relating to the
Business, for the three years prior to the date of this Agreement, (ii) from
three years prior to the date of this Agreement through December 1999, all
settlements and payments in excess of $500,000 required to be paid by Seller or
restrictions imposed on Seller pursuant to such lawsuits or claims and (iii)
from December 1999 through the date of this Agreement, all settlements and
payments in excess of $100,000 required to be paid by Seller or restrictions
imposed on Seller pursuant to such lawsuits or claims.
4.8 EMPLOYEE BENEFITS.
(a) Schedule 4.8 sets forth each Employee Benefit Plan and each
Employee Benefit Arrangement (the "Plans"). Each Plan, to the extent applicable,
is identified on Schedule 4.8 as one or more of the following: a plan subject to
Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code and
applicable Treasury Regulations thereunder, or any other "employee pension plan"
(as defined in Section 3(2) of ERISA); a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA); an "employee welfare plan" (as defined in Section
3(2) of ERISA); "fringe benefit plan" subject to Section 125 or 127 of the Code;
and incentive plans applicable to the Business Employees.
(b) Except as set forth on Schedule 4.8, (i) each Plan complies in
all material respects with its terms and with the applicable requirements of law
and collective bargaining agreements, (ii) no material claims by the Internal
Revenue Service, the Pension Benefit Guaranty Corporation ("PBGC"), the
Department of Labor, any participant or beneficiary or any
24
other person currently are pending, or are, to the Knowledge of Seller,
threatened with respect to any Plan, other than claims for benefits in the
ordinary course, and (iii) each Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter that it
is so qualified and Seller is not aware of any facts or circumstances which
could result in the disqualification of such Plan. No asset of the Business
acquired herein is subject to any lien under ERISA or the Code.
(c) There has been delivered to Buyer with respect to each Plan:
(i) if required under ERISA, a copy of the most recent annual report (including
all required attachments, schedules and financial statements); (ii) a copy of
the Summary Plan Description, together with each Summary of Material
Modifications, required under ERISA, and, unless the Plan is embodied entirely
in an insurance policy, a true and complete copy of the Plan and any amendments
thereto; (iii) if the Plan is funded through a trust or any third-party funding
vehicle (other than an insurance policy or with respect to any "multiemployer
plan"), a copy of the trust or other funding agreement and the latest financial
statements thereof; (iv) a copy of the most recent actuarial reports (prepared
to compute the funding requirements under ERISA, the pension costs under Cost
Accounting Standards 9904.412, and the pension costs and disclosures under
Financial Accounting Standards No. 87, 88 and 132, as applicable) with respect
to each Plan which is a "defined benefit plan" (as defined in Section 3(35) of
ERISA); (v) a copy of the most recent favorable determination letter issued by
the IRS with respect to each Plan intended to be qualified under section 401(a)
of the Code; and (vi) and copies of any collective bargaining agreements which
require Seller to provide benefits to union Business Employees.
(d) With respect to each Plan, all required payments, premiums,
contributions, reimbursements or accruals for all periods (or partial periods)
ending prior to or as of the Closing Date have been made. None of the Plans has
any material unfunded liabilities or risk of incurring liability under Title IV
or Section 302 of ERISA. No plan is a multiemployer plan as defined in ERISA
Section 3(37).
(e) Except as disclosed in Schedule 4.8, the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another event, (A) entitle any current or former employee,
director or officer of Seller or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, (B) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, director or officer or (C) require the immediate funding or financing
of any compensation or benefits, which could reasonably become a liability of
Buyer.
4.9 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 4.9:
(a) the Business is and to the Knowledge of the Seller has been in
compliance with all applicable Environmental Laws except for non-compliances
that have been fully resolved, and except where the failure to be in compliance
would not, individually or in the aggregate, have a Material Adverse Effect;
(b) the Business has all licenses, permits and governmental
consents required under Environmental Laws for the operation of the business as
presently conducted (the
25
"Environmental Permits") and there are no violations, investigations or
proceedings nor, to the Knowledge of Seller, are any investigations or
proceedings pending or threatened, with respect to the Environmental Permits,
other than where the violations, investigation or proceeding relating thereto
would not, individually or in the aggregate, have a Material Adverse Effect
(such Environmental Permits are listed on Schedule 4.9 hereto);
(c) since December 31, 1999, and to the Knowledge of Seller prior
to December 31, 1999, no notice, notification, demand, request for information,
citation, summons, complaint or order has been received by Seller or, to the
Knowledge of Seller, is pending or threatened by any Person against any part of
the Business nor has any penalty been assessed against any part of the Business
with respect to any alleged violation of any Environmental Law or liability
thereunder, other than where such notice, notification, demand, request for
information, citation, summons, complaint or order has been fully resolved;
(d) insofar as it relates to the Business, to the Knowledge of
Seller, no event, condition, circumstance, activity, practice, action or plan of
the Seller has occurred or exists which may interfere with or prevent continued
compliance, or which may give rise, to any liability under any Environmental
Law, or otherwise form the basis of any claim, action, suit, proceeding,
hearing, or investigation, based on or related to the disposal, storage,
handling, manufacture, processing, distribution, use, treatment, or transport,
or the emission, discharge, release or threatened release into the environment
of any Hazardous Materials, except for any of the foregoing which would not have
a Material Adverse Effect;
(e) there is no cleanup or remediation of Hazardous Materials
being conducted or planned at the Leased Premises;
(f) to the Knowledge of Seller, there is no existing contamination
by, and there has not been the release of, any Hazardous Material on, at or
under the Leased Premises that has or would have a Material Adverse Effect; and
(g) to the Knowledge of Seller, the Business has not disposed of,
sent or arranged for the transportation of Hazardous Materials to any site that
has been placed on the "National Priorities List", "CERCLIS", or similar state
list under Environmental Laws.
Any RTC used in or related to the Business shall remain the property of Seller
subject to the obligation of Seller to make such RTC available to Buyer as
required under the Transition Services Agreement. No representation or warranty
is made in this Agreement as to any matters relating to the environment,
Environmental Laws or Hazardous Materials except in this Section 4.9.
4.10 EMPLOYEE AND LABOR RELATIONS. Except as set forth on Schedule 4.10:
(a) there is no labor strike, dispute, or work stoppage or lockout
pending, or, to the Knowledge of Seller, threatened, involving the Business;
26
(b) to the Knowledge of Seller, no union organization campaign is
in progress with respect to the Business Employees, and no question concerning
representation exists respecting such employees;
(c) there is no unfair labor practice charge or complaint against
Seller pending, or, to the Knowledge of Seller, threatened, before the National
Labor Relations Board or similar governmental agency outside of the United
States involving the Business that has or can be reasonably expected to have a
Material Adverse Effect;
(d) there is no pending, or, to the Knowledge of Seller,
threatened, grievance involving a Business Employee that has or can be
reasonably expected to have, if adversely decided, a Material Adverse Effect;
and
(e) no charges with respect to or relating to Seller in respect of
the Business are pending before the Equal Employment Opportunity Commission or
any other Governmental Authority responsible for the prevention of unlawful
employment practices that has or can be reasonably expected to have a Material
Adverse Effect.
4.11 COMPLIANCE WITH LAW; PERMITS.
(a) Except as set forth in Schedule 4.11, Seller has, since
January 1, 1999, conducted the Business and operations of the Business in
compliance with all applicable provisions of any laws, statutes, ordinances or
regulations and such operations are not in violation of any Requirement of Law
applicable to the Business, which non-compliance or violation has or can be
reasonably expected to have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.11, (i) Seller has all
licenses, permits, orders, approvals and other authorizations of or from all
Governmental Authorities which are necessary in the conduct of the Business as
presently being conducted ("Permits"), (ii) such Permits are in full force and
effect, and (iii) no violations or claimed violations are pending before any
Governmental Authority with respect to such Permits except any such violation or
claimed violation as would not be required to be set forth on Schedule 4.7.
(c) Except as set forth in Schedule 4.11: (A) to the Knowledge of
Seller, neither the Business nor any employees engaged in the Business is or
during the past three years has been under administrative, civil or criminal
investigation, indictment or information by any Governmental Authority with
respect to any alleged irregularity, misstatement or omission arising under or
relating to any Government Contract, and (B) during the past three years, Seller
has not made a voluntary disclosure to any Governmental Authority with respect
to any alleged irregularity, misstatement or omission arising under or relating
to any Government Contract of the Business.
4.12 ASSETS OF THE BUSINESS. Except for any Excluded Assets, the Assets
and the rights conferred by the Ancillary Agreements comprise all of the
properties, assets (including, without limitation, computer software and
licenses therefor) and rights of Seller necessary and sufficient to the conduct
of the Business as presently conducted and are adequate for Buyer to conduct the
27
Business on a basis consistent with past practice as an internal organization of
Seller, and except for the Assets listed on Schedule 4.12, no Assets are shared
by the Business with another division of Seller or another business of Seller.
4.13 GOVERNMENT CONTRACTS. Except as set forth on Schedule 4.13:
(a) To the Knowledge of Seller, Seller has (i) complied with all
material terms and conditions of each Government Contract; (ii) complied in all
material respects with all requirements of all laws or agreements pertaining to
each Government Contract and (iii) all representations and certifications
executed, acknowledged or set forth in or pertaining to each Government Contract
were complete and correct in all material respects as of their effective date
and Seller has complied in all material respects with all such representations
and certifications.
(b) Seller has not received a final decision of a contracting
officer or prime contractor asserting any claim or equitable adjustment against
Seller with respect to any Government Contract of the Business; and there are no
material disputes as to which Seller has received notice in writing under any
other federal statute with respect to any Government Contract of the Business.
(c) Seller has not received any written notice of the intention of
any contracting officer, prime contractor, subcontractor or other person to
terminate any Government Contract of the Business for either convenience or
default. Seller has not received any show cause notices, cure notices, or
negative determinations of responsibility with respect to any Government
Contract of the Business. Neither any Governmental Authority nor any prime
contractor, subcontractor or other person has notified Seller, either in writing
or, to the Knowledge of Seller, orally, that Seller has breached or violated any
(i) law or certification pertaining to any Government Contract, or (ii) where
such breach or violation, individually or in the aggregate with all other such
breaches or violations, would have a Material Adverse Effect, representation,
clause, provision or requirement pertaining to any Government Contract.
(d) Seller has not asserted any claim or request for equitable
adjustment requesting money, interpretation of contract terms (where any
reasonably likely interpretation, individually or in the aggregate with all
other such interpretations, would have a Material Adverse Effect), or other
relief under any Government Contract of the Business. To the Knowledge of
Seller, no material cost incurred by Seller or any of its subsidiaries
pertaining to any Government Contract has been questioned or challenged by
representatives of the Administrative Contracting Officer or the Defense
Contract Audit Agency; is, to the Knowledge of Seller, the subject of any
investigation;, or has been disallowed by any Governmental Authority. No amount
of money due to Seller pertaining to any Government Contract has been withheld
or set off nor has any claim been made to withhold or set off money, and, to the
Knowledge of Seller, Seller is entitled to all progress payments received with
respect thereto.
(e) Seller has not been debarred or suspended from participation
in the award of contracts with the Department of Defense or any other
Governmental Authority (excluding for this purpose ineligibility to bid on
certain contracts due to generally applicable bidding requirements) that relate
to or affect the Business. To the Knowledge of Seller, there exist no
28
facts or circumstances that would warrant suspension or debarment or the finding
of non-responsibility or ineligibility on the part of Seller that relate to or
affect the Business. Neither Seller nor any director, officer, nor, to the
Knowledge of Seller, any agent or employee, of Seller directly or indirectly has
with respect to the Business (i) used any funds for contributions, gifts,
entertainment or other expenses relating to political or governmental activity
in violation of any law where such violation, individually or in the aggregate
with all other such violations, would have a Material Adverse Effect, (ii) made
any payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns in violation for any law, or
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
(iii) violated the Truth in Negotiations Act (10 U.S.C. Section 2306a, 41 U.S.C.
Section 254(d)) or (iv) made any other payment in violation of any Law where
such violation, individually or in the aggregate with all other such violations,
would have a Material Adverse Effect. Seller has in place written polices
requiring all foreign agents and sales consultants to agree in writing not to
violate any provision of the Foreign Corrupt Practices Act of 1977, as amended,
or the OECD's Convention on Combating Bribery of Foreign Officials in
International Business Transactions, and Seller uses its reasonable best efforts
to ensure compliance with such policies.
(f) No suspension or debarment action has been commenced against
the Business with respect to any Government Contract of the Business. To the
Knowledge of Seller, neither Seller nor any of its directors, officers, or
employees, is or during the past three years has been under administrative,
civil or criminal investigation, indictment or information by any Governmental
Authority with respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract, and during the past three
years, Seller has not made a voluntary disclosure to any Governmental Authority
with respect to any alleged irregularity, misstatement or omission arising under
or relating to a Government Contract.
4.14 BUSINESS RELATIONSHIPS WITH AFFILIATES. Schedule 4.14 describes all
contracts and transactions between the Business and any other administrative or
business unit of Seller since January 1, 2000, other than transfers of cash
pursuant to Seller's cash management system. After the Closing, except as
contemplated hereby and by the Ancillary Agreements, the Business will not have
any obligations to Seller or any of its Affiliates.
4.15 INSURANCE. Schedule 4.15 sets forth all insurance with third parties
providing insurance coverage for employees, properties or assets of the
Business, including policies of life, disability, fire, theft, workers
compensation, employee fidelity and casualty and liability insurance. All such
policies are in full force and effect as of the date hereof. Furthermore, except
as set forth in Schedule 4.15, (a) Seller has not received any notice of
cancellation or non-renewal of any such policy or arrangement nor is the
termination of any such policies or arrangements threatened, (b) there is no
claim pending under any of such policies or arrangements as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
arrangements, (c) Seller has not received any notice from any of its insurance
carriers that any insurance premiums will be increased in the fixture or that
any insurance coverage presently provided for will not be available to the
Seller in the fixture on substantially the same terms as now in effect and (d)
none of such policies or arrangements provides for any retrospective premium
adjustment, experienced-based liability or loss sharing arrangement affecting
the Business.
29
4.16 RECORDS. To the Knowledge of Seller, the Records are complete and
accurate in all material respects and have been made available as requested by
Buyer.
4.17 INVENTORY. All of the inventories of the Business, other than
inventories of the Business which are reflected in the EACs used in preparation
of the Balance Sheet and the Closing Statement of Assets and Liabilities,
consist of a quality usable and salable in the ordinary and usual course of
business, except for items of obsolete materials and materials of below-standard
quality, all of which items have been written off or written down on the Balance
Sheet to fair market value or for which adequate reserves have been provided
therein.
4.18 FIRPTA. Seller is not a "foreign person" as defined in Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended.
Seller makes no warranty as to merchantability of any of the Assets or of
their fitness for a particular purpose except as provided herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Buyer has all requisite
corporate power and authority to enter into the Transaction Documents and to
consummate the Transactions. All corporate acts and other proceedings required
to be taken by Buyer to authorize the execution, delivery and performance of the
Transaction Documents and the Transactions have been duly and properly taken.
This Agreement has been, and the Transaction Documents, when executed, will be,
duly executed and delivered by Buyer and constitute valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or by general principles (regardless of
whether such enforceability is considered in a proceeding in equity or law).
(b) The execution and delivery of this Agreement does not and of
the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of the Buyer under, any provision of (i) the Certificate of Incorporation
or By-Laws of Buyer, (ii) any Contractual Obligation of Buyer or (iii) any
judgment, order or decree or, subject to the matters described in clauses
(A)-(D) of paragraph (c) below, statute, law, ordinance, rule or regulation
applicable to Buyer or its property or assets.
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(c) No material consent, approval, license, permit order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other Governmental Authority is required
to be obtained or made by or with respect to Buyer or its Affiliates in
connection with the execution and delivery of the Transaction Documents or the
consummation by Buyer of the Transactions, other than (A) compliance with and
filings and notifications under applicable state environmental laws, (B)
compliance with and filings under the HSR Act and (C) those that may be required
solely by reason of Seller's (as opposed to any other third party's)
participation in the transactions contemplated hereby.
5.2 ACTIONS AND PROCEEDINGS, ETC. There are no: (a) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or (b) actions, suits, claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the knowledge of Buyer, threatened against Buyer in either case that are
reasonably likely to materially and adversely affect the ability of Buyer to
enter into and perform its obligations under this Agreement.
5.3 BUYER'S ACKNOWLEDGMENT. Buyer acknowledges and agrees that, (a)
other than the representations and warranties of Seller specifically contained
in this Agreement or in the Ancillary Agreements, there are no representations
or warranties of Seller either expressed or implied with respect to Seller, the
Business or the Transactions, (b) it shall have a right to indemnification
solely as provided in Article X hereof and shall have no claim or right to
indemnification with respect to any information, documents or materials
furnished by either Seller or any of its officers, directors, employees, agents
or advisors, or otherwise available to Buyer, and (c) any cost estimates,
projections or other predictions contained or referred to in the disclosure
schedules to this Agreement or in the information provided to Buyer or any of
its employees, agents or representatives were prepared for internal planning
purposes only and are not and shall not be deemed to be representations or
warranties of Seller or any Affiliate thereof.
5.4 AVAILABLE FUNDS. Buyer has furnished to Seller a true and correct
copy of the commitment letter dated June 20, 2001 from First Union National Bank
to Buyer (the "Commitment Letter"). The Commitment Letter is in full force and
effect on the date hereof, and Buyer is aware of no facts which would reasonably
be expected to result in its inability to satisfy the borrowing conditions
referred to therein as of the Closing Date. Based on the facts as of the date
hereof, the funds available pursuant to the Commitment Letter will be
sufficient, with the funds of Buyer, to make payment of the Purchase Price and
pay all expenses necessary for consummation of the transactions contemplated
hereby.
ARTICLE VI
COVENANTS OF SELLER
Seller covenants and agrees as follows:
6.1 ACCESS. Subject to the provisions of Section 7.1 hereof, prior to
the Closing, Seller will give Buyer and its representatives, employees, counsel
and accountants reasonable access during normal business hours and upon
reasonable notice, to the personnel, properties,
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books and records of the Business for purposes of investigating its assets,
operations, prospects, obligations and liabilities; PROVIDED, HOWEVER, (i) that
such access does not unreasonably disrupt the normal operations of the Business,
and (ii) that Seller is under no obligation to disclose to Buyer any
information, the disclosure of which is restricted by Contract or the
Requirement of Law, except in strict compliance with the applicable Contract or
Requirement of Law and (C) any information as to which the attorney-client
privilege may be available, until a mutually satisfactory joint defense
agreement has been executed by Buyer and Seller.
6.2 ORDINARY CONDUCT. Except as contemplated by this Agreement or as set
forth in Schedule 6.2, from the date hereof to the Closing, Seller agrees to
cause the business of the Business to be conducted in the ordinary course in
substantially the same manner as presently conducted and will make all
reasonable efforts, consistent with past practices, to preserve relationships
with employees, customers, suppliers and others with whom the Business deals.
Seller will not take any of the following actions without the prior written
consent of Buyer, which consent will not be unreasonably withheld or delayed:
(i) transfer any person identified on Schedule 9.1 to another
business of Seller (other than as required by Law or by the terms of any
collective bargaining agreement) or transfer any employee of another
Seller business to the Business, except as may be legally required;
(ii) except in the ordinary course of business, or as required to
comply with applicable law enter into, adopt, amend or terminate any
bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
Business Employee or (except, in the case of employees who are not
officers, for normal compensation increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense),
increase in any manner the compensation or benefits of any Business
Employee or pay any benefit to any Business Employee not required by any
plan or arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, restricted stock, stock
appreciation rights or performance units);
(iii) subject to any Lien, other than Permitted Liens, any of the
material assets (whether tangible or intangible) of the Business;
(iv) acquire any assets or sell, assign, transfer, convey, lease or
otherwise dispose of any of the assets (except, in each case, for fair
consideration in the ordinary course of business consistent with past
practice or pursuant to existing contractual obligations) of the Seller,
relating to the Business;
(v) enter into any commitment for capital expenditures relating to
the Business not contemplated by the capital expenditure budget of Seller
heretofore provided to the Buyer;
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(vi) modify, amend or terminate any of its material Contracts or
waive, release or assign any material rights or claims, except in the
ordinary course of business and consistent with past practice;
(vii) lease, license, mortgage, pledge, or encumber any assets other
than in the ordinary and usual course of business and consistent with the
past practice or transfer, sell or dispose of any assets other than in the
ordinary and usual course of business and consistent with past practice;
(viii) other than in the ordinary course of business, terminate,
modify, amend or waive compliance with any material provision of, any of
the Contracts, or fail to take any reasonable action necessary to preserve
the benefits of any Contract to the Business;
(ix) acquire, purchase or otherwise obtain any additional assets or
provisions, whether inventory, labor or otherwise, in advance of current
Contract requirements;
(x) pay, repurchase, discharge or satisfy any of its claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction thereof in the ordinary course of business and consistent
with past practice;
(xi) make any Tax election other than in ordinary course of business
and consistent with past practice or compromise any Tax liability;
(xii) transfer or license to any Person, other than Buyer, or
otherwise extend, amend or modify in any material respect, any rights to
any Assigned Intellectual Property or Exclusive Intellectual Property (as
those terms are defined in the Intellectual Property Agreement), or enter
into grants to future patent rights or other intellectual property, other
than non-exclusive licenses in the ordinary course of business and
consistent with past practices, with respect to the Assigned Intellectual
Property and Exclusive Intellectual Property, or disclose any Assigned
Intellectual Property or Exclusive Intellectual Property, except pursuant
to confidentiality agreements consistent with past practices;
(xiii) enter into, modify or terminate any labor or collective
bargaining agreement relating to the Business or, through negotiation or
otherwise, make any commitment or incur any liability to any labor
organization relating to Business Employees, except in the ordinary course
of business;
(xiv) enter into any transaction or make or enter into any Contract
relating to the Business which by reason of its size or otherwise is not
in the ordinary course of business;
(xv) with respect to the Business, authorize, propose, enter into or
agree to enter into any acquisition of a material amount of assets, any
disposition of a material
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amount of assets or any release or relinquishment of any material contract
rights not in the ordinary course of business; or
(xvi) take, or agree in writing or otherwise to take, any of the
actions described above in this Section 6.2.
6.3 INSURANCE; ADMINISTRATION OF INSURANCE. Seller shall keep, or cause
to be kept, all insurance policies presently maintained relating to the Business
and its properties, or replacements therefor, in full force and effect through
the close of business on the Closing Date. Following the Closing, (i) Seller,
upon Buyer's request, shall cooperate with and use its commercially reasonable
efforts to assist Buyer in the assertion, perfection and collection of any
proceeds to which it may be entitled under any insurance policy in effect prior
to the Closing Date; and (ii) Seller shall provide Buyer access to insurance
policies in effect prior to the Closing Date to the extent that any such
policies apply to Assumed Liabilities. Buyer shall reimburse Seller for any
out-of-pocket costs incurred by it pursuant to the preceding sentence.
6.4 ACCOUNTS RECEIVABLE. For a period of sixty (60) days after the
Closing, on the first business day of each week after the Closing Date, and
thereafter, promptly following receipt of proceeds from accounts receivable of
the Business, Seller agrees to promptly forward to Buyer any and all proceeds
from accounts receivable of the Business that are received by Seller after 12:01
A.M. on the Closing Date.
6.5 CONFIDENTIAL INFORMATION. On and after the day of the Closing,
Seller will hold, and will cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents ("Representatives") to
hold, in confidence, unless compelled to disclose by any Requirement of Law, all
confidential documents and information concerning the Business (including any
confidential information or documents provided to it pursuant to Section 8.6 and
any trade secrets or other proprietary information forming a part of the
Intellectual Property) (the "Confidential Information"), except to the extent
that such information is (a) in the public domain through no fault of Seller or
any of its Representatives, (b) later lawfully acquired by Seller on a
non-confidential basis from sources other than Buyer or any of its Affiliates or
(c) was developed independently by Seller without access to the confidential
information. The obligation of Seller to hold any such information in confidence
shall be satisfied if it exercises the same care with respect to such
information as Seller would take to preserve the confidentiality of its own
similar information.
6.6 SELLER'S NON-COMPETE. Seller agrees that for a period of five years
from and after the Closing Date, neither it nor any of its Subsidiaries will,
directly or indirectly, through equity ownership or otherwise, own, manage,
control or operate any business which competes, directly or indirectly, with
Buyer: (a) in the manufacture of products substantially of the kind manufactured
by the Business at the Closing Date ("Competitive Products"); or (b) with
respect to any of the contracts or programs reflected in those portions of
Seller's MD&SC 2001 Operating/Long Range Business Plan, dated September 11,
2000, pertaining to the Business (the "OP/LRP"), a copy of which has been
provided to Buyer prior to the date hereof; PROVIDED HOWEVER, that nothing
herein shall prohibit:
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(i) the provision of existing products and services by Seller
through any of its Subsidiaries;
(ii) the provision of design, engineering or systems integration
services by Seller or any of its Subsidiaries;
(iii) any bid, proposal or contract for the provision of an
integrated product or system offering to a customer in which a contract or
program reflected in the OP/LRP may contemplate the provision of
components; provided that neither Seller nor any of its Subsidiaries
manufactures Competitive Products in connection therewith;
(iv) any investment of less than 10% of the equity securities (as
determined at the time of investment) in a Person if the Seller does not
actively participate in the management, supervision or conduct of such
Person, whether through membership or participation in such Person's board
of directors, governing committee, management or otherwise;
(v) any acquisition by the Seller or any of its Subsidiaries of
another Person which is engaged in the manufacture of Competitive
Products, if such activity represents less than 25% of such Person's
revenues and less than 25% of such Person's assets, and if the Seller or
such subsidiary acts diligently to divest such competitive activity in a
commercially reasonable manner.
(vi) any investment of up to 10% in another Person if the Seller (i)
determines in good faith that such investment is primarily motivated by
the receipt by the Seller or one of its Affiliates, or a reasonable
expectation that the Seller or one of its Affiliates will receive, a
contract of significance (in relation to the amount of the investment) for
the provision of goods and/or services, to such Person and (ii) enters
into appropriate arrangements reasonably satisfactory to Buyer to assure
that it will not participate in the management, supervision or conduct of
the business of such Person; PROVIDED that no such arrangement shall be
necessary if the Seller's participation is limited to activities that
directly affect the Seller's performance as a provider of goods and/or
services to such Person and the Seller maintains appropriate firewalls and
similar measures designed to ensure that any information that the Seller
receives from such participation is not used by the Seller to engage,
directly or indirectly, in the manufacture and sale of Competitive
Products.
(vii) Seller's equity ownership and participation in the management
of HRL LLC; PROVIDED HOWEVER, neither Seller nor any of its Subsidiaries
shall obtain another license for Uncooled MicroBolometer from Honeywell,
Inc. after the assignment of such license to Buyer pursuant to Section
2.1(d).
6.7 NO SOLICITATION. (a) Seller shall not (and Seller shall use its
reasonable best efforts to cause the officers, directors, employees,
representatives and agents of Seller, the Business and
35
each Affiliate and representative of Seller including investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any Person or group (other than Buyer, any of its Affiliates or
representatives) concerning any Acquisition Proposal. Seller shall not approve
or recommend, or propose to approve or recommend any Acquisition Proposal, or
enter into any agreement with respect to any Acquisition Proposal. Upon
execution of this Agreement, Seller shall immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and Seller shall request (or if Seller has
the contractual right to do so, demand) the return of all documents, analyses,
financial statements, projections, descriptions and other data previous
furnished to others in connection with Seller's efforts to sell the Company.
Seller shall immediately notify Buyer of the existence of any proposal or
inquiry received by Seller after the date hereof, and Seller shall immediately
communicate to Buyer the terms of any proposal or inquiry which Seller may
receive and the identity of the party making such proposal or inquiry.
"Acquisition Proposal" shall mean any proposal or offer made by any Person other
than Buyer or any subsidiary of Buyer to acquire all or a substantial part of
the business, properties and/or Assets of the Business, whether by merger,
tender offer, exchange offer, sale of assets or similar transactions involving
the Seller, but shall not include a proposal or offer on terms which do not
interfere with the consummation of the Transactions provided for herein.
6.8 SELLER'S COOPERATION FOR AUDITS. If requested by Buyer, Seller will,
at Buyer's expense, promptly cooperate and cause its auditors to prepare such
audited financial statements of the Business as Buyer may require for compliance
with applicable regulations of the SEC.
6.9 ENVIRONMENTAL AND RELATED MATTERS.
(a) Prior to Closing, Seller shall provide to Buyer copies of
environmental reports Seller has in its possession concerning the Business and
Leased Premises, including but not limited to the Phase I report prepared by
ENSR. At Buyer's request, Seller also will provide Buyer access to other
records, reports, permits and other documents that Seller has in its possession
relating to the environmental condition of the Properties. Other than those set
forth above in Section 4.9, Seller makes no warranties or representations,
express or implied, regarding the information and findings of the environmental
reports or other documents and information provided to Buyer. The reports and
documents were not prepared for Buyer or in anticipation of this particular
transaction. Buyer acknowledges that all environmental reports were prepared
solely for Seller's use and benefit.
(b) Seller agrees that it shall retain responsibility, at its sole
cost and expense, to correct, obtain and/or resolve: (i) the conditional
authorization for elementary neutralization for Building 241; and (ii) the City
of Anaheim Fire Department Correction Notice dated August 4, 1999 related to
piping of hazardous production materials. Seller shall correct such matters, to
the extent reasonably practicable, prior to the Closing Date, but if it cannot
correct such matters prior to Closing Date, shall take all commercially
reasonable steps to expeditiously correct, obtain and/or resolve such matters
after the Closing Date.
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(c) From and after the Closing, if any environmental conditions
are discovered at, on, under or migrating from the Leased Premises that may
require investigation and/or remediation, there shall be a rebuttable
presumption that such conditions are the result of activities or occurrences
that existed or arose prior to the Closing Date. Seller shall bear the burden of
proof if it contends that such conditions are a result of the actions of Buyer
or its agents, employees, contractors or invitees after the Closing.
6.10 PURCHASE ORDERS. With respect to each of the systems or other
contracts for which the Business is providing only a portion of the services or
products thereunder pursuant to one or more inter-company work authorizations,
including without limitation, the Contracts set forth on Schedule 6.10,
effective as of the Closing, Buyer will provide and Seller will accept purchase
orders for the provision of such products and services after the Closing. Such
purchase orders will be substantially in the form of the purchase order set
forth on Exhibit D hereto and shall have terms consistent with terms set forth
in such schedule.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
7.1 CONFIDENTIALITY. Buyer acknowledges that the information being
provided to it by Seller is subject to the terms of a confidentiality agreement
dated January 16, 2001 between Buyer and Seller (the "Confidentiality
Agreement"), the terms of which are incorporated herein by reference. Effective
upon, and only upon, the Closing, the Confidentiality Agreement will terminate;
PROVIDED, HOWEVER, that Buyer acknowledges that the Confidentiality Agreement
will terminate only with respect to information relating solely to the Business;
and PROVIDED, FURTHER, HOWEVER, that Buyer acknowledges that any and all other
information provided to it by Seller or Seller's representatives concerning
Seller shall remain subject to the terms and conditions of the Confidentiality
Agreement after the date of the Closing.
7.2 WAIVER OF BULK SALES LAW COMPLIANCE. Buyer hereby waives compliance
by Seller with the requirements, if any, of Article 6 of the Uniform Commercial
Code as in force in any state in which Assets are located and all other similar
Requirements of Law applicable to bulk sales and transfers, to the extent
applicable to the Transactions.
7.3 RELEASE GUARANTIES. Effective on the Closing Date, Buyer shall take
all such actions as may be required to obtain the release of Seller from all
guaranties of indebtedness or other obligations pertaining to the Business.
7.4 COST ACCOUNTING STANDARDS. Buyer shall operate the Business in
compliance with the United States Government Cost Accounting Standards as
described in Federal Acquisition Regulations parts 52.230-2 and 52.230-6 and as
set forth in 48 CFR Chapter 99, at least until all Government Contracts as set
forth in Schedule 4.6 have been completed.
7.5 FINANCING AGREEMENTS.
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(a) Buyer shall use all commercially reasonable efforts to obtain
financing in an amount at least equal to the Purchase Price, including by (i)
executing on or before August 31, 2001 (or such later date to which the
Commitment Letter may be extended) definitive agreements (the "Financing
Agreements") for the credit facilities contemplated by the Commitment Letter,
and (ii) taking all such actions as may be required to satisfy the conditions
for borrowing thereunder.
(b) Without limiting the generality of the foregoing, in the event
that at any time funds are not, or it has become apparent that funds will not
be, made available pursuant to the Commitment Letter and the Financing
Agreements so as to enable Buyer to proceed with the Closing in a timely manner,
Buyer shall (i) use all commercially reasonable efforts to obtain alternative
funding in an amount at least equal to the Purchase Price and (ii) shall
continue to use all commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
(c) Buyer shall take all actions necessary to enforce any or all
of its rights, and comply with all of its obligations under the Commitment
Letter and Financing Agreements, except to the extent consented to by the Seller
in writing.
ARTICLE VIII
MUTUAL COVENANTS
Each of Seller and Buyer covenant and agree as follows:
8.1 HSR FILINGS; PERMITS; NOVATIONS AND CONSENTS.
(a) Seller and Buyer will as promptly as practicable, but in no
event later than five Business Days following the execution and delivery of this
Agreement, file with the United States Federal Trade Commission (the "FTC") and
the United States Department of Justice (the "DOJ") the notification and report
form, if any, required for the Transactions and any supplemental information
requested in connection therewith pursuant to the HSR Act. Any such notification
and report form and supplemental information will be in substantial compliance
with the requirements of the HSR Act. Seller and Buyer shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. Seller and Buyer shall keep each other apprised of
the status of any communications with, and inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any such
inquiry or request. Seller and Buyer will use all reasonable efforts to obtain
any clearance required under the HSR Act for the Transactions.
(b) As promptly as practicable after the date hereof, Buyer and
Seller shall make all other filings with governmental bodies and other
regulatory authorities, and use all
38
reasonable efforts to obtain all permits, approvals, authorizations and consents
of third parties, required to consummate the Transactions and to allow Buyer to
operate the Business after the Closing substantially in the same manner as such
Business is conducted in the ordinary course immediately prior to the Closing.
Buyer and Seller shall furnish promptly to each other all information that is
not otherwise available to the other party and that such party may reasonably
request in connection with any such filing. Buyer and Seller shall use all
reasonable efforts to obtain such consents to the assignment of the Assigned
Contracts as may be required.
(c) In the event that any and all novations, transfer or other
agreements, consents, approvals or waivers necessary for the assignments,
transfer or novation of any Assigned Contract, or any claim, right or benefit
arising thereunder or resulting therefrom, shall not have been obtained prior to
the Closing Date, then as of the Closing, this Agreement, to the extent
permitted by law, shall constitute full and equitable assignment by Seller to
Buyer of all of Seller's right, title and interest in and to, and all of
Seller's obligations and liabilities under, such Assigned Contracts, and Buyer
shall be deemed Seller's agent for purpose of completing, fulfilling and
discharging all of Seller's liabilities under any such Assigned Contract. The
parties shall take all necessary steps and actions to provide Buyer with the
benefits of such Assigned Contracts, and to relieve Seller of the performance
and other obligations thereunder, including entry into subcontracts for the
performance thereof. Buyer agrees to pay, perform and discharge, and indemnify
Seller against and hold Seller harmless from, all obligations and liabilities of
Seller relating to such performance or failure to perform under such Assigned
Contracts.
(d) In the event Seller shall be unable to make the equitable
assignment described in Section 8.1(c), or if such attempted assignment would
give rise to any right of termination, or would otherwise adversely affect the
rights of Seller or Buyer under such Assigned Contract, or would not assign all
Seller's rights thereunder at the Closing, Seller and Buyer shall continue to
cooperate and use their reasonable best efforts to provide Buyer with all such
rights. To the extent that any such consents and waivers are not obtained, or
until the impediments to such assignment are resolved, Seller shall use its
reasonable best efforts to (i) provide to Buyer, at the request of Buyer, the
benefits of any such Assigned Contract to the extent related to the Business,
(ii) cooperate in any lawful arrangement designed to provide such benefits to
Buyer and (iii) enforce, at the request of and for the account of Buyer, any
rights of Seller arising from any such Assigned Contract against any third
Person (including any Governmental Authority) including the right to elect to
terminate in accordance with the terms thereof upon the advice of Buyer. To the
extent that Buyer is provided the benefits of any Assigned Contract referred to
herein (whether from Seller or otherwise), Buyer shall perform the obligations
of Seller thereunder or in connection therewith, and Buyer agrees to pay,
perform and discharge, and indemnify Seller against and hold Seller harmless
from, all obligations and liabilities of Seller relating to such performance or
failure to perform, and in the event of a failure of such indemnity, Seller
shall cease to be obligated under this Agreement in respect of the Assigned
Contract which is the subject of such failure.
(e) Prior to Closing, Seller shall use its reasonable best efforts
to facilitate an agreement between Buyer and Rockwell Science Center
("Rockwell"), which agreement shall maintain for the benefit of Buyer the
cooperative arrangements (including the supply of certain components and certain
intellectual property) currently enjoyed by Seller in connection with the
39
Business. In the event that, (i) such agreement between Buyer and Rockwell has
not been reached prior to Closing and (ii) Seller has not entered into an
agreement with Rockwell reasonably satisfactory and assignable to Buyer, until
the second anniversary of the Closing Date, Seller shall use its reasonable best
efforts to purchase from Rockwell, pursuant to Seller's existing agreement and
understandings with Rockwell, such of the products, intellectual property and
services currently provided by Rockwell for use in the Business as Buyer may
reasonably request for the requirements of the Business. Products, intellectual
property and services so purchased shall be resold by Seller to Buyer at
Seller's cost.
8.2 REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement (including the limitations set forth in Section 8.1), each party will
use all reasonable efforts to cause the Closing to occur as promptly as
practicable. Each of Seller and Buyer will promptly notify the other promptly
after learning of the occurrence of any event or circumstance which would
reasonably be expected to cause any condition to Closing not to be satisfied.
8.3 PUBLICITY. Seller and Buyer agree that, from the date hereof through
the Closing Date, no public release or announcement concerning the Transactions
shall be issued without the prior consent of each party (which consent shall not
be unreasonably withheld or delayed), except as such release or announcement may
be required by any Requirement of Law or by any listing agreement with a
national securities exchange, in which case the party required to make the
release or announcement shall allow the other party reasonable time to comment
on such release or announcement in advance of such issuance. Notwithstanding the
foregoing, Seller shall provide Buyer access to, and facilitate meetings with,
the employees of the Business for the purposes of making announcements
concerning, and preparing for the consummation of, the Transactions.
8.4 COOPERATION AFTER CLOSING. Buyer and Seller shall cooperate with
each other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to ensure the
orderly transition of the Business to Buyer and to minimize any disruption to
the respective businesses of Seller or the Business that might result from the
Transactions. Neither party shall be required by this Section 8.4 to take any
action that would unreasonably interfere with the conduct of its business.
8.5 RECORDS. On the Closing Date, Seller shall deliver or cause to be
delivered to Buyer all Records and materials that would be Records if located at
the Leased Premises which are material to and used primarily in the Business (to
the extent not then in the possession of the Business), except any Records
relating to Excluded Liabilities (including, without limitation, to Seller's Tax
liability or to any litigation or claim not assumed by Buyer hereunder). After
the Closing, upon reasonable written notice and at Buyer's sole expense, Seller
agrees to furnish or cause to be furnished to Buyer and its representatives
(including its auditors), access at reasonable times and during normal business
hours to such information relating to the Business in such Seller's possession
as is reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any Tax returns, reports or forms or the defense of
any Tax claim or assessment, and will permit Buyer or such representatives to
make abstracts from, or copies of, any of such information, or to obtain
temporary possession of any thereof as may be reasonably required by Buyer at
Buyer's sole cost and expense; PROVIDED, HOWEVER, that such
40
access does not unreasonably disrupt the normal operations of such Seller. For a
period of seven (7) years following the Closing, Seller will retain all of such
information relating to the Business.
8.6 ACCESS TO FORMER BUSINESS RECORDS. For a period of five (5) years
following the Closing, Buyer will retain all Records. During such period, upon
reasonable written notice and at Seller's sole expense Buyer will afford
authorized representatives of Seller (including its auditors) access to such
Records in Buyer's possession at reasonable times and during normal business
hours at the principal business office of the Business, or at such other
location or locations at which such Records may be stored or maintained from
time to time, and will permit such representatives to make abstracts from, or
copies of, any of such Records, as may be reasonably required by Seller at such
Seller's sole cost and expense; PROVIDED, HOWEVER, that such access does not
unreasonably disrupt the normal operations of Buyer. During such period, Buyer
will, at Seller's expense (limited, however, to Buyer's reasonable out-of-pocket
expenditures without regard to any employee cost or other overhead expenses),
cooperate with Seller in furnishing information, evidence, testimony, and other
reasonable assistance in connection with any action, proceeding, Tax audit, or
investigation to which such Seller or any of its Affiliates is subject relating
to the business of the Business prior to the Closing. Notwithstanding the
foregoing, while the existence of an adversarial proceeding between the parties
will not abrogate or suspend the provisions of this Section 8.6, as to Records
or information directly applicable pertinent to such dispute, the parties may
not utilize this Section 8.6 but rather, absent agreement, must utilize the
available rules of discovery. The term "Record" as used in this Section 8.6
shall include any data processing files or other computerized data.
8.7 USE OF TRADEMARK AND TRADE NAMES. Notwithstanding anything to the
contrary in this Agreement, Buyer may continue to use the trademarks and
tradename of Seller only to the extent provided for in the Intellectual Property
Agreement.
8.8 GOVERNMENT FURNISHED EQUIPMENTS.
(a) As soon as practicable after the Closing Date, Buyer shall return to
Seller, at Seller's expense, all personal property, equipment and fixtures
loaned, bailed or otherwise furnished by or on behalf of the U.S. Government
("GFE") which (i) were in the custody of Seller prior to the Closing Date, (ii)
are not related to any Assigned Contract, and (iii) will be, after the Closing
Date, in the custody of Buyer or are located on the Leased Premises (the "Seller
GFE"). Notwithstanding the foregoing, Buyer may retain certain items of Seller
GFE associated with the Ground Based Interceptor (GBI) test equipment
accountable to the Seller's National Missile Defense (NMD) contracts until
directed to return such items by the U.S. government or its agents, at which
time, Buyer shall return promptly such Seller GFE to the U.S. government or its
agents at Buyer's expense. While any Seller GFE is in the custody of Buyer or
located on the Leased Premises, Buyer shall use reasonable care to protect such
Seller GFE from damage, theft or destruction. Buyer shall use the Seller GFE
only as authorized by the U.S. government or its agents.
(b) Schedule 8.8 identifies, a preliminary list (which may be updated or
modified from time to time by Seller prior to the Closing Date) of GFE furnished
to the Business that (i) relate to the Assigned Contracts and (ii) is or should
be in the possession of Seller as of the date
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hereof for use in connection with the Assigned Contracts (the "Assigned GFE").
Seller has complied in all material respects with all of its obligations
relating to the Assigned GFE. Immediately after signing, Seller will commence an
audit of the Assigned GFE, at Sellers expense, to ensure the accuracy of
Schedule 8.8, as updated or modified.. Any deficiencies uncovered by the audit
of Schedule 8.8 will be a liability of the Seller. The Parties agree, each at
its own expense, to use their reasonable best efforts to cooperate with each
other and with the United States Government to resolve any deficiencies
remaining as of the Closing Date. After the audit, Buyer shall promptly notify
Seller and the United States Government if any Assigned GFE, which was thought
to be missing, is later found by or is discovered to be in the possession of
Buyer. Notwithstanding the foregoing, Seller shall have no liability with
respect to any such found or discovered Assigned GFE.
ARTICLE IX
EMPLOYEE BENEFIT MATTERS
9.1 OFFER OF EMPLOYMENT. Buyer shall offer employment to each of the
Business Employees of Seller identified on Schedule 9.1 (subject to such changes
as may occur subsequent to the date hereof as the result of terminations,
retirements and transfers; PROVIDED that any changes as a result of transfers
shall be limited to transfers made by mutual agreement between the parties or by
any such employee covered by a collective bargaining agreement that provides
such employee the right to transfer to other jobs at Seller; PROVIDED FURTHER
that any changes as a result of terminations shall be mutually agreed upon by
the parties prior to the Closing Date). Seller agrees to provide to Buyer, in a
complete, diligent and timely manner, all relevant information as Buyer may
reasonably request with respect to compensation, service, and other information
relating to the employment of the Transferred Employees. Offers of employment to
Business Employees who are not subject to a collective bargaining agreement
shall be on economic terms which are set forth in Schedule 9.1(i). Buyer and
Seller shall comply with the requirements of the alternate procedure for the
preparation and filing of the employer Tax Returns and employee information
returns for successor employers set forth in Revenue Procedure 96-60, 1996-2
C.B. 399, or any amendment, modification or replacement thereof. If prior to the
Closing Date Buyer has negotiated a collective bargaining agreement with a union
representing Business Employees who are subject to a collective bargaining
agreement, the offers of employment to such Business Employees shall be on terms
consistent with such new collective bargaining agreement. Except as mutually
agreed upon by Seller and Buyer, neither Seller nor its Affiliates shall offer
employment to any Business Employee to whom Buyer is required to offer
employment pursuant to this Section 9.1 during the 18-month period following the
Closing Date. Neither Buyer nor any Affiliate of Buyer shall offer employment to
any Business Employee who does not become a Transferred Employee during the
18-month period following the Closing Date. Seller's employees who are on
approved leave of absence at the time they accept an offer of employment from
Buyer shall become Transferred Employees as of the date they return from such
leave of absence. Buyer agrees, for a period of eighteen (18) months following
the Closing Date, to provide the Transferred Non-Union Employees benefits as are
set forth in Schedule 9.1(i); PROVIDED, HOWEVER, Buyer shall not be obligated to
provide any such benefits to any terminated employee following the Closing Date.
Buyer shall have no
42
obligation or liability with respect to Former Business Employees or any
Business Employee who does not become a Transferred Employee. Nothing contained
herein shall require Buyer to continue the employment of any Transferred
Employee or provide benefits to any terminated employee following the Closing.
9.2 RETIREMENT PLANS AND OTHER BENEFITS.
(a) GENERALLY. Except as provided in Sections 9.2(b), (c), (d) and
(h) below, Seller shall retain all assets and liabilities relating to the
retirement plans of Seller.
(b) UNION PENSION PLANS. In the event that Buyer is providing
pension benefits to Transferred Union Employees following the Closing Date under
any pension plan of the Buyer (the "Buyer's Union Pension Plan") pursuant to a
collective bargaining agreement between Buyer and the union representing the
Transferred Union Employees, Buyer shall establish or maintain defined benefit
pension plans to be qualified under Section 401(a) of the Code for the benefit
of Transferred Union Employees, and Transferred Non-Union Employees who have an
accrued benefit under the Seller's Union Pension Plans (as defined below),
including credit for past service with Seller for eligibility, vesting, early
retirement and, contingent upon the transfer of assets in accordance with this
Section 9.2(b), benefit accrual previously recognized under The Boeing Company
North American Retirement Plan ("Seller's Union Pension Plan").
Subject to Section 4 of Schedule 9.2, Seller shall cause assets to
be transferred from the Seller's Union Pension Plan to Buyer's Union Pension
Plan within 120 days after the Closing Date in an amount representing the
Estimated Sold Business Asset Share (as determined under Schedule 9.2). The
amount of this initial transfer shall be deducted from the final transfer amount
when determining the remaining amount to be transferred hereunder. Within thirty
(30) days following the final determination of the Sold Business Asset Share (as
defined and determined under Schedule 9.2), or, if later, in the event the
Internal Revenue Service raises any objections to the transfer, the date as of
which the Internal Revenue Service withdraws such objections or is satisfied
that the terms of the transfer have been modified to the extent necessary to
meet such objections, Seller shall cause assets to be transferred from the
Seller's Union Pension Plan to the Buyer's Union Pension Plan or Buyer shall
cause assets to be transferred from the Buyer's Union Pension Plan to the
Seller's Union Pension Plan in accordance with Section 2 of Schedule 9.2. All
transfers shall be in accordance with the requirements of Section 414(1) of the
Code and Cost Accounting Standard 9904.413-50, including the first sentence of
Cost Accounting Standard 9904.413-50(c)(12)(v).
Seller and Buyer shall timely file Forms 5310-A in respect to the
transfers contemplated by this Section 9.2(b) as required by law.
All assets transferred under this Section 9.2(b) or Schedule 9.2
shall be made in cash or cash equivalents. From and after the Closing Date until
the initial transfer of assets as determined under Schedule 9.2, any benefits
that are payable to Transferred Union Employees under the Buyer's Union Pension
Plan shall be paid or continue to be paid out of the Seller's Union Pension
Plan, and the amounts to be transferred to the Buyer's Union Pension Plan shall
43
be reduced by the amount of such payments. After the initial transfer of assets,
any benefits that are payable to Transferred Employees shall be paid under the
Buyer's Union Pension Plan.
The Buyer's Union Pension Plan shall be liable for benefits with
respect to service recognized under the Seller's Union Pension Plan prior to the
Closing Date with respect to Transferred Employees, contingent upon the transfer
of assets in accordance with this Section 9.2(b). Buyer agrees that neither
Seller nor the Seller's Union Pension Plan shall have any further responsibility
with respect to the assets and liabilities so transferred, including without
limitation, obligations following such transfers with respect to the benefits
accrued by the Transferred Union Employees under the Seller's Union Pension
Plan.
Notwithstanding the foregoing, Seller shall have no obligation to
transfer assets pursuant to this Section 9.2(b) if Buyer's Union Pension Plan
does not provide credit for such Transferred Union Employees' service with
Seller for purposes of benefit accrual or if Buyer fails to negotiate a
collective bargaining agreement with the union representing such Transferred
Union Employees within one year of the Closing Date.
(c) NON-UNION PENSION PLANS. Effective as of the Closing Date,
Buyer shall establish or maintain defined benefit pension plans to be qualified
under Section 401(a) of the Code for the benefit of Transferred Non-Union
Employees (the "Buyer's Non-Union Pension Plans"), including credit for past
service with Seller for eligibility, vesting, early retirement and, contingent
upon the transfer of assets in accordance with this Section 9.2(c), benefit
accrual previously recognized under The Boeing Company Pension Value Plan for
Heritage MDC Employees and The Boeing Company Pension Value Plan (the "Seller's
Non-Union Pension Plans").
Subject to Section 4 of Schedule 9.2, Seller shall cause assets to
be transferred from the Seller's Non-Union Pension Plans to Buyer's Non-Union
Pension Plans within 120 days after the Closing Date in an amount representing
the Estimated Sold Business Asset Share (as defined and determined under
Schedule 9.2). The amount of this initial transfer shall be deducted from the
final transfer amount when determining the remaining amount to be transferred
hereunder. Within thirty (30) days following the final determination of the Sold
Business Asset Share as determined under Schedule 9.2, or, if later in the event
the Internal Revenue Service raises any objections to the transfer, the date as
of which the Internal Revenue Service withdraws such objections or is satisfied
that the terms of the transfer have been modified to the extent necessary to
meet such objections, Seller shall cause assets to be transferred from the
Seller's Non-Union Pension Plans to the Buyer's Non-Union Pension Plans or Buyer
shall cause assets to be transferred from the Buyer's Non-Union Pension Plans to
the Seller's Non-Union Pension Plans in accordance with Section 2 of Schedule
9.2. All transfers shall be in accordance with the requirements of Section
414(1) of the Code and Cost Accounting Standard 9904.413-50, including the first
sentence of Cost Accounting Standard 9904.413-50(c)(12)(v).
Seller and Buyer shall timely file Forms 5310-A in respect to the
transfers contemplated by this Section 9.2(c) as required by law.
44
All assets transferred under this Section 9.2(c) or Schedule 9.2
shall be made in cash or cash equivalents. From and after the Closing Date until
the initial transfer of assets as determined under Schedule 9.2, any benefits
that are payable to Transferred Non-Union Employees under the Buyer's Non-Union
Pension Plans shall be paid or continue to be paid out of the Seller's Non-Union
Pension Plans, and the amounts to be transferred to the Buyer's Non-Union
Pension Plans shall be reduced by the amount of such payments. After the initial
transfer of assets, any benefits that are payable to Transferred Non-Union
Employees shall be paid under the Buyer's Non-Union Pension Plans.
The Buyer's Non-Union Pension Plans shall be liable for benefits
with respect to service recognized under the Seller's Non-Union Pension Plans
prior to the Closing Date with respect to Transferred Non-Union Employees,
contingent upon the transfer of assets in accordance with this Section 9.2(c).
Buyer agrees that neither Seller nor the Seller's Non-Union Pension Plans shall
have any further responsibility with respect to the assets and liabilities so
transferred, including without limitation, obligations following such transfers
with respect to the benefits accrued by the Transferred Non-Union Employees
under the Seller's Non-Union Pension Plans.
(d) SAVINGS PLANS. Effective as of the Closing Date, Transferred
Non-Union Employees shall no longer actively participate in The Boeing Company
Voluntary Investment Plan (the "Seller's Savings Plan"). Buyer shall designate a
tax-qualified defined contribution plan of Buyer or one of its Affiliates (such
plan(s), the "Buyer's Savings Plan") that either (i) currently provides for the
receipt from Transferred Non-Union Employees of "eligible rollover
distributions" (as such term is defined under Section 402 of the Code) or (ii)
shall be amended as soon as practicable following the Closing Date to provide
for the receipt from the Transferred Non-Union Employees of eligible rollover
distributions. As soon as practicable following the Closing Date, (x) Buyer
shall provide Seller with such documents and other information as Seller shall
reasonably request to assure itself that Buyer's Savings Plan provides for the
receipt of eligible rollover distributions and (y) Seller shall provide Buyer
with such documents and other information as Buyer shall reasonably request to
assure itself that the accounts of the Transferred Non-Union Employees under the
Seller's Savings Plan, if distributed to such Transferred Non-Union Employees,
would be eligible rollover distributions. Each Transferred Non-Union Employee
who is a participant in the Seller's Savings Plan shall be given the opportunity
to receive a distribution of his or her account balance and shall be given the
opportunity to elect to "roll over" such account balance to the Buyer's Savings
Plan, subject to and in accordance with the provisions of such plans and
applicable law. As soon as practical following the Closing Date, Buyer shall
also amend its Plans or adopt a Board resolution to provide for a matching
contribution as set forth in Schedule 9.1(ii).
(e) FLEXIBLE BENEFITS PLAN. Effective as of the first day of the
month following the Closing Date, Buyer shall allow eligible Transferred
Employees to participate in Buyer's flexible benefits plan and Seller shall
spin-off and Buyer shall assume the health care and dependent care account
balances under Seller's flexible benefits plans with respect to Transferred
Employees to the Buyer's flexible spending account plan.
45
(f) VACATION AND SICK PAY. Seller shall pay all accrued vacation
balances for Transferred Union Employees in accordance with the existing
collective bargaining agreement between Seller and the union representing the
Transferred Union Employees. Buyer agrees to recognize all accrued vacation pay
balances of Transferred Non-Union Employees and to recognize such employees'
service with Seller and its Affiliates for purposes of vacation pay accrual
under Buyer's policies regarding vacation pay. Seller agrees to transfer to
Buyer an amount representing the accrued vacation pay of all Transferred
Non-Union Employees as of the Closing Date. Buyer agrees to allow all
Transferred Non-Union Employees to carry over all accrued vacation pay for a
period of twenty-four (24) months regardless of any maximums for such carryovers
under Buyer's vacation policies. Twenty-four months after the Closing Date,
Transferred Non-Union Employees will become subject to any maximum carryover for
vacation pay under Buyer's vacation policies, and Transferred Non-Union
Employees will be paid for any accrued vacation pay in excess of such maximum.
All Transferred Union Employees will be paid by Seller for any accrued sick pay
as of the Closing Date in accordance with the terms of the applicable collective
bargaining agreement between Seller and the union representing the Transferred
Union Employees. Any accrued sick pay for Transferred Non-Union Employees will
be forfeited in accordance with Seller's sick pay policies. Transferred
Non-Union Employees will become eligible for sick pay under Buyer's sick pay
policies as of the Closing Date.
(g) BONUS, RETENTION AND INCENTIVE PAY PLANS. Seller shall retain
all liability incurred prior to the Closing Date with respect to all of Seller's
bonus, retention and incentive pay plans with respect to Transferred Employees
and shall pay out all such liabilities to Transferred Employees to the extent
required by and in accordance with the terms of the applicable programs. In
addition, Seller shall retain all liability with respect to Seller's bonus,
retention and incentive pay plans with respect to Transferred Employees whether
incurred before, on or after the Closing Date.
(h) CREDIT FOR SERVICE WITH SELLER UNDER BUYER'S PLANS. Subject to
other provisions of this Section 9.2, Buyer and its affiliates and successors
shall provide credit under Buyer's retirement and welfare plans to Transferred
Employees for their service with Seller and its predecessors and affiliates for
purposes of determining eligibility to participate, vesting, and eligibility to
retire (but not for purposes of benefit accrual), to the same extent that such
service was recognized under the Seller Plans that most closely resemble such
Buyer plans. For purposes of such Buyer plans, Buyer shall recognize all amounts
applied to deductibles, co-payments and out-of-pocket maximums with respect to
Transferred Employees under the Seller Plans during the plan year in which the
Closing Date occurs, and will not impose any limitations on coverage for
pre-existing conditions, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Closing Date under any welfare plan of Seller or any
Subsidiary of Seller in which Transferred Employees participate immediately
prior to the Closing Date. Seller agrees to furnish Buyer with any information
necessary to meet its obligations under Section 9.2(h).
9.3 RECOGNITION OF UNION. If and to the extent required by law, Buyer
shall recognize the union that represented any Business Employees as the
exclusive bargaining agent of those employees and shall seek to negotiate with
that union a collective bargaining agreement.
46
9.4 WORKERS' COMPENSATION. Effective as of the Closing Date, Buyer shall
take all necessary and appropriate action to adopt or designate a workers
compensation program to cover Transferred Employees at least comparable to the
one currently provided by Seller in respect of the Transferred Employees.
Buyer's program shall be responsible for all claims for benefits incurred by
Transferred Employees after the Closing Date.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY SELLER. Subject to the terms and conditions of
this Article X, Seller shall indemnify Buyer and each of its Affiliates,
officers, directors, employees and agents against, and hold them harmless from
any Loss suffered or incurred by any such Indemnified Person to the extent
arising from any and all damage, loss, liability and expense (including, without
limitation, reasonable attorneys' fees and other expenses of investigation and
any action, suit or proceeding), and including interest, incurred or suffered by
Buyer, any Affiliate of Buyer, arising from (a) if the Closing occurs, any
breach of any representation or warranty of Seller contained in this Agreement
which survives the Closing or in any certificate, instrument or other document
delivered pursuant hereto, (b) any material breach of any covenant of Seller
contained in this Agreement or (c) if the Closing occurs, the existence of, or
the failure of Seller to pay, perform and discharge when due, any of the
Excluded Liabilities (including, without limitation, any Losses as a result of
the failure of Seller to comply with any Bulk Sales Laws referred to in Section
7.2), including any Excluded Environmental Liabilities and the Seller's failure
to timely discharge any of the Excluded Environmental Liabilities; PROVIDED,
HOWEVER, that Seller shall not be liable under Section 10.1(a) in respect of any
misrepresentation or breach of warranty unless the aggregate amount of Losses
with respect to all misrepresentations and breaches of warranties exceeds
$2,000,000 (and then only to the extent of any such excess); PROVIDED FURTHER,
HOWEVER, that Seller's aggregate liability under Section 10.1(a) and under
Section 10.8 below shall in no event exceed an amount equal to the Purchase
Price less the Closing Net Assets subject to any adjustment as they may be
adjusted pursuant to Section 2.5 (such ceiling on aggregate liability not to be
less than 25% of the Purchase Price). The $2,000,000 limitation in the preceding
sentence does not apply to claims for indemnification pursuant to Section 4.7 of
the Intellectual Property Agreement and any such claims shall not be considered
in determining whether such $2,000,000 limitation has been satisfied.
10.2 INDEMNIFICATION BY BUYER. Subject to the terms and conditions of
this Article X, Buyer shall indemnify Seller and each of its Affiliates,
officers, directors, employees and agents against, and hold them harmless from
any Loss suffered or incurred by any such Indemnified Person to the extent
arising from any and all damage, loss, liability and expense (including, without
limitation, reasonable attorneys' fees and other expenses of investigation and
any action, suit or proceeding), and including interest, incurred or suffered by
Seller, any Affiliate of Seller, arising from (a) if the Closing occurs, any
breach of any representation or warranty of Buyer contained in this Agreement
which survives the Closing or in any certificate, instrument or other document
delivered pursuant hereto or in connection herewith, (b) any material breach of
any covenant of Buyer contained in this Agreement requiring performance after
the Closing Date or (c) if the Closing occurs, the existence of, or the failure
of Buyer to pay, perform and discharge
47
when due, any of the Assumed Liabilities; PROVIDED, HOWEVER, that Buyer shall
not be liable under Section 10.2(a) in respect of any misrepresentation or
breach of warranty unless the aggregate amount of Losses with respect to all
misrepresentations and breaches of warranties exceeds $2,000,000 (and then only
to the extent of any such excess).
10.3 LOSSES NET OF INSURANCE, TAXES, ETC.
(a) The amount of any Loss for which indemnification is provided
under this Article X shall be net of any amounts actually recovered by the
Indemnified Person under insurance policies with respect to such Loss and of any
related reserve in respect thereof reflected on the final Closing Statement of
Assets and Liabilities.
(b) Any amounts otherwise payable to an Indemnified Person with
respect to indemnification for Loss incurred by such Indemnified Person shall be
reduced by any Tax Benefit (as defined below) received by such Indemnified
Person. The Indemnified Person shall endeavor in good faith (provided that this
shall not be deemed to require the commencement of legal proceedings) as is
reasonably necessary in order to obtain any Tax Benefit that may be available as
a result of any Losses hereunder; PROVIDED, HOWEVER, the Indemnified Party shall
not be required to take any action that it determines, in its reasonable
discretion, could adversely affect it (or any of its Affiliates) (including,
without limitation, by reducing other Tax benefits or otherwise increasing the
liability for Taxes of it (or any of its Affiliates)). A "Tax Benefit" shall
arise if, after taking into account United States federal income tax
consequences of the payment or incurrence by such Indemnified Person of the
Losses and any income tax arising out of such Indemnified Person's receipt of
indemnification pursuant to Article X hereof in respect of such Losses, such
Indemnified Person realizes an actual savings; PROVIDED, HOWEVER, that if and to
the extent that any such Tax Benefit is ultimately denied by a taxing authority,
the Indemnifying Person shall pay to such Indemnified Person the amount of such
denied Tax Benefit plus interest at the rate applied by such taxing authority to
underpayments of Tax from the date that interest begins to accrue on the
underpayment of Tax as a result of the denial of such Tax Benefit until the date
that the amount of such Tax Benefit (plus interest) is paid to such Indemnified
Person by the Indemnifying Person.
In the event that any consolidated, combined or unitary group which
includes the Indemnified Person has a consolidated, combined or unitary net
operating loss ("NOL") for United States federal income tax purposes for (or a
NOL carryover or investment tax credit carryover to) the year in which the
Losses were incurred or paid, the Tax Benefit attributable to the Losses shall
be deemed to be realized, if ever, only in the year or years in which there is
an actual reduction in the amount of Taxes paid by such consolidated group over
what would have been paid in the absence of such NOL (or a NOL carryover or
investment tax credit carryover) (that is, the reduction in Taxes shall be
treated as occurring first as a result of the portion of such NOL or NOL
carryover or investment tax credit carryover attributable to or in an amount
equal to such Losses); PROVIDED, HOWEVER, that no Tax Benefit attributable to
the Losses shall be deemed realized at any time after the fifth anniversary of
the date on which an indemnity payment is made by the Indemnifying Party. Any
indemnity payment under this Agreement shall be treated as an adjustment to
Purchase Price for Tax purposes.
48
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, no Indemnifying Person shall, in any event, be liable to the other
party for any consequential damages, including, but not limited to, loss of
revenue or income, cost of capital, diminution in value, or loss of business
reputation or opportunity relating to the breach or alleged breach of this
Agreement. Each party agrees that it will not seek punitive damages as to any
matter under, relating to or arising out of the Transactions. The foregoing
shall not be interpreted, however, to limit indemnification for Losses incurred
as a result of the assertion by a claimant (other than the parties hereto and
their successors and assigns) in a Third-Party Claim of claims for damages of
the foregoing type.
(d) Except as expressly set forth (i) in Section 11.5 as to
equitable remedies, (ii) Sections 4.6 through 4.8 of the Intellectual Property
Agreement, and (iii) Sections 4.1 through 4.4 of Transition Services Agreement,
the parties hereto agree that the indemnification provisions of this Article X
are intended to provide the exclusive remedy as to all Losses either may incur
arising from or relating to the Transactions, and each party hereby waives, to
the extent they may do so, any other rights or remedies that may arise under any
applicable statute, rule or regulation.
10.4 TERMINATION OF INDEMNIFICATION. The obligations to indemnify and
hold harmless a party hereto, pursuant to Sections 10.1(a) and 10.2(a), shall
terminate when the applicable representation or warranty terminates pursuant to
Section 10.6; PROVIDED, HOWEVER, that such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which the person to
be indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice (stating in reasonable detail the
basis of such claim) to the Indemnifying Person.
10.5 PROCEDURES RELATING TO INDEMNIFICATION. In order for an Indemnified
Person to be entitled to any indemnification provided for under this Agreement
in respect of, arising out of or involving a claim or demand made by any Person
against the Indemnified Person (a "Third-Party Claim"), such Indemnified Person
must notify the Indemnifying Person in writing, and in reasonable detail, of the
Third-Party Claim within 10 Business Days after receipt by such Indemnified
Person of written notice of the Third-Party Claim; PROVIDED, HOWEVER, that
failure to give such notification shall not affect the indemnification provided
hereunder in the absence of actual and material prejudice as a result of such
failure. Thereafter, the Indemnified Person shall promptly deliver to the
Indemnifying Person copies of all notices and documents (including court papers)
received by the Indemnified Person relating to the Third-Party Claim.
If a Third-Party Claim is made against the Indemnified Person, the
Indemnifying Person shall have the right to assume the defense (at the
Indemnifying Person's expense) of any such Third-Party Claim through counsel of
its own choosing by so notifying the Indemnified Person within 10 Business Days
after the first receipt by the Indemnifying Person of such notice described
above; PROVIDED, HOWEVER, that any such counsel shall be reasonably satisfactory
to the Indemnified Person. If, under applicable standards of professional
conduct, a conflict with respect to any significant issue between the
Indemnified Person and Indemnifying Person exists in respect of such Third-Party
Claim, the Indemnifying Person shall pay the reasonable fees and expenses of
such additional counsel as may be required to be retained in order to eliminate
such
49
conflict. The Indemnifying Person will be liable for the fees and expenses of
counsel employed by the Indemnified Person for any period during which the
Indemnifying Person has not assumed the defense of any Third-Party Claim (other
than during any period in which the Indemnified Person will have failed to give
notice of a Third-Party Claim as provided above). If the Indemnifying Person
elects to assume the defense of a Third-Party Claim, the Indemnified Person
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Person, it being understood that the Indemnifying Person shall
control such defense.
If the Indemnifying Person chooses to defend or prosecute any Third-Party
Claim, all the parties hereto shall cooperate in the defense or prosecution
thereof, which cooperation shall include, to the extent reasonably requested by
the Indemnifying Person, the retention, and the provision to the Indemnifying
Person, of records and information reasonably relevant to such Third-Party
Claim, and making employees of the Business available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder.
Notwithstanding the foregoing, in the event a Third-Party Claim is made
against the Indemnified Person as to which such Indemnified Person is entitled
to seek indemnification hereunder and (i) such Indemnified Person reasonably
concludes that the Indemnifying Person is not diligently defending such
Indemnified Person or (ii) if the Indemnified Person believes in good faith that
there is a reasonable possibility that a Third-Party Claim may materially and
adversely affect the ongoing business of the Indemnified Person, then the
Indemnified Person shall be entitled to settle, compromise and defend (and to
employ counsel of its choice) such Third-Party Claims; PROVIDED, HOWEVER, the
Indemnifying Person shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Indemnified Person, it being understood that the Indemnified Person shall
control such defense. If the Indemnified Person does not settle, compromise and
defend such Third-Party Claim, the Indemnifying Person shall then have the right
to contest and defend (but not settle) such Third-Party Claim.
If the Indemnifying Person elects to defend or prosecute any Third-Party
Claim, the Indemnified Person shall agree to any settlement, compromise or
discharge of such Third-Party Claim the Indemnifying Person may recommend and
that, by its terms, discharges the Indemnified Person and its Affiliates from
full liability in connection with such Third-Party Claim; PROVIDED, HOWEVER,
that, the Indemnifying Person shall not consent to, and the Indemnified Person
shall not be required to agree to, the entry of any judgment or enter into any
settlement that (i) provides for injunctive or other non-monetary relief
affecting the Indemnified Person or its Affiliates or (ii) does not include as
an unconditional term thereof the giving of a release from all liability with
respect to such Third-Party Claim by each claimant or plaintiff to each
Indemnified Person that is the subject of such Third-Party Claim. The settlement
or consent to entry of judgment shall require the prior approval of the
Indemnified Person. For purposes of this subparagraph, "consent to entry of
judgment" shall be read to encompass failure by the Indemnifying Person to
finally pursue and perfect any rights of appeal, including discretionary
appellate review in the nature of certiorari petition or otherwise.
50
10.6 SURVIVAL OF REPRESENTATIONS. The representations and warranties in
this Agreement and in any other document delivered in connection herewith
(excluding the Intellectual Property Agreement) shall survive the Closing solely
for purposes of Sections 10.1(a) and 10.2(a) but shall terminate at the close of
business on the second anniversary of the Closing Date; provided that (i) the
representations and warranties contained in Section 4.1 shall survive
indefinitely, (ii) the representations and warranties contained in Section 4.3
shall survive until 90 days after expiration of the statute of limitations
applicable to the matters covered thereby (giving effect to any waiver,
mitigation or extension thereof) and (iii) the representations and warranties
contained in Section 4.9 shall survive until three years following the Closing.
For clarification purposes and to avoid any ambiguity, the parties hereto agree
and understand that there is no time limit or other cut-off with respect to the
performance of and indemnification obligations for Assumed Liabilities and
Excluded Liabilities.
10.7 DIRCM I CLAIM. If, prior to the Closing Date, BAE SYSTEMS Avionics
Limited has not agreed to a mutual resolution with Seller with respect to the
DIRCM I Claim, subject to the terms and conditions of Sections 10.3 and 10.5,
Seller shall indemnify Buyer and each of its Affiliates, officers, directors,
employees and agents against, and hold them harmless from, 50% of the excess of
the aggregate Losses suffered or incurred by any such Indemnified Person to the
extent arising from the DIRCM I Claim over the aggregate Losses reflected in the
relevant EACs used in the preparation of the Closing Statement of Assets and
Liabilities. If the aggregate of all such Losses arising from the DIRCM I Claim
is less than the aggregate Losses reflected in the relevant EACs used in the
preparation of the Closing Statement of Assets and Liabilities, Buyer will pay
Seller thirty percent (30%) of such difference.
10.8 SPECIAL INDEMNITY PROVISIONS. This Section 10.8 sets forth
agreements with respect to indemnification for the matters described herein. Any
matter as to which indemnification is provided in this Section 10.8 shall not be
subject to indemnification pursuant to Sections 10.1 or 10.2; PROVIDED HOWEVER
that nothing herein shall preclude a claim for indemnification for any Losses
arising from a breach of Section 4.11 or 4.13 that are in addition to the Losses
covered by this Section 10.8.
(a) Seller shall indemnify Buyer and each of its Affiliates,
officers, directors, employees and agents against, and hold them harmless from,
any Loss which Buyer may incur as the result of any liability of Buyer pursuant
to any Assigned Contract by reason of termination of such contract for default
based on actions of Seller or events occurring prior to the Closing.
(b) Seller shall indemnify Buyer and hold it harmless from the
effect of any reductions in allowable overhead costs (including Taxes) under any
Assigned Contracts for any period prior to the Closing. In the event of an
increase in such allowable overhead costs in respect of any period prior to
Closing, Buyer shall promptly make payment to Seller of all incremental amounts
received by it as the result of such increase. Seller shall promptly notify
Buyer of any changes to billing rates or other changes in facts or circumstances
which affects such allowable overhead costs.
(c) Seller shall indemnify Buyer against, and hold it harmless
from, 80% of the excess of the aggregate Losses suffered or incurred by any such
Indemnified Person to the
51
extent arising from (i) lawsuits or claims described in Section 4.7 relating to
Assigned Contracts and (ii) Warranty and Latent Defect Claims, in each case over
the amounts provided therefor in the relevant EACs as of the Closing. As used
herein, "Warranty and Latent Defect Claims" refers to all claims based upon
warranties contained in, and latent defects in products shipped pursuant to, any
of the Assigned Contracts which are fixed price contracts, provided that that
such claims arise solely from pre-closing events or actions of Seller. In the
event Losses from claims subject to this Section 10.8(c) are less than the
amounts provided therefor in the relevant EACs used in preparation of the
Closing, Buyer shall make payment to Seller of 80% of the amount of such
difference.
(d) The indemnification provisions in Section 10.8(a) and (c)
above shall terminate and be of no further effect on the second anniversary of
the Closing hereunder, except as to any matters of which Buyer has given written
notice to Seller, or Seller has given written notice to Buyer, describing the
underlying claim in reasonable detail, prior to such date.
(e) The aggregate liability of Seller to Buyer pursuant to this
Section 10.8 and Section 10.1(a) shall not exceed an amount equal to the
Purchase Price less the Closing Net Assets subject to any adjustment as they may
be adjusted pursuant to Section 2.5 (such ceiling on aggregate liability not to
be less than 25% of the Purchase Price).
10.9 ACCESS TO INFORMATION; COOPERATION. After the Closing Date and for
so long thereafter as any indemnification claim may arise pursuant to Section
10.7 or 10.8, Seller shall be entitled, from time to time, to review and receive
copies of quarterly EACs related to the DIRCM I Claim or any of the Assigned
Contracts as to which an indemnification or payment claim may arise pursuant to
Section 10.8(c) above, including without limitation, any documents or other
information related thereto. Buyer shall promptly deliver to Seller copies of
all notices and documents (including court papers) received by Buyer relating to
any claims which affect or have a reasonable likelihood of affecting the EACs
referred to in the preceding sentence. Seller shall have a reasonable right to
inspect business records or other documents in the possession of Buyer and shall
have reasonable access to personnel of Buyer, for the purpose of obtaining
information relevant to any actual or potential claim for indemnification
pursuant to Section 10.7 and 10.8; PROVIDED, HOWEVER, (i) that such access does
not unreasonably disrupt the normal operations of the Business, and (ii) that
Buyer is under no obligation to disclose to Seller any information, the
disclosure of which is restricted by Contract or the Requirement of Law, except
in strict compliance with the applicable Contract or Requirement of Law and any
information as to which the attorney-client privilege may be available, until a
mutually satisfactory joint defense agreement has been executed by Buyer and
Seller. In addition, the parties shall cooperate, in good faith, to keep each
other apprised of any developments which may affect their rights and
obligations, and in seeking resolution of any matters with respect to which
indemnification is provided in Section 10.8.
52
ARTICLE XI
GENERAL PROVISIONS
11.1 ASSIGNMENT. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by either party other than by the
operation of law or in connection with a merger or sale of substantially all the
assets of such party without the prior written consent of the other, which
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that Buyer may
(a) assign its rights to purchase the Assets hereunder to an Affiliate of Buyer
and (b) collaterally assign its rights hereunder to its lenders (and affiliates
thereof) under its Financing Agreements to secure obligations thereto, in each
case without the prior written consent of Seller; PROVIDED FURTHER, HOWEVER,
that no assignment shall limit or affect Buyer's obligations hereunder.
11.2 NO THIRD-PARTY BENEFICIARIES. Except as provided in Article X as to
Indemnified Persons, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
11.3 TERMINATION.
(a) Anything contained herein to the contrary notwithstanding,
this Agreement may be terminated (except as set forth in Section 11.3(c)) and
the Transactions abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and Buyer;
(ii) by either Seller or Buyer if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
(which order decree, ruling or other action the parties hereto shall use
their reasonable effort to lift), which permanently restrains, enjoins or
otherwise prohibits the acquisition by Buyer of the Assets and the
Business and such order, decree, ruling or other action shall become final
and non-appealable.
(iii) by Seller if (1) any of the conditions set forth in
Section 3.2 shall have become incapable of fulfillment, and shall not have
been waived by Seller, (2) the condition in Section 3.2(c) shall not have
been satisfied on or before 120 days from the date of this Agreement, or
(3) the Buyer shall have breached in any material respect any of its
representations, warranties, or covenants contained in this Agreement,
which breach cannot be or has not been cured within thirty (30) days after
written notice of such breach has been delivered to the Buyer;
(iv) by Buyer if (1) any of the conditions set forth in
Section 3.1 shall have become incapable of fulfillment, and shall not have
been waived by Buyer, or (2) Seller shall have breached in any material
respect any representation, warranty, covenant or other agreement
contained in this Agreement, which breach cannot be or has
53
not been cured within thirty (30) days after written notice of such breach
has been delivered to the Seller; or
(v) by either party hereto, if the Closing does not occur on
or before the close of business on December 3, 2001, PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 11.3(a)(v)
shall not be available to any party whose willful failure or delay in
fulfilling any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing to occur on or
prior to such date.
(b) In the event of termination by Seller or Buyer pursuant to
this Section 11.3, written notice thereof shall forthwith be given to the other
party and the Transactions shall be terminated, without further action by either
party. If the Transactions are terminated as provided herein:
(i) Buyer shall return all documents and copies and other
material received from Seller relating to the Transactions, whether so
obtained before or after the execution hereof, to Seller; and
(ii) all confidential information received by Buyer with
respect to the Business and Seller shall be treated in accordance with the
Confidentiality Agreement which shall remain in full force and effect
notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 11.3, this
Agreement shall become void and of no further force and effect, except for the
provisions of (i) Section 7.1 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (ii) Section 8.3
relating to publicity, (iii) Section 11.4 relating to certain expenses and fee,
(iv) Section 11.11 relating to finder's fees and broker's fees and (v) this
Section 11.3. Nothing in this Section 11.3 shall be deemed to release either
party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of either party to compel
specific performance by the other party of its obligations under this Agreement.
11.4 EXPENSES AND FEE. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise provided in Section 2.7 or
elsewhere in this Agreement, all fees, costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees, costs or expenses. Notwithstanding the foregoing,
Buyer shall pay Seller a fee in immediately available funds equal to $2,500,000
promptly, but in no event later than five business days, after the termination
of this Agreement if (a) such termination is the result of failure to satisfy
the condition in Section 3.1(e); (b) the failure to satisfy the condition in
Section 3.1(e) is not the result of any failure by Seller to perform its
covenants hereunder; and (b) no other condition to the obligations of Buyer in
Section 3.1 has not been satisfied, other than those conditions which Seller is
in a position to satisfy at the Closing.
54
11.5 EQUITABLE RELIEF. The parties hereto agree that in the event of
either party's breach of its obligations to consummate the Transactions, damages
may prove insufficient and the non-breaching party should be entitled to the
remedy of specific performance.
11.6 AMENDMENTS. No amendment to this Agreement shall be effective unless
it shall be in writing and signed by the parties hereto.
11.7 NOTICES. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) IF TO BUYER, TO:
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, NJ 07054
Attention: Nina Laserson Dunn, Executive Vice
President, General Counsel and Secretary
Telephone: (973) 898-6020
Telecopier: (973) 898-0717
WITH A COPY TO:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Jeffrey Tindell
Telephone: (212) 735-3380
Telecopier: (212) 735-2000
(ii) IF TO SELLER, TO:
The Boeing Company
Space & Communications Group
PO Box 2515 WAS-08
Seal Beach, CA 90740-1515
Attention: Valerie Schurman
Vice President and Assistant General Counsel
Address for overnight courier:
55
WAS-08
2201 Seal Beach Boulevard
Seal Beach, CA 90740-1515
Telephone: (562) 797-1121
Telecopier: (562) 797-5049
WITH A COPY TO:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: Andrew E. Bogen
Telephone: (213) 229-7159
Telecopier: (213) 229-6159
11.8 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings contained in
this Agreement, in any Exhibit or Schedule hereto and in the table of contents
to this Agreement, are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Information set forth in
each Schedule specifically refers to the article and section of this Agreement
to which such information is responsive, and such information shall not be
deemed to have been disclosed with respect to any statement in any article and
section that is not qualified by reference to the pertinent Schedule or, except
with regard to information set forth on the face of any Schedule that makes
reasonably apparent its applicability to any other Schedule, with respect to any
other article or section of this Agreement or for any other purpose. The
Schedules shall not vary, change or alter the language of the representations
and warranties contained in this Agreement. All Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized terms used in any
Schedule or Exhibit, but not otherwise defined therein, shall have the meaning
as defined in this Agreement.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
11.10 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement
contain the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
agreements and understandings relating to such subject matter.
11.11 FEES. Each party hereto hereby represents and warrants that (a) the
only brokers or finders that have acted for such party in connection with this
Agreement or the transactions contemplated hereby or that may be entitled to any
brokerage fee, finder's fee or commission in respect thereof are Bear, Stearns &
Co. Inc. with respect to Buyer and Quarterdeck Investment Partners, Inc. with
respect to Seller, and (b) each of Buyer and Seller agrees that it will pay all
56
fees or commissions which may be payable to such firm(s) as are described in
clause (a) as relating to it.
11.12 SEVERABILITY. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
11.13 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
11.14 DISPUTE RESOLUTION. Except with respect to the matters described in
Sections 2.5, 2.8 and Schedule 9.2, which shall be resolved in accordance with
the terms thereof, and except as otherwise expressly set forth in the Ancillary
Agreements, resolution of any and all disputes arising from or in connection
with this Agreement or the Ancillary Agreements, whether based on contract,
tort, or otherwise (collectively, "Disputes"), shall be exclusively governed by
and settled in accordance with the provisions of this Section 11.14. The parties
hereto shall use all commercially reasonable efforts to settle all Disputes
without resorting to mediation, arbitration or otherwise. The party asserting a
Dispute shall deliver to the other party a written notice setting forth the
basis for the issue in detail, and identifying the section of this Agreement or
Definitive Agreement in question (the "Dispute Notice"). Within ten days of
receipt of a Dispute Notice, the issue shall be elevated to a designated panel
of four individuals, two representatives from each party (one who shall be a
business representative, and the other who shall be a technical or accounting
representative, as appropriate). Such representatives shall be empowered and
authorized to bind their respective companies with respect to the matter in
dispute, and to settle the issue on behalf of their respective companies. These
representatives shall, within 30 days of receipt of the Dispute Notice, confer
and in good faith make a reasonable effort to resolve the issue. If any Dispute
remains unsettled, a party hereto may commence proceedings hereunder by
delivering a written notice from a Senior Vice President or comparable executive
officer of such party (the "Demand") to the other parties providing reasonable
description of the Dispute to the others and expressly requesting arbitration
hereunder. Such Dispute shall be submitted to arbitration under the terms
hereof, which arbitration shall be final, conclusive and binding upon the
parties, their successors and assigns. The arbitration shall be conducted in Los
Angeles, California by three neutral arbitrators acting by majority vote (the
"Panel") selected by agreement of the parties not later than ten (10) days after
delivery of the Demand or, failing such agreement, appointed from the statewide
panel of full-time neutral arbitrators of the American Arbitration Association,
and pursuant to the commercial arbitration rules of the American Arbitration
Association (including the supplementary procedures for large complex disputes),
as amended from time to time (the "AAA Rules"). If an arbitrator so selected
becomes unable to serve, his or her successors shall be similarly selected or
appointed. The arbitration shall be conducted pursuant to the Federal
Arbitration Act and such procedures as the parties subject to such arbitration
(each, a "Party") may agree, or, in the absence of or failing such agreement,
pursuant to the AAA Rules. Notwithstanding the foregoing: (a) each Party shall
have the right to audit the books and records of the other Party that are
reasonably related to the Dispute;
57
(b) each Party shall provide to the other, reasonably in advance of any hearing,
copies of all documents which a Party intends to present in such hearing; (c)
each Party shall be discovery allowed to conduct reasonable discovery through
written document requests and depositions, the nature and extent of which
discovery shall be determined by the Parties; provided that if the Parties
cannot agree on the terms of such discovery, the nature and extent thereof shall
be determined by the Panel which shall take into account the needs of the
Parties and the purposes of arbitration to make discovery expeditious and cost
effective; (d) each Party shall be entitled to make an oral presentation to the
Panel; and (e) the Panel shall select as a resolution the position of either
Buyer or Seller for each item of disagreement and may not impose an alternative
resolution. The award shall be in writing and shall specify the factual and
legal basis for the award. The Panel shall apportion all costs and expenses of
arbitration, including the Panel's fees and expenses and fees and expenses of
experts, between the prevailing and non-prevailing Party as the Panel deems fair
and reasonable. The parties hereto agree that monetary damages may be inadequate
and that any party by whom this Agreement or Definitive Agreement is enforceable
shall be entitled to seek specific performance of the arbitrators' decision from
a court of competent jurisdiction. Any arbitration award shall be binding and
enforceable against the parties hereto and judgment may be entered thereon in
any court of competent jurisdiction.
58
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER:
THE BOEING COMPANY
By:
--------------------------------------
Name:
---------------------------------
Title:
BUYER:
DRS TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
59
EXHIBIT A
INTELLECTUAL PROPERTY AGREEMENT
A-1
INTELLECTUAL PROPERTY AGREEMENT
THIS INTELLECTUAL PROPERTY AGREEMENT (as the same may be amended from time
to time, this "Agreement"), dated as of August 3, 2001 ("Effective Date"),
between The Boeing Company, a Delaware corporation ("Seller") and DRS
Technologies, Inc., a Delaware corporation ("Buyer").
WHEREAS, Buyer and Seller are parties to that certain Asset Purchase
Agreement dated as of August 3, 2001 (the "Purchase Agreement");
WHEREAS, Seller is the owner or licensee of all the Intellectual Property
(as hereinafter defined) used in the Business (as defined below);
WHEREAS, Buyer is desirous of acquiring rights by assignment or license in
all such Intellectual Property that is used or held for use in the Business,
subject to, in the case of certain assigned Intellectual Property, a grantback
license to Seller of certain rights under such Intellectual Property to use such
Intellectual Property in connection with Seller's and its Subsidiaries' Retained
Businesses (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants contained herein and in the Asset
Purchase Agreement and other good and valuable consideration, the receipt of
which is hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise set forth herein, capitalized terms used in this
Agreement shall have the same meanings ascribed to them in the Purchase
Agreement. For purposes of this Agreement, the following capitalized terms shall
have the meanings assigned to them below:
1.1 "BUSINESS" means the Business, as that term is defined in the Purchase
Agreement.
1.2 "ASSIGNED INTELLECTUAL PROPERTY" means the Intellectual Property
identified in Schedule A hereto, existing on the Closing Date (as defined in the
Purchase Agreement) that (a) is exclusively used, held for use or practiced in
or for the Business, or (b) was originated, developed or created in or for the
Business and which is not Exclusive Intellectual Property, or Non-Exclusive
Intellectual Property.
1.3 "BUSINESS MARKS" means the Marks used in connection with the Business
that are being assigned to Buyer and are identified in Schedule A.
1.4 "CATEGORY A INTELLECTUAL PROPERTY" means any Assigned Intellectual
Property (Schedule A) other than Trade Secrets listed on Schedule A but
including Software embedded in any products, components or systems of the
Business as of the Closing Date.
A-2
1.5 "CONFIDENTIAL INFORMATION" means Confidential Information, as that
term is defined in the Purchase Agreement. Information that constitutes or is
protected as a Trade Secret that is included in the Assigned Intellectual
Property or Exclusive Intellectual Property shall be deemed Confidential
Information of Buyer.
1.6 "DISTRIBUTION AGREEMENT" means the Agreement and Plan of Distribution
dated as of December 6, 1996 among Rockwell International Corporation, New
Rockwell International Corporation, and various operating subsidiaries of
Rockwell International Corporation. For purposes of clarity, it is understood
that "the Company Group" referred to in the Distribution Agreement is the Seller
herein.
1.7 "EXCLUSIVE INTELLECTUAL PROPERTY" means the Intellectual Property
identified in Schedule B hereto existing on the Closing Date (as defined in the
Purchase Agreement) that is predominately used or practiced in or for the
Business.
1.8 "HONEYWELL LICENSE AGREEMENT" means the License and Technical Service
Agreement between Honeywell, Inc. and Rockwell International Corporation dated
September 8, 1995.
1.9 "INTELLECTUAL PROPERTY" means all rights in, to, or arising under or
out of any (i) Patents, patent applications, or invention disclosures; (ii)
copyrights or copyright applications and registrations; (iii) Trade Secrets,
(iv) mask works and registrations, (v) Software and (vi) all other intellectual
or industrial property of any kind or nature, in each case arising under or
protected by the laws of any country anywhere the world, but excluding any
Marks.
1.10 "KNOWLEDGE" has the same meaning as defined in the Purchase
Agreement.
1.11 "LICENSED MARKS" means those Marks used in connection with the
Business that are being licensed to Buyer, including those Marks identified in
Schedule C.
1.12 "MARKS" means fictional business names, trade names, trade dress
rights, registered and unregistered trademarks, service marks, logos, and
designs, slogans and general intangibles of like nature, together with goodwill,
registrations and applications relating to the foregoing, including any Internet
domain names, and applications therefor, and like intellectual property rights.
1.13 "NON-EXCLUSIVE INTELLECTUAL PROPERTY" means the Intellectual Property
identified in Schedule C hereto, existing on the Closing Date, which is used in
the Business and is directly related to or is also useful to a significant
degree in the Retained Businesses.
1.14 "PARTY" means Buyer or Seller and "PARTIES" means Buyer and Seller,
collectively.
1.15 "PATENTS" means all classes or types of patents, utility models and
design patents (including, without limitation, originals, divisions,
continuations, continuations-in-part,
A-3
extensions, re-examinations or reissues), and applications for these classes or
types of patent rights in all countries of the world.
1.16 "RETAINED BUSINESS" means the business of the Seller excluding the
Business as of the date hereof.
1.17 "ROCKWELL LICENSE" means the license rights granted to Seller under
Section 4.2(b) of the Distribution Agreement.
1.18 "SELLER PATENTS" means those Patents identified in Schedule C hereto,
including without limitation any patents that issue anywhere in the world in
respect of any patent applications identified in Schedule C hereto.
1.19 "SOFTWARE" means any and all (i) computer programs, including any and
all software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, and (iv) all documentation, including user
manuals and training documentation (including website content identified in
Schedules A, B, or C hereto), relating to any of the foregoing.
1.20 "TRADE SECRETS" means proprietary and confidential commercial and
technical information, including Confidential Information, know-how,
engineering, production and other designs, inventions, discoveries, concepts,
ideas, algorithms, models, methods, processes, drawings, specifications,
formulae, and other technology, databases and documentation thereof and other
proprietary and confidential information, including customer lists, in each case
excluding any rights in respect of any of the foregoing that comprise or are
protected by copyrights, mask work rights or Patents.
1.21 "TRANSFERRED INTELLECTUAL PROPERTY" means Assigned Intellectual
Property, Exclusive Intellectual Property, Non-Exclusive Intellectual
Property and Business Marks.
ARTICLE II
ASSIGNMENT OF ASSIGNED INTELLECTUAL PROPERTY,
EXCLUSIVE INTELLECTUAL PROPERTY AND BUSINESS MARKS
2.1 ASSIGNMENT OF ASSIGNED INTELLECTUAL PROPERTY, EXCLUSIVE INTELLECTUAL
PROPERTY AND BUSINESS MARKS. Subject to Section 3.1, Seller hereby sells,
assigns, transfers and conveys to Buyer, and shall cause each of its
Subsidiaries to sell, assign, transfer and convey to Buyer, as of the Closing
Date, all right, title and interest of Seller and such Subsidiaries in and to
the Assigned Intellectual Property, the Exclusive Intellectual Property, and to
the Business Marks, together with all appurtenant goodwill relating thereto.
A-4
2.2 FURTHER ASSURANCES. Promptly upon the reasonable request of Buyer,
Seller further agrees to execute and deliver, and shall cause each of its
Subsidiaries to execute and deliver, such additional documents and take such
other action as may be necessary or desirable to continue, secure, defend,
register, confirm, evidence and otherwise give full effect to and to perfect the
rights of Buyer under this Agreement, and hereby authorizes and appoints Buyer
and grants Buyer full power of attorney to execute, in the name and on behalf of
Seller and its Subsidiaries, all such documents necessary to perfect, affirm,
record and maintain title in Buyer, its successor, assigns or other legal
representatives to any of such Assigned Intellectual Property, Exclusive
Intellectual Property and Business Marks including but not limited to all
documents necessary to register in the name of Buyer the assignment of (i) each
patent, patent application, and invention disclosure identified in Schedules A
and B in the appropriate country or countries, (ii) each trademark, registration
and application listed in Schedules A and B and (iii) each trade name identified
in Schedules A and B.
2.3 AUTHORIZATION TO RECORD. Seller hereby authorizes the Commissioner of
Patents and Trademarks of the United States and each official holding a
corresponding position of authority in any country in which Seller owns one or
more patent or trademark registrations or has pending one or more patent or
trademark applications to issue and to record the title of Buyer as owner of all
right, title and interest in and to the patents, patent applications and
invention disclosures identified in Schedules A and B, the trademarks,
registrations and applications identified on Schedules A and B, and, if
necessary, the trade names identified in Schedules A and B.
ARTICLE III
LICENSES
3.1 LICENSE GRANT TO SELLER. To the full extent of its right to do so,
Buyer hereby grants to Seller and its Subsidiaries an irrevocable, fully-paid,
worldwide, perpetual, non-exclusive, nontransferable (except as provided in
Section 8.6), royalty-free license, without the right to sublicense
(a) Under the Exclusive Intellectual Property (Schedule B), other
than Software embedded in or delivered or deliverable with
products, systems or components included within the Business,
to make, have made, use (including operate and maintain),
copy, display, perform, import, sell, offer to sell, create
derivative works and modifications, distribute or otherwise
dispose of, in any manner and to any Person, products and
systems, other than Competitive Products, and perform or have
performed services, that incorporate or otherwise use the
Exclusive Intellectual Property, other than Software embedded
in or delivered or deliverable with products, systems or
components included within the Business. Notwithstanding the
foregoing, after five (5) years from the Closing Date there
shall be no restrictions on
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the use by Seller and its Subsidiaries of the Trade Secrets
listed in Schedule B.
3.2 LICENSE GRANT BY SELLER. To the full extent of its right to do so,
Seller hereby grants to Buyer, and shall cause any Subsidiary of Seller to
grant, a worldwide, perpetual, irrevocable, fully-paid, non-transferable (except
as provided in Section 8.6), royalty-free non-exclusive license in Non-Exclusive
Intellectual Property (Schedule C), with the right to sublicense to the extent
provided in Section 3.3:
to make, have made, use (including operate and maintain), copy, have
copied, display, perform, import, sell, offer to sell, create derivative
works and modifications, distribute or otherwise dispose of, in any manner
and to any Person, including without limitation any product, component or
system (and any future generations and derivatives of such products,
components and systems whether developed by or on behalf of Buyer)
included within Buyer's EOSG business and perform or have performed
services which incorporate or otherwise use the Non-Exclusive Intellectual
Property in connection with the Buyer's EOSG business.
3.3 SUBLICENSES.
(a) The license granted to Buyer in Section 3.2 in and to the
Non-Exclusive Intellectual Property shall include the right to sublicense to
Subsidiaries, joint venture partners and other third parties that are
participating in a teaming or other cooperative agreement or arrangement
involving the products or technologies of such third parties and Buyer or
independent contractors that have been engaged by Buyer to assist in the design
or development of products for Buyer or the provision of related services. Any
sublicense agreement entered into by Buyer shall be consistent with the terms of
this Agreement.
(b) Notwithstanding Section 3.3(a), no sublicense shall contain the
right to re-sublicense without prior written consent of Seller and sublicenses
shall be effective only if the permitted sublicensee has agreed in writing to be
bound by all of the limitations imposed under this Agreement with respect to
Confidential Information and the scope of the license granted hereunder. Upon
written request of Seller, Buyer will give Seller written notice identifying any
Subsidiary or other Person to which the Buyer believes a sublicense has been
effectively granted by Buyer. Any sublicense so granted shall be transferable to
a purchaser of substantially all of the assets of a sublicensed Subsidiary;
provided that such purchaser agrees in writing to be bound by all of the
limitations imposed under this Agreement with respect to Confidential
Information and the scope of the license granted hereunder.
3.4 RESERVATION OF RIGHTS. All rights not expressly granted by the
Parties hereunder are reserved to the Parties. Without limiting the generality
of the foregoing, the Parties expressly acknowledge that nothing contained
herein shall be construed or interpreted as a grant, by
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implication or otherwise, of any licenses other than the licenses specified in
Sections 3.1 and 3.2 hereof and the sublicense specified in Section 3.3 hereof.
3.5 INADVERTENT OMISSION. It is the intention of the parties that the
Transferred Intellectual Property shall include all Intellectual Property used,
held for use or practiced by Seller in the Business at the time of Closing Date.
In this regard, any Intellectual Property or Marks inadvertently omitted from
Schedules A through C of this Agreement shall be deemed included in the
Transferred Intellectual Property and added to the appropriate Schedule on a
case-by-case evaluation, and the rights and licenses granted hereunder shall
apply thereto. Any Intellectual Property that originated in or was first created
for the Business shall be rebuttably presumed to be Assigned Intellectual
Property. Any Marks that originated in or were first created for the Business
shall be rebuttably presumed to be Business Marks. All other inadvertently
omitted Intellectual Property shall be rebuttably presumed to be Non-Exclusive
Intellectual Property.
3.6 THIRD PARTY LICENSED INTELLECTUAL PROPERTY. Seller will cooperate
reasonably with Buyer to obtain such consents as may be required to transfer or
sublicense to Buyer under this Agreement the Transferred Intellectual Property
or Marks owned by a third party. Seller and Buyer shall share equally the cost
of obtaining any such consent to the extent such cost is not allowable under the
U.S. Government's Federal Acquisition Regulations applicable to Buyer's
contracts which relate to such Transferred Intellectual Property or Marks.
Seller will, for the one year period immediately following the Closing Date,
cooperate reasonably with Buyer to enable Buyer, at Buyer's expense, to obtain
any third party Intellectual Property that is not transferred to Buyer hereunder
and is necessary to operate the Business.
3.7 TRANSITIONAL TRADEMARK LICENSE. Seller and its Subsidiaries hereby
grant to Buyer ("LICENSEE"), effective upon the Closing Date, a
non-transferable, nonexclusive, royalty-free worldwide transitional right and
license to use the Licensed Marks, together with all slogans, logos, designs and
trade dress associated therewith, which are, in each case, in existence at
Closing Date and currently being used in the conduct of the Business. This
transitional license shall permit use of the Licensed Marks solely on and in
connection with the goods and services of the Business and which are embodied in
or on any stationery, business cards, advertising and promotional materials,
packaging and labels, drawings, equipment, photomasks, manuals and other
documentation, statements of work, and inventory ("BUSINESS Materials"), and for
any administrative, corporate and legal use in connection with the transition
away from using the Licensed Marks. Buyer's right to use the Licensed Marks
shall cease on the earlier of (i) the end of the one year period immediately
following the Closing Date, or (ii) Buyer's depletion of the Business Materials.
Such use of the Licensed Marks shall be solely in the form and consistent with
the manner in which such Licensed Marks were used prior to the Closing Date (the
"TRANSITIONAL LICENSE"). Any and all rights and goodwill arising from the use of
the Licensed Marks by Licensee pursuant to this Transitional License shall inure
solely to Seller's benefit. Licensee agrees that it shall not use, directly or
indirectly, the Licensed Marks in any other way that suggests that there is a
relation or affiliation between Licensee and Seller or any of its Subsidiaries
or Affiliates other than that as created by this Agreement, or as a trademark,
service
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mark or trade name for Licensee and will take reasonable commercial measures to
avoid the appearance that Seller retains any interest in the Business. Nothing
in this Agreement or in the performance thereof, or that might otherwise be
implied by law, shall operate to grant Licensee any right, title or interest in
and to the Licensed Marks. Buyer shall assign, and does hereby assign to Seller,
any rights it may acquire, if any, by the operation of law or otherwise, in the
Licensed Marks pursuant to this Transitional License. As between the parties,
Seller shall have the sole right, and in its sole discretion, to prosecute,
defend and control any action concerning the Licensed Marks.
3.8 RETAINED RIGHTS. Nothing contained in this Agreement shall limit
Seller or Seller's Affiliates from using Trade Secrets listed in Schedules A and
B which, at Closing Date, were incorporated or used in any processes, products,
components or systems used in the Retained Business.
3.9 ROCKWELL LICENSE. Pursuant to Seller's right under Section 10.8 of the
Distribution Agreement to assign any of its rights to a successor of any part of
its business, to the full extent of its right to do so, Seller hereby assigns,
conveys and transfers unto Buyer all of Seller's intellectual property rights
under the Rockwell License solely with respect to the Business, provided
however, that Seller retains all other rights and obligations under the Rockwell
License with respect to Seller's businesses, other than the Business. Schedule
3.9 to this Agreement contains a copy of the fully-executed Distribution
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNITIES AND DISCLAIMERS
4.1 Seller represents and warrants to Buyer that Seller and its
Subsidiaries each has the requisite power and authority in accordance with the
provisions hereof to assign and transfer to Buyer the Assigned Intellectual
Property, the Exclusive Intellectual Property and the Business Marks and to
grant the license in and to the Non-Exclusive Intellectual Property described in
Section 3.2 and:
(a) The patents, patent applications, copyrights (including mask
works), trademark applications and registrations, service mark applications and
registrations and Internet domain name registrations listed on Schedules A
through C have been duly maintained, and, to the Knowledge of Seller are
subsisting, in full force and effect and have not been canceled, expired or
abandoned;
(b) To the Knowledge of Seller, there are no settlements, consents,
judgments, orders, concurrent use or other agreements that restrict Seller's
rights or any of its Subsidiaries' rights to use any Intellectual Property or
Marks necessary for the conduct of the Business;
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(c) To the Knowledge of Seller, the Transferred Intellectual
Property includes all the Intellectual Property and Marks used, held for use or
practiced by Seller and its Subsidiaries in the operation of the Business as
currently conducted;
(d) To the Knowledge of Seller the patents listed on Schedules A and
B are valid.
(e) Seller has in effect procedures for the protection of its Trade
Secrets and requires its employees to sign a written agreement to protect such
Trade Secrets.
(f) To the Knowledge of Seller, no third party is misappropriating,
infringing or otherwise violating any Transferred Intellectual Property owned by
Seller or its Subsidiaries.
(g) Seller has not granted any licenses to third parties to use the
Assigned Intellectual Property, Business Marks or Exclusive Intellectual
Property under the agreements or documents listed on Schedule 4.1(g). To the
extent that Seller, notwithstanding the assignment of the Assigned Intellectual
Property, Business Marks, and Exclusive Intellectual Property to Buyer
hereunder, is required, in Seller's reasonable judgment, to grant a
non-exclusive license to a third party in accordance with the agreements or
documents listed on Schedule 4.1 (g), to any of the patents (or patents
resulting from applications or invention disclosures) included in the Assigned
Intellectual Property or Exclusive Intellectual Property, then Buyer will, in
timely manner after receipt of written notice from Seller, grant such license to
the third party as required and will be entitled to all payments from the third
party in connection therewith.
(h) To the Knowledge of Seller, except as disclosed on Schedule
4.1(h) or on Schedules A or B, Seller has not granted any licenses to third
parties to use the Assigned Intellectual Property, Business Marks or Exclusive
Intellectual Property and except as disclosed on said Schedules and on Schedule
4.1(g) is not obligated to grant any licenses to third parties to use such
Intellectual Property.
4.2 Seller represents and warrants to Buyer that Seller is the owner of
record, free and clear of any Liens (except Permitted Liens and except as set
forth on Schedule 4.2) of all Assigned Intellectual Property, Business Marks and
Exclusive Intellectual Property. Except as disclosed on Schedule 4.2 and except
for licenses of software or firmware used in the Business that are generally
available "off-the-shelf" through commercial software vendors, Seller owns or
has the right to use, without payment to any other party, the Transferred
Intellectual Property except where the failure so to own or have the right to
use such Transferred Intellectual Property would not have, individually or in
the aggregate, a material adverse effect. Except as set forth on Schedule 4.2,
no claims are pending or, to the Knowledge of Seller, threatened against Seller
or any of its Subsidiaries, by any person with respect to the ownership,
validity, enforceability or use of any Transferred Intellectual Property,
challenging or questioning the validity or effectiveness of any such Transferred
Intellectual Property (including threatened opposition, interference,
cancellation proceeding or other legal or governmental proceeding before any
court or registration authority in any jurisdiction against or relating to the
registrations and applications
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listed on Schedules A through C); or alleging that the use of the Transferred
Intellectual Property by Seller or its Subsidiaries in the operation of the
Business is infringing upon, misappropriating or otherwise violating the
intellectual property rights of others, except in each such case, such claims as
would not, individually or in the aggregate, have a material adverse effect. To
the Knowledge of Seller, except as disclosed on Schedule 4.2, the use of the
Transferred Intellectual Property by Seller or its Subsidiaries, does not
infringe, misappropriate or otherwise violate any third party's intellectual
property rights.
4.3 INTENTIONALLY OMITTED
4.4 SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN
THIS AGREEMENT AND THE PURCHASE AGREEMENT, SELLER HEREBY DISCLAIMS ANY IMPLIED
WARRANTIES WITH RESPECT TO THE INTELLECTUAL PROPERTY ASSIGNED OR LICENSED BY IT
HEREUNDER, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR VALIDITY.
4.5 NEITHER PARTY SHALL BE LIABLE, WHETHER IN CONTRACT, IN TORT
(INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR OTHERWISE, FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS OR REVENUE, LOSS OF USE OF EQUIPMENT OR FACILITIES,
BUSINESS INTERRUPTIONS, COSTS OF CAPITAL AND CLAIMS OF CUSTOMERS WHICH IN ANY
WAY ARISE OUT OF, RELATE TO, OR ARE A CONSEQUENCE OF, ITS PERFORMANCE OR
NONPERFORMANCE HEREUNDER, OR THE PROVISION OF OR FAILURE TO PROVIDE ANY SERVICE
HEREUNDER.
4.5.1 COVENANT NOT TO SUE. Except as provided in Section 6.6 of the
Purchase Agreement and except for Seller's or its
Subsidiaries' willful breach of their obligations under this
Agreement, in the event that Seller or any Subsidiary of
Seller: (i) obtains from a third party any products, systems
or components (which such third party has not first obtained
from Seller) that incorporate or otherwise use any Category A
Intellectual Property and sells or offers to sell any system
or higher level product incorporating such third party
products, systems or components, or (ii) sells or offers to
sell after the Closing Date, any product, component or system
that (a) is not included in the Assets conveyed to Buyer under
the Purchase Agreement and (b) was manufactured prior to the
Closing Date and (c) incorporates or uses Category A
Intellectual Property, Buyer hereby agrees, in perpetuity with
respect to 4.5.1 (i) and for ten (10) years after the Closing
Date with respect to 4.5.1 (ii), not to bring an action with
respect to such Category A Intellectual Property against
Seller or its Subsidiaries.
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4.6 (a) For a period of four (4) years after Closing Date, Seller hereby
indemnifies Buyer and its Affiliates against and agrees to hold each of them
harmless from any and all actual damage, loss, liability and expense (including,
without limitation, reasonable attorneys' fees and reasonable expenses of
investigation in connection with any action, suit or proceeding) ("DAMAGES"),
incurred or suffered by Buyer or any Affiliate of Buyer, arising out of (i) any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Seller or any of its Subsidiaries pursuant to this Agreement; (ii)
any claim, suit, action or legal proceedings based on actual or alleged
misappropriation of trade secrets or infringement of copyright rights, or
trademark rights brought against Buyer or its Affiliates by any Person,
including, without limitation, Rockwell Science Center, with respect to any
Transferred Intellectual Property or Marks; (iii) any claim, suit, action or
legal proceedings based on actual or alleged infringement of patents occurring
before the Closing Date in connection with the Business brought against Buyer or
its Affiliates by any Person, (iv) any claim, suit, action or legal proceedings
based on actual or alleged infringement occurring after the Closing Date, of any
United States patent existing as of the Closing Date or which issues thereafter
from a patent application which was filed before the Closing Date, by a product
or system of the Business which was being made, sold, or offered for sale by the
Business, or a process in use by the Business, on or before the Closing Date,
brought against Buyer or its Affiliates by any Person, provided that any such
product, system, or process has not been modified by or on behalf of Buyer or
its Affiliates, or its suppliers, or its customers (unless the cause of such
alleged infringement is unrelated to such modification), and provided further
that Seller may at its option obtain a license of appropriate scope to enable
Buyer and its Affiliates to continue to use the allegedly infringing activity;
and provided further that such actual or alleged infringement is not a result of
a violation by Buyer of the field of use provisions set forth in Article II,
Section 3 of the Honeywell License Agreement assigned under the Purchase
Agreement and (v) the enforcement of their rights under this Section 4.6.
(b) For a period of four (4) years after Closing Date, Buyer hereby
indemnifies Seller and its Subsidiaries against and agrees to hold each of them
harmless from any and all Damages incurred or suffered by Seller or any of its
Affiliates arising out of (i) any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Buyer pursuant to this
Agreement, and (ii) the enforcement of their rights under this Section 4.6.
(c) PROCEDURES RELATING TO INDEMNIFICATION. The provisions of
Section 10.5 of the Purchase Agreement shall apply to any claims for
indemnification made by either Party.
4.7 The liability of Seller to Buyer pursuant to Article IV shall be (i)
deemed a Loss (as defined in the Purchase Agreement) arising under Section
10.1(a) of the Purchase Agreement, and therefore, subject to the provisions of
Section 10.1 thereunder, and (ii) shall be aggregated with all other Losses
arising under Section 10.1(a) of the Purchase Agreement for the purposes of
Section 10.1 thereunder. Claims for indemnification from Buyer pursuant to
Article IV shall not be considered in calculating the $2 million deductible
amount set forth in Section 10.1 of the Purchase Agreement.
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4.8 The liability of Buyer to Seller pursuant to Article IV shall be (i)
deemed a Loss (as defined in the Purchase Agreement) arising under Section
10.2(a) of the Purchase Agreement, and therefore, subject to the provisions of
Section 10.2 thereunder, and (ii) shall be aggregated with all other Losses
arising under Section 10.2(a) of the Purchase Agreement for the purposes of
Section 10.1 thereunder. Claims for indemnification from Seller pursuant to
Article IV shall not be considered in calculating the $2 million deductible
amount set forth in Section 10.2 of the Purchase Agreement.
ARTICLE V
PROTECTION AND ENFORCEMENT; NON-IMPAIRMENT
5.1 PROSECUTION.
(a) Seller agrees to maintain in force all issued patents included
in the Seller Patents on Schedule C owned by Seller or its Subsidiaries (each a
"Covered Seller Patent") and to diligently prosecute all patent applications
included in such Seller Patents (each a "Covered Seller Patent Application"),
all at the sole cost and expense of Seller. The drafting, filing, and
prosecution of any Covered Seller Patent Application shall be Seller's
responsibility and shall be carried out by it in its reasonable discretion.
Notwithstanding the foregoing, if Seller elects to allow any of the Covered
Seller Patents to lapse or become otherwise abandoned or forfeited, Seller will
reasonably endeavor to notify Buyer of its intention to do so at least one
hundred (100) days prior to the date on which the applicable Covered Seller
Patent is due to lapse or become abandoned or forfeited. Buyer shall have the
right to assume control of the applicable Covered Seller Patent at its own
expense by providing Seller written notice to such effect prior to the date such
Covered Seller Patent lapses or otherwise becomes abandoned or forfeited. If
Buyer elects to assume control of the applicable Covered Seller Patent pursuant
to this Section 5.1(a), then Seller shall, at Buyer's expense, assign to Buyer
its entire right, title and interest, to the applicable Seller Patent, subject,
if applicable, to retention of a license of the same scope as that retained by
Seller in Section 3.1.
(b) Buyer shall be under no obligation to: (a) obtain patent
protection for the inventions disclosed in the patent applications or invention
disclosures included as part of the Assigned Intellectual Property or Exclusive
Intellectual Property; (b) maintain any patents included in the Assigned
Intellectual Property or Exclusive Intellectual Property; (c) obtain or maintain
any copyrights or mask works included in the Assigned Intellectual Property or
Exclusive Intellectual Property; or (d) obtain or maintain any other Assigned
Intellectual Property, Exclusive Intellectual Property or Business Marks.
(c) Each Party shall cooperate with the other party in the filing,
prosecution, maintenance or other attempts to protect its Intellectual Property
and Marks including, without limitation, by executing those documents as each
party may require from time to time to ensure that all right, title and interest
in and to the Intellectual Property and Marks continues to reside with such
Party.
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ARTICLE VI
TERM
6.1 TERM. This Agreement shall commence upon the Closing Date and continue
in perpetuity or to the expiration of statutory protection for any such
Intellectual Property or Marks (subject to the provisions of Section 3.7 with
respect to the use of Licensed Marks).
6.2 TERMINATION. This Agreement and each license granted hereunder shall
not be terminable by either Party and the rights granted under this Agreement
shall continue in full force and effect, notwithstanding any material breach of
any term hereof by a Party.
ARTICLE VII
CONFIDENTIALITY
7.1 CONFIDENTIAL INFORMATION.
(a) Each Party shall maintain in confidence all Confidential
Information disclosed to it by the other Party; provided that, in the case of
the Confidential Information included in or protected by the Assigned
Intellectual Property or Exclusive Intellectual Property, Seller shall maintain
in confidence such Confidential Information as though Buyer initially disclosed
such Confidential Information to Seller. Similarly, in the case of the
Confidential Information included in or protected by the Transferred
Intellectual Property, Buyer shall maintain in confidence such Confidential
Information as though Seller initially disclosed such Confidential Information
to Buyer. The receiving Party shall not disclose or make available to any third
party such Confidential Information except for disclosure to such Party's
employees, vendors, contractors, Subsidiaries and representatives only to the
extent necessary to enable such Party to exercise its rights hereunder or as
otherwise expressly authorized by this Agreement. To the extent that disclosure
is authorized by this Agreement, the receiving Party will obtain prior agreement
from its employees, agents or consultants or other permitted third party
recipients not already bound by a fiduciary or contractual duty or obligation of
confidentiality to whom disclosure is to be made to hold in confidence and not
make use of such information for any purpose other than those permitted or
contemplated by this Agreement. The receiving Party will use at least the same
standard of care as it uses to protect its own most confidential information and
will take all reasonable steps to ensure that such employees, agents or
consultants do not disclose or make any unauthorized use of such Confidential
Information. The receiving Party will promptly notify the disclosing Party upon
discovery of any unauthorized use or disclosure of the Confidential Information
of the disclosing Party. With respect to all information exchanged after the
Closing Date, such information must be marked with an appropriate proprietary
legend, or identified as proprietary within a reasonable time after disclosure,
in order to be protected as Confidential Information hereunder.
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7.2. EXCEPTIONS. The obligations of confidentiality contained in Section
7.1 will not apply to the extent that it can be established by the receiving
Party by competent proof that such Confidential Information:
(a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the disclosing
Party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
(d) was developed independently by the receiving Party without
access to the Confidential Information:
(e) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
disclosing Party not to disclose such information to others;
(f) was disclosed as required by law, but only to the extent
required and if the receiving Party promptly notifies the disclosing Party in
advance to provide the opportunity to the disclosing party to take protective
measures and/or to oppose the requirement.
7.3 NO DEROGATION OF LICENSE RIGHTS. Notwithstanding any obligations of
confidentiality imposed on a Party hereunder with respect to Confidential
Information of the other Party, nothing herein or any other agreement between
the Parties shall prohibit one Party from using Confidential information of the
other Party to the extent permitted by this Agreement or from disclosing
Confidential Information of a Party to the extent reasonably necessary in
connection with the exercise of any of the license rights granted to the other
Party hereunder.
7.4 RESTRICTION ON TRADE SECRET DISCLOSURE. Notwithstanding the
foregoing, Buyer agrees not to disclose (i) to any party in any form the origin
of the Trade Secrets listed in Schedule C, or (ii) for a period of four (4)
years after the Closing Date the Trade Secrets listed in Schedule C to parties
who are actual or potential competitors of Seller in the aerospace industry
(except for consultants bound by a written confidentiality agreement to use such
Trade Secrets for the internal purposes of Buyer or its Subsidiaries or
Affiliates only).
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES. All notices or other communications hereunder shall be in
writing, signed by the party providing such notice, and shall be considered
properly given or made and
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shall be deemed to have been duly given on the date of delivery, when delivered
personally or transmitted and received by telecopier/facsimile transmitter,
receipt acknowledged or confirmed during normal business hours, or in the case
of registered or certified mail, return receipt requested, postage prepaid, on
the date shown on such return receipt.
Any notices to Seller shall be sent as follows (or to such other address as
Seller may specify in writing to Buyer):
The Boeing Company
Space and Communications Group
PO Box 2515 WAS-08
Seal Beach, CA 90740-1515
Attention: Valerie Schurman, Vice President and Assistant
General Counsel
Telecopy No.: (562) 797-5049
with a copy to:
Gibson, Dunn & Crutcher, LLP
33 South Grand Avenue
Los Angeles, CA 90071
Attention: Andrew E. Bogen, Esq.
Telecopy: (213) 229-6159
Any notices to Buyer shall be sent as follows (or to such other address as
Buyer may specify in writing to Seller):
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, NJ 07054
Attention: Nina Laserson Dunn, Executive Vice President, General
Counsel and Secretary
Telecopy No.: (973) 898-0717
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Jeffrey Tindell
Telecopy No.: (212) 735-2000
8.2 EXPORT CONTROL. Buyer, Seller and their Subsidiaries agree to comply
with and accept liability for all applicable export control laws and regulations
of the United States and any other country having proper jurisdiction.
8.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable thereto.
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8.4 DISPUTE RESOLUTION. Resolution of any and all disputes arising from
or in connection with this Agreement, whether based on contract, tort, or
otherwise, shall be exclusively governed by and settled in accordance with the
provisions of Section 11.14 of the Purchase Agreement.
8.5 RELATIONSHIP OF THE PARTIES. Neither Party shall have any power or
express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party in any
manner whatsoever, including to any other contract, agreement or undertaking
with any third party. This Agreement will have no force and effect, and the
Transferred Intellectual Property shall not be deemed to have been assigned or
licensed, as the case may be, if the transactions contemplated by the Purchase
Agreement are not consummated.
8.6 ASSIGNMENT AND TRANSFER.
(a) This Agreement, the license rights granted to Seller hereunder,
and the license rights granted to Buyer hereunder, are personal and shall not in
any manner whatsoever be assigned or transferred by Seller or Buyer, as the case
may be, to or with any other person or entity without Seller's or Buyer', as the
case may be, prior written consent, which consent shall not be unreasonably
withheld, provided, however, that no consent is required (i) for assignment by
Buyer to its Affiliates, or (ii) for collateral assignment by Buyer to its
Lenders (and affiliates thereof) to secure obligations thereto. Notwithstanding
the foregoing and Sections 3.1 and 3.2, such licenses may be transferred or
sublicensed to facilitate a merger, acquisition or divestiture or to a purchaser
of substantially all of the assets of the portion of the business to which the
license pertains, subject to the other restrictions and provisions of this
Agreement. Any attempted assignment in violation of the provisions hereof shall
be void AB INITIO and the assignee shall obtain no rights by reason thereof.
(b) This Agreement and the provisions hereof shall be binding at all
times upon and inure to the benefit of the parties, their successors and
permitted assigns.
8.7 SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall be held invalid, illegal or unenforceable in any respect by
a court of competent jurisdiction or a qualified arbitrator or other person
involved any dispute resolution procedure applicable to the Parties, the
validity, legality and enforceability of the remaining provisions contained
herein and other applications thereof shall not in any way be diminished.
8.8 ENTIRE AGREEMENT: AMENDMENTS. This Agreement and the Purchase
Agreement constitute the entire agreements of the parties, and supersede all
other pre-existing agreements, with respect to the matters expressly provided
for in this Agreement. This Agreement may be amended or modified only by mutual
agreement in writing signed by authorized representatives of both parties.
8.9 REMEDIES. The parties' rights and remedies pursuant to this
Agreement shall, subject to the provisions hereof, be cumulative and
nonexclusive of any other rights and
A-16
remedies which they may have pursuant to any other agreement, by operation of
law, or otherwise.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original.
8.11 DESCRIPTIVE HEADINGS. The section and clause headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
8.12 ORDER OF PRECEDENCE. The parties agree that if any terms of this
Agreement conflict with terms in the Purchase Agreement, the terms of this
Agreement shall govern with respect to the resolution of such conflict.
8.13 FORCE MAJEURE. In the event that either party shall be rendered
wholly or partially unable to carry out its obligations under this Agreement by
reasons or causes beyond its control, including but not limited to war (whether
or not declared), sabotage, insurrection, rebellion, riot or other act of civil
disobedience, act of a public enemy, act of any government or any agency or
subdivision thereof, fire, accident, explosion, epidemic, quarantine,
restrictions, storm flood, earthquake or other act of God, which could not be
reasonably expected to be avoided, or new laws or regulations forbidding or
limiting the execution of this Agreement, then the performance of either party
or both parties, as they are affected by such cause, shall be excused during the
continuance of any inability so caused, but such inability shall be remedied
with all reasonable dispatch.
A-17
IN WITNESS WHEREOF, Seller and Buyer have each caused this Agreement to be
duly signed and delivered to the other party.
DRS TECHNOLOGIES, INC.
By: ____________________________________
Title:____________________________________
THE BOEING COMPANY
By: ____________________________________
Title:____________________________________
Schedule A - Assigned Intellectual Property
Schedule B - Exclusive Intellectual Property
Schedule C - Non-Exclusive Intellectual Property
Schedule 3.9 - Rockwell License
Schedule 4.1(g) -Third Party Agreements Containing Licensing Obligations
Schedule 4.1(h) - Grants of Licenses to Third Parties
Schedule 4.2 - Exceptions
A-18
SCHEDULE A
ASSIGNED INTELLECTUAL PROPERTY
1. Patents & Invention Disclosures
o As listed in the Annex to Schedule A Assigned Intellectual
Property-Patents, Patent Applications and Disclosures
2. Trade Secrets
o Trade Secrets relating to infrared focal plane array products used
or held for use for the Business as of the Closing Date, except for
the Trade Secrets that pertain to infrared product production
reflected on Schedule B
o Trade Secrets relating to infrared systems used or held for use for
the Business as of the Closing Date, except for the Trade Secrets
that pertain to infrared system production reflected on Schedule B.
3. Software
o Software deliverable in connection with products or systems of the
Business in use or held for use as of the Closing Date to the extent
such Software is owned by the Seller or the Seller's affiliates.
4. Business Marks
o None
Annex to SCHEDULE A
ASSIGNED INTELLECTUAL PROPERTY - PATENTS, Patent Applications and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------------
Case Number Title Inventor DateReceived FilDate ApplNumber Reportable GovContract Disclosure
Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------------
79SC069 Monolithic Ho, Willie W. 2/19/1980 122,331 0 n/a Filed
Voltage
Controlled,
Phased Array
-----------------------------------------------------------------------------------------------------------------------------------
80SC047 Blocked
Impurity Band Stapelbroek, Maryn G. 10/23/1980 199,881 0 n/a Filed
Detectors
-----------------------------------------------------------------------------------------------------------------------------------
81SC081 Impurity Band
Conduction
Semiconductor Stapelbroek, Maryn G. 9/15/1983 06/532,332 0 n/a Filed
Devices
-----------------------------------------------------------------------------------------------------------------------------------
81SC081 Impurity Band
Conduction
Semiconductor Stapelbroek, Maryn G. 9/13/1984 463,121 0 n/a Filed
Devices
-----------------------------------------------------------------------------------------------------------------------------------
83SC022 Solid-State Kleinhans, W A. 10/7/1983 539,878 0 n/a Filed
Photomultiplier
-----------------------------------------------------------------------------------------------------------------------------------
84SC012 PROCESS FOR
PRODUCING
AMORPHOUS AND Morgan, P ED 6/6/1997 2/22/1985 704,979 0 * Filed
CRYSTALLINE
SILICON NITRIDE
-----------------------------------------------------------------------------------------------------------------------------------
85SC044 Method for
Making a
Reticulated
Temperature Gergis, I S. 11/2/1988 266,174 -1 *unknown Filed
Sensitive
Imaging Device
-----------------------------------------------------------------------------------------------------------------------------------
86E048 Non-Destructive Fang, P Y., Marshall, Closed
Testing of MCT A H.
Detector Array
-----------------------------------------------------------------------------------------------------------------------------------
87SC005 Multicolor Woodberry, F J. 6/30/1989 374,412 0 n/a Filed
Focal Plane
Arrays
-----------------------------------------------------------------------------------------------------------------------------------
86SC013 Intrinsic
Impurity Band
Conduction Stapelbroek, Maryn G. 12/23/1988 289,133 0 n/a Filed
Detectors
-----------------------------------------------------------------------------------------------------------------------------------
87SC028 Multicolor
Infrared Focal Gluck, N S. 8/21/1989 396,154 0 n/a Filed
Plane Arrays
-----------------------------------------------------------------------------------------------------------------------------------
90E033 Apparatus for Gable, A L., et al. 6/17/1991 716476 Filed
Large Area
Infrared Focal
Plane
-----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------
Case Number IssDate PatNumber Allowance Comments
Date
----------------------------------------------------------------------
79SC069 4/6/1982 4,323,901 Patent Expired 4/06/99
----------------------------------------------------------------------
80SC047
2/4/1986 4,568,960
----------------------------------------------------------------------
81SC081
4/29/1986 4,586,074
----------------------------------------------------------------------
81SC081
10/18/1988 1,243,388
----------------------------------------------------------------------
83SC022 4/29/1986 4,586,068
----------------------------------------------------------------------
84SC012
11/12/1985 4,552,740 Patent Abandoned
----------------------------------------------------------------------
85SC044
2/13/1990 4,900,367
----------------------------------------------------------------------
86E048
----------------------------------------------------------------------
87SC005 9/11/1990 4,956,555
----------------------------------------------------------------------
86SC013
10/9/1990 4,962,304
----------------------------------------------------------------------
87SC028
10/20/1992 5,157,258
----------------------------------------------------------------------
90E033 3/30/1993 5198671 33870
----------------------------------------------------------------------
Annex to SCHEDULE A
ASSIGNED INTELLECTUAL PROPERTY - PATENTS, Patent Applications and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------------
Case Number Title Inventor DateReceived FilDate ApplNumber Reportable GovContract Disclosure
Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------------
90E034 Low Moving Mass Sardou, F D. 8/6/1990 5/21/1991 703645 DASG60-87- Filed
Two Axis Gimbal C-0031
-----------------------------------------------------------------------------------------------------------------------------------
90E034 EPO Low Moving Mass Sardou, F D. 4/7/1992 92105993.7 -1 Filed
Two Axis Gimbal
-----------------------------------------------------------------------------------------------------------------------------------
91E031 Ceramic Frames Adkins, Larry R. 7/22/1991 8/17/1992 930,630 -1 DASG60-90- Filed
and Capsules C-013
for Z-Axis
Modules
-----------------------------------------------------------------------------------------------------------------------------------
93E008 Vertical
Collecting DASG60-87- Closed
Infrared D'Souza, A 2/23/1993 -1 C-0038
Detectors
-----------------------------------------------------------------------------------------------------------------------------------
94E012 Electronically
Switched Micro
Bolometer Howard, Philip E. 3/3/1994 0 n/a Authorized
Bridge ROIC
-----------------------------------------------------------------------------------------------------------------------------------
94E015 Apparatus and
Method for
Mounting and Asatourian, R K., et
Stabilizing a al. 3/23/1995 409230 Filed
Hybrid Focal
Plane Array
-----------------------------------------------------------------------------------------------------------------------------------
94E015 EPO Apparatus and
Method for
Mounting and Asatourian, R K., et
Stabilizing a al. 9/16/1996 96114824
Hybrid Focal
Plane Array
-----------------------------------------------------------------------------------------------------------------------------------
94E017 Sealed-Cavity
Microstructre
and
Microbolometer Fitzgibbons, E T., et 7/10/1998 113,472 0 n/a Filed
and Associated al.
Fabrication
Methods
-----------------------------------------------------------------------------------------------------------------------------------
94E017A DIV Sealed-Cavity
Microstructre
and
Microbolometer Fitzgibbons, E T., et 4/17/2001 09/836,785 Filed
and Associated al.
Fabrication
Methods
-----------------------------------------------------------------------------------------------------------------------------------
94E017 WO Sealed-Cavity PCT/US99/14818 5/30/1999 Filed
Microstructre
and
Microbolometer Fitzgibbons, E T., et
and Associated al.
Fabrication
-----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------
Case Number IssDate PatNumber Allowance Comments
Date
---------------------------------------------------------------------
90E034 9/1/1992 5143334 33702 Patent Abandoned -
Expiration Date:
09/01/96
---------------------------------------------------------------------
90E034 EPO Abandoned
---------------------------------------------------------------------
91E031 6/7/1994 5,319,521 34317
---------------------------------------------------------------------
93E008
---------------------------------------------------------------------
94E012
---------------------------------------------------------------------
94E015
12/17/1996 5585624 35235
---------------------------------------------------------------------
94E015 EPO
Abandoned
---------------------------------------------------------------------
94E017
6/26/2001 6,252,229
---------------------------------------------------------------------
94E017A DIV
Pending
---------------------------------------------------------------------
94E017 WO
PCT Application
Abandoned
---------------------------------------------------------------------
3
Annex to SCHEDULE A
ASSIGNED INTELLECTUAL PROPERTY - PATENTS, Patent Applications and DISCLOSURES
----------------------------------------------------------------------------------------------------------------------------------
Case Number Title Inventor DateReceived FilDate ApplNumber Reportable GovContract Disclosure
Invention Number Status
----------------------------------------------------------------------------------------------------------------------------------
Methods
----------------------------------------------------------------------------------------------------------------------------------
94E039 Stabilized Asatourian, R K. 3/23/1995 409229 Filed
Hybrid Focal
Plane Array
Structure
----------------------------------------------------------------------------------------------------------------------------------
94E039 EPO Stabilized
Hybrid Focal
Plane Array Asatourian, R K. 9/13/1996 96114741 Filed
Structure
----------------------------------------------------------------------------------------------------------------------------------
94SC055 Method of Gergis, I S. 11/13/1995 555668 0 n/a Filed
Making
Suspended
Microstructures
----------------------------------------------------------------------------------------------------------------------------------
94SC055 AU Method of Gergis, I S. 11/1/1996 70565/96 Filed
Making
Suspended
Microstructures
----------------------------------------------------------------------------------------------------------------------------------
94SC055 CA Method of
Making
Suspended Gergis, I S. 11/12/1996 2190077 Filed
Microstructures
----------------------------------------------------------------------------------------------------------------------------------
94SC055 EPO Method of
Making
Suspended Gergis, I S. 10/16/1996 96115692 Filed
Microstructures
-----------------------------------------------------------------------------------------------------------------------------------
94SC055 JP Method of
Making
Suspended Gergis, I S. 11/12/1996 300344/1996 Filed
Microstructures
-----------------------------------------------------------------------------------------------------------------------------------
95E005 Imbalanced Asatourian, R K. 1/27/1995 6/7/1995 481000 0 n/a Filed
Composite Focal
Plane Array
-----------------------------------------------------------------------------------------------------------------------------------
95E005 CIP Imbalanced Asatourian, R K. 6/24/1996 666076 Filed
Composite Focal
Plane Array
-----------------------------------------------------------------------------------------------------------------------------------
95E005 EPO Imbalanced Asatourian, R K. 9/16/1996 96114825 Filed
Composite Focal
Plane Array
-----------------------------------------------------------------------------------------------------------------------------------
95E005 Imbalanced
CIP/EPO Composite Focal Asatourian, R K. 6/24/1997 97110303 Filed
Plane Array
-----------------------------------------------------------------------------------------------------------------------------------
95E035 Vertical D'Souza, A I. 4/17/1995 0 n/a Closed
Collecting
Infrared
Detectors
-----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------
Case Number IssDate PatNumber Allowance Comments
Date
---------------------------------------------------------------------
94E039 3/11/1997 5610389
---------------------------------------------------------------------
94E039 EPO
EPO Application Pending
---------------------------------------------------------------------
94SC055 5/6/1997 5627112
---------------------------------------------------------------------
94SC055 AU 5/25/2000 715673
---------------------------------------------------------------------
94SC055 CA
Canadian Appl Pending
---------------------------------------------------------------------
94SC055 EPO
EPO Appl Pending
---------------------------------------------------------------------
94SC055 JP
Japanese Appl Pending
---------------------------------------------------------------------
95E005
----------------------------------------------------------------------
95E005 CIP 2/3/1998 5714760
----------------------------------------------------------------------
95E005 EPO EPO Appl Pending
----------------------------------------------------------------------
95E005
CIP/EPO
EPO CIP Appl Pending
----------------------------------------------------------------------
95E035
----------------------------------------------------------------------
4
Annex to SCHEDULE A
ASSIGNED INTELLECTUAL PROPERTY - PATENTS, Patent Applications and DISCLOSURES
------------------------------------------------------------------------------------------------------------------------------------
Case Number Title Inventor DateReceived FilDate ApplNumber Reportable GovContract Disclosure
Invention Number Status
------------------------------------------------------------------------------------------------------------------------------------
95E130 Multi-Spectral
IR Sensor Using
Single Focal Gubala, M B., et al. Closed
Plane Array
------------------------------------------------------------------------------------------------------------------------------------
95SC082 Use of DeWames, R E. 10/3/1995 0 n/a Closed
Manganate
Perovskite
Compounds as
Bolometers
------------------------------------------------------------------------------------------------------------------------------------
96E064 Integrated
Thermo-Electric
Cooler/Vacuum Costa, R D. 7/8/1996 0 n/a Closed
Package
------------------------------------------------------------------------------------------------------------------------------------
96SC010 Semiconductor
Multi
Heterojunction
Thermal Detecto Sullivan, G J. 2/2/1996 0 n/a Closed
Detectors and
Focal Plane
Arrays
------------------------------------------------------------------------------------------------------------------------------------
97BN004 Micromechanical
Heat Switch
Integrated into
Suspended Gergis, I S. 5/13/1997 0 n/a Closed
Thermal
Detectors
------------------------------------------------------------------------------------------------------------------------------------
97BN014 Magnetron
Sputtering of
VOx for Kobrin, P 10/6/1997 0 n/a Open
Infrared
Microbolometers
------------------------------------------------------------------------------------------------------------------------------------
97E008 MULTICOLOR
FOCAL PLANE
ARRAY USING Stapelbroek, Maryn G. 3/3/1999 262,143 Filed
MICROLENSES
------------------------------------------------------------------------------------------------------------------------------------
97E008 WO MULTICOLOR
FOCAL PLANE
ARRAY USING Stapelbroek, Maryn G. 3/3/2000 PCT/US00/05632
MICROLENSES
------------------------------------------------------------------------------------------------------------------------------------
98-235 An Optimized Han, Chien-Jin 5/21/1998 6/7/1999 09/326,937 Filed
Pixel Structure
for
Microbolometer-B
High-Performance
Uncooled IR ased
Focal Plane
Array Devices
------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------
Case Number IssDate PatNumber Allowance Comments
Date
---------------------------------------------------------------------
95E130 Case Number changed:
C5E132 does not exist
9 should be 95E130
-
---------------------------------------------------------------------
95SC082
---------------------------------------------------------------------
96E064
---------------------------------------------------------------------
96SC010
---------------------------------------------------------------------
97BN004
---------------------------------------------------------------------
97BN014
---------------------------------------------------------------------
97E008
5/22/2001 6,236,508 1/12/01
---------------------------------------------------------------------
97E008 WO
PCT Appl Pending
----------------------------------------------------------------------
98-235
----------------------------------------------------------------------
5
Annex to SCHEDULE A
ASSIGNED INTELLECTUAL PROPERTY - PATENTS, Patent Applications and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------------
Case Number Title Inventor DateReceived FilDate ApplNumber Reportable GovContract Disclosure
Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------------
Devices
-----------------------------------------------------------------------------------------------------------------------------------
99-261 Micro-Device
Universal Brood, Ronald L. 8/23/1999 Closed
Process Tray
-----------------------------------------------------------------------------------------------------------------------------------
00-122 Novel Pixel Ionescu, Adrian C. 4/4/2000 Authorized
Architecture
For
Microbolometer
Uncooled IR
Focal Plane
Array Devices
-----------------------------------------------------------------------------------------------------------------------------------
93E006 Integrated Chiaverini, D J., et al. Closed
Single Chip
Nuclear
Hardened Focal
Plane Readout
98-235 WO Pixel Structure
Having a
Bolometer with
Spaced Apart
Absorber and Chien-Jin Han
Transducer E.T. Fitzgibbons. 5/21/98 5/16/98 PCT/US00/13431
Layers and an
Associated
Fabrication
Method
99-495 US Reference
Bolometer and
Associated Ronald L. Brood 12/23/99 11/15/00 09/713,043
Fabrication
Methods
---------------------------------------------------------------------
Case Number IssDate PatNumber Allowance Comments
Date
---------------------------------------------------------------------
99-261
---------------------------------------------------------------------
00-122
---------------------------------------------------------------------
93E006
98-235 WO
99-495 US
6
SCHEDULE B
EXCLUSIVE INTELLECTUAL PROPERTY
1. Patents & Invention Disclosures
o As listed in the Annex to Schedule B Exclusive Intellectual
Property - Patents, Patent Applications and Disclosures
2. Trade Secrets
o Trade Secrets relating to production of infrared products and
infrared systems.
o Trade Secrets embodied in the deliverable Software set forth
on Schedule A.
3. Software
o None
4. Business Marks
o None
Annex to SCHEDULE B
EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications and DISCLOSURES
----------------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor DateReceived FilDate ApplNumber Reportable GovContract Disclosure
Invention Number Status
----------------------------------------------------------------------------------------------------------------------------------
R-7231 METHOD OF MAKING PLANAR 2/7/1983 Filed
III-V COMPOUND DEVICE BY
ION IMPLANTATION
----------------------------------------------------------------------------------------------------------------------------------
R-7344 GaAs COMPLIMENTARY 1/16/1984 Filed
ENHANCEMENTMODE JUNCTION
FIELD EFFECT TRANSISTOR
STRUCTURES AND
----------------------------------------------------------------------------------------------------------------------------------
R-7465 OPTICAL SCANNING TRANSDUCER 1/15/1987 Filed
----------------------------------------------------------------------------------------------------------------------------------
R-7740 CIRCUIT BOARD SUPPORT DEVICE 5/23/1988 Filed
----------------------------------------------------------------------------------------------------------------------------------
R-7811 AN ELECTRO-OPTICAL CONTACT 6/21/1993 Filed
ASSEMBLY
----------------------------------------------------------------------------------------------------------------------------------
R-8866 SIGHTING APPARATUS FOR Gehris, James 2/20/1998 027,097 Filed
AIMING AN OPTICAL DEVICE D., et al.
----------------------------------------------------------------------------------------------------------------------------------
75R007 Two axes remote mirror mount Heinz, T A. 6/28/1976 700,430 Filed
----------------------------------------------------------------------------------------------------------------------------------
86R052 Magnetic optics adaptive Laeger, H 8/21/1989 396,192 Filed
technique
----------------------------------------------------------------------------------------------------------------------------------
92E068 Cryogenic Infrared Scenary Adachi, I P. 8/5/1992 Closed
Simulation Device
----------------------------------------------------------------------------------------------------------------------------------
92E097 Novel Method of Sheeks, 10/30/1992 Closed
Descriminating Infrared Oliver P.
Color Band in Targets in
Gamma Field Using Faceted
Filters
----------------------------------------------------------------------------------------------------------------------------------
98-316 Temperature Compensated Howard, 7/15/1998 3/3/2000 09/518,344 Filed
Response and Offset Philip E.
Correction (TECOMP)
----------------------------------------------------------------------------------------------------------------------------------
98-316 EPO Temperature Compensated Howard, 2/16/2001 01200553.4 Filed
Response and Offset Philip E.
Correction (TECOMP)
----------------------------------------------------------------------------------------------------------------------------------
98-316 JP Temperature Compensated Howard, 3/2/2001 058540/2001 Filed
Response and Offset Philip E.
Correction (TECOMP)
----------------------------------------------------------------------------------------------------------------------------------
99-238 Solid Cryogenic Optical Dadson, Carl 5/3/1999 8/11/2000 09/637,383 -1 F04701-96-C- Filed
Filter F. 0044
----------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
CaseNumber IssDate PatNumber Allowance Comments
Date
------------------------------------------------------------------------
R-7231 6/5/1984 4,452,646
------------------------------------------------------------------------
R-7344 2/4/1986 4,568,957
------------------------------------------------------------------------
R-7465 7/5/1988 4,755,731
------------------------------------------------------------------------
R-7740 ######## 4,948,108
------------------------------------------------------------------------
R-7811 9/5/1995 5,448,676
------------------------------------------------------------------------
R-8866 ######## 6,122,102 5/10/2000
------------------------------------------------------------------------
75R007 ######## 4,060,314
------------------------------------------------------------------------
86R052 ######## 4,962,309
------------------------------------------------------------------------
92E068
------------------------------------------------------------------------
92E097
-----------------------------------------------------------------------
98-316
-----------------------------------------------------------------------
98-316 EPO EPO Appl Pending
-----------------------------------------------------------------------
98-316 JP Japanese Appl Pending
-----------------------------------------------------------------------
99-238
-----------------------------------------------------------------------
SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY
1. Patents & Invention Disclosures
o As listed in the Annex to Schedule C Non-Exclusive
Intellectual Property - Patents, Patent Applications and
Disclosures
2. Trade Secrets
o Trade Secrets in use, or held for use, by the Business at the
Closing Date relating to:
|X| General Engineering processes
|X| General Material processes
|X| General Manufacturing processes
|X| General Business processes
3. Business Marks
o None
4. Licensed Marks
o The Boeing logo and name
o The McDonnell Douglas logo and name
5. Software
o Any Software other than Software set forth in Schedule A in
use by the Business as of the Closing Date to the extent such
Software is owned by the Seller or the Seller's Affiliates..
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
A89-066 Single Platform Wiley, Edward R. 6/6/1989 0 Closed
Passive Tracking Method
-----------------------------------------------------------------------------------------------------------------------------
00-260 Dual Line-Scanned
Focal Plane For Phase Dolne, Jean 6/24/2000 Open
Diversity-Aided Imaging
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0855 Method and Apparatus
for Determining
Infrared Signature of Jensen, David G. 0 Open
Objects
-----------------------------------------------------------------------------------------------------------------------------
R-7207 OPTICAL GRADING
DEMODULATOR AND SENSOR 6/13/1983 Filed
SYSTEM
-----------------------------------------------------------------------------------------------------------------------------
R-8266 Digital Image System 4/5/1995 08/417,647 Filed
and Method for
Determining Surface
Reflective and
Refractive
Characteristics of
Objects
-----------------------------------------------------------------------------------------------------------------------------
R-8355 Process for Protecting
Optical Properties of
a Thermal Central 7/8/1997 08/889,548 Filed
Coating
-----------------------------------------------------------------------------------------------------------------------------
R-8355A CPA Process for Protecting
Optical Properties of 4/28/1995
a Thermal Central 08/431,688 Filed
Coating
-----------------------------------------------------------------------------------------------------------------------------
00-425 Method and apparatus
for determining the
optical efficiency of
secondary optics
-----------------------------------------------------------------------------------------------------------------------------
D91-028 Automatic Deployment, Grenier, Francis E. 2/15/1991 0 Closed
Damping and Passive
Tracking Array
-----------------------------------------------------------------------------------------------------------------------------
D91-046 Clutter Suppression in
Scanning Infrared Norsworthy, Dr, Keit 3/4/1991 0 Closed
Sensors
-----------------------------------------------------------------------------------------------------------------------------
R-8171 Chemical Resistance 10/29/1990 08/604,877 -1 NAS9-18200 Filed
Coatings
-----------------------------------------------------------------------------------------------------------------------------
R-8171A Chemical Resistance 10/29/1990 08/604,208 Filed
Coatings
-----------------------------------------------------------------------------------------------------------------------------
R-8653 Infrared Reflective, Mckee, M 10/28/1996 60/029,272 Filed
Rf Coatings
-----------------------------------------------------------------------------------------------------------------------------
70-393 Passivation of Silicon Unknown
Electronic Devices By
Low-Temperature Plasma
Oxidation
-----------------------------------------------------------------------------------------------------------------------------
70-405 Externally Modulated Unknown
Infrared Jammer
-----------------------------------------------------------------------------------------------------------------------------
72-108 Infrared
Countermeasure Optical Unknown
Modulator
-----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
--------------------------------------------------------------------------
A89-066
--------------------------------------------------------------------------
00-260
--------------------------------------------------------------------------
D&SG-0855
--------------------------------------------------------------------------
R-7207
5/26/1987 4,668,093
--------------------------------------------------------------------------
R-8266 12/19/1995 5,477,332
--------------------------------------------------------------------------
R-8355
3/23/1999 5,885,658
--------------------------------------------------------------------------
R-8355A CPA
CPA Appl Pending
--------------------------------------------------------------------------
00-425
--------------------------------------------------------------------------
D91-028
--------------------------------------------------------------------------
D91-046
--------------------------------------------------------------------------
R-8171 1/12/1999 5,858,468
--------------------------------------------------------------------------
R-8171A 3/5/1996 5,496,784
--------------------------------------------------------------------------
R-8653
Abandoned Case
--------------------------------------------------------------------------
70-393
--------------------------------------------------------------------------
70-405
--------------------------------------------------------------------------
72-108
--------------------------------------------------------------------------
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
73-141 Infrared
Countermeasure Optical Unknown
Modulator
-----------------------------------------------------------------------------------------------------------------------------
82-181 On-Board Defense Coggeshall, Randy L. 5/26/1982 0 Closed
System Against
Infrared Guided
Anti-Aircraft Missiles
-----------------------------------------------------------------------------------------------------------------------------
86-031 Improved Takeoff and Shields, Randolph C. 2/19/1986 0 Closed
Landing Visibility
Through Infrared
Imagery
-----------------------------------------------------------------------------------------------------------------------------
90R103 INFRARED COUNTER Sliney Jr, J G. 6/15/1990 0 * Closed
MEASURE (IRCM)
ENHANCED INTERCEPTOR
-----------------------------------------------------------------------------------------------------------------------------
92L065 ELECTRO-OPTICAL
INFRARED (IR) SENSOR 10/8/1992
SYSTEM - LOW Herzberg, J S. Closed
OBSERVABLE INSTALLATION
-----------------------------------------------------------------------------------------------------------------------------
93L050 INFRARED REFERENCE Schoenlau, W T. 6/30/1993 Closed
INSPECTION STANDARD
(IRIS)
-----------------------------------------------------------------------------------------------------------------------------
95E092 Modification of Fire Castle, K.R., Davis, 9/25/1995 533,801 Filed
Detection Optics John E., et al.
Concept
-----------------------------------------------------------------------------------------------------------------------------
95E103 Staring Sensor Davis, J.E. 9/6/1994 300,763 Filed
-----------------------------------------------------------------------------------------------------------------------------
95E109 Electro-optical sensor Creekmore, Vernon 9/2/1994 300,246 Filed
system for use in R., Davis, John E.
observing objects
-----------------------------------------------------------------------------------------------------------------------------
98-362 Thermal Deposition of Santha, Imre 8/5/1998 Closed
Titanium (Ti), Nickel
(Ni), Gold (Au) and
Indium (In) for High
Density and High
Aspect Ratio Pattern
Delineation of Focal
Plane Arrays (FPA), in
Sequential Form
-----------------------------------------------------------------------------------------------------------------------------
00-019 High Temperature Safai, Morteza 1/21/2000 Closed
Remote Infrared Sensor
-----------------------------------------------------------------------------------------------------------------------------
BW87-30 Flir (Forward Looking
Infrared)/Laser
Boresight Tester Lay, Henry P. 8/24/1987 2/4/1988 07 152,401 0 Filed
(F/Lbt)
-----------------------------------------------------------------------------------------------------------------------------
D91-059 Silicon Sputtering of Doscher-Good, Patris 3/21/1991 0 Closed
Organic Films To
Improve Atomic Oxygen
Resistance
-----------------------------------------------------------------------------------------------------------------------------
R-7991 INTEGRATED CIRCUIT 7/30/1990 Filed
CHIP INTERCONNECT
-----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
--------------------------------------------------------------------------
73-141
--------------------------------------------------------------------------
82-181
--------------------------------------------------------------------------
86-031
--------------------------------------------------------------------------
90R103
--------------------------------------------------------------------------
92L065
--------------------------------------------------------------------------
93L050
--------------------------------------------------------------------------
95E092 11/24/1998 5,841,589
--------------------------------------------------------------------------
95E103 3/26/1996 5502309
--------------------------------------------------------------------------
95E109 7/9/1996 5,534,697 3/4/1996
--------------------------------------------------------------------------
98-362
--------------------------------------------------------------------------
00-019
--------------------------------------------------------------------------
BW87-30
4/17/1990 4,917,490
Abandoned Case
--------------------------------------------------------------------------
D91-059
--------------------------------------------------------------------------
R-7991 10/29/1991 5,061,988 Abandoned Case
--------------------------------------------------------------------------
11
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
R-8366 High Temperature 10/28/1997 08/958,224 Filed
Resistive Films and
Cards of Selectable
Resistivity and Method
of Making Same
-----------------------------------------------------------------------------------------------------------------------------
R-8366A DIV High Temperature 4/13/1999 09/298,818 Filed
Resistive Films and
Cards of Selectable
Resistivity and Method
of Making Same
-----------------------------------------------------------------------------------------------------------------------------
R-8475 Substrates and Method 12/11/1995 08/570,634 Filed
for Laser Marking Same
-----------------------------------------------------------------------------------------------------------------------------
R-8712 Digital Frequency 10/28/1997 08/957,915 Filed
Measurement
-----------------------------------------------------------------------------------------------------------------------------
63-047 Prevention of Silicon Jung, Charles 11/18/1964 04 411,972 0 AF04(657)7132 Open
Caking in High
Temperature
Fluidization Process
-----------------------------------------------------------------------------------------------------------------------------
63-441 Long-Path Infrared Palmer, Thomas Y. 8/27/1963 6/10/1964 04 374,063 0 Open
Refractometer and Gas
Sampler
-----------------------------------------------------------------------------------------------------------------------------
70-064 Chemical Interaction Unknown
Between Fluorocarbon
Polymers and Silicones
-----------------------------------------------------------------------------------------------------------------------------
75-048 Infrared Radiant Heat Authorized
Gun
-----------------------------------------------------------------------------------------------------------------------------
77R016 A METHOD FOR Carpenter, H W. 3/15/1977 8/16/1978 05/934,113 0 Filed
PRESSURELESS SINTERING
SILICON BASED CERAMICS
-----------------------------------------------------------------------------------------------------------------------------
77R016A DIV A METHOD FOR Carpenter, H W. 2/21/1979 06/013,103 Filed
PRESSURELESS SINTERING
SILICON BASED CERAMICS
-----------------------------------------------------------------------------------------------------------------------------
77R016A DIV A METHOD FOR
PRESSURELESS SINTERING Carpenter, H W. 2/21/1979 06/013,497 Filed
SILICON BASED CERAMICS
-----------------------------------------------------------------------------------------------------------------------------
80-010 Infrared Boe-Gun Hand Hill, Ricky C. 1/16/1980 0 Closed
Held & Bench Type
-----------------------------------------------------------------------------------------------------------------------------
82-352 A Method of Coloring Lechner, Robert D. 12/7/1982 0 Closed
Cured Silicone Rubbers
-----------------------------------------------------------------------------------------------------------------------------
86R074 AGE TOUGHENED SILICON
NITRIDE/ZIRCONIA Lange, Frederick F. 9/26/1986 0 * Closed
-----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
---------------------------------------------------------------------------
R-8366
---------------------------------------------------------------------------
R-8366A DIV Divisional Appl Pending
---------------------------------------------------------------------------
R-8475 12/29/1998 5,853,955
---------------------------------------------------------------------------
R-8712 2/15/2000 6,026,418 9/8/1999
--------------------------------------------------------------------------
63-047 12/31/1968 3,419,416
--------------------------------------------------------------------------
63-441 1/16/1968 3,364,351
--------------------------------------------------------------------------
70-064
--------------------------------------------------------------------------
75-048
--------------------------------------------------------------------------
77R016 6/24/1980 4,209,478 Patent Expired: 8/16/98
--------------------------------------------------------------------------
77R016A DIV Abandoned Case
--------------------------------------------------------------------------
77R016A DIV
Abandoned Case
--------------------------------------------------------------------------
80-010
--------------------------------------------------------------------------
82-352
--------------------------------------------------------------------------
86R074
--------------------------------------------------------------------------
12
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
COMPOSITES
-----------------------------------------------------------------------------------------------------------------------------
88E003 Silicone Rubber Edwards, P N. 10/14/1987 0 n/a Closed
Sealant Materials for
Use Below -25 Degrees
Centigrade
-----------------------------------------------------------------------------------------------------------------------------
88E073 Resistive Planar Star Trinh, T N. 12/11/1988 4/2/1991 679,400 0 n/a Filed
Double-balanced Mixer
-----------------------------------------------------------------------------------------------------------------------------
93ST023 OPTICAL-THERMAL,
INFRARED-RADIATION Nguyen, Bich N. 3/10/1993 0 * Closed
HEATING SYSTEM
-----------------------------------------------------------------------------------------------------------------------------
96-024 Forward Looking Andrew, Jim 1/23/1996 -1 N00019-93-C- Closed
Infrared Technology 000
Insertion for the V-22
-----------------------------------------------------------------------------------------------------------------------------
96-090 Minimum Impact Ladd, Michael M. 4/17/1996 7/22/1997 08 943,972 -1 * Filed
Infrared Control System
-----------------------------------------------------------------------------------------------------------------------------
96ST013 METHOD FOR Roxby, Don L. 4/1/1996 0 * Closed
CAPTURING/DECODING
MACHINE-READABLE
SYMBOLS USING INFRARED
(THERMAL) IMAGING
TECHNOLOGY
-----------------------------------------------------------------------------------------------------------------------------
97-264 Fiber Optic Garriss, Gregory M. 12/15/1997 0 Open
Mid-Infrared FT-IR
Spectroscopy Grazing
Angle Surface Analysis
Probe
----------------------------------------------------------------------------------------------------------------------------
97ST017 METHOD OF SUBPIXEL
RESOLUTION CREATION 11/13/1996
USING EXISTING FOCAL Beauregard, J 0 * Open
PLANE STRUCTURES
----------------------------------------------------------------------------------------------------------------------------
99-130 Flying Infrared for Guell, Jeff J. 5/4/1999 6/30/1999 60/141,922 Filed
Low-level Operations
(FLILO)
----------------------------------------------------------------------------------------------------------------------------
99-130 Flying Infrared for Guell, Jeff J. 6/30/2000 09/608,234 Filed
Low-level Operations
(FLILO)
----------------------------------------------------------------------------------------------------------------------------
A83-065 Infrared Image Kenyon, Bruce A. 4/11/1983 4/16/1985 06/723,815 0 Filed
Projection System
----------------------------------------------------------------------------------------------------------------------------
A83-069 Silicon Nitride Verzemnieks, Juris 4/25/1993 8/20/1986 06/898,071 -1 F33615-79-C- Open
Articles With 1836
Controlled
Multi-Density Regions
----------------------------------------------------------------------------------------------------------------------------
A84-021 Passive Optical and Gulacsik, Chris 2/17/1984 0 Closed
Infrared Scanner
----------------------------------------------------------------------------------------------------------------------------
A84-092 Infrared Target
Holographic Projection Gilmer, Ernest V. 8/7/1984 0 Closed
System
----------------------------------------------------------------------------------------------------------------------------
A85-001 Step/Slow-Scan Norsworthy, Dr, Keit 1/2/1985 12/30/1986 06/947,858 0 Filed
Infrared Sensor
----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
---------------------------------------------------------------------------
88E003
---------------------------------------------------------------------------
88E073 11/23/1993 5,265,266 3/18/1993
---------------------------------------------------------------------------
93ST023
---------------------------------------------------------------------------
96-024
---------------------------------------------------------------------------
96-090
---------------------------------------------------------------------------
96ST013
---------------------------------------------------------------------------
97-264
--------------------------------------------------------------------------
97ST017
--------------------------------------------------------------------------
99-130 Provisional Application
Abandoned in Favor of Utility
--------------------------------------------------------------------------
99-130 Appl Pending
--------------------------------------------------------------------------
A83-065 9/26/2000 6,123,288 5/23/2000
--------------------------------------------------------------------------
A83-069 4/7/1992 5,103,239 4/7/1992 Patent Expired: 04/07/96
--------------------------------------------------------------------------
A84-021
--------------------------------------------------------------------------
A84-092
--------------------------------------------------------------------------
A85-001 8/30/1988 4,767,937
--------------------------------------------------------------------------
13
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
A87-021 Silicon Infrared Plaag, Robert E. 3/13/1987 0 Closed
Optical Gate
-----------------------------------------------------------------------------------------------------------------------------
A87-118 Simulated Blackbody
for Infrared Scene Park, Ernest D. 11/25/1987 0 Closed
Generation
-----------------------------------------------------------------------------------------------------------------------------
A90-045 Spike-Noise
Suppression in Walmsley, Charles 3/20/1990 0 Closed
Infrared Sensors
-----------------------------------------------------------------------------------------------------------------------------
A90-097 Infrared Target Board Jones, C. Stanley 8/10/1990 0 Closed
-----------------------------------------------------------------------------------------------------------------------------
BW86-55 Sensitive Element for Wode, Melvin G. 11/24/1986 4/21/1988 07/184,190 0 Open
an Infrared
Photocathode
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0458 Infrared Energy Inglee, Clinton F. 9/22/1982 06/420,167 0 Filed
Detection Device
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0461 Infrared Radiation
Filter Lens for van Winkle, George W 0 Open
Aircraft Lights
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0562 Hybrid Semi-Strapdown Pinson, George T. 0 Closed
Infrared Seeker
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0905 Infrared Converter Wode, Melvin G. 0 Open
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0905 Infrared Converter Reinhold, Ralph R. 0 Open
-----------------------------------------------------------------------------------------------------------------------------
D&SG-0945 Method and Apparatus Pinson, George T. 0 Closed
for Covertly Viewing a
Target Using Infrared
Radiation
-----------------------------------------------------------------------------------------------------------------------------
D91-173 Variably Emissive Kosnik, Kenneth G. 10/21/1991 0 Closed
Surfaces That Are
Infrared Band Selective
-----------------------------------------------------------------------------------------------------------------------------
D91-194 The Use of a Low Avery, James E. 12/4/1991 2/25/1992 07/840,509 0 Filed
Bandgap Infrared
Sensitive Solar Cell
as a Bypass Diode in a
Voltage Matched Tandem
Cell Circuit
-----------------------------------------------------------------------------------------------------------------------------
D91-194A The Use of a Low
CIP Bandgap Infrared 7/26/1993
Sensitive Solar Cell
as a Bypass Diode in a Avery, James E. 08/097,353 Filed
Voltage Matched Tandem
Cell Circuit
-----------------------------------------------------------------------------------------------------------------------------
D93-042 Antenna-Coupled Li, Kin 4/9/1993 0 Closed
Detector Array for
Infrared Imaging
Application
-----------------------------------------------------------------------------------------------------------------------------
E87-042 Stocastic Focal Plane Norsworthy, Dr, Keit 7/7/1987 2/23/1988 07/159,538 0 Filed
-----------------------------------------------------------------------------------------------------------------------------
E88-007 A Novel Method of Tanielian, Minas H. 1/15/1987 11/26/1990 07/618,056 0 Filed
Forming Feedthroughs
for Electrical and/Or
Thermal Conduction
Between the Front and
Back of Silicon Wafer
-----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
---------------------------------------------------------------------------
A87-021
---------------------------------------------------------------------------
A87-118
---------------------------------------------------------------------------
A90-045
---------------------------------------------------------------------------
A90-097
---------------------------------------------------------------------------
BW86-55 4/3/1990 4,914,296 Abandoned Case - Expired
---------------------------------------------------------------------------
D&SG-0458 11/6/1984 4,481,417
---------------------------------------------------------------------------
D&SG-0461
---------------------------------------------------------------------------
D&SG-0562
---------------------------------------------------------------------------
D&SG-0905 Listed Twice (see below)
---------------------------------------------------------------------------
D&SG-0905 ***
---------------------------------------------------------------------------
D&SG-0945
---------------------------------------------------------------------------
D91-173
---------------------------------------------------------------------------
D91-194 9/28/1993 5,248,346
---------------------------------------------------------------------------
D91-194A
CIP
2/14/1995 5,389,158
---------------------------------------------------------------------------
D93-042
---------------------------------------------------------------------------
E87-042 10/17/1995 5,459,319 7/21/1994
---------------------------------------------------------------------------
E88-007 11/24/1992 5,166,097
---------------------------------------------------------------------------
14
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
Conduction Between the
Front and Back of
Silicon Wafer
-----------------------------------------------------------------------------------------------------------------------------
E88-007A A Novel Method of
DIV Forming Feedthroughs
for Electrical and/Or
Thermal Conduction Tanielian, Minas H. 11/20/1992 07/979.297 Filed
Between the Front and
Back of Silicon Wafer
-----------------------------------------------------------------------------------------------------------------------------
E88-007B A Novel Method of Tanielian, Minas H. 10/18/1994 08/325,548 Filed
FWC Forming Feedthroughs
for Electrical and/Or
Thermal Conduction
Between the Front and
Back of Silicon Wafer
-----------------------------------------------------------------------------------------------------------------------------
E89-009 A Coaxial Dual Mode Vacanti, David C. 3/8/1989 12/11/1991 07/804,720 0 Open
Antenna System for
Infrared and
-----------------------------------------------------------------------------------------------------------------------------
H-379 High Responsivity
Thermochronic Infrared Morris, Henry B. 10/3/1997 08/949,325 Filed
Detector
-----------------------------------------------------------------------------------------------------------------------------
H-379A High Responsivity Morris, Henry B. 2/24/1999 09/256,198 Filed
DIV Thermochronic Infrared
Detector
-----------------------------------------------------------------------------------------------------------------------------
H-379 PCT High Responsivity Morris, Henry B. 10/2/1998 PCT/US98/20844 Filed
Thermochronic Infrared
Detector
-----------------------------------------------------------------------------------------------------------------------------
R-3084 "Interferometer for Unknown
Measuring Frequency
Separation of Lasers"
& "Chirped Synthetic
Wavelength Radar"
-----------------------------------------------------------------------------------------------------------------------------
R-3117 Coordinate Measuring Unknown
Instrument
-----------------------------------------------------------------------------------------------------------------------------
R-7050 SURFACE HOLD DOWN 3/15/1982 Filed
MECHANISM
-----------------------------------------------------------------------------------------------------------------------------
R-7338 ANALOG TO DIGITAL 10/28/1985 Filed
CONVERSION
-----------------------------------------------------------------------------------------------------------------------------
R-7539 DIGITAL SYNCHRONOUS 12/30/1988 Filed
DETECTOR SAMPLING
-----------------------------------------------------------------------------------------------------------------------------
R-7783 Transient Waveform 3/15/1988 07/168,448 Filed
Generator
-----------------------------------------------------------------------------------------------------------------------------
R-7869 Wavelength Shift
Switch and Sensing 10/17/1988 07/258,557 Filed
System
-----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
---------------------------------------------------------------------------
E88-007A
DIV
Divisional Abandoned
---------------------------------------------------------------------------
E88-007B 4/23/1996 5,510,655 7/20/1995 File Wrapper Continuation
FWC
---------------------------------------------------------------------------
E89-009 3/29/1994 5,298,909 10/19/1993
---------------------------------------------------------------------------
H-379
5/4/1999 5,900,799
---------------------------------------------------------------------------
H-379A 9/19/2000 6,121,618 5/16/2000
DIV
---------------------------------------------------------------------------
H-379 PCT PCT Case Abandoned
---------------------------------------------------------------------------
R-3084
---------------------------------------------------------------------------
R-3117
---------------------------------------------------------------------------
R-7050 2/12/1985 4,498,647
---------------------------------------------------------------------------
R-7338 5/12/1987 4,665,382
Abandoned Case: Expired
---------------------------------------------------------------------------
R-7539 2/19/1991 4,994,991
---------------------------------------------------------------------------
R-7783 6/6/1989 4,837,525
Abandoned Case
---------------------------------------------------------------------------
R-7869
4/24/1990 4,919,512
---------------------------------------------------------------------------
15
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
R-7983 Isothermal Panel and 5/11/1988 07/192,610 Filed
Plenum
-----------------------------------------------------------------------------------------------------------------------------
R-8215 PROCESS FOR PRODUCING 5/1/1992 -1 NAS9-18200 Filed
A HIGH EMITTANCE
COATING AND RESULTING
ARTICLE
-----------------------------------------------------------------------------------------------------------------------------
R-8238 HIGH EMITTANCE, LOW 5/26/1992 -1 NAS9-18200 Filed
ABSORPTANCE COATINGS
-----------------------------------------------------------------------------------------------------------------------------
R-8311 Adaptive Infrared Howard, B. M. 9/23/1996 08/717,758 Filed
Modulator
-----------------------------------------------------------------------------------------------------------------------------
R-8311 WO Adaptive Infrared Howard, B. M. 9/18/1997 PCT/US97/15904 Filed
Modulator
-----------------------------------------------------------------------------------------------------------------------------
R-8355A CON Process for Protecting 7/8/1997 08/889,548 Filed
Optical Properties of
Thermal Central
Coating
-----------------------------------------------------------------------------------------------------------------------------
R-8355A CPA Process for Protecting 4/28/1995 08/431/688 Filed
Optical Properties of
a Thermal Central
Coating
-----------------------------------------------------------------------------------------------------------------------------
R-8357 METHOD AND SYSTEM FOR 12/24/1991 813,872 Filed
REMOVING A COATING
FROM A SUBSTRATE USING
RADIANT ENERGY AND A
PARTI
-----------------------------------------------------------------------------------------------------------------------------
R-8368 Ultra-Stabel Gain 12/28/1995 08/581,322 Filed
Circuit
-----------------------------------------------------------------------------------------------------------------------------
R-8404 Articles with Stable
Coatings having 4/25/1994 08/232,627 Filed
Tailorable Optical
Properties
-----------------------------------------------------------------------------------------------------------------------------
R-8505 Light Weight Reflector 7/12/1994 08/273,786 Filed
Facet
-----------------------------------------------------------------------------------------------------------------------------
R-8505A FWC Light Weight Reflector 1/21/1997 08/786,146 Filed
Facet
-----------------------------------------------------------------------------------------------------------------------------
R-8505B DIV Light Weight Reflector 5/1/1998 09/071,338 Filed
Facet
-----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
--------------------------------------------------------------------------
R-7983 1/30/1990 4,896,719
--------------------------------------------------------------------------
R-8215 6/8/1993 5,217,600
--------------------------------------------------------------------------
R-8238 3/22/1994 5,296,285
--------------------------------------------------------------------------
R-8311 6/30/1998 5,774,255
--------------------------------------------------------------------------
R-8311 WO PCT Abandoned
--------------------------------------------------------------------------
R-8355A CON 3/23/1999 5,885,658 Continuation of Divisional
08/653,775 - Abandoned
5/28/96, which is a division
of 08/431,688, which is a
continuation of 07/927,002,
abandoned.
---------------------------------------------------------------------------
R-8355A CPA Continuation of 07/927,002
filed 8/10/92 which is
Abandoned. CPA Pending.
---------------------------------------------------------------------------
R-8357 7/12/1994 5,328,517
---------------------------------------------------------------------------
R-8368 7/22/1997 5,650,748
---------------------------------------------------------------------------
R-8404
---------------------------------------------------------------------------
R-8505
Abandoned Case
---------------------------------------------------------------------------
R-8505A FWC 5/12/1998 5,751,503 File Wrapper Continuation
Granted
---------------------------------------------------------------------------
R-8505B DIV 9/21/1999 5,956,191
Divisional Granted
---------------------------------------------------------------------------
16
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
R-8513 Multilayer Radome 2/16/1996 08/602,900 Filed
Structure And Its
Fabrication
-----------------------------------------------------------------------------------------------------------------------------
R-8513A DIV Multilayer Radome 7/15/1997 08/893,208 Filed
Structure And Its
Fabrication
-----------------------------------------------------------------------------------------------------------------------------
R-8513 WO Multilayer Radome
Structure And Its 2/16/1996 US97/02272 Filed
Fabrication
-----------------------------------------------------------------------------------------------------------------------------
R-8561 RFI Suppression 8/10/1994 08/288,373 Filed
Circuit and Method
-----------------------------------------------------------------------------------------------------------------------------
R-8561 EP RFI Suppression 8/8/1995 95943564.5 Filed
Circuit and Method
-----------------------------------------------------------------------------------------------------------------------------
R-8579 MICROMACHINED INFRARED MADDING, R 9/27/1996 FILED
GEN
-----------------------------------------------------------------------------------------------------------------------------
R-8606 Ionizing Film
Lightning Test Method 10/29/1996 08/741,379 Filed
and Apparatus
-----------------------------------------------------------------------------------------------------------------------------
R-8606 WO Ionizing Film PCT/US97/17946 Filed
Lightning Test Method
and Apparatus
-----------------------------------------------------------------------------------------------------------------------------
R-8615 Method for Analyzing 10/1/1996 08/723,104 -1 NAS8-39400 Filed
Structures having
Deformable Rigid
Elements
-----------------------------------------------------------------------------------------------------------------------------
R-8615A Method for Analyzing 4/3/1997 08/832,311 Filed
DIV Structures having
Deformable Rigid
Elements
-----------------------------------------------------------------------------------------------------------------------------
R-8615B Method for Analyzing
CON Structures having 11/19/1997 08/974,256 Filed
Deformable Rigid
Elements
-----------------------------------------------------------------------------------------------------------------------------
R-8674 Modular Solid State 7/16/1997 08/893,304 Filed
Power Controller
-----------------------------------------------------------------------------------------------------------------------------
R-8677 Trivalent Chromium
Electroplating 11/18/1996 08/751,266 Filed
Compositions
-----------------------------------------------------------------------------------------------------------------------------
R-8718 Multilayer Circuit
Board with 10/3/1997 08/943,948 Filed
Electrically
Resisitive Heating
Element
-----------------------------------------------------------------------------------------------------------------------------
R-8940 Bead Damping Devices
for Noise and Closed
Vibration Control
-----------------------------------------------------------------------------------------------------------------------------
R-8229 HEMISPHERIC
MATRIXSIZED IMAGING 5/13/1993 Filed
OPTICAL SYSTEM
-----------------------------------------------------------------------------------------------------------------------------
R-8196 DIGITAL IMAGE SYSTEM 5/23/1994 Filed
FOR DETERMINING
RELATIVE POSITION AND
MOTION OF IN-FLIGHT
VEHICLES
-----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
--------------------------------------------------------------------------
R-8513 1/13/1998 5,707,723
--------------------------------------------------------------------------
R-8513A DIV 12/13/1998 5,849,234 Divisional Granted
--------------------------------------------------------------------------
R-8513 WO
PCT Abandoned
--------------------------------------------------------------------------
R-8561 12/5/1995 5,473,332
--------------------------------------------------------------------------
R-8561 EP EPO Case Pending
--------------------------------------------------------------------------
R-8579
???
--------------------------------------------------------------------------
R-8606
7/7/1998 5,777,479
--------------------------------------------------------------------------
R-8606 WO PCT Abandoned
--------------------------------------------------------------------------
R-8615 Abandoned Case
--------------------------------------------------------------------------
R-8615A 7/7/1998 5,777,236
DIV
--------------------------------------------------------------------------
R-8615B
CON 11/24/1998 5,841/040
--------------------------------------------------------------------------
R-8674 5/12/1998 5,752,047
--------------------------------------------------------------------------
R-8677
Abandoned Case
--------------------------------------------------------------------------
R-8718
9/5/2000 6,114,674 9/27/1999
--------------------------------------------------------------------------
R-8940
--------------------------------------------------------------------------
R-8229
7/16/1995 5,434,406
--------------------------------------------------------------------------
R-8196 2/20/1996 5,493,392
--------------------------------------------------------------------------
17
Annex to SCHEDULE C
NON-EXCLUSIVE INTELLECTUAL PROPERTY - PATENTS, Patent Applications
and DISCLOSURES
-----------------------------------------------------------------------------------------------------------------------------
CaseNumber Title Inventor Date File Date ApplNumber Reportable Gov Contract Disclosure
Received Invention Number Status
-----------------------------------------------------------------------------------------------------------------------------
01-312 SILHOUETTE TRACKING Authorized
ALGORITHM FOR ALTITUDE Thomas P. Weismulleri 5-16-01 - not
DETERMINATION yet filed
-----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
CaseNumber Issue Date Patent Allowance Comments
Number Date
--------------------------------------------------------------------------
01-312
--------------------------------------------------------------------------
18
Schedule 3.9
Distribution Agreement
o A copy of the Agreement and Plan of Distribution dated as of December 6,
1996 among Rockwell International Corporation, New Rockwell International
Corporation, and various operating subsidiaries of Rockwell International
Corporation, and as stated in Section 20 of the Transition Agreement by
and among New Rockwell International Corporation (to be renamed Rockwell
International Corporation), The Boeing Company, and Rockwell International
Corporation (to be renamed Boeing North American, Inc.) has been delivered
to Buyer and is incorporated herein by reference.
19
SCHEDULE 4.1(g)
THIRD PARTY AGREEMENTS CONTAINING LICENSING OBLIGATIONS
1. The General Agreement between Airbus Industrie GIE and The Boeing Company
for the Settlement of Patent Disputes, dated July 16, 1999. There is an
obligation to grant licenses to Airbus in certain patents pursuant to such
Agreement.
2. The Cross-License Agreement between Lockheed Corporation (now Lockheed
Martin Corporation) and The Boeing Company, dated May 12, 1978. There is
an obligation to grant licenses to Lockheed in patents and patent
applications relating to airplanes or airplane parts pursuant to such
Agreement.
3. The Commission Decision, dated July 30, 1997, of the Commission of the
European Communities, requires Seller to license on a non-exclusive
reasonable-royalty basis, upon request of another aircraft manufacturer,
government funded patents (which could be used in the manufacture or sale
of commercial jet aircraft) and blocking patents, including related
know-how.
20
SCHEDULE 4.1(h)
GRANTS OF LICENSES TO THIRD PARTIES
1. The following cases, identified by case number, including US and
foreign patents/applications, have been non-exclusively licensed to
Honeywell, Inc:
a. 94SC055
b. 94E017
2. A non-assertion of patents of Seller against Honeywell, Inc (and its
vendees or transferees) for infringement if based on the use of the
MEMS technology transferred to Honeywell by Seller under an Asset
Purchase Agreement dated April 13, 1999.
3. Seller has agreed, under various US government contracts that it has
entered into, to standard procurement regulation provisions, e.g.,
FAR and DFARS, pursuant to which the US Government is granted rights
in certain technical data and software.
4. Seller has entered into non-disclosure agreements/provisions with
various companies, such as suppliers and customers, to carry out its
business. Rights to use Seller proprietary information on a
restricted basis are normally granted under such
agreements/provisions.
5. A cross-license of intellectual property as set forth in Section
4.2(a) of the Agreement and Plan of Distribution dated as of December
6, 1996 among Rockwell International Corporation, New Rockwell
International Corporation, and various operating subsidiaries of
Rockwell International Corporation, and as stated in Section 20 of
the Transition Agreement by and among New Rockwell International
Corporation (to be renamed Rockwell International Corporation), The
Boeing Company, and Rockwell International Corporation (to be renamed
Boeing North American, Inc.) dated as of December 6, 1996.
6. Rights of Rockwell International Corporation as set forth in Sections
2 and 20 of the Transition Agreement by and among New Rockwell
International Corporation (to be renamed Rockwell International
Corporation), The Boeing Company, and Rockwell International
Corporation (to be renamed Boeing North American, Inc.) dated as of
December 6, 1996, relative to intellectual property resulting from
services performed by the Rockwell Science Center for (or in a joint
project with) Seller pursuant to such Agreement.
21
SCHEDULE 4.2
EXCEPTIONS
1. Assignments of some of the cases transferred to Seller in the 1996
acquisition of the Aerospace and Defense Businesses of Rockwell
International and the 1997 acquisition of the McDonnell Douglas
Corporation have not been recorded. Seller will, at its expense, assist
Buyer, on Buyer's request, in the recording of any such cases into the
name of Buyer, to the extent of providing documentation to confirm
ownership of Seller (before the assignment to Buyer under this Agreement),
and any other documentation necessary to enable Buyer to record its
ownership interest in such cases, and Seller will pay for any associated
recording costs in the U.S. Patent Office (to the extent such recording
costs are in addition to the standard costs which would be paid by Buyer
to record the assignment under this Agreement if such cases had been
recorded in the name of Seller).
2. The Conexant Corporation, a Rockwell spinoff, previously claimed that a
number of patents, which only include relative to this Agreement, Case
Numbers 86SC013 and 94SC055, which were assigned to Seller in the sale of
the Rockwell Aerospace and Defense businesses, should have been retained
by Rockwell and subsequently transferred to Conexant with its spinoff in
January 1999. In negotiations to resolve this matter, Conexant has agreed
that Case Numbers 86SC013 and 94SC055 were correctly assigned to Seller
and that Conexant has no claim to ownership thereof.
3. Assigned Intellectual Property and Exclusive Intellectual Property
includes proprietary information of Honeywell Inc. which was provided to
Seller under the Honeywell License Agreement (as described in Section 1.8
of this Agreement, and assigned to Buyer under the Purchase Agreement). In
addition, certain payments to Honeywell Inc. may be required under said
Agreement in connection with the use of such Intellectual Property.
22
EXHIBIT B
TRANSITIONAL SERVICES AGREEMENT
EXCUTION COPY
EXHIBIT B
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is dated as of
this 3rd day of August, 2001, by and between The Boeing Company, a Delaware
corporation ("Seller"), and DRS Technologies, Inc., a Delaware corporation
("Buyer").
BACKGROUND
Seller and Buyer are the parties to that certain Asset Purchase
Agreement dated as of August 3, 2001 (the "Asset Purchase Agreement").
Seller has been providing certain services to the Business and Seller
and Buyer desire that Seller continue providing such services on the terms
contained herein.
In connection with the transition contemplated hereby, Seller desires
that Buyer provide certain services related to Seller's occupancy of certain
Leased Premises (as depicted in Exhibit A of the Building 241 Lease) and the
Temporary Areas (as defined below).
The Asset Purchase Agreement contemplates the execution and delivery of
this Agreement.
All capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement.
TERMS
In consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE 1
---------
SERVICES
--------
1.1. SERVICES.
(a) During the term of this Agreement, subject to the terms and
conditions set forth herein, each party (the "Providing Party") agrees to
provide to the other party (the "Receiving Party") the transition services,
support, facilities and other resources set forth in EXHIBIT A and EXHIBIT B
hereto, as applicable. Each category described in EXHIBIT A and EXHIBIT B is
defined herein as a "Service" and together are defined herein as the "Services."
The Providing Party shall provide the Services in good faith and, with respect
to Services to be provided by Seller, at a level and quality substantially
equivalent to that provided by Seller for the Business in accordance with its
past practices prior to the Closing Date, subject to such mutually agreed upon
adjustments in the manner Seller provides such Services as are appropriate to
reflect the transfer of the Business to Buyer.
1 of 14
(b) For thirty (30) days following the Closing Date, any additional
services currently provided by Seller to and in support of the Business may be
included as Services pursuant to this Agreement, as reasonably requested by
Buyer and agreed to by the Seller, providing that such agreement shall not be
unreasonably withheld by Seller. Such additional services shall be provided at a
cost to be determined by the parties.
(c) To the extent that the exhibits to this Agreement, or portions
thereof, are indicated as "incomplete" or "open," Buyer and Seller shall use
their reasonable best efforts to complete such exhibits by mutual agreement
prior to the Closing Date.
1.2 CHANGE IN SERVICES. In the event Seller implements changes in the
method of providing Services to its operating units (including changes in
personnel, systems, programs and procedures), with the prior written consent of
Buyer, which consent shall not be unreasonably withheld, Seller may make such
changes in the Services provided hereunder, provided that the Services provided
hereunder are equivalent in terms of scope, depth and quality as the comparable
services, support, facilities and other resources provided to such other
operating units. Buyer shall notify Seller of any change in the Business
subsequent to the Closing Date which is reasonably likely to affect Seller's
obligations under this Agreement. A change to the Business made by Buyer that
causes Seller to unreasonably incur additional costs to continue to provide a
particular Service, makes it unduly burdensome for Seller to provide a
particular Service or substantially alters the level, scope and quality of a
particular Service contemplated by this Agreement will relieve Seller of its
responsibility to provide such Service, unless agreed to in advance by Seller.
In the event Buyer implements changes in the method of providing
Services to Seller as contemplated hereby, with the prior written consent of
Seller, which consent shall not be unreasonably withheld, Buyer may make such
changes in the Services provided hereunder, provided that the Services provided
hereunder are equivalent in terms of scope, depth and quality as comparable
services provided by Buyer to Seller. Seller shall notify Buyer of any change
subsequent to the Closing Date which is reasonably likely to affect Buyer's
obligations under this Agreement. Any change made by Seller that affects the
ability of Buyer to continue to provide a particular Service contemplated by
this Agreement will relieve Buyer of its responsibility to provide such Service,
unless agreed to in advance by Buyer.
1.3 TRANSITION PLAN. Buyer, with reasonable support and assistance from
Seller, will oversee the preparation of the transition plan (the "Transition
Plan") pursuant to which Buyer will evaluate each of the Services and determine
whether to (a) provide such services internally, (b) obtain such services from
third parties or (c) continue to obtain such services from Seller to the extent
provided under this Agreement. Buyer and Seller shall use reasonable efforts to
assist and cooperate with one another in implementing the transfer of
facilities, equipment and functions as set forth in the Transition Plan. Each
party, at its own expense except as otherwise set forth in the exhibits to this
Agreement, shall, in good faith, make available to the other, in a manner which
does not materially interrupt the ongoing operations of the other party, the
personnel reasonably needed to facilitate such orderly transfer, including,
without limitation, general consultation related thereto.
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1.4 ENVIRONMENTAL MATTERS. Neither party will use, generate, release,
store or deposit at or transport to or from the areas temporarily occupied by a
party pursuant to this Agreement (the "Temporary Areas") or any building or real
property of which the Temporary Areas are a part, any Hazardous Materials (as
defined in the Asset Purchase Agreement), except that each party may use such
materials in quantities and in a manner consistent with normal office operations
and normal operations of the Business as conducted on the Closing Date; provided
that neither party shall use such materials in any manner which may give rise to
liability for environmental cleanup, damage to property, or personal injury to
the Employees, Seller's employees, or any other person and provided further that
any such use shall be in compliance with all applicable laws and legal
requirements relating to the protection of human health and the environment.
Without in any way limiting the generality of the foregoing, each party will
provide to the other party, within 10 working days after the Closing Date, a
report listing the names and quantities of all Hazardous Materials to be used,
generated or stored by such party (other than those used, generated or stored in
normal office operations) in the Temporary Areas owned or leased by the other
party. Throughout the term of this Agreement, each party shall notify the other
party within 10 working days after any of the following occurrences: (1) such
party increases the amount of a previously disclosed Hazardous Material so that
at any one time its storage, use or generation of such Hazardous Materials
exceeds 55 gallons, 500 lbs. or 200 cubic feet annually; (2) such party adds a
new Hazardous Material in an amount such that at any one time its storage, use
or generation of such Hazardous Materials exceeds 55 gallons, 500 lbs. or 200
cubic feet annually; or (3) such party increases the quantity of its storage,
use or generation of any previously identified Hazardous Material by 100% or
more.
1.5. FEE; PAYMENT. The Receiving Party shall pay to the Providing Party
the fee indicated opposite each Service on EXHIBIT A or EXHIBIT B hereto, as
applicable (the "Fees"). To the extent that the Providing Party provides
Services to the Receiving Party pursuant to this Agreement, the Providing Party
will invoice the Receiving Party for the applicable amounts of such Fees on a
monthly basis or at such other frequency as the parties might otherwise agree,
providing reasonable detail as to the calculation thereof, and the Receiving
Party will pay each invoice within twenty (20) days after such invoice has been
duly given to the Buyer.
To the extent that the Seller owes any Fees to Buyer, the Seller may at
its sole discretion offset such Fees with (i) any Fees owed by the Buyer to the
Seller or (ii) any payments of invoices by the Seller for purchases on behalf of
the Seller in connection with the Business on and after the Closing Date. If the
net difference between the Seller's Fees to the Buyer and the sum of clauses (i)
and (ii) in the previous sentence exceeds $100,000, Buyer shall pay the excess
within five (5) business days after a written notification of such excess has
been duly given to the Buyer.
1.6. AUDIT OF TRANSITION SERVICES. Quarterly, or more frequently as may
be reasonably determined by the parties, upon reasonable notice and during
normal business hours, Seller shall permit Buyer or its authorized
representatives to examine and make copies and abstracts from the books and
records of the Seller pertaining directly to the Services for the purpose of
auditing the performance of, and the charges of, the Seller under the terms of
this Agreement. Cost of this audit, and any support required from the Seller,
shall be at the Buyer's expense.
ARTICLE 2
---------
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REPRESENTATIONS AND WARRANTIES
------------------------------
2.1. REPRESENTATIONS OF SELLER. Seller represents and warrants to Buyer
as follows:
(a) Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Seller is duly
qualified or licensed to do business in each jurisdiction in which the property
relating to the Business is owned, leased or operated by Seller or the nature of
the Business makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified or licensed do not individually or in the
aggregate have a Material Adverse Effect. Seller has the requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings
required to be taken by Seller to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken. This Agreement has been,
and when executed, will be, duly executed and delivered by Seller and
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(b) The execution and delivery of this Agreement does not and will
not, and the consummation of the transactions and compliance with the terms of
this Agreement will not conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Seller under, any provision of (i) the Certificate of
Incorporation or By-Laws or other organizational or governing documents of
Seller, (ii) except as provided in the Asset Purchase Agreement and the
disclosure schedules thereto, any Contractual Obligation of Seller, or (iii)
except as provided in the Asset Purchase Agreement and the disclosure schedules
thereto, any judgment, order or decree or, Requirement of Law applicable to
Seller or their respective property or assets, other than, in the case of
clauses (ii) and (iii) above, any such conflicts, violations, defaults, rights
or Liens that, individually or in the aggregate, would not have a Material
Adverse Effect.
(c) No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Seller in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, other than as provided in the Asset Purchase
Agreement and the disclosure schedules thereto.
2.2. REPRESENTATIONS OF BUYER. Buyer represents and warrants to Seller
as follows:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Buyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings
required to be taken by Buyer to authorize the
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execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and properly taken. This Agreement has been,
and when executed, will be, duly executed and delivered by Buyer and constitutes
valid and binding obligations of Buyer, enforceable against Buyer in accordance
with its respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or by general principles (regardless of
whether such enforceability is considered in a proceeding in equity or law).
(b) The execution and delivery of this Agreement does not and will
not, and the consummation of the transactions and compliance with the terms of
this Agreement will not conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of Buyer under, any provision of (i) the Certificate of
Incorporation or By-Laws of Buyer, (ii) any Contractual Obligation of Buyer or
(iii) except as provided in the Asset Purchase Agreement, any judgment, order or
decree or statute, law, ordinance, rule or regulation applicable to Buyer or its
property or assets, other than, in the case of clauses (ii) and (iii) above, any
such conflicts, violations, defaults, rights or Liens that, individually or in
the aggregate, would not have a Material Adverse Effect.
(c) No material consent, approval, license, permit order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other Governmental Authority is required
to be obtained or made by or with respect to Buyer or its Affiliates in
connection with the execution and delivery of this Agreement or the consummation
by Buyer of the transactions contemplated hereby, other than as provided in the
Asset Purchase Agreement.
ARTICLE 3
---------
TERM AND TERMINATION
--------------------
3.1 TERM OF AGREEMENT. The Providing Party shall continue to make the
Services available pursuant to this Agreement for the periods set forth such
Services in EXHIBIT A and EXHIBIT B hereto, as applicable, starting upon the
Effective Date and shall continue until the termination of all Services in
accordance herewith. Notwithstanding the foregoing, the Receiving Party may
discontinue (or reduce the amount of) any of the Services (and the related
payment obligations) by providing the Providing Party (i) with written Service
Termination Notice (as defined below) timely delivered to the Providing Party in
accordance with Section 3.2, identifying the specific Service to be terminated
or (ii) upon expiration of the time period designated for providing such Service
in EXHIBIT A or EXHIBIT B hereto (as to such Service, the "Service Period");
PROVIDED, if Seller and Buyer mutually agree that such terminated Service is
indispensable for the provision of another Service or if such terminated Service
is identified on EXHIBIT C hereto ( a "Dependant Service"), Buyer may not
terminate such Service unless the additional Dependant Service is also
terminated.
3.2 TERMINATION OF SERVICES. The Receiving Party may, at its option and
in its sole discretion, terminate or reduce the amount of any Service by
delivering written notice to the
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Providing Party (a "Service Termination Notice") at least 75 days (or such other
period of time as may be specified for a Service in EXHIBIT A or EXHIBIT B
hereto) (the "Termination Notice Period") before the effective date of
termination of such Service specified in such Service Termination Notice;
PROVIDED, if such terminated Service is indispensable for the provision of a
Dependant Service, Buyer may not terminate such Service unless the Dependant
Service is also terminated. Before and after such effective date of termination,
the parties shall collaborate in good faith and at each party's own expense
except as otherwise set forth in the exhibits to this Agreement, to enable the
Receiving Party to provide such services for itself on a stand-alone basis,
including without limitation by transferring information, books and records. The
Providing Party acknowledges the Receiving Party's right to discontinue (and, as
provided in EXHIBIT A and EXHIBIT B hereto, reduce) all or any portion of the
Services hereunder and agrees that the Receiving Party will have no liability to
the Providing Party for terminating the Services in accordance with this
paragraph and EXHIBIT A and EXHIBIT B hereto. The termination of any Service
shall not affect the parties' obligations with respect to other Services
hereunder except as provided herein. Each party shall bear its own expenses as a
result of the termination of any Service unless otherwise provided for under
this Agreement.
3.3 EVENTS OF DEFAULT. If (a) either party fails to perform in any
material respect any material provision of this Agreement relating to any
Service contemplated hereby, and the failure is not corrected within fifteen
days after the other party gives written notice of default thereof pursuant to
this SECTION 3.3; or (b) if either party fails to make any payment required by
this Agreement relating to any Service to be performed under this Agreement
within fifteen (15) days after receiving written notice from the non-defaulting
party that such payment is past due; then the non-defaulting party may terminate
such Service without prejudice to any other rights and remedies it may have
under this Agreement. If any Service terminated pursuant to this Section 3.3 is
necessary to provide any Dependent Service, then such Dependent Service shall
also be terminated.
ARTICLE 4
---------
MISCELLANEOUS
-------------
4.1 AGREEMENT TO INDEMNIFY.
(a) Subject to Section 4.4 below, Seller hereby agrees to
indemnify and hold harmless Buyer and its Affiliates, each of the foregoing's
respective directors, officers, employees and agents and each of the foregoing's
respective heirs, executors, successors and assigns (collectively, the "Buyer
Indemnified Parties") from and against any and all losses and expenses that any
Buyer Indemnified Party may suffer, incur or be subjected to by reason of any
legal action, proceeding, arbitration or claim by a third party, whether
commenced or threatened (a "Claim") arising out of or as a result of (i) any
breach by Seller or its representations or warranties in Section 2 of this
Agreement or (ii) any breach of any covenant of such party contained in this
Agreement.
(b) Subject to Section 4.4 below and except as set forth in
Section 4.1(a) above, Buyer hereby agrees to indemnify and hold harmless Seller
and its Affiliates, each of the foregoing's
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respective directors, officers, employees and agents and each of the foregoing's
respective heirs, executors, successors and assigns (collectively, the "Seller
Indemnified Parties") from and against any and all losses and expenses that any
Seller Indemnified Party may suffer, incur or be subjected to by reason of any
Claims arising out of or as a result of this Agreement or the transactions
contemplated hereby.
4.2 INDEMNIFICATION PROCEDURES. The parties agree to comply with the
procedures set forth in Article X of the Asset Purchase Agreement with respect
to any Claim by a third party as to which indemnification is sought under
Section 4.1.
4.3. FORCE MAJEURE. Neither party shall be liable for loss arising out
of a failure to perform or a delay in performing any of its obligations under
this Agreement resulting from causes beyond its control, including, but not
limited to, acts of God, fire, flood, explosion, accidents, war, civil disorder,
work stoppages (including strikes or lockouts) resulting from the actions of the
other party, mechanical breakdowns, shortages of labor or regulations of any
civil or military authority. In the event such a curtailment by either party
continues in whole or in part, then the Receiving Party may arrange for
temporary provision of the Services until the Providing Party can resume
provision of the Services to the Receiving Party.
4.4 LIMITATION ON LIABILITY. In the event of any breach by Seller of
this Agreement, including without limitation any defect or deficiency in the
Services provided hereunder, Seller's liability shall not exceed the actual and
reasonable cost of Buyer to acquire the relevant Service elsewhere. In the event
of any defect or deficiency in the Services provided hereunder by Buyer, Buyer's
liability shall not exceed the actual and reasonable cost of acquiring the
relevant Service elsewhere. Buyer and Seller hereby acknowledge that such actual
and reasonable cost may exceed the Fee for such Service set forth in the
exhibits to this Agreement. Under no circumstances shall either party be liable
for any punitive or consequential damages hereunder, including without
limitation loss of profits, revenue, goodwill, cost of capital, diminution in
value or loss of business reputation or opportunity.
4.5. INDEPENDENT CONTRACTOR. This Agreement shall not constitute or
give rise to a partnership or joint venture between the parties. All activities
by the Providing Party hereunder shall be carried on by or on behalf of the
Providing Party as an independent contractor and not as an agent for the
Receiving Party.
4.6 CONFLICTING DOCUMENTS. To the extent that any documents issued in
connection with the provision of the Services by the Providing Party to the
Receiving Party contain terms or conditions which are in conflict with, or
derogate from this Agreement, the terms of this Agreement shall control.
4.7 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) three business days
after mailing if mailed by certified or registered mail, return receipt
requested, (ii) one business day after delivery to Federal Express or other
nationally recognized overnight express carrier, if sent for overnight delivery
with fee prepaid, (iii) upon receipt if sent via facsimile with receipt
confirmed, or (iv) upon receipt if delivered personally, addressed as follows or
to such other address or addresses of which the respective party shall have
notified the other:
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(i) IF TO BUYER, TO:
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, NJ 07054
Attention: Nina Laserson Dunn, Executive Vice President, General
Counsel and Secretary
Telephone: (973) 898-6020
Telecopier: (973) 898-0717
WITH A COPY TO:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Jeffrey Tindell, Esq.
Telephone: (212) 735-3380
Telecopier: (212) 735-2000
(ii) IF TO SELLER, TO:
The Boeing Company
Space & Communications Group
PO Box 2515 WAS-08
Seal Beach, CA 90740-1515
Attention: Valerie Schurman
Vice President and Assistant General Counsel
Address for overnight courier:
WAS-08
2201 Seal Beach Boulevard
Seal Beach, CA 90740-1515
Telephone: (562) 797-1121
Telecopier: (562) 797-5049
WITH A COPY TO:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: Andrew E. Bogen, Esq.
Telephone: (213) 229-7159
Telecopier: (213) 229-6159
8 of 14
4.8. ENTIRE AGREEMENT. The agreement of the parties, which is comprised
of this Agreement and the Exhibits hereto, together with the Asset Purchase
Agreement and other documents referred to herein, sets forth the entire
agreement and understanding between the parties (with respect to the subject
matter hereof and thereof) and supersedes any prior agreement or understanding,
written or oral.
4.9. ASSIGNMENT; BINDING EFFECT; SEVERABILITY. This Agreement may not
be assigned by either party except in conjunction with the sale of the Business
or substantially all of the assets of the Business; PROVIDED, HOWEVER, Seller
may delegate the performance of any of the Services hereunder to any of its
Affiliates with the prior written consent of Buyer, and Buyer may collaterally
assign its rights hereunder to its lenders (and affiliates thereof) under its
Financing Agreements to secure obligations thereto without the prior written
consent of Seller. The provisions of this Agreement are severable, and in the
event that any one or more provisions are deemed illegal or unenforceable the
remaining provisions shall remain in full force and effect unless the deletion
of such provision shall cause this Agreement to become materially adverse to any
party, in which event the parties shall use reasonable efforts to arrive at an
accommodation which best preserves for the parties the benefits and obligations
of the offending provision.
4.10. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws (as opposed to the choice of
laws provisions) of the State of Delaware.
4.11. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto were
upon one instrument and shall be effective when one or more such counterparts
has been signed by each party and delivered to the other party.
4.12. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express
or implied, is intended to or shall (i) confer on any person other than the
parties hereto and their respective successors or permitted assigns any rights
(including third party beneficiary rights), remedies, obligations or liabilities
under or by reason of this Agreement, or (ii) constitute the parties hereto as
partners or as participants in a joint venture. This Agreement shall not provide
third parties with any remedy, claim, liability, reimbursement, cause of action
or other right in excess of those existing without reference to the terms of
this Agreement.
4.13. HEADINGS. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
4.14. AMENDMENT AND WAIVER. The parties may by mutual agreement amend
this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other party, (c) waive
compliance by any other party with any of the agreements contained herein and
performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
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4.15 ADDITIONAL DOCUMENTS. Each party shall promptly execute and
deliver or cause to be executed and delivered such additional documents as are
reasonably required by the other party for the purposes of implementing this
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first above written.
THE BOEING COMPANY
By:
----------------------
Name:
Title:
DRS TECHNOLOGIES, INC.
By:
----------------------
Name:
Title:
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EXHIBIT A
---------
SERVICES TO BE PROVIDED BY SELLER TO BUYER
Open
EXHIBIT B
---------
SERVICES TO BE PROVIDED BY BUYER TO SELLER
Open
EXHIBIT C
---------
DEPENDENT SERVICES
Open
TRANSITION SERVICES AGREEMENT
EXHIBIT B
EXHIBIT A - SELLER SERVICES
SERVICE BASIS OF RATE RATE
------- ------------- ----
RATE DATA ASSUMPTION Where Basis of Rate references "Actual
-------------------- Cost", the billing rate shall be adjusted either
up or down to reflect actual pool rate based on
Boeing rates and factors allocation to other
Boeing departments
TRANSACTION BASED SERVICES
--------------------------
SSG PROVIDED SERVICES
Self Service Copiers Actual Cost based on constant allocation per $ 9.41
person using DRS Headcount at closing date
of 303.
Creative Services Excluded N/A
Lithography Excluded N/A
Mail Services Excluded N/A
Microfilm Services Excluded N/A
Transportation Excluded N/A
Xerography Excluded N/A
Employment Excluded N/A
Travel Accounting Excluded N/A
Payroll Excluded N/A
Timekeeping Excluded N/A
Travel Management Per SLA. Limited to completion of travel by Per SLA
transferrPereSLAoyees initiated prior to Closing
Date. Assumes that Boeing Travel Accounting
will bill DRS directly for any costs associated
with on going TA or charges to Boeing GE
credit cards. Credit cards must be returned
not later than the completion of the authorized
trip or the end of the service period, which
ever is earlier
Records Management Cost Per Month N/A
Boeing People Systems (BPS) Excluded N/A
LOCAL (MD&SC/S&C) SERVICES
Information Systems (Infrastructure Rates)
DESKTOP SUPPORT
Desktop System Support (incl Help Desk & E Mail) Actual Cost Per Keyboard/Per Month excluding $ 245.65
Desktop Break/Fix (Labor incl. in Desktop) refresh costs. T&M (Cost of non-warranted material) Actual Cost
Domino Servers & Administration Actual Cost Per Keyboard $ 19.00
VOICE SUPPORT
Dial Tone Actual Cost Per phone line $ 23.005
COST PER SERVICE TERMINATION
SERVICE MONTH PERIOD NOTICE PERIOD POC (BOEING/DRS)
------- ------ -------------
RATE DATA ASSUMPTION
--------------------
TRANSACTION BASED SERVICES
--------------------------
SSG PROVIDED SERVICES
Self Service Copiers $ 2,851 3 months 30 days Mackey/Rooney
Creative Services None N/A Mackey/Rooney
Lithography None N/A Mackey/Rooney
Mail Services None N/A Mackey/Rooney
Microfilm Services None N/A Mackey/Rooney
Transportation None N/A Mackey/Rooney
Xerography None N/A Mackey/Rooney
Employment None N/A Mackey/Rooney
Travel Accounting None N/A Mackey/Rooney
Payroll None N/A Mackey/Rooney
Timekeeping None N/A Mackey/Rooney
Travel Management NTE 1 month
Records Management $ 350 6 Months 30 days Mackey/Rooney
Boeing People Systems (BPS) None N/A Mackey/Rooney
LOCAL (MD&SC/S&C) SERVICES
Information Systems (Infrastructure Rates)
DESKTOP SUPPORT
Desktop System Support (incl Help Desk & E Mail) 2 Months 60 days Nissen/Walinsky
Desktop Break/Fix (Labor incl. in Desktop) 2 Months 60 days Nissen/Walinsky
Domino Servers & Administration 2 Months 60 days Nissen/Walinsky
VOICE SUPPORT
Dial Tone Base Lease 60 days Nissen/Walinsky
Page 1 of 5
BOEING PROPRIETARY
TRANSITION SERVICES AGREEMENT
EXHIBIT B
EXHIBIT A - SELLER SERVICES
SERVICE BASIS OF RATE RATE
------- ------------- ----
Voice Mail Actual Cost Per phone line $ 2.100
Phones Admin & Building Cabling Actual Cost Per phone line $ 23.000
Calling Card/Domestic Long Distance Excluded N/A
International Long Distance Excluded N/A
Calling Card & Pager Changes Excluded N/A
AMC Hardware No Wire Actual Cost Per Change/event $ 151.734
AMC Hardware With Wire Actual Cost Per Change/event $ 218.603
AMC Premimum No Wire Actual Cost Per Change/event $ 226.840
AMC Premimum With Wire Actual Cost Per Change/event $ 323.023
Telephone Software Changes Actual Cost Per Change/event $ 10.185
Pagers Excluded N/A
Cell Phones (150 min, base) Excluded N/A
Cell Phones Additional Minutes Excluded N/A
MAINFRAME SUPPORT - MUST DISPOSITION ALL DATA PER BOEING PROCESS BEFORE OBLIGATION CAN BE ENDED
Batch CPU Time - Prime Time Actual Cost Per CPU Minute $ 0.552
Batch CPU Time - Non-Prime Time Actual Cost Per CPU Minute $ 0.384
Batch Setup Actual Cost Per Job $ 1.217
TSO CPU Time - Prime Time Actual Cost Per CPU Minute $ 0.647
TSO CPU Time - Non-Prime Time Actual Cost Per CPU Minute $ 0.447
IMS/CICS Time - Prime Time Actual Cost Per CPU Minute $ 0.539
IMS/CICS Time - Non-Prime Time Actual Cost Per CPU Minute $ 0.369
Disk Space 3380 Actual Cost 3380 Track equivalent $ 0.171
Disk Space Actual Cost Megabyte $ 0.226
Tape Reel Storage Actual Cost Per Reel $ 0.511
Tape Reel Storage - Off-site Actual Cost Per Reel $ 0.600
Tape Reel Mount Actual Cost Per Reel Mount $ 1.724
Page Print Actual Cost Per 10K Pages $ 790.000
Data Entry Actual Cost Per 80 Characters $ 0.300
Microfiche Actual Cost Per Fiche $ 1.660
Microfiche Copy Actual Cost Per Fiche $ 0.350
On-line Print Storage (Coins) Actual Cost Per 10K Pages $ 7.000
DISTRIBUTED SERVER
VIDEO SERVICE
Modular Video Excluded N/A
SYSTEMS & PROGRAMMING
Client Server & Mainframe Excluded
Collaborative Domino Excluded
ENGINEERING WORKSTATION SUPPORT
IPDMS (eMatrix) support & Training Actual Cost - Time and Material Actual Cost
3 HP Workstations (IBM lease) Cost Per Month N/A
IT SYSTEMS TRANSITION INTERFACE Actual Cost - Time and Material Actual Cost
COST PER SERVICE TERMINATION
SERVICE MONTH PERIOD NOTICE PERIOD POC (BOEING/DRS)
------- ------ -------------
Voice Mail Base Lease 60 days Nissen/Walinsky
Phones Admin & Building Cabling Base Lease 60 days Nissen/Walinsky
Calling Card/Domestic Long Distance None Nissen/Walinsky
International Long Distance None Nissen/Walinsky
Calling Card & Pager Changes None Nissen/Walinsky
AMC Hardware No Wire Base Lease 60 days Nissen/Walinsky
AMC Hardware With Wire Base Lease 60 days Nissen/Walinsky
AMC Premimum No Wire Base Lease 60 days Nissen/Walinsky
AMC Premimum With Wire Base Lease 60 days Nissen/Walinsky
Telephone Software Changes Base Lease 60 days Nissen/Walinsky
Pagers None Nissen/Walinsky
Cell Phones (150 min, base) None Nissen/Walinsky
Cell Phones Additional Minutes None Nissen/Walinsky
MAINFRAME SUPPORT - MUST DISPOSITION ALL DATA PER BOEING PROCESS BEFORE OBLIGATION CAN BE ENDED
Batch CPU Time - Prime Time 1 Month 30 days Nissen/Walinsky
Batch CPU Time - Non-Prime Time 1 Month 30 days Nissen/Walinsky
Batch Setup 1 Month 30 days Nissen/Walinsky
TSO CPU Time - Prime Time 1 Month 30 days Nissen/Walinsky
TSO CPU Time - Non-Prime Time 1 Month 30 days Nissen/Walinsky
IMS/CICS Time - Prime Time 1 Month 30 days Nissen/Walinsky
IMS/CICS Time - Non-Prime Time 1 Month 30 days Nissen/Walinsky
Disk Space 3380 1 Month 30 days Nissen/Walinsky
Disk Space 1 Month 30 days Nissen/Walinsky
Tape Reel Storage 1 Month 30 days Nissen/Walinsky
Tape Reel Storage - Off-site 1 Month 30 days Nissen/Walinsky
Tape Reel Mount 1 Month 30 days Nissen/Walinsky
Page Print 1 Month 30 days Nissen/Walinsky
Data Entry 1 Month 30 days Nissen/Walinsky
Microfiche 1 Month 30 days Nissen/Walinsky
Microfiche Copy 1 Month 30 days Nissen/Walinsky
On-line Print Storage (Coins) 1 Month 30 days Nissen/Walinsky
DISTRIBUTED SERVER
VIDEO SERVICE
Modular Video None Nissen/Walinsky
SYSTEMS & PROGRAMMING
Client Server & Mainframe Nissen/Walinsky
Collaborative Domino Nissen/Walinsky
ENGINEERING WORKSTATION SUPPORT
IPDMS (eMatrix) support & Training 1 Month 30 days Connelly/Brand
3 HP Workstations (IBM lease) $ 1,659 4 months 30 days Fienstien/Brand
IT SYSTEMS TRANSITION INTERFACE TSA Agreement Nissen/Walinsky
Page 2 of 5
BOEING PROPRIETARY
TRANSITION SERVICES AGREEMENT
EXHIBIT B
EXHIBIT A - SELLER SERVICES
SERVICE BASIS OF RATE RATE
------- ------------- ----
COMPUTER SECURITY Actual Cost Per Head on Boeing Systems/Per $ 8.500
month
GENERAL SERVICES
----------------
SSG PROVIDED SERVICES
Correspondence Control Excluded N/A
Export Control Excluded N/A
Forms & Supplies Excluded N/A
Forms & Supplies Management Excluded N/A
Library Services Excluded N/A
Surplus Sales Excluded N/A
Traffic Services Excluded N/A
Employee Services Excluded N/A
Procurement (Non-Production items) Excluded N/A
Security & Fire
Uniformed Security, Access Mgmt, Fire Service Cost Per month
Additional Guard service prior to physical Cost Per month (CY 2001/CY2002)
separation
Investigations Excluded N/A
Government Security Programs Excluded N/A
Frequency Management Excluded N/A
Companywide Mailing Excluded N/A
Medical Services Excluded N/A
Safety & Health Policy (company wide) Excluded N/A
Environmental Policy (company wide) Excluded N/A
People Services (company wide - Service awards,
360 degree appraisals, employee survey, etc) Excluded N/A
International Comp & Domestic Relocation Excluded N/A
LOCAL (MD&SC/S&C) SERVICES
Accounting Excluded N/A
TSA Administration Cost per month N/A
Disclosure Statement - Option Excluded N/A
Contract Services Excluded N/A
Rate Management Support (advisory only) Excluded N/A
Information Systems
Business System Support Excluded N/A
Domino Programming Support Excluded N/A
COST PER SERVICE TERMINATION
SERVICE MONTH PERIOD NOTICE PERIOD POC (BOEING/DRS)
------- ------ -------------
COMPUTER SECURITY None 30 days Nissen/Walinsky
GENERAL SERVICES
----------------
SSG PROVIDED SERVICES
Correspondence Control None N/A Mackey/Rooney
Export Control None N/A Mackey/Rooney
Forms & Supplies None N/A Mackey/Rooney
Forms & Supplies Management None N/A Mackey/Rooney
Library Services None N/A Mackey/Rooney
Surplus Sales None N/A Mackey/Rooney
Traffic Services None N/A Mackey/Rooney
Employee Services None N/A Mackey/Rooney
Procurement (Non-Production items) None N/A Mackey/Rooney
Security & Fire
Uniformed Security, Access Mgmt, Fire Service $ 27,000 Base Lease 60 Days Mackey/Rooney
Additional Guard service prior to physical $ 7,100/ Till N/A Mackey/Rooney
separation $ 7,285 Separation
Complete
Investigations None N/A Mackey/Rooney
Government Security Programs None N/A Mackey/Rooney
Frequency Management None N/A Mackey/Rooney
Companywide Mailing None N/A Mackey/Rooney
Medical Services None N/A Mackey/Rooney
Safety & Health Policy (company wide) None N/A Mackey/Rooney
Environmental Policy (company wide) None N/A Mackey/Rooney
People Services (company wide - Service awards,
360 degree appraisals, employee survey, etc) None N/A Mackey/Rooney
International Comp & Domestic Relocation None N/A Mackey/Rooney
LOCAL (MD&SC/S&C) SERVICES
Accounting None N/A Smith/Viviano
TSA Administration $ 2,000 TSA Life N/A Smith/Viviano
Disclosure Statement - Option None N/A Smith/Viviano
Contract Services None N/A Merrigan/Viviano
Rate Management Support (advisory only) None N/A Gralow/Viviano
Information Systems
Business System Support None N/A Nissen/Walinsky
Domino Programming Support None N/A Nissen/Walinsky
Page 3 of 5
BOEING PROPRIETARY
TRANSITION SERVICES AGREEMENT
EXHIBIT B
EXHIBIT A - SELLER SERVICES
SERVICE BASIS OF RATE RATE
------- ------------- ----
Transition Support & All Labor Support not listed
below Excluded N/A
Computer Security Excluded N/A
Engineering W/S Support Excluded N/A
Local Security Officer Support Excluded N/A
Telecom & Voice transition Support Excluded N/A
Human Resources Services & Support Excluded
Supplier Mananagement & Procurement
Excluded. Support may be provided via
Shipping separate PO for direct activities N/A
Warehousing Excluded N/A
PQA Excluded N/A
Major Subcontracts
Cost Analysis Excluded N/A
Compliance Excluded N/A
Receiving Excluded N/A
General Procurement Excluded N/A
Property Accountability Excluded N/A
Manufactuing/Operations Support
SHEA (IAW TSA Schedule A, Annex - SHEA Services) Actual Cost - Time and material Actual Cost
EPACS Excluded N/A
Quality Excluded N/A
Metrology Excluded N/A
Inspection Excluded N/A
Facilities
Janitorial Services - B/222 only $ 0.15/ft
Waste Disposal B/222 only Cost per month. Excludes Hazordous Waste N/A
F&IE Support - B/241 Actual Cost per hour (labor plus F&IE Actual Cost
allocation rate)
Facilities Maintenance Support to B/241 Actual Cost per hour (labor plus F&IE
productuion/Test equipment allocation rate) Actual Cost
SES Consolidation Boeing to execute & fund (to Boeing
standards). Support will not exceed
Consolidation plan and any changes required
by DRS will be at DRS Expense
COST PER SERVICE TERMINATION
SERVICE MONTH PERIOD NOTICE PERIOD POC (BOEING/DRS)
------- ------ -------------
Transition Support & All Labor Support not listed
below None N/A Nissen/Walinsky
Computer Security None N/A Nissen/Walinsky
Engineering W/S Support None N/A Nissen/Walinsky
Local Security Officer Support None N/A Nissen/Walinsky
Telecom & Voice transition Support None N/A Nissen/Walinsky
Human Resources Services & Support
Supplier Mananagement & Procurement
Shipping None N/A R. Roach/ G.E.Smith
Warehousing None N/A R. Roach/ G.E.Smith
PQA None N/A R. Roach/ G.E.Smith
Major Subcontracts
Cost Analysis None N/A R. Roach/ G.E.Smith
Compliance None N/A R. Roach/ G.E.Smith
Receiving None N/A R. Roach/ G.E.Smith
General Procurement None N/A R. Roach/ G.E.Smith
Property Accountability None N/A
Manufactuing/Operations Support
SHEA (IAW TSA Schedule A, Annex - SHEA Services) 9 Months 75 days O'Rourke/Rooney
EPACS None Witt/G.E. Smith
Quality None Witt/G.E. Smith
Metrology None Witt/G.E. Smith
Inspection None Witt/G.E. Smith
Facilities
Janitorial Services - B/222 only $ 15,977 3 month 75 days Gemmill/Rooney
Waste Disposal B/222 only $ 565 3 month 30 days Gemmill/Rooney
F&IE Support - B/241 Base Lease 75 days Sater/Rooney
Facilities Maintenance Support to B/241
productuion/Test equipment Base Lease 75 days Sater/Rooney
SES Consolidation Plan = Per Plan N/A Beaty/Sheldon
$ 4.821M
Page 4 of 5
BOEING PROPRIETARY
TRANSITION SERVICES AGREEMENT
EXHIBIT B
EXHIBIT A - SELLER SERVICES
SERVICE BASIS OF RATE RATE
------- ------------- ----
RECLAIM Trade Credits Seller shall provide or make available to Buyer
on an annual basis (running from June 30 to
July 1) sufficient RTC's for the continued
operation of the Business as conducted on the
Closing Date, for the equipment sold by Seller
to Buyer. Specifically, Seller shall provide to
Buyer on an annual basis RTCs adequate to
operate the emergency generator for up to 30
hours. Emergency operation of secondary
generators or other permitted equipment over
and above 30 hours annually is excluded and
it will be the responsibility of the Buyer to
obtain any additional RTC's for continued
operation, if required.
NON-RECURRING BUSINESS SYSTEM & OTHER SETUP COSTS
-------------------------------------------------
All effort Authorized and charged under Seller DRS will pay for costs up to, but shall not Actual Costs
General Order 00024 exceed, $400 thousand
TEMPORARY SERVICES - PERTAINS TO OCCUPANCY OF RETAINED BOEING AREAS BY THE
BUSINESS PRIOR TO CONSOLIDATION OF THE BUSINESS INTO THE BUYER'S AREAS
SSG PROVIDED SERVICES
Mail Services Excluded N/A
Transportation Excluded N/A
LOCAL (MD&SC/S&C) SERVICES
Information Systems Same as General and Transaction Based Services
Facilities
Area Occupancy in Excess of Net Leased and Cost per net Square Foot per month. Boeing $ 1.70
Owned area (Pre-consolidation) agrees to work acceleration of consolidation by
1 month to March 2002 and will not charge
DRS for temporary areas after that date
assuming Buyer cooperated fully with Seller to
achieve full consolidation.
Traffic Services Excluded N/A
Security & Fire
Uniformed Security No Additional Charge
Fire Services No Additional Charge
Investigations Excluded N/A
Access Management No Additional Charge
Government Security Programs Excluded N/A
COST PER SERVICE TERMINATION
SERVICE MONTH PERIOD NOTICE PERIOD POC (BOEING/DRS)
------- ------ -------------
RECLAIM Trade Credits No Charge period for Per Lease O'Rouke/Smergalinolo
either B/241 Agreement
or B/222 will
be separately
determined
and shall be
equal to the
Buyer's
Lease for
each
building,
respectively
NON-RECURRING BUSINESS SYSTEM & OTHER SETUP COSTS
-------------------------------------------------
All effort Authorized and charged under Seller N/A N/A None Beaty/Smergalinolo
General Order 00024
TEMPORARY SERVICES - PERTAINS TO OCCUPANCY OF RETAINED BOEING AREAS BY THE
BUSINESS PRIOR TO CONSOLIDATION OF THE BUSINESS INTO THE BUYER'S AREAS
SSG PROVIDED SERVICES
Mail Services None N/A Mackey/Rooney
Transportation None N/A Mackey/Rooney
LOCAL (MD&SC/S&C) SERVICES
Information Systems Same as General and Transaction Based Services Nissen/Walinsky
Facilities
Area Occupancy in Excess of Net Leased and Nov '01 to Per lease Gemmill/Rooney
Owned area (Pre-consolidation) Mar '02 Agreement
Traffic Services None
Security & Fire
Uniformed Security Base Lease Per lease Agreement Mackey/Rooney
Fire Services Base Lease Per lease Agreement Mackey/Rooney
Investigations $ - None N/A Mackey/Rooney
Access Management Base Lease Per lease Agreement Mackey/Rooney
Government Security Programs None N/A Mackey/Rooney
Page 5 of 5
BOEING PROPRIETARY
Transition Services Agreement DRAFT 6/20/01
EXHIBIT B
EXHIBIT B - BUYER SERVICES
SERVICE BASIS OF RATE RATE COST PER MONTH
------- ------------- ----
TEMPORARY SERVICES - PERTAINS TO BOEING OCCUPANCY OF LEASED OR OWNED
PROPERTY PRIOR TO COMPLETION OF THE SES CONSOLIDATION
INTO NEWCO AREAS
Facilities
Area Occupancy N/A - Boeing occupancy of Buyers areas will $ -- $ --
be credited against Buyer temporary areas
in Boeing retained buildings or areas.
SERVICE SERVICE PERIOD TERMINATION NOTICE PERIOD
------- -------------- -------------------------
TEMPORARY SERVICES - PERTAINS TO BOEING OCCUPANCY OF LEASED OR OWNED
PROPERTY PRIOR TO COMPLETION OF THE SES CONSOLIDATION
INTO NEWCO AREAS
Per 120 days
Consolidation
Plan
BOEING PROPRIETARY
EXHIBIT C-1
222 LEASE AGREEMENT
EXECUTION COPY
LEASE AGREEMENT
(Building 222)
By and between
The Boeing Company
And
DRS Technologies, Inc.
-------------------------
Dated as of August 3, 2001
-------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
1. TERM.............................................................1
A. Initial Term.................................................1
B. Option to Extend the Term....................................1
C. Conditions Applicable to Each Extension......................2
2. RENT.............................................................2
A. Base Rent....................................................2
B. Additional Rent..............................................2
C. Payment of Rent..............................................3
3. UTILITIES........................................................3
4. CONDITION; AS IS; DISCLAIMER.....................................4
5. MAINTENANCE......................................................4
6. USE..............................................................4
7. ACCESS; PARKING..................................................5
8. TAXES............................................................5
A. Payment of Real Property Taxes...............................5
B. Personal Property Taxes......................................5
9. Condition at Surrender...........................................5
10. INDEMNIFICATION AND INSURANCE....................................6
A. Indemnity....................................................6
A. Indemnity....................................................6
B. Tenant's Insurance...........................................7
C. Mutual Waiver of Claims......................................7
D. Mutual Waiver of Subrogation.................................8
11. DAMAGE OR DESTRUCTION............................................8
A. Total Destruction or Untenantability.........................8
B. Partial Destruction or Untenantability.......................8
C. Landlord's Obligation to Restore.............................8
12. ALTERATIONS......................................................9
13. ENVIRONMENTAL MATTERS............................................9
A. Compliance with Laws and Requirements........................9
B. Definitions..................................................9
i
PAGE
C. Remediation.................................................10
D. Documentation and Right to Inspect..........................10
E. Notification................................................11
F. Restoration.................................................12
G. Indemnification.............................................13
H. Survivability...............................................13
14. DEFAULT.........................................................14
A. Events of Default...........................................14
B. Remedies....................................................14
C. General Provisions Concerning Remedies......................16
D. Landlord Default............................................16
15. Successors and Assigns, Transfer By Landlord....................17
A. In General..................................................17
B. Transfers by Landlord of Landlord's Interest................17
16. PROTECTION OF LENDERS; ESTOPPEL CERTIFICATES....................17
A. Protection of Lenders; Subordination Agreements.............17
B. Estoppel Certificates.......................................18
17. NOTICE..........................................................18
18. LANDLORD'S RIGHT OF ENTRY.......................................19
19. QUIET ENJOYMENT.................................................19
20. SEVERABILITY....................................................19
21. HOLDOVER........................................................19
22. CONDEMNATION....................................................20
23. LIENS...........................................................20
24. TARGET..........................................................20
25. COMMON AREAS....................................................20
26. DEMISING WALLS..................................................20
27. MISCELLANEOUS...................................................21
A. Attorney's Fees.............................................21
B. Captions....................................................21
C. Time is of the Essence......................................21
D. Counterparts................................................21
E. Choice of Law...............................................21
F. Complete Agreement..........................................21
ii
PAGE
G. No Recordation..............................................22
EXHIBIT A Depiction of Premises.....................................23
EXHIBIT B Repairs and Maintenance...................................24
iii
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease"), is made and entered into this 3rd day of August,
2001, by and between THE BOEING COMPANY, a Delaware corporation ("Landlord"),
and DRS Technologies, Inc., a Delaware corporation ("Tenant"), in connection
with that certain Asset Purchase Agreement, dated as of August 3, 2001 (the
"Asset Purchase Agreement"), between Landlord and Tenant.
For and in consideration of the covenants and agreements herein provided,
Landlord does hereby lease, demise and let unto Tenant that certain premises
described as approximately and are hereby stipulated to contain 106,512 square
feet of space (exclusive of shared areas) located within that certain building
known as Building 222 at 3330 East Miraloma Avenue, Anaheim, California (the
"Building"), together with 19,115 square feet of yard space ( together the
"Premises"), all as depicted in the attached Exhibit A.
1. TERM
A. INITIAL TERM.
The term of this Lease (the "Term") shall commence on the date of the
Closing as defined in the Asset Purchase Agreement between the parties
("Commencement Date") and, unless terminated sooner by the terms of this
Lease, shall continue for eighteen (18) months (the "Initial Term"),
ending on February 3, 2003.
B. OPTION TO EXTEND THE TERM.
Tenant shall have the option to extend the Term for a period of one (1)
year. If Tenant exercises said option, Tenant shall have the conditional
right to extend the Term for a second extension period of one (1) year, as
hereafter provided. The first such extension shall be referred to in this
Lease as the "First Extended Term," the second such extension shall be
referred to as the "Second Extended Term," and each such extension shall
be referred to as an "Extended Term." If Tenant wishes to exercise an
option to extend the Term, Tenant shall deliver written notice of such
exercise to Landlord no later than 120 days before the expiration of the
Term. If not exercised in this fashion, such options shall expire and be
of no further effect. If one or more of said options are exercised, the
"Term" shall be deemed to include the Initial Term and the Extended
Term(s) as to which options are exercised and shall end on the last day
thereof, unless sooner terminated pursuant to the terms of this Lease. The
option is personal to Tenant and shall not be assigned except as provided
below.
1
C. CONDITIONS APPLICABLE TO EACH EXTENSION.
Notwithstanding paragraph 1.B., Tenant may not exercise its option to
extend unless (a) the Lease is in full force and effect and (b) no Event
of Default has occurred and is continuing at the time of exercise of such
option. In addition, no exercise to extend the Term shall be valid, and
the Term shall not be extended if an Event of Default (paragraph 14) has
occurred and is continuing on the date on which the Extended Term would
otherwise commence; provided, however, that if Tenant exercises the
extension option within the time period specified under Paragraph B above,
then notwithstanding the existence of an Event of Default or the time of
such attempted exercise, the option shall be deemed to have been validly
exercised if the Event of Default is cured within any applicable cure
period provided to the Tenant under this Lease.
2. RENT
A. BASE RENT.
Tenant agrees to pay Landlord as rental for the Premises the sum indicated
below during the applicable term:
--------------------------------------------------------------------
Initial Term $156,788
--------------------------------------------------------------------
First Extended Term $159,476
Second Extended Term $160,371
--------------------------------------------------------------------
as base rent ("Base Rent") per month, payable in advance on or before the
first day of each month during the Term of this Lease without offset or
other deduction. The Base Rent for any period less than a calendar month
shall be prorated.
B. ADDITIONAL RENT.
All amounts payable by Tenant hereunder, other than Base Rent, are rent
and are referred to as "Additional Rent." Additional Rent is payable by
Tenant within ten days of Landlord's demand therefor. Additional Rent and
Base Rent are sometimes referred to as "Rent." The utilities for the
Building are not separately metered. Tenant's Pro Rata Share (as defined
below) the cost of real property taxes, repairs and maintenance (including
the items listed on Exhibit B), and utilities for the Building
(collectively, "Operating Expenses") is included in the Base Rent, based
on their average cost per square foot of the Building over Landlord's
entire Anaheim campus in the year 2000 ("the Base Year"). Tenant shall
reimburse Landlord as Additional Rent for its Pro Rata Share, based on the
number of square feet leased by Tenant within the Building (which is equal
to 56%, such percentage, Tenant's "Pro Rata Share"), of any increase in
Operating
2
Expenses over the Base Year, determined in the manner set forth above in
accordance with the accounting practices of Landlord in effect at the
commencement of the Term. Notwithstanding the foregoing, the following
shall not be included in "Operating Expenses:"
1. capital costs or expenditures;
2. depreciation on the Building;
3. costs for which Landlord is reimbursed by its insurer or any
third party's insurer;
4. ground rent;
5. any increase in real property taxes due to a reassessment upon
a sale of the Building;
6. leasing or brokerage fees, commissions or expenses and
attorneys' fees and disbursements incurred in connection with
lease preparation or negotiation for the Building or
litigation existing as of the date hereof;
7. salaries of personnel above the level of Manager - Plant
Services;
8. interest or principal or other payments on mortgage or other
debt costs, if any, or any payments whatsoever on any ground
leases;
9. capital expenditures incurred in connection with compliance
with laws, unless expenditures are the result of the specific
operations of Tenant's business as compared with the occupancy
of the Premises by tenants generally;
10. taxes as measured by the net income of Landlord from the
operation of the Building;
11. janitorial services; and
12. costs that are paid directly by Tenant.
C. PAYMENT OF RENT.
All Rent shall be paid in immediately available funds and in lawful money
of the United States without deduction, withholding, set-off, or (except
as expressly provided for in this Lease) abatement of any kind. The
payment of Rent is an independent covenant.
3. UTILITIES
Landlord shall furnish electric power and water. Landlord shall also provide
heating and air conditioning at levels and during such hours as are customary
for buildings of similar use and character in Landlord's Anaheim Campus.
Landlord's obligation to supply electric power and water is contingent upon the
supply of such services to the Building from the purveyors thereof, and Landlord
shall have no liability to Tenant, nor shall Tenant have the right to withhold
or abate the payment of Rent, in the event that any such service is curtailed or
suspended as a result of causes beyond the reasonable control of Landlord.
Landlord shall be entitled to subscribe to interruptible programs to reduce the
cost of electric power. Any curtailment imposed by the Independent System
Operator under such a program shall be deemed beyond the reasonable control of
Landlord.
3
4. CONDITION; "AS IS;" DISCLAIMER
Tenant shall accept the Premises in their condition as of the execution of the
Lease, subject to all recorded or unrecorded matters, laws, ordinances, and
governmental regulations and orders. Landlord represents and warrants that
except as disclosed in the Asset Purchase Agreement, it has not received from
any public agency any notice that the Premises are in violation of any federal,
state or local law or regulation. Except as expressly provided herein OR IN THE
ASSET PURCHASE AGREEMENT, Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation, express or implied, as to the
condition of the Premises or the suitability of the Premises for Tenant's
intended use. Tenant represents and warrants that Tenant has made its own
inspection of and inquiry regarding the condition of the Premises and, Except as
expressly provided herein OR IN THE ASSET PURCHASE AGREEMENT, is not relying on
any representations of Landlord with respect thereto. Landlord and Tenant
expressly agree that there are and shall be no implied warranties of
merchantability, habitability, suitability, fitness for a particular purpose or
of any other kind arising out of this Lease, other than Landlord's warranty of
title and of quiet enjoyment set out in Paragraph 19. EXCEPT AS EXPRESSLY
PROVIDED IN ARTICLE x OF THE aSSET pURCHASE aGREEMENT, TENANT HEREBY WAIVES,
RELEASES, AND RENOUNCES ANY AND ALL CLAIMS AGAINST LANDLORD FOR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO OR IN ANY WAY ARISING OUT OF
ANY CONDITION, DEFECT OR NONCONFORMANCE IN THE PREMISES.
5. MAINTENANCE
Landlord, at Landlord's sole cost and expense, is responsible for keeping the
Premises and the Building, including the foundation, exterior walls, floor, roof
and structural parts of the Premises and Building and all building systems and
equipment in good operating condition, except for normal wear and tear,
casualty, and condemnation. Tenant shall be responsible for repairing any damage
to the Premises or the Building, other than ordinary wear and tear, caused by
Tenant's use of the Premises (subject to the waiver of claims in paragraph
10.C).
6. USE
Tenant will occupy the Premises for the purpose of operating the Business, as
such term is defined in the Asset Purchase Agreement. The Premises shall not be
used for any other purpose without first obtaining the written consent of the
Landlord, which consent shall not be unreasonably withheld. In its use of the
Premises, the Tenant shall not violate any applicable law, ordinance, deed
restriction or regulation affecting the Building or any part
4
thereof. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall not be responsible for any violation of applicable law existing as
of the date hereof with respect to the Premises or the Building, or for any
capital expenditures required for the Premises or the Building to comply with
applicable law, unless necessitated by Tenant's specific business operations
within the Premises (as compared with the occupancy of the Premises by tenants
generally) or triggered by alterations requested by or performed by Tenant.
7. ACCESS; PARKING
Landlord shall provide Tenant unrestricted access to the Premises on a 24 hour a
day, 7 day a week basis. Tenant shall have the right to use up to 265
unassigned, general parking spaces in the parking lot in common with the other
tenants of the Building and other buildings owned and occupied by Landlord.
8. TAXES.
A. PAYMENT OF REAL PROPERTY TAXES. Landlord shall be responsible for the
payment of all real property taxes affecting the Premises and shall keep
the Premises free and clear of any liens, charges, and encumbrances of any
taxing authority for the collection of unpaid real property taxes which
accrue during the Term.
B. PERSONAL PROPERTY TAXES. Tenant shall pay directly all taxes charged
against trade fixtures, furnishings, equipment, inventory, or any other
personal property belonging to Tenant which may be located in the
Premises.
9. CONDITION AT SURRENDER
At the termination of the Term of this Lease, Tenant shall remove all of its
personal property (repairing any damage caused by such removal) and surrender
the Premises to Landlord in the same condition as at the Commencement Date,
broom-swept clean, except for normal wear and tear, casualty, matters covered by
the mutual waiver of claims (paragraph 10.C), condemnation, alterations
permitted by Landlord and Section 13 hereof. The provisions of this paragraph
shall survive the expiration or termination of this Lease.
5
10. INDEMNIFICATION AND INSURANCE
A. INDEMNITY BY TENANT
Tenant shall indemnify and hold Landlord harmless from and against any and
all claims or liability for bodily injury to or death of any person or
damage to any property arising out of Tenant's use of the Premises or from
the conduct of Tenant's business, or from any activity, work, or thing
done, permitted or suffered by Tenant in or about the Premises, except:
(i.) claims and liabilities to the extent caused by any negligence
on the part of Landlord, its agents, employees, contractors or
invitees; or
(ii.) claims and liabilities for property damage addressed in Clause
(E) entitled "Mutual Waiver of Claims."
Such indemnity shall include all reasonable costs, attorneys' fees and
expenses incurred in the defense of any such claim or any action or
proceeding brought thereon. This indemnity will be applicable to a claim
only if the Landlord:
(i.) notifies Tenant of the claim or liability in writing within
sixty (60) days after the Landlord receives notice of the claim or
liability;
(ii.) permits Tenant to defend or settle against the claim or
liability; and
(iii.) cooperates with Tenant in any defense or settlement against
the claim or liability.
This Section 10A shall survive the expiration or termination of this
Lease.
B. INDEMNITY BY LANDLORD
Landlord shall indemnify and hold Tenant harmless from and against any and
all claims or liability for bodily injury to or death of any person or
damage to any property arising out of the conduct of Landlord, or from any
activity, work, or thing done, permitted or suffered by Landlord in or
about the Building, except:
(i.) claims and liabilities to the extent caused by any negligence
on the part of Tenant, its agents, employees, contractors or
invitees; or
(ii.) claims and liabilities for property damage addressed in Clause
(E) entitled "Mutual Waiver of Claims."
Such indemnity shall include all reasonable costs, attorneys' fees and
expenses incurred in the defense of any such claim or any action or
proceeding brought thereon. This indemnity will be applicable to a claim
only if the Tenant:
6
(i.) notifies Landlord of the claim or liability in writing within
sixty (60) days after the Landlord receives notice of the claim or
liability;
(ii.) permits Landlord to defend or settle against the claim or
liability; and
(iii.) cooperates with Landlord in any defense or settlement against
the claim or liability.
This Section 10B shall survive the expiration or termination of this
Lease.
C. TENANT'S INSURANCE
Tenant, at Tenant's own cost and expense, will provide and keep in full
force and effect during the Term of this Lease, public liability insurance
with limits of not less than One Million Dollars ($1,000,000) covering
bodily injury to persons, including death and loss of or damage to real
and personal property. Such insurance may be provided under Tenant's
blanket public liability insurance policy. During the Term of the Lease,
Landlord shall be named as an additional insured under such insurance to
the extent of Tenant's undertaking set forth in Clause A, entitled
"Indemnity." A certificate evidencing such insurance coverage shall be
delivered to Landlord not less than fifteen (15) days prior to the
commencement of the Term hereof or the date when Tenant shall enter into
possession, whichever occurs later. Such certificate of insurance will
provide for fifteen (15) days advance notice in the event of cancellation.
D. LANDLORD'S INSURANCE
Landlord, at Landlord's own cost and expense, will maintain and keep in
full force and effect during the Term of this Lease, a policy or policies
of insurance covering loss or damage to the Building in the amount of the
full replacement value thereof (exclusive of Tenant's alterations, trade
fixtures, equipment and personal property) providing protection against
all perils included in an "all risk" property insurance policy, subject
however to the following paragraph E, "Mutual Waiver of Claims."
E. MUTUAL WAIVER OF CLAIMS
Landlord and Tenant do each herewith and hereby release and relieve the
other, and waive their entire claim of recovery for loss or damage to
property arising out of or incident to fire, lightning or any other perils
normally included in an "all-risk" form property insurance policy when
such property constitutes the Premises or the Building or is in, on or
about the Premises, Building or land on which the Building is situated
whether or not such loss or damage is due to the negligence of
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Landlord or Tenant, their agents, employees, guests, licensees, invitees
or contractors.
F. MUTUAL WAIVER OF SUBROGATION
Each of Landlord and Tenant shall cause its insurance carriers to waive
all rights of subrogation against the other party hereto to the extent of
Landlord's or Tenant's undertaking set forth in Clause A or B above
entitled respectively "Indemnity by Tenant," "Indemnity by Landlord," and
Clause E entitled "Mutual Waiver of Claims."
11. DAMAGE OR DESTRUCTION
A. TOTAL DESTRUCTION OR UNTENANTABILITY
In the event the Premises or any significant portion of the Building are
totally destroyed or rendered wholly untenantable by any cause, as
determined by Landlord in Landlord's reasonable judgment, this Lease shall
cease and terminate on the date of the destruction or casualty.
B. PARTIAL DESTRUCTION OR UNTENANTABILITY
In the event that the Premises is partially destroyed or rendered
partially unusable by Tenant for the purposes set forth in paragraph 6,
entitled "Use," by any cause, and if the destruction or damaged
improvements can not be restored within ninety (90) days as determined by
Landlord in Landlord's reasonable judgment, Landlord shall promptly so
notify Tenant and either party may elect upon ten (10) days written notice
to the other party to terminate this Lease; provided, however, that if
such damage or destruction is repaired within such ten (10) day period,
then such termination notice shall be of no force and effect (the portion
of the Premises damaged or destroyed or rendered unusable shall be
referred to as the "Affected Space"). In the event that neither the
Landlord nor the Tenant elects to terminate this Lease as provided in this
paragraph 11.B, and the damage was not caused by the negligent or
intentional act of the Tenant, the Base Rent payable with respect to the
remaining Premises until the Premises has been restored, shall be reduced
to the amount determined by multiplying the Base Rent otherwise payable by
a fraction, the denominator of which shall be the total rentable square
feet of the Premises as of the day of the casualty resulting in the damage
or destruction, and the numerator of which shall be an amount equal to the
number of gross square feet of the Premises less the number of gross
square feet of the Affected Space.
C. LANDLORD'S OBLIGATION TO RESTORE
In the event that the Premises is partially destroyed or rendered
partially untenantable by any cause and this Lease is not terminated as
provided herein, Landlord shall promptly rebuild and restore the Building
and the Premises to their
8
prior condition and diligently prosecute the work to completion; provided,
however, that if the Premises and Building are not restored within one
hundred eighty (180) days, Tenant may terminate this Lease upon notice to
Landlord.
12. ALTERATIONS.
Tenant shall not make any structural alterations, improvements, or modifications
to the Premises or which affect the exterior of the Premises without Landlord's
prior written consent, which Landlord may withhold in its sole discretion.
Tenant may, however, install trade fixtures, which Tenant may remove at the end
of the Term, provided it repairs at its own cost any damage resulting from such
removal. At the end of the Term, at Landlord's option, Tenant shall restore any
alterations, structural or otherwise, to their condition at the commencement of
the Term, provided that Landlord notifies Tenant in writing at the time of
Landlord's consent. Tenant shall have the right, upon prior written notice to
Landlord, to install signage identifying Tenant at the entrances to the Premises
and the Building, and on the exterior of the Building, provided that the size
and location of such signage shall be subject to Landlord's reasonable approval.
13. ENVIRONMENTAL MATTERS
A. COMPLIANCE WITH LAWS AND REQUIREMENTS.
Except as otherwise agreed by Landlord in writing or as set forth in
Section 6.9 of the Asset Purchase Agreement or the Transition Services
Agreement dated August 3, 2001 between Landlord and Tenant (the "TSA"),
Tenant shall be solely responsible at its expense for obtaining any
permits, licenses or approvals, and for preparing, maintaining and
submitting any records or reports, as required under applicable
Environmental Laws and Requirements for its operations hereunder. Tenant
shall comply with any and all applicable Environmental Laws and
Requirements and shall not cause, permit or allow the presence of and
shall not generate, release, store, or deposit any Hazardous Substances on
or about the Premises in violation of any applicable Environmental Laws
and Requirements. Tenant shall not release any Hazardous Substances into
the soil, water (including groundwater) or air of the Premises or onto any
other adjoining property in violation of Environmental Laws and
Requirements. In the event of a spill or other release of Hazardous
Substances caused by Tenant, its agents, employees or invitees at or from
the Premises, Tenant shall undertake prompt response as required by law,
including but not limited to reporting to appropriate agencies, and shall
notify Landlord of same as soon as possible.
B. DEFINITIONS:
1) As used herein, the term "Hazardous Substance" means
any hazardous, toxic, chemical, or dangerous substance, pollutant,
contaminant, waste or material, including petroleum, which is regulated
under
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any and all federal, state, or local statute, ordinance, rule, regulation,
or common law relating to chemical management, environmental protection,
contamination, or cleanup including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 as amended
(42 U.S.C. ss. 9601 et seq.), the Resource Conservation and Recovery Act
as amended (42 U.S.C. ss. 6901 et seq.) or any other Federal, state,
county, or city law, regulation or ordinance relating to the protection of
the environment or of human health.
2) As used herein the term "Environmental Laws and
Requirements" means any and all federal, state, local laws, statutes
(including without limitation the statutes referred to in paragraph
13(b)(1), above), ordinances, rules, regulations and/or common law
relating to environmental protection, contamination, the release,
generation, production, transport, treatment, processing, use, disposal,
or storage of Hazardous Substances, and the regulations promulgated by
regulatory agencies pursuant to these laws, and any applicable federal,
state, and/or local regulatory agency-initiated orders, requirements,
obligations, directives, notices, approvals, licenses, or permits,
including but not limited to those for the reporting, investigation,
cleaning, or remediation of any Hazardous Substances on the Premises.
C. REMEDIATION.
1) Should Tenant fail to perform any of its obligations
pursuant to this agreement or to any and all applicable Environmental Laws
and Requirements, Tenant shall at its own expense promptly remedy such
noncompliance. Tenant shall at its own expense clean up or remediate any
Hazardous Substance which Tenant has caused to be released at or from the
Leased Premises to the extent required by applicable Environmental Laws
and Requirements. Should Tenant fail so to do, Landlord shall have the
right, but not the duty, to enter the Leased Premises personally or
through its agents, consultants, or contractors to perform the same and
Tenant shall promptly pay to Landlord on demand and as Additional Rent all
costs and expenses incurred by Landlord thereby. Further, Tenant shall
hold Landlord harmless from any losses, including claims of third parties,
resulting from Tenant's noncompliance with Environmental Laws and
Requirements, or from any unsafe condition or release of Hazardous
Substances caused by Tenant.
2) From and after the Commencement Date, if any
environmental conditions are discovered at, on, under or migrating from
the Premises that may require investigation and/or remediation, there
shall be a rebuttable presumption that such conditions are the result of
activities or occurrences that existed or arose prior to the Commencement
Date. Landlord shall bear the burden of proof if it contends that such
conditions are a result of the actions of Tenant or its agents, employees,
contractors or invitees after the Commencement Date.
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D. DOCUMENTATION AND RIGHT TO INSPECT.
Tenant shall provide copies to Landlord of any reports regarding its
operations at the Premises which are submitted to governmental agencies
pursuant to any Environmental Laws and Requirements. Tenant shall also
make available to Landlord upon request all permits and approvals, and all
records maintained by Tenant pursuant to any Environmental Laws and
Requirements. During the Term, Landlord and/or its agents or employees
shall have the right to periodically inspect the Premises at reasonable
times upon prior notice to Tenant and accompanied by a Tenant
representative to confirm that Tenant is in compliance with the terms of
this Agreement, including compliance with any and all Environmental Laws
and Requirements. Further, if Landlord at any time should have any cause
to believe that any Hazardous Substances are or at any time during the
term of this Lease have been released at or from the Premises without
strict compliance with all Environmental Laws and Requirements or in a
manner which may give rise to liability for environmental cleanup, damage
to property, or personal injury to Landlord, or any other person, Landlord
shall have the right at its discretion, but not the duty, to enter, at any
reasonable time upon prior notice to Tenant and accompanied by a Tenant
representative, and conduct an inspection of the Premises including
invasive tests to determine whether, and the extent to which, Hazardous
Substances have been released. Tenant hereby grants to Landlord, and its
employees, agents, employees, consultants, and contractors the right to
enter the Premises upon reasonable notice to Tenant and to perform such
tests on the Premises as are reasonably necessary in the opinion of
Landlord to conduct such investigations. Landlord shall conduct any
discretionary tests or investigations in a manner which will not
materially affect Tenant's operations at the Premises. If, however, such
tests or investigations are required to comply with any Environmental Laws
or Regulations, Landlord shall make reasonable efforts to conduct those
tests or investigations in a manner that will not materially affect
Tenant's operations at the Premises. Landlord may retain any independent
qualified professional consultant to enter the Premises to conduct such
inspections. Such consultant's reasonable fee shall be payable by Tenant
if such consultant determines that Tenant's activities constitute a
material violation of Environmental Laws and Requirements or have resulted
in the release of Hazardous Substances into the environment which may give
rise to liability for environmental cleanup, damage to property, or
personal injury to Landlord or any other person; otherwise, such fee shall
be payable by Landlord.
E. NOTIFICATION.
Each party shall promptly notify the other party hereto (and shall enclose
all relevant notices and written materials, of (i) any inquiry, action or
proceeding initiated by any governmental agency or any third party with
respect to any release of Hazardous Materials, any violation of
Environmental Laws, in each case specifically relating to the Premises or
the Building (a "Proceeding"), (ii) any material event, filing, notice or
action relating to any Proceeding, and (iii) any
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filing or communication with or to any governmental agency reflecting any
material change or event relating to use of Hazardous Materials in, on or
around the Premises. Tenant shall permit Landlord to review, extract or
copy all MSDS's for Hazardous Materials used, stored or emitted from the
Premises. In addition, Tenant and Landlord shall each immediately notify
the other, both orally and in writing, of any release of Hazardous
Materials arising out of or related to its respective operations and will
identify whether such release, in such party's reasonable opinion, (1) is
required to be reported to any applicable governmental agency, (2)
potentially poses any risk or exposure to other occupants of the Building,
(3) has the potential to be released into any common Building area or
system (including HVAC, adjacent premises, industrial or sanitary waste
water disposal or treatment system), or (4) has the potential to exceed or
violate any permit held by Tenant or held by Landlord of which Tenant or
Landlord, respectively, is aware. In addition, each party shall notify the
other of any enforcement, cleanup, removal or other governmental or
regulatory action instituted or completed pursuant to any Environmental
Laws.
Without in any way limiting the generality of the foregoing, each party
will provide to the other party, within 10 working days after the
Commencement Date, a report listing the names and quantities of all
Hazardous Materials to be used, generated or stored by such party (other
than those used, generated or stored in normal office operations) in the
Premises. Throughout the term of this Lease, each party shall notify the
other party within 10 working days after any of the following occurrences
in connection with the use of the Premises: (1) such party increases the
amount of a previously disclosed Hazardous Material so that at any one
time, its storage, use or generation of such Hazardous Material exceeds 55
gallons, 500 lbs. or 200 cubic feet; (2) such party adds a new Hazardous
Material in an amount such that at any one time, its storage, use or
generation of such Hazardous Material exceeds 55 gallons, 500 lbs. or 200
cubic feet; or (3) such party increases the quantity of its storage, use
or generation of any previously identified Hazardous Material by 100% or
more.
F. RESTORATION.
With reasonable promptness following the expiration or earlier termination
of this Lease, Tenant shall, at Tenant's sole expense, if and to the
extent applicable, perform each of the following:
(i) remove from the Premises all Hazardous Materials then
stored or used by Tenant at the Premises and all of Tenant's personal
property; and
(ii) to the extent necessitated by Tenant's use of Hazardous
Materials of a type or in a manner inconsistent with Landlord's prior use
of Hazardous Materials at the Premises, decontaminate, or pay for
decontamination in order to neutralize or remove any chemical residues, in
accordance with
12
commercially reasonable standards and applicable Environmental Laws, all
piping, conduits, pits, sumps, trenches, walls, pilings, floors and tanks
which (A) will remain in or about the Premises and (B) were used by Tenant
for the handling, conveyance and/or discharge of Hazardous Materials of a
type or in a manner inconsistent with Landlord's prior use of Hazardous
Materials at the Premises or were contaminated with Hazardous Materials
used by Tenant of a type or in a manner inconsistent with Landlord's prior
use of Hazardous Materials at the Premises.
G. INDEMNIFICATION.
Tenant shall indemnify, hold harmless, and defend Landlord, and its
directors, officers, employees, agents, assigns, and attorneys from any
and all claims, damages, response costs, and expenses arising out of or in
any way relating to the violation of any Environmental Laws and
Requirements, or to the generation, release, storage, deposit or disposal
of Hazardous Substances, to the extent caused by Tenant, its agents,
employees, contractors and invitees at any time during the Term of the
Lease, including but not limited to: (1) claims of third parties,
including governmental agencies, for damages (including personal injury
and/or property damage), response costs, fines, penalties, injunctive or
other relief; (2) the cost, expense, or loss to Landlord of any injunctive
relief, including preliminary or temporary injunctive relief, applicable
to the Landlord or the Premises; and (3) the expense of reporting the
existence of Hazardous Substances to any agency of any state government or
the United States as required by applicable laws or regulations, before
and after any trial or appeal therefrom whether or not taxable as costs;
all of which shall be paid by Tenant when accrued. Similarly, Landlord
shall indemnify, hold harmless, and defend Tenant, and its directors,
officers, employees, agents, assigns, and attorneys from any and all
claims, damages, response costs, and expenses arising out of or in any way
relating to the violation of any Environmental Laws and Requirements, or
to the generation, release storage, deposit or disposal of Hazardous
Substances, to the extent caused by Landlord, its agents, employees and
invitees. Notwithstanding the foregoing, neither party shall be liable for
consequential damages, lost profits, or diminution in value of the other
party's property.
H. SURVIVABILITY .
Except as set forth in Section 13.H, the provisions of this Section 13
shall survive the expiration or termination of this Lease.
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14. DEFAULT
A. EVENTS OF DEFAULT.
Each of the following shall be an event of default (each, an "Event of
Default") under this Lease:
(1) Tenant shall fail to pay Rent under this Lease within five days
after it is due and such failure shall continue for a period of ten days
after written notice from Landlord.
(2) Tenant shall abandon or vacate the Premises, unless Tenant provides
adequate security for the Premises, evidence of the continuation of
insurance coverage and is otherwise complying with the terms of the
Lease, including the payment of Rent.
(3) Tenant shall fail to obtain or maintain any policy of insurance
required pursuant to the terms of this Lease.
(4) Tenant shall fail to execute any subordination agreement (paragraph
16.A) or estoppel certificate (paragraph 16.B) required by the terms of
this Lease.
(5) Tenant shall permit or suffer a lien that Landlord has required
Tenant to remove pursuant to paragraph 23.
(6) Tenant shall fail to perform any of Tenant's other obligations under
this Lease and such failure shall continue for a period of 30 days after
written notice from Landlord; provided that if more than 30 days shall
be required to complete such performance, Tenant shall not be in default
if Tenant shall commence such performance within the 30 day period and
shall thereafter diligently pursue its completion. Any notice provided
to Tenant shall be in lieu of, and not in addition to, any notice
required under the California Code of Civil Procedure or other
applicable law, and any cure period provided herein shall run
concurrently with any cure period provided by applicable laws.
(7) Tenant shall make a general assignment or general arrangement for
the benefit of creditors; a petition for adjudication of bankruptcy or
for reorganization or rearrangement shall be filed by or against Tenant
and shall not be dismissed within 90 days; a trustee or receiver shall
be appointed to take possession of substantially all of Tenant's assets
located at the Premises or Tenant's interest in this Lease and
possession shall be subjected to attachment, execution or other judicial
seizure which shall not be discharged within 90 days.
B. REMEDIES.
14
If an Event of Default occurs and is continuing, Landlord may, at any time
thereafter, with or without notice or demand (except as expressly provided
herein) and without limiting Landlord in the exercise of any right or
remedy which Landlord may have:
(a) Peaceably reenter the Premises upon voluntary surrender by Tenant or
remove Tenant and any other persons occupying the Premises therefrom,
using such legal proceedings as may be available;
(b) In addition to reentry under (a) above, terminate this Lease. Upon
such termination, Landlord may recover from Tenant the following: (i)
the worth at the time of award of the unpaid Rent and other charges
under this Lease that had been earned at the time of termination; (ii)
the worth at the time of award of the amount by which the unpaid Rent
and other charges under this Lease which would have been earned after
termination until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; (iii) the
worth at the time of award of the amount by which the unpaid Rent and
other charges under this Lease for the balance of the term of this Lease
after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; and (iv) any other
amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under
this Lease or that in the ordinary course of things would be likely to
result therefrom. As used herein, the following terms are defined: (a)
The "worth at the time of award" of the amounts referred to in clauses
(i) and (ii) is computed by allowing interest at the lesser of 15
percent per annum or the maximum lawful rate. The "worth at the time of
award" of the amount referred to in clause (iii) is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus 3 percent.
(c) In addition to reentry pursuant to paragraph (a) above, elect in
writing to terminate Tenant's right to possession without terminating
the Lease. In such case, the Lease shall continue in effect for so long
as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all its rights and remedies under this Lease,
including the right to recover Rent as it becomes due. Any such payments
due Landlord shall be made upon demand therefor from time to time and
Tenant agrees that Landlord may file suit to recover any sums falling
due from time to time. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect in writing to
terminate this Lease for such previous breach.
(d) With respect to a default under paragraph 14.A(3), Landlord may, but
shall not be required to, pay any premiums necessary to keep any
required insurance in force or to obtain replacement policies of
insurance and the cost of said premiums upon Landlord's demand shall be
promptly reimbursed by Tenant to Landlord as Additional Rent. With
respect to a default under paragraph
15
14.A(5), Landlord may, but shall not be required to discharge said lien
and the amount so paid by Landlord shall be promptly reimbursed by
Tenant to Landlord as Additional Rent.
C. GENERAL PROVISIONS CONCERNING REMEDIES.
For purposes of calculating the damages which Landlord may recover from
Tenant pursuant to this paragraph 14, all amounts payable by Tenant in
excess of Base Rent shall be deemed Additional Rent. For the purpose of
calculating Landlord's damages by reason of Tenant's failure to pay all
sums other than Base Rent that would have been payable hereunder if this
Lease had not been terminated, such sums shall be those that would have
been so payable hereunder as of the time of the award. On any termination,
Landlord's damages for default shall include all reasonable costs and
fees, including reasonable attorneys' fees that Landlord shall incur in
connection with the filing, commencement, pursuing and/or defending of any
action in any bankruptcy court or other court with respect to the Lease,
the obtaining of relief from any stay in bankruptcy restraining any action
to evict Tenant; or the pursuing of any action with respect to Landlord's
right to possession of the Premises. To the extent permitted by applicable
law, any and all rights and remedies which Landlord may have under this
Lease and at law and equity shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such rights and
remedies may be exercised at the same time to the greatest extent
permitted by law. All costs incurred by Landlord in connection with
collecting any amounts and damages owing by Tenant pursuant to the
provisions of this Lease or to enforce any provision of this Lease,
including by way of example, but not limitation, reasonable attorneys'
fees from the date any such matter is turned over to an attorney, shall
also be recoverable by Landlord from Tenant. Landlord and Tenant agree
that any action or proceeding arising out of this Lease shall be heard by
a court sitting without a jury, in the State of California and each party
hereby waives all rights to a trial by jury.
D. LANDLORD DEFAULT.
(a) Tenant shall give notice of any failure by Landlord to perform any of
its obligations under this Lease to Landlord. Landlord shall not be in
default under this Lease unless Landlord shall fail to cure such
nonperformance within 30 days after receipt of Tenant's notice. However,
if such nonperformance shall reasonably require more than 30 days to cure,
Landlord shall not be in default if such cure shall be commenced within
such 30 day period and thereafter diligently pursued to completion.
(b) With respect to a default under Section 10.D, Tenant may, but shall
not be required to, pay any premiums necessary to keep any required
insurance in force or to obtain replacement policies of insurance and the
cost of said premiums upon Tenant's demand shall be deducted from amounts
due to Landlord as Rent.
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15. SUCCESSORS AND ASSIGNS, TRANSFER BY LANDLORD
A. IN GENERAL.
The parties agree that all provisions of this Lease are to be construed as
covenants and agreements as though the words imparting those covenants and
agreements were used in each separate paragraph of the Lease. Subject to
the provisions of this paragraph 15, all of the provisions of this Lease
shall bind and inure to the benefit of the parties and their respective
heirs, legal representatives, successors and assigns, but Tenant shall not
assign this Lease nor sublease the Premises nor grant to any other person
or party the right or license to possess the Premises in whole or in part
without the prior written consent of Landlord, which Landlord may withhold
in its sole discretion. Notwithstanding the foregoing, Tenant may assign
this Lease to any entity controlling, controlled by, or under common
control with Tenant, so long as Tenant notifies Landlord in writing prior
to such assignment. No such assignment shall relieve Tenant of liability
hereunder.
B. TRANSFERS BY LANDLORD OF LANDLORD'S INTEREST.
No owner of the Premises shall be liable under this Lease except for
breaches of Landlord's obligations occurring while owner of the Premises
and nothing contained in this Lease shall be construed to permit Tenant to
offset against rents due a successor landlord, a judgment (or other
judicial process) requiring the payment of money by reason of any default
of a prior landlord. In pursuing any remedies under this Lease against the
Landlord or any of its successors or assigns as owner of the Premises,
including the holder of any ground lease, deed of trust or mortgage
encumbering the Premises, or any purchaser or transferee pursuant to the
foreclosure or transfer of the Premises under any such instrument becomes
the Landlord, Tenant shall look solely to the interest of said party in
the Premises and not to the other assets of Landlord or such successor.
Landlord's liability under this Lease shall be limited to Landlord's
estate and interest in the Building (or to the proceeds thereof) and no
other property or other assets of Landlord or its partners (if Landlord is
a partnership), agents, employees, legal representatives, successors or
assigns, shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect
to this Lease, the relationship of Landlord and Tenant hereunder or
Tenant's use and occupancy of the Premises.
16. PROTECTION OF LENDERS; ESTOPPEL CERTIFICATES
A. PROTECTION OF LENDERS; SUBORDINATION AGREEMENTS.
Tenant agrees that this Lease shall be subordinate to any ground lease or
underlying lease, mortgage or deed of trust or other lien covering the
Premises or any portion of the Premises, upon and subject to the following
terms and
17
conditions. Such subordination shall be evidenced by the execution by
Tenant and the lender of a subordination, nondisturbance and attornment
agreement in form reasonably satisfactory to the lender and Tenant or
otherwise in a form used in similar transactions; provided that the
agreement may not change any of Tenant's obligations under the Lease. Said
agreement shall include a provision to the effect that in the event of a
termination of the ground or underlying lease or foreclosure of the
mortgage, deed of trust or other lien in favor of the secured party, or
upon a sale of the property encumbered thereby pursuant to the trustee's
power of sale, or upon a transfer of the Property by deed in lieu of
foreclosure, then for so long as Tenant is not in default under the terms,
covenants and conditions of this Lease, this Lease shall continue in full
force and effect as a direct lease between the owner or succeeding owner
of the Property, as Landlord, and Tenant for the balance of the term of
this Lease, upon and subject to all of the terms, covenants and conditions
of this Lease.
B. ESTOPPEL CERTIFICATES.
Each party hereto shall, upon request from the other party, at any time
and from time to time execute, acknowledge and deliver to such party a
written statement, in the form generally acceptable to institutional
purchasers or lenders certifying as follows: that this Lease is unmodified
and in full force and effect (or if there has been modification thereof,
that the same is in full force and effect as modified and stating the
nature thereof); that to the best of its knowledge there are no uncured
defaults on the part of the other party hereto (or if any such default
exists, the specific nature and extent thereof); the date to which any
rents and other charges have been paid in advance, if any; and such other
matters relating to the obligations of the parties under the Lease as are
typically contained in such certificates.
17. NOTICE
Where provision is made herein for notice of any kind, it shall be deemed
sufficient, if such notice if addressed as shown below:
To Landlord:
The Boeing Company
C/o Boeing Realty Corporation
3760 Kilroy Airport Way, Suite 500
Long Beach, CA 90806
ATTN.: Lease Administrator
TEL.: (562) 627-4900
FAX: (562) 627-4906
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To Tenant:
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, NJ 07054
Attention: Nina Laserson Dunn, Executive Vice President,
General Counsel and Secretary
Telephone: (973) 898-6020
Telecopier: (973) 898-0717
All such notices shall be delivered by recognized overnight delivery service for
next business day delivery, with all fees prepaid.
18. LANDLORD'S RIGHT OF ENTRY
Landlord shall have the following rights without effecting an eviction or
disturbance of Tenant's use or possession of the Premises or giving rise to any
claim for abatement of Rent, when accompanied by a Tenant representative and
upon reasonable prior notice to Tenant: (i) To enter the Premises as reasonably
necessary to conduct inspections or to ensure that Tenant is complying with its
obligations hereunder; (ii) To install and maintain signs on the exterior and
interior of the Building, except within the Premises, provided the signs do not
block either completely or partially the exterior windows of the Premises; (iii)
To have pass keys to the Premises; (iv) To decorate, remodel, repair, alter or
otherwise prepare the Premises for re-occupancy during the last six (6) months
of the Term hereof if, during or prior to such time, Tenant has vacated the
Premises, or at any time after Tenant abandons the Premises; (v) To do or permit
to be done any work in or about the exterior of the Building or any adjacent or
nearby building, land, street or alley; or (vi) to place "for sale" signs on the
Land or the Building and to enter the Premises with brokers, appraisers,
engineers or other consultants and to show the Premises to prospective
purchasers.
19. QUIET ENJOYMENT
Landlord warrants and covenants that, during the Lease Term, Tenant shall have
the exclusive right to possession and quiet enjoyment of the Premises and shall
have, hold and enjoy the Premises peacefully and quietly, without any manner of
let, suit, trouble or hindrance by any person claiming by or through Landlord.
20. SEVERABILITY
If a court of competent jurisdiction shall determine, to any extent, that any
provision, term or condition of this Lease shall be invalid or unenforceable,
that determination shall not affect the remainder of this Lease, and each
provision, term or condition in the remainder of this Lease shall be valid and
enforceable to the extent permitted by law.
21. HOLDOVER
19
Any holding over after the expiration of the Lease Term of this Lease with the
written consent of Landlord shall be construed to be a tenancy from month to
month on the same terms and conditions as set forth in this Lease except that
the amount of Rent due during the hold-over period shall be 125% the amount of
Rent due under the Lease, provided that if Tenant shall hold over without the
written consent of Landlord, Tenant shall in addition be liable to Landlord for
and shall hold Landlord harmless from any and all damages to which Landlord is
legally entitled as a result of such holding over.
22. CONDEMNATION
If any part of the Premises should be taken under governmental law, ordinance,
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with Tenant's use
of the Premises, then upon 30 days' prior written notice by Tenant this Lease
shall terminate and Base Rent shall be apportioned as of the date of title
vesting in such proceeding or purchase. Otherwise, this Lease shall not
terminate, but the Base Rent payable hereunder during the unexpired term (or
period of such taking if shorter) shall be reduced to such extent as may be fair
and reasonable under the circumstances. Landlord shall be entitled to receive
the entire price or award from any such taking. Tenant shall have the right, to
the extent that same shall not diminish Landlord's award, to make a claim
against the condemning authority (but not Landlord) for such compensation as may
be separately awarded or recoverable by Tenant for Tenant's goodwill, moving
expenses and damage to the property that Tenant is permitted to remove under
this Lease and other items recoverable by Tenant under applicable law (excluding
Tenant's leasehold interest).
23. LIENS
Tenant shall keep the Premises, the Building, and the land on which the Building
is located free and clear of all liens of any third parties arising out of
Tenant's actions or the conduct of Tenant's business. Tenant shall discharge any
such liens at Landlord's request.
24. TARGET
During the Term of this Lease, Tenant may use the target near Landlord's
Building 257, and Landlord will take no action which interferes with the
unobstructed line of sight between the Premises and the target.
25. COMMON AREAS
Tenant shall have the use, in common with Landlord and other tenants of
the Building, of the common areas shown as "shared" on Exhibit A.
26. DEMISING WALLS
20
As soon as practicable after the commencement of the Term, Landlord shall
construct, at its expense, the demising walls and other improvements reasonably
necessary to insure that the Premises are separate and secure from the remainder
of the Building, which construction shall be substantially in compliance with
the terms and conditions of the Transition Services Agreement between Landlord
and Tenant, executed concurrently with the Asset Purchase Agreement.
27. MISCELLANEOUS
A. ATTORNEY'S FEES
If either party brings an action to enforce the provisions, terms and
conditions in this Lease or to declare rights hereunder, the prevailing
party in that action shall be entitled to reasonable attorneys' fees to be
paid by the other party, as such costs and fees may be fixed by the court.
B. CAPTIONS
The marginal headings or titles to the sections of this Lease are not a
part of the Lease but are inserted only for convenience. They shall have
no effect on the construction or interpretation of any part of this Lease.
C. TIME IS OF THE ESSENCE
Time is of the essence in the performance of all covenants and conditions
of this Lease in which time is a factor.
D. COUNTERPARTS
This Lease may be executed in any number of counterparts, each of which
when executed and delivered shall constitute an original Lease, but all of
which together shall constitute one and the same Lease.
E. CHOICE OF LAW
This Lease shall be governed by the Laws of the State of California.
F. COMPLETE AGREEMENT
This Lease contains the entire and complete agreement between the parties
hereto, with all previous negotiations, warranties, covenants, conditions
and promises being merged herein. Landlord and Tenant further agree that
no alteration, amendment or modification to this Lease shall be binding
upon Landlord or Tenant unless same is first reduced to writing and signed
by both Landlord and Tenant. Landlord and Tenant further warrant to one
another that they will not
21
assert any promise, condition, covenant, warranty or other consideration
made either prior to or subsequent to the execution of this Lease.
G. NO RECORDATION.
Neither party shall record this Lease.
Executed in duplicate as of the date first written above.
LANDLORD: TENANT:
The Boeing Company DRS Technologies, Inc.
By: By:
--------------------------- ---------------------
Title: Title:
------------------------------ ------------------
22
EXHIBIT A
Depiction of Premises
23
EXHIBIT B
Repairs and Maintenance
Refuse Disposal Contract
Landscaping Maintenance Contract
Filter Replacement Contract
DI & RO Water Maintenance Contract
Gas Detection Maintenance Contract
Cooling Tower Maintenance Contract
Chiller Maintenance Contract
Boiler Maintenance Contract
Roofing Maintenance Contract
Street Sweeping Contract
Window Washing Contract
Planned Maintenance Labor
Planned Maintenance Material
Unplanned Maintenance Labor
Unplanned Maintenance Material
24
EXHIBIT C-2
241 LEASE AGREEMENT
EXECUTION COPY
LEASE AGREEMENT
(Building 241)
By and between
The Boeing Company
And
DRS Technologies, Inc.
-------------------------
Dated as of August 3, 2001
-------------------------
------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
1. TERM.............................................................1
A. Initial Term.................................................1
B. Option to Extend the Term....................................1
C. Conditions Applicable to Each Extension......................1
2. RENT.............................................................2
A. Base Rent....................................................2
B. Additional Rent..............................................2
C. Payment of Rent..............................................3
3. UTILITIES........................................................3
4. CONDITION; AS IS; DISCLAIMER.....................................4
5. MAINTENANCE......................................................4
6. USE..............................................................5
7. ACCESS; PARKING..................................................5
8. TAXES............................................................5
A. Payment of Real Property Taxes...............................5
B. Personal Property Taxes......................................5
9. Condition at Surrender...........................................5
10. INDEMNIFICATION AND INSURANCE....................................6
A. Indemnity....................................................6
A. Indemnity....................................................6
B. Tenant's Insurance...........................................7
C. Mutual Waiver of Claims......................................7
D. Mutual Waiver of Subrogation.................................8
11. DAMAGE OR DESTRUCTION............................................8
A. Total Destruction or Untenantability.........................8
B. Partial Destruction or Untenantability.......................8
C. Landlord's Obligation to Restore.............................8
12. ALTERATIONS......................................................9
13. ENVIRONMENTAL MATTERS............................................9
A. Compliance with Laws and Requirements........................9
B. Definitions..................................................9
i
PAGE
C. Remediation.................................................10
D. Documentation and Right to Inspect..........................11
E. Notification................................................11
F. Restoration.................................................12
G. Indemnification.............................................13
H. Survivability...............................................13
14. DEFAULT.........................................................14
A. Events of Default...........................................14
B. Remedies....................................................14
C. General Provisions Concerning Remedies......................16
D. Landlord Default............................................16
15. Successors and Assigns, Transfer By Landlord....................17
A. In General..................................................17
B. Transfers by Landlord of Landlord's Interest................17
16. PROTECTION OF LENDERS; ESTOPPEL CERTIFICATES....................17
A. Protection of Lenders; Subordination Agreements.............17
B. Estoppel Certificates.......................................18
17. NOTICE..........................................................18
18. LANDLORD'S RIGHT OF ENTRY.......................................19
19. QUIET ENJOYMENT.................................................19
20. SEVERABILITY....................................................19
21. HOLDOVER........................................................19
22. CONDEMNATION....................................................20
23. LIENS...........................................................20
24. NOT USED........................................................20
25. COMMON AREAS....................................................20
26. DEMISING WALLS..................................................20
27. MISCELLANEOUS...................................................21
A. Attorney's Fees.............................................21
B. Captions....................................................21
C. Time is of the Essence......................................21
D. Counterparts................................................21
E. Choice of Law...............................................21
F. Complete Agreement..........................................21
ii
PAGE
G. No Recordation..............................................22
EXHIBIT A Depiction of Premises.....................................23
EXHIBIT B Repairs and Maintenance...................................24
iii
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease"), is made and entered into this 3rd day of August,
2001, by and between THE BOEING COMPANY, a Delaware corporation ("Landlord"),
and DRS TECHNOLOGIES, INC., a Delaware corporation ("Tenant"), in connection
with that certain Asset Purchase Agreement, dated as of August 3, 2001 (the
"Asset Purchase Agreement"), between Landlord and Tenant.
For and in consideration of the covenants and agreements herein provided,
Landlord does hereby lease, demise and let unto Tenant that certain premises
described as approximately and are hereby stipulated to contain 61,219 square
feet of space (exclusive of shared areas) located within that certain building
known as Building 241 at 3400 East Miraloma Avenue, Anaheim, California (the
"Building"), together with 14,565 square feet of yard space ( together the
"Premises"), all as depicted in the attached Exhibit A.
1. TERM
A. INITIAL TERM.
The term of this Lease (the "Term") shall commence on the date of the
Closing as defined in the Asset Purchase Agreement between the parties
("Commencement Date") and, unless terminated sooner by the terms of this
Lease, shall continue for one (1) year (the "Initial Term"), ending on
August 3, 2002.
B. OPTION TO EXTEND THE TERM.
Tenant shall have the option to extend the Term for a period of six (6)
months. If Tenant exercises said option, Tenant shall have the right to
extend the Term for a second extension period of six (6) months. The first
such extension shall be referred to in this Lease as the "First Extended
Term," the second such extension shall be referred to as the "Second
Extended Term," and each such extension shall be referred to as an
"Extended Term." If Tenant wishes to exercise an option to extend the
Term, Tenant shall deliver written notice of such exercise to Landlord no
later than 30 days before the expiration of the Term. If not exercised in
this fashion, such options shall expire and be of no further effect. If
one or more of said options are exercised, the "Term" shall be deemed to
include the Initial Term and the Extended Term(s) as to which options are
exercised and shall end on the last day thereof, unless sooner terminated
pursuant to the terms of this Lease. The option is personal to Tenant and
shall not be assigned except as provided below.
C. CONDITIONS APPLICABLE TO EACH EXTENSION.
Notwithstanding paragraph 1.B., Tenant may not exercise an option to
extend unless (a) the Lease is in full force and effect and (b) no Event
of Default has occurred and is continuing at the time of exercise of such
option. In addition, no
1
exercise to extend the Term shall be valid, and the Term shall not be
extended if an Event of Default (paragraph 14) has occurred and is
continuing on the date on which the Extended Term would otherwise
commence; provided, however, that if Tenant exercises the extension option
within the time period specified under Paragraph B above, then
notwithstanding the existence of an Event of Default or the time of such
attempted exercise, the option shall be deemed to have been validly
exercised if the Event of Default is cured within any applicable cure
period provided to the Tenant under this Lease.
2. RENT
A. BASE RENT.
Tenant agrees to pay Landlord as rental for the Premises the sum indicated
below during the applicable term:
--------------------------------------------------------------------
Initial Term $214,007
--------------------------------------------------------------------
First Extended Term $217,306
Second Extended Term $218,249
--------------------------------------------------------------------
as base rent ("Base Rent") per month, payable in advance on or before the
first day of each month during the Term of this Lease without offset or
other deduction. The Base Rent for any period less than a calendar month
shall be prorated.
B. ADDITIONAL RENT.
All amounts payable by Tenant hereunder, other than Base Rent, are rent
and are referred to as "Additional Rent." Additional Rent is payable by
Tenant within ten days of Landlord's demand therefor. Additional Rent and
Base Rent are sometimes referred to as "Rent." The utilities for the
Building are not separately metered. Tenant's Pro Rata Share (as defined
below) the cost of real property taxes, repairs and maintenance (including
the items listed on Exhibit B), and utilities for the Building
(collectively, "Operating Expenses") is included in the Base Rent, based
on their average cost per square foot of the Building over Landlord's
entire Anaheim campus in the year 2000 ("the Base Year"). Tenant shall
reimburse Landlord as Additional Rent for its Pro Rata Share, based on the
number of square feet leased by Tenant within the Building (which is equal
to 85%, such percentage, Tenant's "Pro Rata Share"), of any increase in
Operating Expenses over the Base Year, determined in the manner set forth
above in accordance with the accounting practices of Landlord in effect at
the commencement of the Term. Base Rent includes an amount for utilities
related charges of $1.31 per square foot per month (the "Electrical Energy
Charge"). The parties shall, at the commencement of any Extended Term,
review actual such
2
charges previously incurred to determine whether such Electrical Energy
Charge should be prospectively adjusted, whether upwards or downwards, to
reflect the prospective cost of such electrical energy related charges
during such Extended Term. To the extent that the adjusted energy charge
("Adjusted Energy Charge") exceeds the Electrical Energy Charge, then Base
Rent for such Extension Period shall be increased accordingly, or if less,
reduced accordingly. No credit shall be due either party for any
overpayment or underpayment for any period prior to the date such
adjustment is made. Until such adjustment is made, Tenant will continue to
pay Base Rent and Additional Rent as otherwise provided in this Lease
Agreement. Notwithstanding the foregoing, the following shall not be
included in "Operating Expenses:"
1. capital costs or expenditures;
2. depreciation on the Building;
3. costs for which Landlord is reimbursed by its insurer or any
third party's insurer;
4. ground rent;
5. any increase in real property taxes due to a reassessment upon
a sale of the Building;
6. leasing or brokerage fees, commissions or expenses and
attorneys' fees and disbursements incurred in connection with
lease preparation or negotiation for the Building or
litigation existing as of the date hereof;
7. salaries of personnel above the level of Manager - Plant
Services;
8. interest or principal or other payments on mortgage or other
debt costs, if any, or any payments whatsoever on any ground
leases;
9. capital expenditures incurred in connection with compliance
with laws, unless expenditures are the result of the specific
operations of Tenant's business as compared with the occupancy
of the Premises by tenants generally;
10. taxes as measured by the net income of Landlord from the
operation of the Building;
11. janitorial services; and
12. costs that are paid directly by Tenant.
C. PAYMENT OF RENT.
All Rent shall be paid in immediately available funds and in lawful money
of the United States without deduction, withholding, set-off, or (except
as expressly provided for in this Lease) abatement of any kind. The
payment of Rent is an independent covenant.
3. UTILITIES
Landlord shall furnish electric power and water. Landlord shall also provide
heating and air conditioning at levels and during such hours as are customary
for buildings of similar use and character in Landlord's Anaheim Campus.
Landlord's obligation to supply
3
electric power and water is contingent upon the supply of such services to the
Building from the purveyors thereof, and Landlord shall have no liability to
Tenant, nor shall Tenant have the right to withhold or abate the payment of
Rent, in the event that any such service is curtailed or suspended as a result
of causes beyond the reasonable control of Landlord. Landlord shall be entitled
to subscribe to interruptible programs to reduce the cost of electric power. Any
curtailment imposed by the Independent System Operator under such a program
shall be deemed beyond the reasonable control of Landlord.
4. CONDITION; "AS IS;" DISCLAIMER
Tenant shall accept the Premises in their condition as of the execution of the
Lease, subject to all recorded or unrecorded matters, laws, ordinances, and
governmental regulations and orders. Landlord represents and warrants that
except as disclosed in the Asset Purchase Agreement, it has not received from
any public agency any notice that the Premises are in violation of any federal,
state or local law or regulation. Except as expressly provided herein OR IN THE
ASSET PURCHASE AGREEMENT, Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation, express or implied, as to the
condition of the Premises or the suitability of the Premises for Tenant's
intended use. Tenant represents and warrants that Tenant has made its own
inspection of and inquiry regarding the condition of the Premises and, Except as
expressly provided herein OR IN THE ASSET PURCHASE AGREEMENT, is not relying on
any representations of Landlord with respect thereto. Landlord and Tenant
expressly agree that there are and shall be no implied warranties of
merchantability, habitability, suitability, fitness for a particular purpose or
of any other kind arising out of this Lease, other than Landlord's warranty of
title and of quiet enjoyment set out in Paragraph 19. EXCEPT AS EXPRESSLY
PROVIDED IN ARTICLE x OF THE aSSET pURCHASE aGREEMENT, TENANT HEREBY WAIVES,
RELEASES, AND RENOUNCES ANY AND ALL CLAIMS AGAINST LANDLORD FOR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO OR IN ANY WAY ARISING OUT OF
ANY CONDITION, DEFECT OR NONCONFORMANCE IN THE PREMISES.
5. MAINTENANCE
Landlord, at Landlord's sole cost and expense, is responsible for keeping the
Premises and the Building, including the foundation, exterior walls, floor, roof
and structural parts of the Premises and Building and all building systems and
equipment in good operating condition, except for normal wear and tear,
casualty, and condemnation. Tenant shall be responsible for repairing any damage
to the Premises or the Building, other than ordinary wear and tear, caused by
Tenant's use of the Premises (subject to the waiver of claims in paragraph
10.C).
4
6. USE
Tenant will occupy the Premises for the purpose of operating the Business, as
such term is defined in the Asset Purchase Agreement. The Premises shall not be
used for any other purpose without first obtaining the written consent of the
Landlord, which consent shall not be unreasonably withheld. In its use of the
Premises, the Tenant shall not violate any applicable law, ordinance, deed
restriction or regulation affecting the Building or any part thereof.
Notwithstanding anything to the contrary contained in this Lease, Tenant shall
not be responsible for any violation of applicable law existing as of the date
hereof with respect to the Premises or the Building, or for any capital
expenditures required for the Premises or the Building to comply with applicable
law, unless necessitated by Tenant's specific business operations within the
Premises (as compared with the occupancy of the Premises by tenants generally)
or triggered by alterations requested by or performed by Tenant.
7. ACCESS; PARKING
Landlord shall provide Tenant unrestricted access to the Premises on a 24 hour a
day, 7 day a week basis. Tenant shall have the right to use up to 171
unassigned, general parking spaces in the parking lot in common with the other
tenants of the Building and other buildings owned and occupied by Landlord.
8. TAXES.
A. PAYMENT OF REAL PROPERTY TAXES. Landlord shall be responsible for the
payment of all real property taxes affecting the Premises and shall keep
the Premises free and clear of any liens, charges, and encumbrances of any
taxing authority for the collection of unpaid real property taxes which
accrue during the Term.
B. PERSONAL PROPERTY TAXES. Tenant shall pay directly all taxes
charged against trade fixtures, furnishings, equipment, inventory, or
any other personal property belonging to Tenant which may be located in
the Premises.
9. CONDITION AT SURRENDER
At the termination of the Term of this Lease, Tenant shall remove all of its
personal property (repairing any damage caused by such removal) and surrender
the Premises to Landlord in the same condition as at the Commencement Date,
broom-swept clean, except for normal wear and tear, casualty, matters covered by
the mutual waiver of claims (paragraph 10.C), condemnation, alterations
permitted by Landlord and Section 13 hereof. The provisions of this paragraph
shall survive the expiration or termination of this Lease.
5
10. INDEMNIFICATION AND INSURANCE
A. INDEMNITY BY TENANT
Tenant shall indemnify and hold Landlord harmless from and against any and
all claims or liability for bodily injury to or death of any person or
damage to any property arising out of Tenant's use of the Premises or from
the conduct of Tenant's business, or from any activity, work, or thing
done, permitted or suffered by Tenant in or about the Building, except:
(i.) claims and liabilities to the extent caused by any
negligence on the part of Landlord, its agents, employees,
contractors or invitees; or
(ii.) claims and liabilities for property damage addressed in
Clause (E) entitled "Mutual Waiver of Claims."
Such indemnity shall include all reasonable costs, attorneys' fees and
expenses incurred in the defense of any such claim or any action or
proceeding brought thereon. This indemnity will be applicable to a claim
only if the Landlord:
(i.) notifies Tenant of the claim or liability in writing within
sixty (60) days after the Landlord receives notice of the claim or
liability;
(ii.) permits Tenant to defend or settle against the claim or
liability; and
(iii.) cooperates with Tenant in any defense or settlement against
the claim or liability.
This Section 10A shall survive the expiration or termination of this
Lease.
B. INDEMNITY BY LANDLORD
Landlord shall indemnify and hold Tenant harmless from and against any and
all claims or liability for bodily injury to or death of any person or
damage to any property arising out of the conduct of Landlord, or from any
activity, work, or thing done, permitted or suffered by Landlord in or
about the Premises, except:
(i.) claims and liabilities to the extent caused by any
negligence on the part of Tenant, its agents, employees,
contractors or invitees; or
(ii.) claims and liabilities for property damage addressed in
Clause (E) entitled "Mutual Waiver of Claims."
Such indemnity shall include all reasonable costs, attorneys' fees and
expenses incurred in the defense of any such claim or any action or
proceeding brought thereon. This indemnity will be applicable to a claim
only if the Tenant:
6
(i.) notifies Landlord of the claim or liability in writing
within sixty (60) days after the Landlord receives notice of the claim
or liability;
(ii.) permits Landlord to defend or settle against the claim or
liability; and
(iii.) cooperates with Landlord in any defense or settlement against
the claim or liability.
This Section 10B shall survive the expiration or termination of this
Lease.
C. TENANT'S INSURANCE
Tenant, at Tenant's own cost and expense, will provide and keep in full
force and effect during the Term of this Lease, public liability insurance
with limits of not less than One Million Dollars ($1,000,000) covering
bodily injury to persons, including death and loss of or damage to real
and personal property. Such insurance may be provided under Tenant's
blanket public liability insurance policy. During the Term of the Lease,
Landlord shall be named as an additional insured under such insurance to
the extent of Tenant's undertaking set forth in Clause A, entitled
"Indemnity." A certificate evidencing such insurance coverage shall be
delivered to Landlord not less than fifteen (15) days prior to the
commencement of the Term hereof or the date when Tenant shall enter into
possession, whichever occurs later. Such certificate of insurance will
provide for fifteen (15) days advance notice in the event of cancellation.
D. LANDLORD'S INSURANCE
Landlord, at Landlord's own cost and expense, will maintain and keep in
full force and effect during the Term of this Lease, a policy or policies
of insurance covering loss or damage to the Building in the amount of the
full replacement value thereof (exclusive of Tenant's alterations, trade
fixtures, equipment and personal property) providing protection against
all perils included in an "all risk" property insurance policy, subject
however to the following paragraph E, "Mutual Waiver of Claims."
E. MUTUAL WAIVER OF CLAIMS
Landlord and Tenant do each herewith and hereby release and relieve the
other, and waive their entire claim of recovery for loss or damage to
property arising out of or incident to fire, lightning or any other perils
normally included in an "all-risk" form property insurance policy when
such property constitutes the Premises or the Building or is in, on or
about the Premises, Building or land on which the Building is situated
whether or not such loss or damage is due to the negligence of
7
Landlord or Tenant, their agents, employees, guests, licensees, invitees
or contractors.
F. MUTUAL WAIVER OF SUBROGATION
Each of Landlord and Tenant shall cause its insurance carriers to waive
all rights of subrogation against the other party hereto to the extent of
Landlord's or Tenant's undertaking set forth in Clause A or B above
entitled respectively "Indemnity by Tenant," "Indemnity by Landlord," and
Clause E entitled "Mutual Waiver of Claims."
11. DAMAGE OR DESTRUCTION
A. TOTAL DESTRUCTION OR UNTENANTABILITY
In the event the Premises or any significant portion of the Building are
totally destroyed or rendered wholly untenantable by any cause, as
determined by Landlord in Landlord's reasonable judgment, this Lease shall
cease and terminate on the date of the destruction or casualty.
B. PARTIAL DESTRUCTION OR UNTENANTABILITY
In the event that the Premises is partially destroyed or rendered
partially unusable by Tenant for the purposes set forth in paragraph 6,
entitled "Use," by any cause, and if the destruction or damaged
improvements can not be restored within ninety (90) days as determined by
Landlord in Landlord's reasonable judgment, Landlord shall promptly so
notify Tenant and either party may elect upon ten (10) days written notice
to the other party to terminate this Lease; provided, however, that if
such damage or destruction is repaired within such ten (10) day period,
then such termination notice shall be of no force and effect (the portion
of the Premises damaged or destroyed or rendered unusable shall be
referred to as the "Affected Space"). In the event that neither the
Landlord nor the Tenant elects to terminate this Lease as provided in this
paragraph 11.B, and the damage was not caused by the negligent or
intentional act of the Tenant, the Base Rent payable with respect to the
remaining Premises until the Premises has been restored, shall be reduced
to the amount determined by multiplying the Base Rent otherwise payable by
a fraction, the denominator of which shall be the total rentable square
feet of the Premises as of the day of the casualty resulting in the damage
or destruction, and the numerator of which shall be an amount equal to the
number of gross square feet of the Premises less the number of gross
square feet of the Affected Space.
C. LANDLORD'S OBLIGATION TO RESTORE
In the event that the Premises is partially destroyed or rendered
partially untenantable by any cause and this Lease is not terminated as
provided herein, Landlord shall promptly rebuild and restore the Building
and the Premises to their
8
prior condition and diligently prosecute the work to completion; provided,
however, that if the Premises and Building are not restored within one
hundred eighty (180) days, Tenant may terminate this Lease upon notice to
Landlord.
12. ALTERATIONS.
Tenant shall not make any structural alterations, improvements, or modifications
to the Premises or which affect the exterior of the Premises without Landlord's
prior written consent, which Landlord may withhold in its sole discretion.
Tenant may, however, install trade fixtures, which Tenant may remove at the end
of the Term, provided it repairs at its own cost any damage resulting from such
removal. At the end of the Term, at Landlord's option, Tenant shall restore any
alterations, structural or otherwise, to their condition at the commencement of
the Term, provided that Landlord notifies Tenant in writing at the time of
Landlord's consent. Tenant shall have the right, upon prior written notice to
Landlord, to install signage identifying Tenant at the entrances to the Premises
and the Building, and on the exterior of the Building, provided that the size
and location of such signage shall be subject to Landlord's reasonable approval.
13. ENVIRONMENTAL MATTERS
A. COMPLIANCE WITH LAWS AND REQUIREMENTS.
Except as otherwise agreed by Landlord in writing or as set forth in
Section 6.9 of the Asset Purchase Agreement or the Transition Services
Agreement dated August 3, 2001 between Landlord and Tenant (the "TSA"), ,
Tenant shall be solely responsible at its expense for obtaining any
permits, licenses or approvals, and for preparing, maintaining and
submitting any records or reports, as required under applicable
Environmental Laws and Requirements for its operations hereunder. Tenant
shall comply with any and all applicable Environmental Laws and
Requirements and shall not cause, permit or allow the presence of and
shall not generate, release, store, or deposit any Hazardous Substances on
or about the Premises in violation of any applicable Environmental Laws
and Requirements. Tenant shall not release any Hazardous Substances into
the soil, water (including groundwater) or air of the Premises or onto any
other adjoining property in violation of Environmental Laws and
Requirements. In the event of a spill or other release of Hazardous
Substances caused by Tenant, its agents, employees or invitees at or from
the Premises, Tenant shall undertake prompt response as required by law,
including but not limited to reporting to appropriate agencies, and shall
notify Landlord of same as soon as possible.
B. DEFINITIONS:
1) As used herein, the term "Hazardous Substance" means
any hazardous, toxic, chemical, or dangerous substance, pollutant,
contaminant, waste or material, including petroleum, which is regulated
under
9
any and all federal, state, or local statute, ordinance, rule, regulation,
or common law relating to chemical management, environmental protection,
contamination, or cleanup including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 as amended
(42 U.S.C. ss. 9601 et seq.), the Resource Conservation and Recovery Act
as amended (42 U.S.C. ss. 6901 et seq.) or any other Federal, state,
county, or city law, regulation or ordinance relating to the protection of
the environment or of human health.
2) As used herein the term "Environmental Laws and
Requirements" means any and all federal, state, local laws, statutes
(including without limitation the statutes referred to in paragraph
13(b)(1), above), ordinances, rules, regulations and/or common law
relating to environmental protection, contamination, the release,
generation, production, transport, treatment, processing, use, disposal,
or storage of Hazardous Substances, and the regulations promulgated by
regulatory agencies pursuant to these laws, and any applicable federal,
state, and/or local regulatory agency-initiated orders, requirements,
obligations, directives, notices, approvals, licenses, or permits,
including but not limited to those for the reporting, investigation,
cleaning, or remediation of any Hazardous Substances on the Premises.
C. REMEDIATION.
1) Should Tenant fail to perform any of its obligations
pursuant to this agreement or to any and all applicable Environmental Laws
and Requirements, Tenant shall at its own expense promptly remedy such
noncompliance. Tenant shall at its own expense clean up or remediate any
Hazardous Substance which Tenant has caused to be released at or from the
Leased Premises to the extent required by applicable Environmental Laws
and Requirements. Should Tenant fail so to do, Landlord shall have the
right, but not the duty, to enter the Leased Premises personally or
through its agents, consultants, or contractors to perform the same and
Tenant shall promptly pay to Landlord on demand and as Additional Rent all
costs and expenses incurred by Landlord thereby. Further, Tenant shall
hold Landlord harmless from any losses, including claims of third parties,
resulting from Tenant's noncompliance with Environmental Laws and
Requirements, or from any unsafe condition or release of Hazardous
Substances caused by Tenant.
2) From and after the Commencement Date, if any
environmental conditions are discovered at, on, under or migrating from
the Premises that may require investigation and/or remediation, there
shall be a rebuttable presumption that such conditions are the result of
activities or occurrences that existed or arose prior to the Commencement
Date. Landlord shall bear the burden of proof if it contends that such
conditions are a result of the actions of Tenant or its agents, employees,
contractors or invitees after the Commencement Date.
10
D. DOCUMENTATION AND RIGHT TO INSPECT.
Tenant shall provide copies to Landlord of any reports regarding its
operations at the Premises which are submitted to governmental agencies
pursuant to any Environmental Laws and Requirements. Tenant shall also
make available to Landlord upon request all permits and approvals, and all
records maintained by Tenant pursuant to any Environmental Laws and
Requirements. During the Term, Landlord and/or its agents or employees
shall have the right to periodically inspect the Premises at reasonable
times upon prior notice to Tenant and accompanied by a Tenant
representative to confirm that Tenant is in compliance with the terms of
this Agreement, including compliance with any and all Environmental Laws
and Requirements. Further, if Landlord at any time should have any cause
to believe that any Hazardous Substances are or at any time during the
term of this Lease have been released at or from the Premises without
strict compliance with all Environmental Laws and Requirements or in a
manner which may give rise to liability for environmental cleanup, damage
to property, or personal injury to Landlord, or any other person, Landlord
shall have the right at its discretion, but not the duty, to enter, at any
reasonable time upon prior notice to Tenant and accompanied by a Tenant
representative, and conduct an inspection of the Premises including
invasive tests to determine whether, and the extent to which, Hazardous
Substances have been released. Tenant hereby grants to Landlord, and its
employees, agents, employees, consultants, and contractors the right to
enter the Premises upon reasonable notice to Tenant and to perform such
tests on the Premises as are reasonably necessary in the opinion of
Landlord to conduct such investigations. Landlord shall conduct any
discretionary tests or investigations in a manner which will not
materially affect Tenant's operations at the Premises. If, however, such
tests or investigations are required to comply with any Environmental Laws
or Regulations, Landlord shall make reasonable efforts to conduct those
tests or investigations in a manner that will not materially affect
Tenant's operations at the Premises. Landlord may retain any independent
qualified professional consultant to enter the Premises to conduct such
inspections. Such consultant's reasonable fee shall be payable by Tenant
if such consultant determines that Tenant's activities constitute a
material violation of Environmental Laws and Requirements or have resulted
in the release of Hazardous Substances into the environment which may give
rise to liability for environmental cleanup, damage to property, or
personal injury to Landlord or any other person; otherwise, such fee shall
be payable by Landlord.
E. NOTIFICATION.
Each party shall promptly notify the other party hereto (and shall enclose
all relevant notices and written materials, of (i) any inquiry, action or
proceeding initiated by any governmental agency or any third party with
respect to any release of Hazardous Materials, any violation of
Environmental Laws, in each case specifically relating to the Premises or
the Building (a "Proceeding"), (ii) any material event, filing, notice or
action relating to any Proceeding, and (iii) any
11
filing or communication with or to any governmental agency reflecting any
material change or event relating to use of Hazardous Materials in, on or
around the Premises. Tenant shall permit Landlord to review, extract or
copy all MSDS's for Hazardous Materials used, stored or emitted from the
Premises. In addition, Tenant and Landlord shall each immediately notify
the other, both orally and in writing, of any release of Hazardous
Materials arising out of or related to its respective operations and will
identify whether such release, in such party's reasonable opinion, (1) is
required to be reported to any applicable governmental agency, (2)
potentially poses any risk or exposure to other occupants of the Building,
(3) has the potential to be released into any common Building area or
system (including HVAC, adjacent premises, industrial or sanitary waste
water disposal or treatment system), or (4) has the potential to exceed or
violate any permit held by Tenant or held by Landlord of which Tenant or
Landlord, respectively, is aware. In addition, each party shall notify the
other of any enforcement, cleanup, removal or other governmental or
regulatory action instituted or completed pursuant to any Environmental
Laws.
Without in any way limiting the generality of the foregoing, each party
will provide to the other party, within 10 working days after the
Commencement Date, a report listing the names and quantities of all
Hazardous Materials to be used, generated or stored by such party (other
than those used, generated or stored in normal office operations) in the
Premises. Throughout the term of this Lease, each party shall notify the
other party within 10 working days after any of the following occurrences
in connection with the use of the Premises: (1) such party increases the
amount of a previously disclosed Hazardous Material so that at any one
time, its storage, use or generation of such Hazardous Material exceeds 55
gallons, 500 lbs. or 200 cubic feet; (2) such party adds a new Hazardous
Material in an amount such that at any one time, its storage, use or
generation of such Hazardous Material exceeds 55 gallons, 500 lbs. or 200
cubic feet; or (3) such party increases the quantity of its storage, use
or generation of any previously identified Hazardous Material by 100% or
more.
F. RESTORATION.
With reasonable promptness following the expiration or earlier termination
of this Lease, Tenant shall, at Tenant's sole expense, if and to the
extent applicable, perform each of the following:
(i) remove from the Premises all Hazardous Materials then
stored or used by Tenant at the Premises and all of Tenant's personal
property; and
(ii) to the extent necessitated by Tenant's use of Hazardous
Materials of a type or in a manner inconsistent with Landlord's prior use
of Hazardous Materials at the Premises, decontaminate, or pay for
decontamination in order to neutralize or remove any chemical residues, in
accordance with
12
commercially reasonable standards and applicable Environmental Laws, all
piping, conduits, pits, sumps, trenches, walls, pilings, floors and tanks
which (A) will remain in or about the Premises and (B) were used by Tenant
for the handling, conveyance and/or discharge of Hazardous Materials of a
type or in a manner inconsistent with Landlord's prior use of Hazardous
Materials at the Premises or were contaminated with Hazardous Materials
used by Tenant of a type or in a manner inconsistent with Landlord's prior
use of Hazardous Materials at the Premises.
G. INDEMNIFICATION.
Tenant shall indemnify, hold harmless, and defend Landlord, and its
directors, officers, employees, agents, assigns, and attorneys from any
and all claims, damages, response costs, and expenses arising out of or in
any way relating to the violation of any Environmental Laws and
Requirements, or to the generation, release, storage, deposit or disposal
of Hazardous Substances, to the extent caused by Tenant, its agents,
employees, contractors and invitees at any time during the Term of the
Lease, including but not limited to: (1) claims of third parties,
including governmental agencies, for damages (including personal injury
and/or property damage), response costs, fines, penalties, injunctive or
other relief; (2) the cost, expense, or loss to Landlord of any injunctive
relief, including preliminary or temporary injunctive relief, applicable
to the Landlord or the Premises; and (3) the expense of reporting the
existence of Hazardous Substances to any agency of any state government or
the United States as required by applicable laws or regulations, before
and after any trial or appeal therefrom whether or not taxable as costs;
all of which shall be paid by Tenant when accrued. Similarly, Landlord
shall indemnify, hold harmless, and defend Tenant, and its directors,
officers, employees, agents, assigns, and attorneys from any and all
claims, damages, response costs, and expenses arising out of or in any way
relating to the violation of any Environmental Laws and Requirements, or
to the generation, release storage, deposit or disposal of Hazardous
Substances, to the extent caused by Landlord, its agents, employees and
invitees. Notwithstanding the foregoing, neither party shall be liable for
consequential damages, lost profits, or diminution in value of the other
party's property.
H. SURVIVABILITY .
Except as set forth in Section 13.H, the provisions of this Section 13
shall survive the expiration or termination of this Lease.
13
14. DEFAULT
A. EVENTS OF DEFAULT.
Each of the following shall be an event of default (each, an "Event of
Default") under this Lease:
(1) Tenant shall fail to pay Rent under this Lease within five days
after it is due and such failure shall continue for a period of ten days
after written notice from Landlord.
(2) Tenant shall abandon or vacate the Premises, unless Tenant provides
adequate security for the Premises, evidence of the continuation of
insurance coverage and is otherwise complying with the terms of the
Lease, including the payment of Rent.
(3) Tenant shall fail to obtain or maintain any policy of insurance
required pursuant to the terms of this Lease.
(4) Tenant shall fail to execute any subordination agreement (paragraph
16.A) or estoppel certificate (paragraph 16.B) required by the terms of
this Lease.
(5) Tenant shall permit or suffer a lien that Landlord has required
Tenant to remove pursuant to paragraph 23.
(6) Tenant shall fail to perform any of Tenant's other obligations under
this Lease and such failure shall continue for a period of 30 days after
written notice from Landlord; provided that if more than 30 days shall
be required to complete such performance, Tenant shall not be in default
if Tenant shall commence such performance within the 30 day period and
shall thereafter diligently pursue its completion. Any notice provided
to Tenant shall be in lieu of, and not in addition to, any notice
required under the California Code of Civil Procedure or other
applicable law, and any cure period provided herein shall run
concurrently with any cure period provided by applicable laws.
(7) Tenant shall make a general assignment or general arrangement for
the benefit of creditors; a petition for adjudication of bankruptcy or
for reorganization or rearrangement shall be filed by or against Tenant
and shall not be dismissed within 90 days; a trustee or receiver shall
be appointed to take possession of substantially all of Tenant's assets
located at the Premises or Tenant's interest in this Lease and
possession shall be subjected to attachment, execution or other judicial
seizure which shall not be discharged within 90 days.
B. REMEDIES.
14
If an Event of Default occurs and is continuing, Landlord may, at any time
thereafter, with or without notice or demand (except as expressly provided
herein) and without limiting Landlord in the exercise of any right or
remedy which Landlord may have:
(a) Peaceably reenter the Premises upon voluntary surrender by Tenant or
remove Tenant and any other persons occupying the Premises therefrom,
using such legal proceedings as may be available;
(b) In addition to reentry under (a) above, terminate this Lease. Upon
such termination, Landlord may recover from Tenant the following: (i)
the worth at the time of award of the unpaid Rent and other charges
under this Lease that had been earned at the time of termination; (ii)
the worth at the time of award of the amount by which the unpaid Rent
and other charges under this Lease which would have been earned after
termination until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; (iii) the
worth at the time of award of the amount by which the unpaid Rent and
other charges under this Lease for the balance of the term of this Lease
after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; and (iv) any other
amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under
this Lease or that in the ordinary course of things would be likely to
result therefrom. As used herein, the following terms are defined: (a)
The "worth at the time of award" of the amounts referred to in clauses
(i) and (ii) is computed by allowing interest at the lesser of 15
percent per annum or the maximum lawful rate. The "worth at the time of
award" of the amount referred to in clause (iii) is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus 3 percent.
(c) In addition to reentry pursuant to paragraph (a) above, elect in
writing to terminate Tenant's right to possession without terminating
the Lease. In such case, the Lease shall continue in effect for so long
as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all its rights and remedies under this Lease,
including the right to recover Rent as it becomes due. Any such payments
due Landlord shall be made upon demand therefor from time to time and
Tenant agrees that Landlord may file suit to recover any sums falling
due from time to time. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect in writing to
terminate this Lease for such previous breach.
(d) With respect to a default under paragraph 14.A(3), Landlord may, but
shall not be required to, pay any premiums necessary to keep any
required insurance in force or to obtain replacement policies of
insurance and the cost of said premiums upon Landlord's demand shall be
promptly reimbursed by Tenant to Landlord as Additional Rent. With
respect to a default under paragraph
15
14.A(5), Landlord may, but shall not be required to discharge said lien
and the amount so paid by Landlord shall be promptly reimbursed by
Tenant to Landlord as Additional Rent.
C. GENERAL PROVISIONS CONCERNING REMEDIESx.
For purposes of calculating the damages which Landlord may recover from
Tenant pursuant to this paragraph 14, all amounts payable by Tenant in
excess of Base Rent shall be deemed Additional Rent. For the purpose of
calculating Landlord's damages by reason of Tenant's failure to pay all
sums other than Base Rent that would have been payable hereunder if this
Lease had not been terminated, such sums shall be those that would have
been so payable hereunder as of the time of the award. On any termination,
Landlord's damages for default shall include all reasonable costs and
fees, including reasonable attorneys' fees that Landlord shall incur in
connection with the filing, commencement, pursuing and/or defending of any
action in any bankruptcy court or other court with respect to the Lease,
the obtaining of relief from any stay in bankruptcy restraining any action
to evict Tenant; or the pursuing of any action with respect to Landlord's
right to possession of the Premises. To the extent permitted by applicable
law, any and all rights and remedies which Landlord may have under this
Lease and at law and equity shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such rights and
remedies may be exercised at the same time to the greatest extent
permitted by law. All costs incurred by Landlord in connection with
collecting any amounts and damages owing by Tenant pursuant to the
provisions of this Lease or to enforce any provision of this Lease,
including by way of example, but not limitation, reasonable attorneys'
fees from the date any such matter is turned over to an attorney, shall
also be recoverable by Landlord from Tenant. Landlord and Tenant agree
that any action or proceeding arising out of this Lease shall be heard by
a court sitting without a jury, in the State of California and each party
hereby waives all rights to a trial by jury.
D. LANDLORD DEFAULT.
(a) Tenant shall give notice of any failure by Landlord to perform any of
its obligations under this Lease to Landlord. Landlord shall not be in
default under this Lease unless Landlord shall fail to cure such
nonperformance within 30 days after receipt of Tenant's notice. However,
if such nonperformance shall reasonably require more than 30 days to cure,
Landlord shall not be in default if such cure shall be commenced within
such 30 day period and thereafter diligently pursued to completion.
(b) With respect to a default under Section 10.D, Tenant may, but shall
not be required to, pay any premiums necessary to keep any required
insurance in force or to obtain replacement policies of insurance and the
cost of said premiums upon Tenant's demand shall be deducted from amounts
due to Landlord as Rent.
16
15. SUCCESSORS AND ASSIGNS, TRANSFER BY LANDLORD
A. IN GENERAL.
The parties agree that all provisions of this Lease are to be construed as
covenants and agreements as though the words imparting those covenants and
agreements were used in each separate paragraph of the Lease. Subject to
the provisions of this paragraph 15, all of the provisions of this Lease
shall bind and inure to the benefit of the parties and their respective
heirs, legal representatives, successors and assigns, but Tenant shall not
assign this Lease nor sublease the Premises nor grant to any other person
or party the right or license to possess the Premises in whole or in part
without the prior written consent of Landlord, which Landlord may withhold
in its sole discretion. Notwithstanding the foregoing, Tenant may assign
this Lease to any entity controlling, controlled by, or under common
control with Tenant, so long as Tenant notifies Landlord in writing prior
to such assignment. No such assignment shall relieve Tenant of liability
hereunder.
B. TRANSFERS BY LANDLORD OF LANDLORD'S INTEREST.
No owner of the Premises shall be liable under this Lease except for
breaches of Landlord's obligations occurring while owner of the Premises
and nothing contained in this Lease shall be construed to permit Tenant to
offset against rents due a successor landlord, a judgment (or other
judicial process) requiring the payment of money by reason of any default
of a prior landlord. In pursuing any remedies under this Lease against the
Landlord or any of its successors or assigns as owner of the Premises,
including the holder of any ground lease, deed of trust or mortgage
encumbering the Premises, or any purchaser or transferee pursuant to the
foreclosure or transfer of the Premises under any such instrument becomes
the Landlord, Tenant shall look solely to the interest of said party in
the Premises and not to the other assets of Landlord or such successor.
Landlord's liability under this Lease shall be limited to Landlord's
estate and interest in the Building (or to the proceeds thereof) and no
other property or other assets of Landlord or its partners (if Landlord is
a partnership), agents, employees, legal representatives, successors or
assigns, shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect
to this Lease, the relationship of Landlord and Tenant hereunder or
Tenant's use and occupancy of the Premises.
16. PROTECTION OF LENDERS; ESTOPPEL CERTIFICATES
A. PROTECTION OF LENDERS; SUBORDINATION AGREEMENTS.
Tenant agrees that this Lease shall be subordinate to any ground lease or
underlying lease, mortgage or deed of trust or other lien covering the
Premises or any portion of the Premises, upon and subject to the following
terms and
17
conditions. Such subordination shall be evidenced by the execution by
Tenant and the lender of a subordination, nondisturbance and attornment
agreement in form reasonably satisfactory to the lender and Tenant or
otherwise in a form used in similar transactions; provided that the
agreement may not change any of Tenant's obligations under the Lease. Said
agreement shall include a provision to the effect that in the event of a
termination of the ground or underlying lease or foreclosure of the
mortgage, deed of trust or other lien in favor of the secured party, or
upon a sale of the property encumbered thereby pursuant to the trustee's
power of sale, or upon a transfer of the Property by deed in lieu of
foreclosure, then for so long as Tenant is not in default under the terms,
covenants and conditions of this Lease, this Lease shall continue in full
force and effect as a direct lease between the owner or succeeding owner
of the Property, as Landlord, and Tenant for the balance of the term of
this Lease, upon and subject to all of the terms, covenants and conditions
of this Lease.
B. ESTOPPEL CERTIFICATES.
Each party hereto shall, upon request from the other party, at any time
and from time to time execute, acknowledge and deliver to such party a
written statement, in the form generally acceptable to institutional
purchasers or lenders certifying as follows: that this Lease is unmodified
and in full force and effect (or if there has been modification thereof,
that the same is in full force and effect as modified and stating the
nature thereof); that to the best of its knowledge there are no uncured
defaults on the part of the other party hereto (or if any such default
exists, the specific nature and extent thereof); the date to which any
rents and other charges have been paid in advance, if any; and such other
matters relating to the obligations of the parties under the Lease as are
typically contained in such certificates.
17. NOTICE
Where provision is made herein for notice of any kind, it shall be deemed
sufficient, if such notice if addressed as shown below:
To Landlord:
The Boeing Company
C/o Boeing Realty Corporation
3760 Kilroy Airport Way, Suite 500
Long Beach, CA 90806
ATTN.: Lease Administrator
Tel.: (s562) 627-4900
FAX: (562) 627-4906
18
To Tenant:
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, NJ 07054
Attention: Nina Laserson Dunn, Executive Vice President,
General Counsel and Secretary
Telephone: (973) 898-6020
Telecopier: (973) 898-0717
All such notices shall be delivered by recognized overnight delivery service for
next business day delivery, with all fees prepaid.
18. LANDLORD'S RIGHT OF ENTRY
Landlord shall have the following rights without effecting an eviction or
disturbance of Tenant's use or possession of the Premises or giving rise to any
claim for abatement of Rent, when accompanied by a Tenant representative and
upon reasonable prior notice to Tenant: (i) To enter the Premises as reasonably
necessary to conduct inspections or to ensure that Tenant is complying with its
obligations hereunder; (ii) To install and maintain signs on the exterior and
interior of the Building, except within the Premises, provided the signs do not
block either completely or partially the exterior windows of the Premises; (iii)
To have pass keys to the Premises; (iv) To decorate, remodel, repair, alter or
otherwise prepare the Premises for re-occupancy during the last six (6) months
of the Term hereof if, during or prior to such time, Tenant has vacated the
Premises, or at any time after Tenant abandons the Premises; (v) To do or permit
to be done any work in or about the exterior of the Building or any adjacent or
nearby building, land, street or alley; or (vi) to place "for sale" signs on the
Land or the Building and to enter the Premises with brokers, appraisers,
engineers or other consultants and to show the Premises to prospective
purchasers.
19. QUIET ENJOYMENT
Landlord warrants and covenants that, during the Lease Term, Tenant shall have
the exclusive right to possession and quiet enjoyment of the Premises and shall
have, hold and enjoy the Premises peacefully and quietly, without any manner of
let, suit, trouble or hindrance by any person claiming by or through Landlord.
20. SEVERABILITY
If a court of competent jurisdiction shall determine, to any extent, that any
provision, term or condition of this Lease shall be invalid or unenforceable,
that determination shall not affect the remainder of this Lease, and each
provision, term or condition in the remainder of this Lease shall be valid and
enforceable to the extent permitted by law.
21. HOLDOVER
19
Any holding over after the expiration of the Lease Term of this Lease with the
written consent of Landlord shall be construed to be a tenancy from month to
month on the same terms and conditions as set forth in this Lease except that
the amount of Rent due during the hold-over period shall be 125% the amount of
Rent due under the Lease, provided that if Tenant shall hold over without the
written consent of Landlord, Tenant shall in addition be liable to Landlord for
and shall hold Landlord harmless from any and all damages to which Landlord is
legally entitled as a result of such holding over.
22. CONDEMNATION
If any part of the Premises should be taken under governmental law, ordinance,
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with Tenant's use
of the Premises, then upon 30 days' prior written notice by Tenant this Lease
shall terminate and Base Rent shall be apportioned as of the date of title
vesting in such proceeding or purchase. Otherwise, this Lease shall not
terminate, but the Base Rent payable hereunder during the unexpired term (or
period of such taking if shorter) shall be reduced to such extent as may be fair
and reasonable under the circumstances. Landlord shall be entitled to receive
the entire price or award from any such taking. Tenant shall have the right, to
the extent that same shall not diminish Landlord's award, to make a claim
against the condemning authority (but not Landlord) for such compensation as may
be separately awarded or recoverable by Tenant for Tenant's goodwill, moving
expenses and damage to the property that Tenant is permitted to remove under
this Lease and other items recoverable by Tenant under applicable law (excluding
Tenant's leasehold interest).
23. LIENS
Tenant shall keep the Premises, the Building, and the land on which the Building
is located free and clear of all liens of any third parties arising out of
Tenant's actions or the conduct of Tenant's business. Tenant shall discharge any
such liens at Landlord's request.
24. NOT USED
25. COMMON AREAS
Landlord shall have the use, in common with Tenant, of the common areas of
the Building, including the lobby, restrooms, stairways, aisles, and elevators.
26. DEMISING WALLS
As soon as practicable after the commencement of the Term, Landlord shall
construct, at its expense, the demising walls and other improvements reasonably
necessary to insure that the Premises are separate and secure from the remainder
of the Building, which construction shall be substantially in compliance with
the terms and
20
conditions of the Transition Services Agreement between Landlord and Tenant,
executed concurrently with the Asset Purchase Agreement.
27. MISCELLANEOUS
A. ATTORNEY'S FEES
If either party brings an action to enforce the provisions, terms and
conditions in this Lease or to declare rights hereunder, the prevailing
party in that action shall be entitled to reasonable attorneys' fees to be
paid by the other party, as such costs and fees may be fixed by the court.
B. CAPTIONS
The marginal headings or titles to the sections of this Lease are not a
part of the Lease but are inserted only for convenience. They shall have
no effect on the construction or interpretation of any part of this Lease.
C. TIME IS OF THE ESSENCE
Time is of the essence in the performance of all covenants and conditions
of this Lease in which time is a factor.
D. COUNTERPARTS
This Lease may be executed in any number of counterparts, each of which
when executed and delivered shall constitute an original Lease, but all of
which together shall constitute one and the same Lease.
E. CHOICE OF LAW
This Lease shall be governed by the Laws of the State of California.
F. COMPLETE AGREEMENT
This Lease contains the entire and complete agreement between the parties
hereto, with all previous negotiations, warranties, covenants, conditions
and promises being merged herein. Landlord and Tenant further agree that
no alteration, amendment or modification to this Lease shall be binding
upon Landlord or Tenant unless same is first reduced to writing and signed
by both Landlord and Tenant. Landlord and Tenant further warrant to one
another that they will not assert any promise, condition, covenant,
warranty or other consideration made either prior to or subsequent to the
execution of this Lease.
21
G. NO RECORDATION.
Neither party shall record this Lease.
Executed in duplicate as of the date first written above.
LANDLORD: TENANT:
The Boeing Company DRS Technologies, Inc.
By: By:
--------------------------- ---------------------
Title: Title:
------------------------------ ------------------
22
EXHIBIT A
Depiction of Premises
23
EXHIBIT B
Repairs and Maintenance
Refuse Disposal Contract
Landscaping Maintenance Contract
Filter Replacement Contract
DI & RO Water Maintenance Contract
Gas Detection Maintenance Contract
Cooling Tower Maintenance Contract
Chiller Maintenance Contract
Boiler Maintenance Contract
Roofing Maintenance Contract
Street Sweeping Contract
Window Washing Contract
Planned Maintenance Labor
Planned Maintenance Material
Unplanned Maintenance Labor
Unplanned Maintenance Material
24
EXHIBIT D
PURCHASE ORDER
[To Come]
E-1
EXHIBIT E
BILL OF SALE
E-1
BILL OF SALE
FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, The Boeing Company, a Delaware corporation (the "Seller"), by
these presents, does hereby, pursuant to the Asset Purchase Agreement (the
"Agreement") dated as of August 3, 2001 by and between the Seller and DRS
Technologies, Inc., a Delaware Corporation (the "Buyer"), sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer does hereby purchase
and acquire from the Seller, all of its rights, title and interest in the
Transferred Assets.
The Seller agrees that it will, at any time and from time to time,
make, execute and deliver, or cause to be made, executed and delivered, such
assignments, deeds, bills of sale, drafts, checks, returns, filings and other
instruments, consents and assurances and take or cause to be taken all such
action as the Buyer may reasonably request for the effectual consummation,
confirmation and particularization of the Agreement and the transactions
contemplated thereby.
This Bill of Sale is an instrument of transfer contemplated by, and
is executed pursuant to, the Agreement. Nothing contained in this Bill of Sale
shall be deemed to supersede, amend or modify any of the terms, conditions or
provisions of the Agreement or any rights or obligations of the parties under
the Agreement and, to the extent of any conflict between the Agreement and this
Bill of Sale, the terms and provisions of the Agreement shall prevail.
This Bill of Sale shall be governed by and construed in accordance
with the internal laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
This Bill of Sale may be executed in one or more counterparts, all
of which shall be considered one and the same Bill of Sale, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
Capitalized terms used herein but not otherwise defined shall have
the meanings ascribed to them in the Agreement.
E-2
IN WITNESS WHEREOF, the parties have caused this Bill of Sale to be
signed by their duly authorized officers as of this ____ day of September, 2001.
SELLER:
THE BOEING COMPANY
By:
-----------------------------------------
Name: Brent E. Reed
Title: Controller, Space and Communications
BUYER:
DRS TECHNOLOGIES, INC.
By:
-----------------------------------------
Name:
Title:
E-3
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
F-1
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Agreement") is made and
entered into as of September 28, 2001 by and among The Boeing Company, a
Delaware corporation ("Seller"), and DRS Technologies, Inc., a Delaware
corporation ("Buyer").
WHEREAS, Buyer and Seller are parties to an Asset Purchase Agreement,
dated as of August 3, 2001 (the "Purchase Agreement"), relating to the sale and
transfer of the Assets (as such term is defined in the Purchase Agreement) owned
by Seller to Buyer, and
WHEREAS, the parties desire to enter into this Agreement for the purchase
of effecting the assignment by Seller to Buyer of the Assets of Seller as
contemplated in the Purchase Agreement (the "Assignment") and the assumption of
the Assumed Liabilities related to the Assets as contemplated in the Purchase
agreement (the "Assumption").
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITION.
Except as otherwise defined in this Agreement, all capitalized terms used
herein shall have the meanings given to them in the Purchase Agreement.
2. ASSIGNMENT
Pursuant to the Purchase Agreement, all of the rights, title and interest
of Seller in and to the Assets (including, without limitation, the Assigned
Contracts) are hereby assigned and transferred by Seller to Buyer and its
successors and permitted assigns, and Buyer hereby accepts and assumes the
assignment and transfer of al of Seller's rights, title and interest from
Seller.
3. ASSUMPTION.
Pursuant to and subject to the provisions and limitations of Section 2.3
of the Purchase Agreement, which Section is incorporated herein by reference,
Buyer hereby agrees to assume, perform and timely pay and discharge the Assumed
Liabilities.
4. AMENDMENT. This Agreement may only be amended or modified by
a written instrument executed by the parties hereto.
5. BINDING EFFECT; EFFECT ON PURCHASE AGREEMENT.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, permitted assigns and legal
representatives. Neither this Agreement, nor any right or obligation hereunder,
may be directly or indirectly assigned or transferred by any party, in whole or
in part, to any third party, including, without limitation, any bankruptcy
trustee, by operation of law or otherwise, whether voluntary or involuntary,
without the prior
F-2
written consent of the other party hereto. This Agreement is an instrument of
transfer contemplated by, and is executed pursuant to, the Purchase Agreement.
Nothing in this Agreement shall be deemed to supersede, amend or modify any of
the terms, conditions or provisions of the Purchase Agreement or any rights or
obligations of the parties under the Purchase Agreement and, to the extent of
any conflict between the Purchase Agreement and this Agreement, the terms and
provisions of the Purchase Agreement shall prevail.
6. CONSTRUCTION.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State, without regard to the conflicts of law
principles of such State.
7. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
8. DISPUTE RESOLUTION.
Any disputes relating to the terms of meaning of this Agreement shall be
determined in accordance with Section 11.14 of the Purchase Agreement.
F-3
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER:
THE BOEING COMPANY
By:
--------------------------------------
Name: Brent E. Reed
Title: Controller, Space and
Communications
BUYER:
DRS TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
F-4
SCHEDULE 9.1
EMPLOYMENT OFFER TO BUSINESS EMPLOYEES
SCHEDULE 9.1(I)
TERMS OF EMPLOYMENT; BUYER BENEFIT PLANS*
--------------------------------------------------------------------------------
BENEFIT GENERAL DESCRIPTION
--------------------------------------------------------------------------------
WAGES Equal to current Boeing base wages
DRS plans to establish a pension plan to accept
Boeing plan assets for transferred employees. Plan
will have similar benefit structure as current
plan(s). No new employees will be eligible. Business
Employees (as defined in the Asset Purchase
Agreement) who retire effective on the first day of
the month following the month in which the Closing
Date occurs, shall not receive any service credit
PENSION PLAN with Boeing for benefit accrual purposes.
Match = 100% of first 6% of employee contribution.
401K PLAN vesting over 5 yrs. Prior service recognized.
Choice of 3 plans: 2 POS, 1 PPO. Office visits $5,
$10, $15 co-pay; no deduct for in-net under POS;
various deductibles for out of net and PPO.
Depending on plan, employee bi-weekly contributions
range from $9.49 for lowest plan, employee only to
$74.80 for highest plan, family
HEALTH INSURANCE** coverage (includes dental contribution).
One Plan - PPO; $1500 annual max; $1000 ortho.
life max. for dependents only < 19; 100% prevent,
no deduct; 80% basic; 50% major after $50 deduct;
2 cleanings/yr. Offered in conjunction with
medical plans; employee contributions included in
DENTAL INSURANCE medical above.
VISION INSURANCE (PART OF In net includes annual exam/lenses/contacts;
OF HEALTH PLAN) frames every 24 mo. Small reimbursement out of net.
PRESCRIPTION DRUGS (PART $5/$10; with formulary same as generic; $10
OF HEALTH PLAN) mail-order
2 times base pay; reduced to 65% at age 65 and 50%
BASIC LIFE INSURANCE at age 70.-Company paid
Can purchase up to 5 times salary to $500K; age
SUPPLEMENTAL LIFE INS. based premium
Can purchase for spouse: up to $100K, age based
DEPENDENT LIFE premium; Child: up to $25K, cost = $.12/1000.
BASIC AD&D 2 times base pay-Company paid
Can purchase up to 5 times salary to $500K.
Spouse at 50%; child at 10% to $10K.; option for
SUPPLEMENTAL AD&D family coverage
1
--------------------------------------------------------------------------------
BENEFIT GENERAL DESCRIPTION
--------------------------------------------------------------------------------
State plan plus company paid supplement to 70% of
SHORT-TERM DISABILITY base pay for 13 weeks. Max benefit = $2500/wk.
Effective after 90 days of STD. 60% benefit
LONG-TERM DISABILITY (66.7% exec.) Company paid.
SICKNESS & ACCIDENT INS. See Short-term disability
SURVIVOR BENEFITS PLAN None
BUSINESS TRAVEL INSURANCE $200K ($500K 24 hr for exec.)
FLEXIBLE SPENDING ACCOUNTS Dep. $5K; Health - no limit.
1-5 yrs-10 days; 6-10 yrs-15 days; 11-15 yrs-20
VACATION days; 16+ yrs-25 days.
Unlimited short duration leave, provided that
excessive or repetitive absences may be addressed
SICK DAYS as a performance issue.
10-12 days including holiday shut-down; schedule
HOLIDAYS determined annually.
BEREAVEMENT LEAVE 3 days for immediate family
JURY LEAVE 10 Days, annually.
MILITARY LEAVE Yes, in accordance with law.
OTHER LEAVE Yes, medical, family leave, personal.
1 wk for every yr of svc; min 2 wks (after 6 mo.),
max 26 wks. Requires release. No medical or other
LAYOFF BENEFITS PLAN benefit continuation
SHIFT DIFFERENTIAL None
Straight time for hours over 46/week. Subject to
EXEMPT OVERTIME dept. approval.
100% of tuition, books for grade >=C. Graduate
level requires >=B. Full-time employment required
for eligibility. For job related programs only.
TUITION REIMBURSEMENT & Company paid job-related workshops, conferences,
TRAINING technical training, etc.
Toll-free access for employees and family members
for confidential assistance on personal issues.
EMPLOYEE ASSISTANCE PLAN Includes 3 counseling sessions if needed; then
(EAP) coordinates with medical plan.
Annual awards for key management and technical
STOCK OPTION PLAN personnel.
EMPLOYEE INCENTIVE PLAN Local level plan based on business unit performance.
2
--------------------------------------------------------------------------------
BENEFIT GENERAL DESCRIPTION
--------------------------------------------------------------------------------
FELLOWS (ENGR & TECH)
STOCK AWARDS TBD at local level (no stock grants)
SHARE VALUE TRUST None
ICP for execs - based on company performance and
individual goals; targets range from 18% to 62.5%
ANNUAL INCENTIVE PLAN of mid-pt of salary range.
LONG-TERM INCENTIVE PLAN None
DEFERRED COMPENSATION PLAN None
SERP None
SUPPLEMENTAL BENEFIT PLAN None
EXECUTIVE LAYOFF PLAN Same as Salaried employees.
RETIREE MEDICAL BENEFITS None
RETIREE LIFE INSURANCE None
EXECUTIVE HEALTH EXAM None
Most benefits require employment status of full-time
regular employee working 30 or more hours per week.
NOTES Benefits for part-time employees are limited.
----------
* The employee costs set forth in this schedule accurately reflect the
current costs, but are subject to change during the annual renewal period. This
schedule is intended to be a supplement to the Asset Purchase Agreement and in
the event of a conflict between the documents, the Asset Purchase Agreement will
control. This summary shall be subject to the terms set forth in the underlying
policies and plans outlined herein.
** For purposes of the Health Insurance, Buyer will offer coverage under
the plan with the lowest premium to all Transferred Non-Union Employees and
their spouses and dependents at no cost to such employees for the first six
months of their employment with Buyer.
3
SCHEDULE 9.2
PENSION ASSET TRANSFER
1. DEFINITIONS.
(a) For purposes of this Schedule 9.2 and unless the context indicates
otherwise, all terms used herein without definition shall have the meaning
ascribed to them in the Asset Purchase Agreement and the following terms
shall have the meaning ascribed to them hereunder:
"Actuarial Accrued Liability" shall, as of any date, be the accrued
liability determined as of such date using the actuarial cost method and
assumptions specified in the Actuarial Reports for the Plan Year beginning
immediately prior to such date prepared by Towers, Perrin or other actuary
for Seller to compute components of pension cost in accordance with Cost
Accounting Standard 9904.412-40 and 50.
"Seller's Retirement Plans" means The Boeing Company North America
Retirement Plan, The Boeing Company Pension Value Plan for Heritage MDC
Employees and The Boeing Company Pension Value Plan.
"Business Participants" means, with respect to each Seller Retirement
Plan, the Participants in such plan who are Transferred Employees and
their beneficiaries and alternate payees, except that Business
Participants shall not include any Transferred Employee who retired from
Seller effective the first day of the month following the month in which
the Closing Date occurs.
"Buyer's Retirement Plans" means the Buyer's Union Pension Plans and
Buyer's Non-Union Pension Plans as established or maintained pursuant to
the Asset Purchase Agreement.
"Participants" means, with respect to the Seller Retirement Plans, all
participants in such plans, including beneficiaries of deceased former
employees and alternate payees.
"Sold Business Accrued Liability" for either of the Seller Retirement
Plans means the sum of the Actuarial Accrued Liability of all Business
Participants.
"Sold Business Fraction" for either of the Seller Retirement Plans means
(a) the Sold Business Accrued Liability with respect to such plan, divided
by (b) the Total Accrued Liability of such plan.
"Sold Business Asset Share" means with respect to each of the Seller
Retirement Plans that portion of the fair market value of the assets of
each of the Seller Retirement Plans allocable to the Buyer's Retirement
Plans as of the Closing Date, which is the product of the Sold Business
Fraction and the fair market value of the assets of each said plan as of
the Closing Date based on participant classification as of the Closing
Date.
1
"Total Accrued Liability" means, with respect to each Seller Retirement
Plan, the sum of the Actuarial Accrued Liability of all participants in
such plan.
(b) Buyer shall establish or maintain effective as of the Closing Date
retirement plans as described in Section 9.2 of the Asset Purchase
Agreement.
2. INITIAL TRANSFER OF ASSETS.
(a) Not later than 120 days after the Closing Date and subject to the
requirements of Section 4 hereof being satisfied, Seller shall cause a
transfer of assets and liabilities from the Seller's Retirement Plans to
the Buyer's Retirement Plans upon the terms and conditions set forth in
the Asset Purchase Agreement and this Schedule 9.2. The value of the
assets of each Seller Retirement Plan to be transferred within 120 days of
the Closing Date shall be an amount equal to eighty-five percent (85%) of
the product of the Estimated Sold Business Fraction (as defined below) and
the market value of the assets such Seller Retirement Plan as of the last
day of the month preceding the Closing Date or, if the market value (as
adjusted for distributions and contributions from the end of such month to
the Closing Date) of such Seller Retirement Plan has changed by more than
five percent (5%) since such date, as of the day immediately preceding the
Closing Date (such amount, the "Estimated Sold Business Asset Share"). The
assets of a Seller Retirement Plan to be transferred to a Buyer Retirement
Plan shall be determined in the same manner and consistent with the
provisions of Section 5 hereof. Buyer shall cause the Buyer Retirement
Plans to accept such transfers and to assume all plan liabilities relating
to the Business Participants.
(b) ESTIMATED SOLD BUSINESS FRACTION. For purposes of the initial transfer of
assets within 120 days of the Closing Date, Seller's enrolled actuary
shall reasonably and in good faith estimate the amount of the Sold
Business Accrued Liability and Total Accrued Liability as of the end of a
calendar month not less than 30 days or more than 60 days preceding the
Closing Date ("Initial Valuation Date") under each of the Seller
Retirement Plans. Based on such estimates of Sold Business Accrued
Liability and Total Accrued Liability, the Seller's actuary shall
determine its estimate of the Sold Business Fraction ("Estimated Sold
Business Fraction"), which shall be binding for purposes of the initial
transfer of assets unless there have been material changes in any of the
Seller Retirement Plans or in the participants of the Seller Retirement
Plans since the date of the actuary's determination.
(c) DETERMINATION OF THE SOLD BUSINESS ACCRUED LIABILITY AND SOLD BUSINESS
FRACTION. Seller shall determine in good faith the Business Participants
as of the Initial Valuation Date and the Closing Date.
(d) CONTINUATION OF BENEFIT PAYMENTS. From and after the Closing Date until
the later of (i) the end of three months following the Closing Date or
(ii) the Final Adjustment, at the written direction of plan administrator
for the applicable Buyer's Retirement Plan, Seller shall cause its
administrator with respect to the corresponding Seller Retirement Plan to
administer the payment of retirement benefits to Business Participants on
behalf of and in
2
accordance with the terms of such Buyer's Retirement Plan out of the
assets of the Seller's Retirement Plan, which shall offset amounts to be
transferred to Buyer's Retirement Plan hereunder. The trustee of the
Seller Retirement Plan, Seller and their employees shall be entitled to
rely entirely upon the plan administrator's written direction. Buyer shall
promptly reimburse Seller for all reasonable costs and expenses incurred
in connection with the payment of benefits on and after the Closing Date
on behalf of a Buyer's Retirement Plan.
3. FINAL ADJUSTMENT.
(a) Seller shall cause its enrolled actuary for each of the Seller Retirement
Plans to reasonably and in good faith determine, as soon as practicable
but in any case within nine months following the Closing Date, the Sold
Business Accrued Liability and the Total Accrued Liability of each of the
Seller Retirement Plans (which shall be in compliance with Seller's
existing accredited methodologies) as of the Closing Date. Seller's
actuary shall promptly deliver a copy of its determination to Buyer,
together with all final work papers and other reasonably necessary
supporting information in order to permit Buyer's enrolled actuaries to
verify the amount of the Sold Business Accrued Liability and Total Accrued
Liability. Not later than the date of the Seller's actuary's
determination, Seller shall deliver to Buyer a copy of a valuation of the
assets of each Seller Retirement Plan as of the day immediately preceding
the Closing Date, as well as a valuation of the assets initially
transferred from the Seller's Retirement Plans to the Buyer's Retirement
Plans as of the Closing Date.
(b) Within 60 days after Buyer receives the Seller actuary's determination
(the "Determination") of Sold Business Accrued Liability and Total Accrued
Liability as of the Closing Date, Buyer may identify any manifest errors
or material issues regarding such calculations or the valuation of assets
of the Seller Retirement Plans. The Determination will be conclusive and
binding on the Parties unless Buyer, within the 60-day period after the
delivery of the Determination including such results and supporting
information, notifies Seller in writing that it disputes the calculation,
specifying the nature of the dispute and the basis therefor (the
"Notice").
(c) Buyer and its enrolled actuary may raise any manifest errors or material
issues in the Determination which the Seller's actuary shall attempt to
resolve as promptly as practicable.
(d) Enrolled actuaries retained by Seller and Buyer shall attempt in good
faith to reach agreement to resolve all of the disputes set forth in the
Notice within 30 days after the Notice is given by Buyer to Seller. If the
differential in the Sold Business Accrued Liability with respect to the
Sold Business Asset Share is less than 1.5% of the Sold Business Asset
Share, the determination of the Seller's actuary with respect to the
Determination shall be conclusive. If the differential is more than 1.5%
of the Sold Business Asset Share with respect to the Determination above,
the dispute with respect to the Determination shall be resolved as set
forth under paragraphs (e) and (f) below.
3
(e) If enrolled actuaries retained by Seller and Buyer cannot resolve all
disputes with respect to a Determination within such 30-day period and the
disputes involve more than 1.5% of Sold Business Asset Share as above
described, Seller and Buyer shall jointly select a third, impartial
actuary from a nationally recognized actuarial firm to resolve the
disputes (and the same such actuary shall resolve both Determinations). If
the Parties cannot jointly select a third, impartial actuary within 15
days after the end of such 30-day period, the President of the Conference
of Consulting Actuaries shall select an impartial actuary. The cost of the
impartial actuary shall be shared equally by Seller and Buyer.
(f) Promptly, but no later than 30 days after his or her selection, the
impartial actuary shall review the results of the calculation, the
supporting information with respect to a Determination and the Notice and
shall reach his or her own decision as to the issues in dispute and the
determination of the Sold Business Asset Share, as the case may be (which
determination shall be equal to or between the respective amounts asserted
by Seller and Buyer). Such determination shall be final and conclusive for
all purposes.
No later than 45 days following the final determination of the Sold Business
Asset Share, (i) Seller shall cause a transfer of assets from each Seller
Retirement Plan to the corresponding Buyer's Retirement Plan equal to the amount
by which the Sold Business Asset Share exceeds the Estimated Sold Business Asset
Share, if any, or (ii) Buyer shall cause a transfer of assets from each Buyer's
Retirement Plan to the corresponding Seller Retirement Plan equal to the amount
by which the Estimated Sold Business Asset Share exceeds the Sold Business Asset
Share. Any amounts to be transferred between a Seller Retirement Plan and a
Buyer's Retirement Plan more than one day following the Closing Date in
satisfaction of the Final Adjustment shall include investment gains or losses
from the day preceding the Closing Date, as follows:
(i) With respect to the period from the day preceding the Closing
Date to and including the date of the initial transfer of assets
hereunder ("Initial Transfer Date"), investment gains and losses
shall mean interest credited at five percent (5%) per annum,
regardless of the actual investment experience of the assets of the
transferor plan during such period; and
(ii) With respect to the period from the Initial Transfer Date to
and including the day preceding the date of payment of the Final
Adjustment, investment gains and losses shall mean interest credited
during such period at the same interest rate used by the Pension
Benefit Guaranty Corporation to value annuities and lump sums under
Section 4044 of ERISA, regardless of the actual investment
experience of the assets of the transferor plan.
4. REQUIREMENTS OF TRANSFER.
Notwithstanding any provision in the Asset Purchase Agreement or this Schedule
9.2 to the contrary, each transfer of assets of any Seller Retirement Plan is
subject to the receipt by Seller of, and no such transfer shall be made unless
Seller has received: (i) evidence reasonably satisfactory to it that Buyer has
timely completed all governmental filings or submissions needed
4
in order for the Buyer's Retirement Plans to receive a transfer of assets from
the Seller Retirement Plans, (ii) IRS qualification letters, or an opinion of
Buyer's counsel in a form reasonably satisfactory to Seller, to the effect that
the Buyer's Retirement Plans as in effect on the date of the transfer satisfy
the qualification requirements under Section 401(a) of the Code, and (iii) an
opinion of Buyer's counsel in a form reasonably satisfactory to Seller that the
requirements of Section 411(d)(6) of the Code are satisfied by the Buyer's
Retirement Plans.
In no event shall any transfer from any Seller Retirement Plan be made prior to
the lapse of thirty (30) days after the filing of a complete Form 5310A.
In the event any transfer of assets is to take place on any Saturday, Sunday or
legal holiday, the assets shall be transferred on the next following business
day and valued on the last business day of the month preceding the transfer.
5. DETERMINATION OF THE ASSETS TO BE TRANSFERRED.
Notwithstanding any provision in the Asset Purchase Agreement or this Schedule
9.2 to the contrary, the value of assets to be transferred to and liabilities to
be assumed by the Buyer's Retirement Plans shall be no less than that necessary
to satisfy the requirements of Section 414(l) of the Code and shall be adjusted,
as necessary, to satisfy the requirements of Cost Accounting Standard
9904.413-50, including the first sentence of Cost Accounting Standard
9904.413-50(c)(12)(v).
To the extent that the amount of assets actually transferred pursuant to
Schedule 9.2 is less than the amount required by the applicable Cost Accounting
Standard and Federal Acquisition Regulation, Seller will be solely responsible
for the settlement of any related obligations with the United States Government.
To the extent that the amount of assets transferred pursuant to Schedule 9.2 is
greater than the amount required by the applicable Cost Accounting Standard and
Federal Acquisition Regulation, then at such time or times, if any, Buyer
receives governmental reimbursement by reason of and for the amount of such
excess, Buyer shall promptly pay to Seller the amount of such reimbursement.
5
EX-99.2
4
a2060842zex-99_2.txt
EXHIBIT 99.2
Exhibit 99.2
================================================================================
CREDIT AGREEMENT
dated as of September 28, 2001,
by and among
DRS TECHNOLOGIES, INC.,
as Borrower,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
TD SECURITIES (USA) INC.,
as Syndication Agent
and
MELLON BANK, N.A.,
as Documentation Agent
FIRST UNION SECURITIES, INC.,
as Co-Lead Arranger and Book Manager,
and
MELLON BANK, N.A.,
as Co-Lead Arranger
================================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................1
SECTION 1.1 DEFINITIONS.................................................................................1
SECTION 1.2 GENERAL....................................................................................22
SECTION 1.3 OTHER DEFINITIONS AND PROVISIONS...........................................................22
ARTICLE II REVOLVING CREDIT FACILITY............................................................................22
SECTION 2.1 REVOLVING CREDIT LOANS.....................................................................22
SECTION 2.2 SWINGLINE LOANS............................................................................23
SECTION 2.3 PROCEDURE FOR ADVANCES OF REVOLVING CREDIT AND SWINGLINE LOANS.............................24
SECTION 2.4 REPAYMENT OF LOANS.........................................................................25
SECTION 2.5 NOTES......................................................................................27
SECTION 2.6 PERMANENT REDUCTION OF THE REVOLVING CREDIT COMMITMENT.....................................27
SECTION 2.7 TERMINATION OF REVOLVING CREDIT FACILITY...................................................28
ARTICLE III LETTER OF CREDIT FACILITY...........................................................................28
SECTION 3.1 L/C COMMITMENT.............................................................................28
SECTION 3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT................................................28
SECTION 3.3 COMMISSIONS AND OTHER CHARGES..............................................................29
SECTION 3.4 L/C PARTICIPATIONS.........................................................................29
SECTION 3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER...................................................30
SECTION 3.6 OBLIGATIONS ABSOLUTE.......................................................................31
SECTION 3.7 EFFECT OF APPLICATION......................................................................31
SECTION 3.8 EXISTING FOREIGN CURRENCY LETTERS OF CREDIT................................................32
ARTICLE IV TERM LOAN FACILITY...................................................................................32
SECTION 4.1 TERM LOANS.................................................................................32
SECTION 4.2 PROCEDURE FOR ADVANCE OF TERM LOAN.........................................................32
SECTION 4.3 REPAYMENT OF TERM LOAN.....................................................................32
SECTION 4.4 PREPAYMENTS OF TERM LOAN...................................................................33
SECTION 4.5 TERM NOTES.................................................................................36
SECTION 4.6 OPTIONAL INCREASE IN TERM LOAN COMMITMENT..................................................36
ARTICLE V GENERAL LOAN PROVISIONS...............................................................................38
SECTION 5.1 INTEREST...................................................................................38
SECTION 5.2 NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS...................................41
SECTION 5.3 FEES.......................................................................................42
SECTION 5.4 MANNER OF PAYMENT..........................................................................42
SECTION 5.5 CREDITING OF PAYMENTS AND PROCEEDS.........................................................43
SECTION 5.6 ADJUSTMENTS................................................................................43
SECTION 5.7 NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS OF CREDIT; ASSUMPTION
i
BY THE ADMINISTRATIVE AGENT................................................................43
SECTION 5.8 CHANGED CIRCUMSTANCES......................................................................44
SECTION 5.9 INDEMNITY..................................................................................46
SECTION 5.10 CAPITAL REQUIREMENTS.......................................................................47
SECTION 5.11 TAXES......................................................................................47
SECTION 5.12 SECURITY...................................................................................49
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING.........................................................50
SECTION 6.1 CLOSING....................................................................................50
SECTION 6.2 CONDITIONS TO CLOSING AND INITIAL EXTENSIONS OF CREDIT.....................................50
SECTION 6.3 CONDITIONS TO ALL EXTENSIONS OF CREDIT.....................................................54
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWER......................................................55
SECTION 7.1 REPRESENTATIONS AND WARRANTIES.............................................................55
SECTION 7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC............................................62
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES..................................................................63
SECTION 8.1 FINANCIAL STATEMENTS AND PROJECTIONS.......................................................63
SECTION 8.2 OFFICER'S COMPLIANCE CERTIFICATE...........................................................64
SECTION 8.3 ACCOUNTANTS' CERTIFICATE...................................................................64
SECTION 8.4 OTHER REPORTS..............................................................................64
SECTION 8.5 NOTICE OF LITIGATION AND OTHER MATTERS.....................................................65
SECTION 8.6 ACCURACY OF INFORMATION....................................................................66
ARTICLE IX AFFIRMATIVE COVENANTS................................................................................66
SECTION 9.1 PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS....................................67
SECTION 9.2 MAINTENANCE OF PROPERTY....................................................................67
SECTION 9.3 INSURANCE..................................................................................67
SECTION 9.4 ACCOUNTING METHODS AND FINANCIAL RECORDS...................................................67
SECTION 9.5 PAYMENT AND PERFORMANCE OF OBLIGATIONS.....................................................67
SECTION 9.6 COMPLIANCE WITH LAWS AND APPROVALS.........................................................68
SECTION 9.7 ENVIRONMENTAL LAWS.........................................................................68
SECTION 9.8 COMPLIANCE WITH ERISA......................................................................68
SECTION 9.9 COMPLIANCE WITH AGREEMENTS.................................................................68
SECTION 9.10 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.....................................69
SECTION 9.11 ADDITIONAL SUBSIDIARIES....................................................................69
SECTION 9.12 RESERVED...................................................................................71
SECTION 9.13 USE OF PROCEEDS............................................................................71
SECTION 9.14 CONDUCT OF BUSINESS........................................................................71
SECTION 9.15 ACCOUNT DESIGNATION........................................................................72
SECTION 9.16 DEBT RATING................................................................................72
SECTION 9.17 EXISTING LETTERS OF CREDIT.................................................................72
SECTION 9.18 FURTHER ASSURANCES.........................................................................72
ii
ARTICLE X FINANCIAL COVENANTS...................................................................................72
SECTION 10.1 MAXIMUM TOTAL LEVERAGE RATIO...............................................................72
SECTION 10.2 MINIMUM FIXED CHARGE COVERAGE RATIO........................................................73
SECTION 10.3 MAXIMUM CAPITAL EXPENDITURES...............................................................74
ARTICLE XI NEGATIVE COVENANTS...................................................................................74
SECTION 11.1 LIMITATIONS ON DEBT.........................................................................74
SECTION 11.2 LIMITATIONS ON LIENS........................................................................75
SECTION 11.3 LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND ACQUISITIONS................................76
SECTION 11.4 LIMITATIONS ON MERGERS AND LIQUIDATION......................................................79
SECTION 11.5 LIMITATIONS ON SALE OF ASSETS...............................................................80
SECTION 11.6 LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS..................................................80
SECTION 11.7 LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK.......................................81
SECTION 11.8 TRANSACTIONS WITH AFFILIATES................................................................81
SECTION 11.9 CERTAIN ACCOUNTING CHANGES; ORGANIZATIONAL DOCUMENTS........................................81
SECTION 11.10 AMENDMENTS; PAYMENTS AND PREPAYMENTS OF SUBORDINATED DEBT...................................81
SECTION 11.11 AMENDMENTS, CONSENTS AND WAIVERS UNDER ASSET PURCHASE AGREEMENT.............................81
SECTION 11.12 RESTRICTIVE AGREEMENTS......................................................................82
SECTION 11.13 NATURE OF BUSINESS..........................................................................82
SECTION 11.14 LIMITATION ON BONDING OBLIGATIONS...........................................................82
SECTION 11.15 IMPAIRMENT OF SECURITY INTERESTS............................................................82
ARTICLE XII DEFAULT AND REMEDIES................................................................................82
SECTION 12.1 EVENTS OF DEFAULT...........................................................................82
SECTION 12.2 REMEDIES....................................................................................85
SECTION 12.3 RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC.............................................86
ARTICLE XIII THE ADMINISTRATIVE AGENT...........................................................................86
SECTION 13.1 APPOINTMENT.................................................................................86
SECTION 13.2 DELEGATION OF DUTIES........................................................................87
SECTION 13.3 EXCULPATORY PROVISIONS......................................................................87
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT........................................................87
SECTION 13.5 NOTICE OF DEFAULT...........................................................................88
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS..................................88
SECTION 13.7 INDEMNIFICATION.............................................................................89
SECTION 13.8 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.........................................89
SECTION 13.9 RESIGNATION OF THE ADMINISTRATIVE AGENT; SUCCESSOR ADMINISTRATIVE AGENT.....................89
SECTION 13.10 TRUSTEE POWERS..............................................................................90
SECTION 13.11 DOCUMENTATION AND SYNDICATION AGENT.........................................................90
ARTICLE XIV MISCELLANEOUS.......................................................................................90
SECTION 14.1 NOTICES.....................................................................................90
SECTION 14.2 EXPENSES; INDEMNITY.........................................................................91
SECTION 14.3 SET-OFF.....................................................................................92
iii
SECTION 14.4 GOVERNING LAW...............................................................................92
SECTION 14.5 JURISDICTION AND VENUE......................................................................92
SECTION 14.6 BINDING ARBITRATION; WAIVER OF JURY TRIAL...................................................93
SECTION 14.7 REVERSAL OF PAYMENTS........................................................................94
SECTION 14.8 INJUNCTIVE RELIEF; PUNITIVE DAMAGES.........................................................94
SECTION 14.9 ACCOUNTING MATTERS..........................................................................95
SECTION 14.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS......................................................95
SECTION 14.11 AMENDMENTS, WAIVERS AND CONSENTS............................................................99
SECTION 14.12 PERFORMANCE OF DUTIES......................................................................100
SECTION 14.13 SYNDICATION OF CREDIT FACILITY.............................................................100
SECTION 14.14 ALL POWERS COUPLED WITH INTEREST...........................................................100
SECTION 14.15 SURVIVAL OF INDEMNITIES....................................................................101
SECTION 14.16 TITLES AND CAPTIONS........................................................................101
SECTION 14.17 SEVERABILITY OF PROVISIONS.................................................................101
SECTION 14.18 COUNTERPARTS...............................................................................101
SECTION 14.19 TERM OF AGREEMENT..........................................................................101
SECTION 14.20 ADVICE OF COUNSEL..........................................................................101
SECTION 14.21 NO STRICT CONSTRUCTION.....................................................................101
SECTION 14.22 INCONSISTENCIES WITH OTHER DOCUMENTS; INDEPENDENT EFFECT OF COVENANTS......................102
iv
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Swingline Note
Exhibit A-3 - Form of Term Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Subsidiary Guaranty Agreement
Exhibit I - Form of Collateral Agreement
Exhibit J - Form of Lender Addition and Acknowledgment
Exhibit K - Form of Borrowing Base Certificate
Exhibit L - Form of Pledge Agreement
SCHEDULES
Schedule 1 - Lenders and Commitments
Schedule 2 - Unrestricted Subsidiaries
Schedule 6.2(c)(v) - Environmental Reports
Schedule 7.1(a) - Jurisdictions of Organization and Qualification
Schedule 7.1(b) - Subsidiaries and Capitalization
Schedule 7.1(i) - ERISA Plans
Schedule 7.1(l) - Material Contracts
Schedule 7.1(m) - Labor and Collective Bargaining Agreements
Schedule 7.1(r) - Owned and Leased Real Property
Schedule 7.1(t) - Debt, Guaranty and Bonding Obligations
Schedule 7.1(u) - Litigation
Schedule 11.2 - Existing Liens
Schedule 11.3 - Existing Loans, Advances and Investments
v
CREDIT AGREEMENT, dated as of the 28th day of September, 2001, by and
among DRS TECHNOLOGIES, INC., a Delaware corporation, as Borrower, the lenders
who are or may become a party to this Agreement, as Lenders, FIRST UNION
NATIONAL BANK, a national banking association, as Administrative Agent for the
Lenders, TD SECURITIES (USA) INC., as Syndication Agent and MELLON BANK, N.A.,
as Documentation Agent.
STATEMENT OF PURPOSE
The Borrower has requested, and the Lenders have agreed, to extend
certain credit facilities to the Borrower on the terms and conditions of this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"ACCOUNT DEBTOR" means, with respect to any Account, any Person
obligated to make payment thereunder, including, without limitation, any account
debtor thereon.
"ACCOUNTS" means all "accounts" (as now or hereafter defined in the
UCC) of the Borrower or any of its Restricted Subsidiaries, including, without
limitation, all present or future accounts receivable, all rights to payment of
a monetary obligation, whether or not earned by performance, for property sold,
leased, licensed, assigned or otherwise disposed of or to be sold, leased,
licensed, assigned or otherwise disposed of, for services rendered or to be
rendered, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, or arising
out of the use of a credit card or charge card or information contained on or
for use with the card, all rights in any merchandise or goods which any of the
same may represent, all notes receivable, health care insurance receivables (as
now or hereafter defined in the UCC), book debts, notes, bills, drafts,
acceptances, and all sums of money due or to become due thereon and all proceeds
thereof and all rights, title, security interests and guarantees with respect to
each of the foregoing.
"ACQUISITION" means the acquisition of the assets and business of
Sensors by the Borrower from The Boeing Company pursuant to the terms of the
Asset Purchase Agreement.
"ADDITIONAL TERM LOAN" has the meaning assigned thereto in Section 4.6.
"ADDITIONAL TERM LOAN EFFECTIVE DATE" means the date, which shall be a
Business Day, on or before the Additional Term Loan Termination Date, but no
earlier than thirty (30) days
after any Increase Notification Date, on which the Term Lenders make Additional
Term Loans to the Borrower pursuant to Section 4.6.
"ADMINISTRATIVE AGENT" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 13.9.
"ADMINISTRATIVE AGENT'S OFFICE" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
14.1(c).
"AFFILIATE" means, with respect to any Person, any other Person (other
than a Subsidiary of such Person) which directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such first Person or any of its Subsidiaries. The term "control" means (a)
the power to vote ten percent (10%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"AGGREGATE COMMITMENT" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be increased, reduced or otherwise
modified at any time or from time to time pursuant to the terms hereof. On the
Closing Date, the Aggregate Commitment shall be Two Hundred Forty Million
Dollars ($240,000,000).
"AGREEMENT" means this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"APPLICABLE LAW" means all applicable provisions of constitutions,
laws, statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities and
all orders and decrees of all courts and arbitrators.
"APPLICABLE MARGIN" shall have the meaning assigned thereto in Section
5.1(c).
"APPLICATION" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"APPROVED FUND" means any Person (other than a natural Person),
including, without limitation, any special purpose entity, that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business;
PROVIDED, that with respect to any assignment of any Revolving Credit
Commitment, such Approved Fund must be administered by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
"ARBITRATION RULES" shall have the meaning assigned thereto in Section
14.6(a).
"ASSET COVERAGE RATIO" means as of any date of determination, the ratio
of (a) the sum of (i) Available Cash PLUS (ii) the gross book value of all
Accounts of the Borrower and its Restricted Subsidiaries on such date determined
in accordance with GAAP PLUS (iii) the gross
2
book value of all Inventory of the Borrower and its Restricted Subsidiaries on
such date determined in accordance with GAAP to (b) the aggregate outstanding
amount of all Extensions of Credit as of such date.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement by and
between The Boeing Company and the Borrower dated as of August 3, 2001, together
with all exhibits, schedules and all other documents and agreements executed in
relation thereto, as amended, modified or otherwise supplemented with the
consent of the Administrative Agent, which consent is not to be unreasonably
withheld.
"ASSET SALE PROCEEDS" shall have the meaning assigned thereto in
Section 4.4(b)(iii).
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning assigned thereto in
Section 14.10.
"AVAILABLE CASH" means, as of any date of determination, without
duplication, calculated in accordance with GAAP, the aggregate amount of all
cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries, which
such cash or Cash Equivalents are readily marketable and available without
restriction or limitation for the immediate payment or repayment of Debt as of
such date of determination.
"BASE RATE" means, at any time, the higher of (a) the Prime Rate and
(b) the Federal Funds Rate PLUS 1/2 of 1%; each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the Prime
Rate or the Federal Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate based upon
the Base Rate as provided in Section 5.1(a).
"BENEFITED LENDER" shall have the meaning assigned thereto in Section
5.6.
"BONDING OBLIGATIONS" means, with respect to the Borrower or any
Restricted Subsidiary thereof, without duplication, the face amount (including,
without limitation, any contingent obligations arising in connection therewith),
of any surety, performance or other bond issued at the request of or delivered
by the Borrower or any Restricted Subsidiary thereof in the ordinary course of
business to any other Person owed any contractual or other obligation (other
than for borrowed money or other Debt) by such Borrower or Restricted Subsidiary
thereof to secure the performance of such contractual or other obligations or
otherwise benefit such Person to whom such contractual or other obligations are
owed. All outstanding Bonding Obligations as of the Closing Date are set forth
on SCHEDULE 7.1(T).
"BORROWER" means DRS Technologies, Inc., a Delaware corporation.
"BORROWING BASE" means at any date of determination thereof, an amount
equal to the sum of (a) ninety percent (90%) of Eligible Accounts Receivable,
PLUS (b) fifty percent (50%) of Eligible Unbilled Receivables, plus (c) fifty
percent (50%) of Eligible Inventory.
"BORROWING BASE CERTIFICATE" means each certificate delivered by the
Borrower
3
substantially in the form of EXHIBIT K.
"BORROWING LIMIT" means, at any date of determination thereof, an
amount equal to the LESSER of (a) the Borrowing Base and (b) the Revolving
Credit Commitment of all Lenders.
"BUSINESS DAY" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York, New York, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"CALCULATION DATE" shall have the meaning assigned thereto in Section
5.1(c).
"CAPITAL ASSET" means, with respect to the Borrower and its Restricted
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the Borrower
and its Restricted Subsidiaries.
"CAPITAL EXPENDITURES" means with respect to the Borrower and its
Restricted Subsidiaries for any period, the aggregate cost of all Capital Assets
acquired by the Borrower and its Restricted Subsidiaries during such period, as
determined in accordance with GAAP.
"CAPITAL LEASE" means any lease of any property by the Borrower or any
of its Restricted Subsidiaries, as lessee, that should, in accordance with GAAP,
be classified and accounted for as a capital lease on a Consolidated balance
sheet of the Borrower and its Restricted Subsidiaries.
"CASH EQUIVALENTS" shall have the meaning assigned thereto in Section
11.3(b).
"CHANGE IN CONTROL" shall have the meaning assigned thereto in Section
12.1(i).
"CLOSING DATE" means the date of this Agreement or such later Business
Day upon which each condition described in Section 6.2 shall be satisfied or
waived in all respects in a manner acceptable to the Administrative Agent, in
its sole discretion.
"CODE" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or modified from time to time.
"COLLATERAL" shall mean the collateral security for the Obligations
pledged or granted pursuant to the Security Documents.
"COLLATERAL AGREEMENT" means the collateral agreement of even date
herewith executed by the Borrower and its Domestic Subsidiaries that are
Restricted Subsidiaries in favor of the Administrative Agent for the ratable
benefit of itself and the Lenders, substantially in the form of EXHIBIT I, as
amended, restated, supplemented or otherwise modified from time to time
4
"COMMITMENT" means, as to any Lender, the sum of such Lender's
Revolving Credit Commitment and Term Loan Commitment as set forth opposite such
Lender's name on SCHEDULE 1 hereto, as such Commitment may be increased, reduced
or otherwise modified at any time or from time to time pursuant to the terms
hereof.
"COMMITMENT PERCENTAGE" means, as to any Lender at any time, the ratio
of (a) the amount of the Commitment of such Lender to (b) the Aggregate
Commitment of all the Lenders.
"CONSOLIDATED" means, when used with reference to financial statements
or financial statement items of the Borrower and its Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"CREDIT FACILITY" means, collectively, the Revolving Credit Facility,
the Term Loan Facility and the L/C Facility.
"DEBT" means, with respect to the Borrower and its Restricted
Subsidiaries at any date and without duplication, the sum of the following
calculated in accordance with GAAP: (a) all liabilities, obligations and
indebtedness for borrowed money including, but not limited to, obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase price of property or
services of any such Person (including, without limitation, all obligations
under non-competition agreements), except trade payables arising in the ordinary
course of business not more than ninety (90) days past due, (c) all obligations
of any such Person as lessee under Capital Leases to the extent such obligations
are required to be capitalized in accordance with GAAP, (d) all Debt of any
other Person secured by a Lien on any asset of any such Person, (e) all Guaranty
Obligations of any such Person, (f) all obligations, contingent or otherwise, of
any such Person relative to the face amount of letters of credit, whether or not
drawn, including, without limitation, any Reimbursement Obligation, and banker's
acceptances issued for the account of any such Person, (g) all obligations of
any such Person to redeem, repurchase, exchange, defease or otherwise make
payments in respect of capital stock or other securities or partnership
interests of such Person and, (h) all net payment obligations incurred by any
such Person pursuant to Hedging Agreements; PROVIDED, however, that Bonding
Obligations shall not be considered Debt.
"DEFAULT" means any of the events specified in Section 12.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"DISPUTES" shall have the meaning set forth in Section 14.6.
"DOLLARS" OR "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"DOLLAR EQUIVALENT" means, at any time of determination, (a) with
respect to any L/C Obligation denominated in Dollars, the amount thereof and (b)
with respect to any L/C Obligation denominated in a currency other than Dollars,
the amount of Dollars which is equivalent to the amount of such L/C Obligation
at the most favorable spot exchange rate determined by the Administrative Agent
to be available to it at such time of determination.
5
"DOMESTIC SUBSIDIARY" means any direct or indirect subsidiary of the
Borrower organized under the laws of the United States, the law of any State
thereof or the laws of Puerto Rico.
"EBITDA" means, for any period, the sum of the following determined on
a Consolidated basis, without duplication, for the Borrower and its Restricted
Subsidiaries in accordance with GAAP: (a) Net Income for such period PLUS (b)
the sum of the following to the extent deducted in determining Net Income: (i)
income and franchise taxes, (ii) Interest Expense, (iii) amortization and
depreciation, (iv) expenses related to the transactions contemplated under this
agreement, (v) extraordinary losses, (vi) non-cash losses from the sale of
assets, (vii) in connection with the Acquisition, a one-time non-cash write-off
relating to "in process" research and development of Sensors and (viii) non-cash
minority interest deductions, LESS (c) interest income and any extraordinary
gains, PLUS (d) Pro Forma EBITDA; PROVIDED, that as of the fiscal quarters
ending on the dates set forth below, EBITDA for the four (4) consecutive fiscal
quarter period ending on such date shall be adjusted to reflect historical
EBITDA attributable to Sensors by the below amount corresponding to such fiscal
quarter end:
---------------------------------- ---------------------------------
DATE AMOUNT
---------------------------------- ---------------------------------
September 30, 2001 $5,200,000
---------------------------------- ---------------------------------
December 31, 2001 $3,900,000
---------------------------------- ---------------------------------
March 31, 2002 $2,600,000
---------------------------------- ---------------------------------
June 30, 2002 $1,300,000
---------------------------------- ---------------------------------
"ELIGIBLE ASSIGNEE" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized under the laws of the
United States or any state thereof, having combined capital and surplus in
excess of $500,000,000, (b) a commercial bank organized under the laws of any
other country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $500,000,000, (d) already a Lender hereunder (whether as an original
party to this Agreement or as the assignee of another Lender), (e) the successor
(whether by transfer of assets, merger or otherwise) to all or substantially all
of the commercial lending business of the assigning Lender, (f) any Affiliate of
the assigning Lender, (g) any Approved Fund or (h) any other Person that has
been approved in writing as an Eligible Assignee by the Borrower (other than
upon the occurrence and during the continuance of any Default or Event of
Default) and the Administrative Agent.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, at any date of determination
thereof, any BONA FIDE Account created or acquired by the Borrower or any
Restricted Subsidiary thereof in the ordinary course of their business as
presently conducted, for which the Account Debtor has been billed and which
Account satisfies and continues to satisfy the following requirements:
(i) The Account is a BONA FIDE existing obligation of the
named Account Debtor arising from the rendering of services or the sale
and delivery of
6
merchandise to such Account Debtor in the ordinary course of business
on terms that are normal and customary in the business of the Borrower
or its Restricted Subsidiaries and is actually and absolutely owing to
the Borrower or a Restricted Subsidiary of the Borrower and is not
contingent for any reason and such Borrower or such Restricted
Subsidiary has lawful and absolute title to such Account;
(ii) The Account does not arise out of transactions with an
employee, officer, agent, director, stockholder or other Affiliate of
the Borrower or any Restricted Subsidiary thereof;
(iii) The Account is evidenced by an invoice and has not
remained unpaid for a period exceeding ninety (90) days or more beyond
the invoice date of the invoice;
(iv) The Account is not due from an Account Debtor whose debt
on Accounts that are unpaid ninety (90) days or more after the invoice
date of the respective invoices exceeds fifty percent (50%) of such
Account Debtor's total debt to the Borrower and its Restricted
Subsidiaries;
(v) The Account is a valid, legally enforceable obligation of
the Account Debtor and no offset (including without limitation
discounts, advertising allowances, counterclaims or contra accounts) or
other defense on the part of such Account Debtor or any claim on the
part of such Account Debtor denying liability thereunder has been
asserted; PROVIDED, HOWEVER, that if the Account is subject to any such
offset, defense or claim, or any inventory related thereto has been
returned, such account shall not be an Eligible Accounts Receivable
only to the extent of the maximum amount of such offset, defense, claim
or return and the balance of such Account, if it otherwise represents a
valid, uncontested and legally enforceable obligation of the Account
Debtor and meets all of the other criteria for eligibility set forth
herein, shall be considered an Eligible Account Receivable;
(vi) The Account Debtor is not the subject of any bankruptcy
or insolvency proceeding of any kind;
(vii) The services have been performed (unless billing prior
to such services having been performed is permitted under the agreement
with the Account Debtor) or the subject merchandise has been shipped or
delivered on open Account to the named Account Debtor on an absolute
sale basis and not on a bill-and-hold, consignment, sale on approval or
subject to any other repurchase or return agreement and no material
part of the subject goods has been returned;
(viii) Other than pursuant to the Security Documents, the
Account is not subject to any Lien or security interest whatsoever,
including any Account owed pursuant to any contractual or other
obligation of the Borrower or any Restricted Subsidiary thereof subject
to any Bonding Obligation;
7
(ix) The Account is not evidenced by chattel paper or an
instrument of any kind;
(x) The Account is not due from an Account Debtor, except for
the United States government, its branches and its agencies, whose
total debt to the Borrower and its Restricted Subsidiaries, on a
Consolidated basis, on Accounts exceeds fifteen percent (15%) of the
aggregate amount of the Eligible Accounts Receivable; PROVIDED,
HOWEVER, that the Account shall not be an Eligible Account Receivable
only to the extent of such excess, if it otherwise represents a valid,
uncontested and legally enforceable obligation of the Account Debtor
and meets all of the other criteria for eligibility set forth herein;
(xi) The Account is not due pursuant to a Governmental
Contract with respect to which the aggregate amount of all Accounts due
under such Governmental Contract to the Borrower and its Subsidiaries,
on a Consolidated basis, exceeds fifteen percent (15%) of the aggregate
amount of the Eligible Accounts Receivable; PROVIDED, HOWEVER, that the
Account shall not be an Eligible Account Receivable only to the extent
of such excess, if it otherwise represents a valid, uncontested and
legally enforceable obligation of the Account Debtor and meets all of
the other criteria for eligibility set forth herein;
(xii) The Account has not been turned over to any Person that
is not a Restricted Subsidiary or Affiliate of the Borrower for
collection;
(xiii) The Administrative Agent has not determined, in good
faith in its reasonable discretion in accordance with its internal
credit policies and after fifteen (15) days notice to the Borrower that
(A) collection of the Account is insecure or (B) the Account may not be
paid by reason of the Account Debtor's financial inability to pay;
(xiv) The Account is not with a customer located in any state
denying creditors access to said state's courts in the absence of a
notice of business activities report or other similar filing, unless
the Borrower, its Restricted Subsidiaries and Affiliates have either
qualified as a foreign corporation authorized to transact business in
such state or has filed a notice of business activities report or
similar filing with the applicable state agency for the then current
year;
(xv) With respect to any Account, which is payable to a
Foreign Subsidiary (any such Account, a "Foreign Account"), the amount
of such Foreign Account is reported in Dollars (irrespective of the
currency in which such Account is payable) on the applicable Borrowing
Base Certificate; PROVIDED that no more than thirty percent (30%) of
the aggregate amount of all Eligible Accounts Receivable at any one
time shall be Foreign Accounts; and
(xvi) In addition to the foregoing, with respect to Accounts
arising out of a Governmental Contract, the Administrative Agent is
satisfied as to the absence of setoffs, counterclaims and other
defenses to payment on the part of the United States or
8
such state governmental authority.
"ELIGIBLE INVENTORY" means, at any date of determination, any Inventory
of the Borrower or any Restricted Subsidiary thereof that satisfies and
continues to satisfy each of the following requirements:
(a) Any warranty or representation contained in this Agreement or any
of the other Loan Documents applicable either to Inventory in general or to any
specific Inventory remains true and correct in all material respects with
respect to such Inventory;
(b) If the Inventory is located in a public warehouse, the
Administrative Agent shall have received a control agreement, in form and
substance reasonably satisfactory to the Administrative Agent;
(c) The Inventory is not under consignment to or from any Person;
(d) The Inventory is free from defects which would materially and
adversely affect the market value thereof;
(e) The Inventory meets in all material respects all standards imposed
by any Governmental Authority having regulatory authority over such Inventory,
its use or sale, and is either currently useable or currently saleable in the
normal course of the Borrower's or any Restricted Subsidiary's business;
(f) The Inventory was produced in accordance with the Fair Labor
Standards Act and is not subject to the "hot goods" provisions contained in 29
U.S.C.ss.215 or any successor statute or section;
(g) The Inventory is not obsolete or currently unfit for use or sale in
the ordinary course of the business of the Borrower or any Restricted Subsidiary
thereof;
(h) Other than pursuant to the Security Documents, the Inventory is not
subject to any Lien or security interest whatsoever; PROVIDED that for purposes
hereof, any Inventory subject to a progress payment shall not be considered to
be subject to a Lien or security interest.
(i) If the Inventory has been purchased with a trade letter of credit,
all reimbursement and similar obligations with respect to such trade letter of
credit has been paid in full;
(j) With respect to any Inventory located outside of the United States
(any such Inventory, "Foreign Inventory"), no more than thirty percent (30%) of
the aggregate amount of all Eligible Inventory at any one time shall be Foreign
Inventory; and
(k) The Administrative Agent has not determined, in good faith in its
reasonable discretion in accordance with its internal credit policies, that the
Inventory is
9
otherwise ineligible.
"ELIGIBLE UNBILLED RECEIVABLES" means, at any date of determination
thereof, any Account (i) which is an Eligible Accounts Receivable, but for the
fact such Account has not been invoiced (a) as a result of normal frequency of
billing under the particular contract, or (b) as a result of government delays
in the preparation of contract documents and (ii) which will be invoiced within
ninety (90) days of the "as of" date of the particular Borrowing Base
Certificate setting forth such Account.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
(6) years been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, allegations,
notices of noncompliance or violation, investigations (other than internal
reports prepared by any Person in the ordinary course of business and not in
response to any third party action or request of any kind) or proceedings
relating in any way to any actual or alleged violation of or liability under any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law, including, without limitation, any and all claims by
Governmental Authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages, contribution, indemnification cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to human health or the environment.
"ENVIRONMENTAL LAWS" means any and all federal, foreign, state,
provincial and local laws, statutes, ordinances, rules, regulations, permits,
licenses, approvals, interpretations and orders of courts or Governmental
Authorities, relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation or remediation of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA AFFILIATE" means any Person who, together with the Borrower, is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including, without limitation, any basic, supplemental or emergency reserves)
in respect of eurocurrency liabilities or any similar category of liabilities
for a member bank of the Federal Reserve System in New York City.
10
"EVENT OF DEFAULT" means any of the events specified in Section 12.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"EXCESS CASH FLOW" means, for any period of determination, the sum of
(a) EBITDA for such period (determined by adding back thereto any amounts
deducted in determining Net Income for such period that were paid, incurred or
accrued by Borrower or any of its Restricted Subsidiaries in violation of any of
the other provisions of this Agreement), MINUS (b) income and franchise taxes
(paid or payable in cash) and (to the extent permitted hereunder) Interest
Expense (paid or payable in cash) MINUS (c) all principal payments made in
respect of Debt during such period, to the extent permitted hereunder (excluding
Excess Cash Flow Payments pursuant to Section 4.4(b)(vii)) MINUS (d) all Capital
Expenditures made in cash during such period, to the extent permitted hereunder,
MINUS (e) non-scheduled principal payments of Term Loans (excluding Excess Cash
Flow Payments pursuant to Section 4.4(b)(v)) and PLUS or MINUS (as applicable)
(f) changes in working capital.
"EXCESS PROCEEDS" shall have the meaning assigned thereto in Section
4.4(b)(vii).
"EXISTING FACILITY" means the credit facility established by the
Amended and Restated Revolving Credit Loan and Term Loan Agreement by and among
the Borrower, DRS Technologies Canada Company, DRS Technologies Canada, Inc.,
DRS EO, Inc. and DRS FPA, L.P., as Co-Borrowers, Mellon Bank, N.A., as Agent,
Mellon Bank Canada, as Lender and the other Lenders signatory thereto, as
Lenders, dated as of October 20, 1998 as amended from time to time.
"Existing Foreign Currency Letters of Credit" means (a) letter of
credit number 866287 issued by Mellon Bank, N.A. in the face amount of
(pound)750,000 and (b) letter of credit number 869397 issued by Mellon Bank,
N.A. in the face amount of CDN $1,000,000.
"EXISTING LETTERS OF CREDIT" means those letters of credit issued by
Mellon Bank, N.A. and existing on the Closing Date and identified on SCHEDULE
7.1(T).
"EXTENSIONS OF CREDIT" means, as to any Lender at any time, (a) an
amount equal to the sum of (i) the aggregate principal amount of all Revolving
Credit Loans made by such Lender then outstanding, (ii) such Lender's Revolving
Credit Commitment Percentage of the L/C Obligations then outstanding, (iii) such
Lender's Revolving Credit Commitment Percentage of the Swingline Loans then
outstanding and (iv) the aggregate principal amount of all Term Loans made by
such Lender then outstanding, or (b) the making of any Loan or participation in
any Letter of Credit by such Lender, as the context requires.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FEDERAL FUNDS RATE" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a daily rate
which is determined,
11
in the opinion of the Administrative Agent, to be the rate at which federal
funds are being offered for sale in the national federal funds market at 9:00
a.m. (Charlotte time). Rates for weekends or holidays shall be the same as the
rate for the most immediately preceding Business Day.
"FIRST UNION" means First Union National Bank, a national banking
association, and its successors.
"FISCAL YEAR" means the fiscal year of the Borrower and its Restricted
Subsidiaries ending on March 31.
"FIXED CHARGES" means, for any period, the sum of the following
determined on a Consolidated basis, without duplication, for the Borrower and
its Restricted Subsidiaries in accordance with GAAP: (a) Interest Expense (paid
in cash), (b) scheduled principal payments with respect to Debt, and (c) cash
taxes.
"FOREIGN ACCOUNTS" shall have the meaning assigned thereto in clause
(vii) of the definition of Eligible Accounts Receivable.
"FOREIGN SUBSIDIARY" means any direct or indirect subsidiary of the
Borrower that is not a Domestic Subsidiary.
"GAAP" means United States generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained on a
consistent basis for the Borrower and its Subsidiaries throughout the period
indicated.
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GOVERNMENTAL CONTRACT" means a contract between the Borrower and an
agency, department or instrumentality of the United States or any state
Governmental Authority in the United States where such Borrower is the prime
contractor.
"GUARANTY OBLIGATION" means, with respect to the Borrower and its
Restricted Subsidiaries, without duplication, any obligation, contingent or
otherwise, of any such Person pursuant to which such Person has directly or
indirectly guaranteed any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement condition or otherwise) or (b) entered
12
into for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); PROVIDED, that the term Guaranty
Obligation shall not include (i) endorsements for collection or deposit in the
ordinary course of business or (ii) guarantees by the Borrower or any Restricted
Subsidiary thereof of any non-Debt obligations of the Borrower or any Restricted
Subsidiary thereof.
"HAZARDOUS MATERIALS" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance or a
trespass which pose a health or safety hazard to Persons or neighboring
properties, or (f) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.
"HEDGING AGREEMENT" means any agreement with respect to any Interest
Rate Contract, forward rate agreement, commodity swap, forward foreign exchange
agreement, currency swap agreement, cross-currency rate swap agreement, currency
option agreement or other agreement or arrangement designed to alter the risks
of any Person arising from fluctuations in interest rates, currency values or
commodity prices, all as amended, restated, supplemented or otherwise modified
from time to time.
"INCREASE NOTIFICATION" means the written notice by the Borrower of its
desire to increase the Term Loan Commitment pursuant to Section 4.6.
"INCREASE NOTIFICATION DATE" means the date on which the Increase
Notification is received by the Administrative Agent.
"INSURANCE AND CONDEMNATION PROCEEDS" shall have the meaning assigned
thereto in Section 4.4(b)(iv).
"INTEREST EXPENSE" means, with respect to the Borrower and its
Restricted Subsidiaries for any period, the gross interest expense (including,
without limitation, interest expense attributable to Capital Leases and all net
payment obligations pursuant to Hedging Agreements) of the Borrower and its
Restricted Subsidiaries, all determined for such period on a Consolidated basis,
without duplication, in accordance with GAAP.
"INTEREST PERIOD" shall have the meaning assigned thereto in Section
5.1(b).
"INTEREST RATE CONTRACT" means any interest rate swap agreement,
interest rate cap agreement, interest rate floor agreement, interest rate collar
agreement, interest rate option or any
13
other agreement regarding the hedging of interest rate risk exposure executed in
connection with hedging the interest rate exposure of any Person and any
confirming letter executed pursuant to such agreement, all as amended, restated,
supplemented or otherwise modified from time to time.
"INVENTORY" means all "inventory" (as now or hereafter defined in the
UCC) of the Borrower or any Restricted Subsidiary, including, without
limitation, all raw materials, inventory and other materials and supplies,
work-in-process, finished goods, all accessions thereto, documents therefor and
any products made or processed therefrom and all substances, if any, commingled
therewith or added thereto.
"ISP98" means the International Standby Practices (1998 Revision,
effective January 1, 1999), International Chamber of Commerce Publication No.
590.
"ISSUING LENDER" means (a) with respect to Letters of Credit issued
hereunder after the Closing Date, First Union, in its capacity as issuer
thereof, or any successor thereto and (b) with respect to the Existing Letters
of Credit, Mellon Bank, N.A.
"L/C COMMITMENT" means the lesser of (a) Thirty-Five Million Dollars
($35,000,000) and (b) the Revolving Credit Commitment.
"L/C FACILITY" means the letter of credit facility established pursuant
to Article III.
"L/C OBLIGATIONS" means at any time, an amount equal to the sum of (a)
the aggregate 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 Section 3.5.
"L/C PARTICIPANTS" means the collective reference to all the Lenders
other than the Issuing Lender.
"LENDER" means each Person executing this Agreement as a Lender
(including, without limitation, the Issuing Lender and the Swingline Lender
unless the context otherwise requires) set forth on the signature pages hereto
and each Person that hereafter becomes a party to this Agreement as a Lender
pursuant to Section 4.6 or Section 14.10.
"LENDING OFFICE" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Revolving Credit Commitment Percentage or Term
Loan Percentage, as applicable, of the Extensions of Credit.
"LETTERS OF CREDIT" means the collective reference to letters of credit
issued pursuant to Section 3.1 and the Existing Letters of Credit.
"LIBOR" means the rate of interest per annum determined on the basis of
the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a
period equal to the applicable Interest Period which appears on the Dow Jones
Market Screen 3750 at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of the applicable Interest
14
Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any
reason, such rate does not appear on Dow Jones Market Screen 3750, then "LIBOR"
shall be determined by the Administrative Agent to be the arithmetic average of
the rate per annum at which deposits in Dollars in minimum amounts of at least
$5,000,000 would be offered by first class banks in the London interbank market
to the Administrative Agent at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period. Each calculation by the Administrative
Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest
error.
"LIBOR RATE" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR
LIBOR Rate = ----------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR RATE LOAN" means any Loan bearing interest at a rate based upon
the LIBOR Rate as provided in Section 5.1(a).
"LIEN" means, with respect to any asset, any mortgage, leasehold
mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance
of any kind in respect of such asset. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset which it has acquired
or holds subject to the interest of a vendor or lessor under any conditional
sale agreement, Capital Lease or other title retention agreement relating to
such asset.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Applications, the Security Documents, each joinder agreement executed pursuant
to Section 9.11 and each other document, instrument, certificate and agreement
executed and delivered by the Borrower or any Subsidiary thereof in connection
with this Agreement or otherwise referred to herein or contemplated hereby
(excluding any Hedging Agreement), all as may be amended, restated, supplemented
or otherwise modified from time to time.
"LOANS" means the collective reference to the Revolving Credit Loans,
the Term Loans, the Swingline Loans, and "Loan" means any of such Loans.
"MATERIAL ADVERSE EFFECT" means, with respect to the Borrower or any of
its Restricted Subsidiaries or Sensors, a material adverse effect on (i) the
properties, business, prospects, operations or condition (financial or
otherwise) of such Persons, taken as a whole, or (ii) the ability of such
Persons, taken as a whole, to perform their obligations under the Loan Documents
in each case to which they are parties.
"MATERIAL CONTRACT" means (a) any contract or other agreement, written
or oral, of the Borrower or any of its Restricted Subsidiaries involving
monetary liability of or to any Person in an amount in excess of $5,000,000 per
annum, or (b) any other contract or agreement, written or oral, of the Borrower
or any of its Restricted Subsidiaries the failure to comply with which could
reasonably be expected to have a Material Adverse Effect.
15
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, or has accrued an obligation to make
contributions within the preceding six (6) years.
"NET CASH PROCEEDS" means, as applicable, (a) with respect to any sale
or other disposition of assets, the gross cash proceeds received by the Borrower
or any of its Restricted Subsidiaries from such sale LESS the sum of (i) all
income taxes and other taxes assessed (or reasonably anticipated to be payable)
by a Governmental Authority as a result of such sale and any other fees and
expenses incurred in connection therewith, (ii) net reserves required in
accordance with GAAP in connection with such sale and (iii) the principal amount
of, premium, if any, and interest on any Debt secured by a Lien on the asset (or
a portion thereof) sold, which Debt is required to be repaid in connection with
such sale, (b) with respect to any offering of capital stock or issuance of
Debt, the gross cash proceeds received by the Borrower or any of its Restricted
Subsidiaries therefrom LESS all reasonable legal, underwriting and other
reasonable fees and expenses incurred in connection therewith and (c) with
respect to any payment under an insurance policy or in connection with a
condemnation proceeding, the amount of cash proceeds received by the Borrower or
its Restricted Subsidiaries from an insurance company or Governmental Authority,
as applicable, net of all reasonable expenses of collection.
"NET INCOME" means, with respect to the Borrower and its Restricted
Subsidiaries, for any period of determination, the net income (or loss) of the
Borrower and its Restricted Subsidiaries for such period, determined on a
Consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded from Net Income the net income (or loss) of any Person accrued prior to
the date it becomes a Restricted Subsidiary of such Person or is merged into or
consolidated with such Person or any of its Restricted Subsidiaries or that
Person's assets are acquired by such Person or any of its Restricted
Subsidiaries.
"NEW LENDER" shall have the meaning assigned thereto in Section 4.6(b).
"NOTES" means the collective reference to the Revolving Credit Notes,
the Term Notes and Swingline Notes, and "Note" means any of such Notes.
"NOTICE OF ACCOUNT DESIGNATION" shall have the meaning assigned thereto
in Section 2.3(b).
"NOTICE OF BORROWING" shall have the meaning assigned thereto in
Section 2.3(a).
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning assigned
thereto in Section 5.2.
"NOTICE OF PREPAYMENT" shall have the meaning assigned thereto in
Section 2.4(c).
"OBLIGATIONS" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
the L/C Obligations, (c) all existing or future payment and other obligations
owing by the Borrower under any Hedging Agreement (which such Hedging
16
Agreement is permitted hereunder) with any Person that is a Lender hereunder at
the time such Hedging Agreement is executed, (all such obligations with respect
to any such Hedging Agreement, "Hedging Obligations") and (d) all other fees and
commissions (including attorneys' fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrower or any of its Restricted Subsidiaries to the Lenders or the
Administrative Agent, in each case under or in respect of this Agreement, any
Note, any Letter of Credit or any of the other Loan Documents of every kind,
nature and description, direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated, and whether or
not evidenced by any note.
"OFFICER'S COMPLIANCE CERTIFICATE" shall have the meaning assigned
thereto in Section 8.2.
"OTHER TAXES" shall have the meaning assigned thereto in Section
5.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for the employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
(6) years been maintained for the employees of the Borrower or any of its
current or former ERISA Affiliates.
"PERFORMANCE BASED LETTERS OF CREDIT" means standby Letters of Credit
issued to ensure the performance of services and/or delivery of goods by or on
behalf of the Borrower.
"PERMITTED ACQUISITION" means any acquisition permitted by Section
11.3(d).
"PERMITTED ACQUISITION CONSIDERATION" means the aggregate amount of the
purchase price (including, but not limited to, any assumed debt, earn-outs
(valued at the maximum amount payable thereunder), deferred payments, or capital
stock of the Borrower, net of the applicable acquired company's cash (including
Cash Equivalents) balance as shown on its most recent financial statements
delivered in connection with the applicable Permitted Acquisition) to be paid on
a singular basis in connection with any applicable Permitted Acquisition as set
forth in the applicable Permitted Acquisition Documents executed by the Borrower
or any of its Restricted Subsidiaries in order to consummate the applicable
Permitted Acquisition.
"PERMITTED ACQUISITION DOCUMENTS" means the merger, stock and/or asset
purchase documents entered into in connection with any Permitted Acquisition.
"PERMITTED LIEN" means any Lien permitted pursuant to Section 11.2
hereof.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
17
"PLEDGE AGREEMENT" means the collective reference to the pledge
agreements executed by the Borrower (or applicable Restricted Subsidiary
thereof) in favor of the Administrative Agent for the ratable benefit of itself
and the Lenders, substantially in the form of EXHIBIT L hereto, as amended,
restated, supplemented or otherwise modified.
"PRIME RATE" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in such prime rate occurs. The parties hereto acknowledge that
the rate announced publicly by First Union as its prime rate is an index or base
rate and shall not necessarily be its lowest or best rate charged to its
customers or other banks.
"PRO FORMA EBITDA" means with respect to any Person acquired in
connection with a Permitted Acquisition consummated during any calculation
period, EBITDA of such acquired Person calculated on a pro forma basis as of the
first day of such calculation period.
"PURCHASING LENDER" shall have the meaning assigned thereto in Section
14.10.
"REGISTER" shall have the meaning assigned thereto in Section 14.10(d).
"REIMBURSEMENT OBLIGATION" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"REQUIRED LENDERS" means, at any date, any combination of Lenders
holding at least fifty-one percent (51%) of each of (a) the Revolving Credit
Commitment (or, if the Revolving Credit Facility has been terminated, any
combination of Lenders holding at least fifty-one percent (51%) of the aggregate
outstanding Extensions of Credit thereunder) and (b) the aggregate outstanding
Extensions of Credit under the Term Loan Facility.
"RESPONSIBLE OFFICER" means any of the following: the chief executive
officer, chief financial officer or corporate controller of the Borrower or any
other officer of the Borrower reasonably acceptable to the Administrative Agent.
"RESTRICTED SUBSIDIARIES" means all Subsidiaries of the Borrower other
than the Unrestricted Subsidiaries.
"REVOLVING CREDIT COMMITMENT" means (a) as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the account of the
Borrower hereunder in an aggregate principal amount at any time outstanding not
to exceed the amount set forth opposite such Lender's name on SCHEDULE 1 hereto
as such amount may be reduced or modified at any time or from time to time
pursuant to the terms hereof and (b) as to all Lenders, the aggregate commitment
of all Lenders to make Revolving Credit Loans, as such amount may be reduced at
any time or from time to time pursuant to the terms hereof. The Revolving Credit
Commitment of all Lenders on the Closing Date shall be $100,000,000.
"REVOLVING CREDIT COMMITMENT PERCENTAGE" means, as to any Lender at any
time, the
18
ratio of (a) the amount of the Revolving Credit Commitment of such Lender to (b)
the Revolving Credit Commitments of all Lenders.
"REVOLVING CREDIT FACILITY" means the revolving credit facility
established pursuant to Article II.
"REVOLVING CREDIT LOANS" means any revolving loan made to the Borrower
pursuant to Section 2.1, and all such revolving loans collectively as the
context requires.
"REVOLVING CREDIT NOTES" means the collective reference to the
Revolving Credit Notes made by the Borrower payable to the order of each Lender,
substantially in the form of EXHIBIT A-1 hereto, evidencing the Revolving Credit
Facility, and any amendments, supplements and modifications thereto, any
substitutes therefor, and any replacements, restatements, renewals or extension
thereof, in whole or in part; "REVOLVING CREDIT NOTE" means any of such
Revolving Credit Notes.
"REVOLVING CREDIT MATURITY DATE" means the earliest of the dates
referred to in Section 2.7.
"SECURITY DOCUMENTS" means the collective reference to the Subsidiary
Guaranty Agreement, the Collateral Agreement, the Pledge Agreement, and each
other agreement or writing pursuant to which the Borrower or any Restricted
Subsidiary thereof purports to pledge or grant a security interest in any
property or assets securing the Obligations or any such Person purports to
guaranty the payment and/or performance of the Obligations, in each case, as
amended, restated, supplemented or otherwise modified from time to time.
"SENSORS" means the collective reference to the assets and business
which, immediately prior to the Closing Date, comprise the Sensors and
Electronic Systems Organization business unit of The Boeing Company.
"SOLVENT" means, as to the Borrower and its Restricted Subsidiaries on
a particular date, that any such Person (a) has capital sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage and is able to pay its debts as they mature, (b) owns property
having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liabilities (including
contingencies), and (c) does not believe that it will incur debts or liabilities
beyond its ability to pay such debts or liabilities as they mature.
"SUBORDINATED DEBT" means the collective reference to any Debt of the
Borrower or any Restricted Subsidiary subordinated in right and time of payment
to the Obligations and containing such other terms and conditions, in each case
as are reasonably satisfactory to the Required Lenders.
"SUBSIDIARY" means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent (50%)
of the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of
19
directors or other managers of such corporation, partnership, limited liability
company or other entity is at the time owned by or the management is otherwise
controlled by such Person (irrespective of whether, at the time, capital stock
or other ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency). Unless otherwise
qualified, references to "Subsidiary" or "Subsidiaries" herein shall refer to
those of the Borrower.
"SUBSIDIARY GUARANTEED OBLIGATIONS" means the collective reference to
the guaranteed obligations of each of the Restricted Subsidiaries party to the
Subsidiary Guaranty Agreement.
"SUBSIDIARY GUARANTORS" means the collective reference to the Domestic
Subsidiaries of the Borrower who are Restricted Subsidiaries executing the
Subsidiary Guaranty Agreement.
"SUBSIDIARY GUARANTY AGREEMENT" means the unconditional guaranty
agreement of even date herewith executed by each of the Subsidiary Guarantors in
favor of the Administrative Agent for the ratable benefit of itself and the
Lenders, substantially in the form of EXHIBIT H, as amended, restated,
supplemented or otherwise modified from time to time.
"SWINGLINE COMMITMENT" means the lesser of (a) Five Million Dollars
($5,000,000) and (b) the Revolving Credit Commitment.
"SWINGLINE FACILITY" means the swingline facility established pursuant
to Section 2.2.
"SWINGLINE LENDER" means First Union in its capacity as swingline
lender hereunder.
"SWINGLINE LOAN" means any swingline loan made by the Swingline Lender
to the Borrower pursuant to Section 2.2, and all such swingline loans
collectively as the context requires.
"SWINGLINE NOTE" means the Swingline Note made by the Borrower payable
to the order of the Swingline Lender, substantially in the form of EXHIBIT A-2
hereto, evidencing the Swingline Loans, and any amendments, supplements and
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extensions thereof, in whole or in part.
"SWINGLINE TERMINATION DATE" means the first to occur of (a) the
resignation of First Union as Administrative Agent in accordance with Section
13.9 and (b) the Revolving Credit Maturity Date.
"TAXES" shall have the meaning assigned thereto in Section 5.11(a).
"TERM LOAN COMMITMENT" means (a) as to any Lender, the obligation of
such Lender to make the Term Loans to the account of the Borrower hereunder in
an aggregate principal amount not to exceed the amount set forth opposite such
Lender's name on SCHEDULE 1 hereto, as such amount may be increased, reduced or
modified at any time or from time to time pursuant to the terms hereof and (b)
as to all Lenders, the aggregate commitment to make Term Loans. The
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Term Loan Commitment of all Lenders as of the Closing Date shall be
$140,000,000.
"TERM LOAN FACILITY" shall mean the term loan facility established
pursuant to ARTICLE IV.
"TERM LOAN INCREASE TERMINATION DATE" means the first to occur of (a)
September 30, 2003, (b) the date of termination by the Administrative Agent on
behalf of the Lenders pursuant to Section 12.2(a), or (c) the date of
termination pursuant to Section 4.4.
"TERM LOAN MATURITY DATE" means the first to occur of (a) September 30,
2008, or (b) the date of termination by the Administrative Agent on behalf of
the Lenders pursuant to Section 12.2(a).
"TERM LOAN PERCENTAGE" means, as to any Lender, after the Term Loans
are made, the ratio of (i) the outstanding principal balance of the Term Loan of
such Lender to (ii) the aggregate outstanding principal balance of the Term
Loans of all Lenders.
"TERM LOANS" shall mean the term loans to be made to the Borrower by
the Lenders pursuant to Section 4.1 and all Additional Term Loans made to the
Borrower pursuant to Section 4.6.
"TERM NOTES" means the Term Notes made by the Borrower payable to the
order of each of the Lenders, substantially in the form of EXHIBIT A-3 hereto,
evidencing the Debt incurred by the Borrower pursuant to the Term Loan Facility,
and any amendments, modifications and supplements thereto, any substitute
therefor, and any replacement, restatements, renewals or extensions thereof, in
whole or in part.
"TERMINATION EVENT" means except for any such event or condition that
could not reasonably be expected to have a Material Adverse Effect: (a) a
"Reportable Event" described in Section 4043 of ERISA for which the notice
requirement has not been waived by the PBGC, or (b) the withdrawal of the
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or
(c) the termination of a Pension Plan, the filing of a notice of intent to
terminate a Pension Plan or the treatment of a Pension Plan amendment as a
termination, under Section 4041 of ERISA, if the plan assets are not sufficient
to pay all plan liabilities, or (d) the institution of proceedings to terminate,
or the appointment of a trustee with respect to, any Pension Plan by the PBGC,
or (e) any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan, or (f) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (g) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan if
withdrawal liability is asserted by such plan, or (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (h) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"TOTAL LEVERAGE RATIO" shall have the meaning assigned thereto in
Section 10.1.
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"UNIFORM CUSTOMS" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), effective January, 1994 International
Chamber of Commerce Publication No. 500.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower set
forth on Schedule 2 hereto.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York, as amended or modified from time to time.
"UNITED STATES" means the United States of America.
"WHOLLY-OWNED" means, with respect to a Subsidiary, that all of the
shares of capital stock or other ownership interests of such Subsidiary are,
directly or indirectly, owned or controlled by the Borrower and/or one or more
of its Wholly-Owned Subsidiaries (except for directors' qualifying shares or
other shares required by Applicable Law to be owned by a Person other than the
Borrower).
SECTION 1.2 GENERAL. Unless otherwise specified, a reference in this
Agreement to a particular article, section, subsection, Schedule or Exhibit is a
reference to that article, section, subsection, Schedule or Exhibit of this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Any reference herein to "CHARLOTTE TIME"
shall refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 OTHER DEFINITIONS AND PROVISIONS.
(a) USE OF CAPITALIZED TERMS. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) MISCELLANEOUS. 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.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 REVOLVING CREDIT LOANS. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations and warranties set
forth herein, each Lender severally agrees to make Revolving Credit Loans to the
Borrower from time to time from
22
the Closing Date through, but not including, the Revolving Credit Maturity Date
as requested by the Borrower in accordance with the terms of Section 2.3;
PROVIDED, that (a) the sum of the aggregate amount of all outstanding Revolving
Credit Loans (after giving effect to the amount requested and the use of the
proceeds thereof to repay Extensions of Credit hereunder), Swingline Loans and
L/C Obligations from any Lender to the Borrower shall at no time exceed such
Lender's Revolving Credit Commitment and (b) no borrowing of Revolving Credit
Loans shall be made if, immediately after giving effect thereto and the use of
the proceeds thereof to repay Extensions of Credit hereunder, the aggregate
principal amount of Revolving Credit Loans then outstanding PLUS (i) all
outstanding Swingline Loans PLUS (ii) the aggregate principal amount of all
outstanding L/C Obligations would exceed the then applicable Borrowing Limit.
Each Revolving Credit Loan by a Lender shall be in a principal amount equal to
such Lender's Revolving Credit Commitment Percentage of the aggregate principal
amount of Revolving Credit Loans requested on such occasion. Subject to the
terms and conditions hereof, the Borrower may borrow, repay and reborrow
Revolving Credit Loans hereunder until the Revolving Credit Maturity Date.
SECTION 2.2 SWINGLINE LOANS.
(a) AVAILABILITY. Subject to the terms and conditions of this
Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrower
from time to time from the Closing Date through, but not including, the
Swingline Termination Date; PROVIDED, that the Swingline Lender shall have no
obligation to make any Swingline Loan, if, after giving effect to any amount
requested and the use of the proceeds thereof to repay Extensions of Credit
hereunder, (a) the aggregate principal amount of all Swingline Loans then
outstanding would exceed the Swingline Commitment or (b) the aggregate principal
amount of all Revolving Credit Loans then outstanding plus the aggregate
principal amount of all Swingline Loans then outstanding PLUS the L/C
Obligations then outstanding would exceed the then applicable Borrowing Limit.
(b) REFUNDING.
(i) Swingline Loans shall be refunded by the Lenders (which
for such purpose shall include the Swingline Lender in its capacity as
a Lender having a Revolving Credit Commitment) on demand by the
Swingline Lender. Subject to clause (a) of the proviso to the initial
sentence of Section 2.1 hereof, such refundings shall be made by the
Lenders in accordance with their respective Revolving Credit Commitment
Percentages and shall thereafter be reflected as Revolving Credit Loans
of the Lenders on the books and records of the Administrative Agent.
Each Lender shall fund its respective Revolving Credit Commitment
Percentage of Revolving Credit Loans as required to repay Swingline
Loans outstanding to the Swingline Lender upon demand to such Lender by
telecopier (or by telephone promptly confirmed by telecopier) by the
Swingline Lender but in no event later than 2:00 p.m. (Charlotte time)
on the next succeeding Business Day after such demand is made. No
Lender's obligation to fund its respective Revolving Credit Commitment
Percentage of a Swingline Loan shall be affected by any other Lender's
failure to fund its Revolving Credit Commitment Percentage of a
Swingline Loan, nor shall any Lender's Revolving Credit Commitment
Percentage be
23
increased as a result of any such failure of any other Lender to fund
its Revolving Credit Commitment Percentage of a Swingline Loan.
(ii) The Borrower shall pay to the Swingline Lender on demand
the amount of such Swingline Loans to the extent amounts received from
the Lenders are not sufficient to repay in full the outstanding
Swingline Loans requested or required to be refunded. In addition, the
Borrower hereby authorizes the Administrative Agent to charge any
account maintained by the Borrower with the Swingline Lender (up to the
amount available therein) in order to immediately pay the Swingline
Lender the amount of such Swingline Loans to the extent amounts
received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded. If
any portion of any such amount paid to the Swingline Lender shall be
recovered by or on behalf of the Borrower from the Swingline Lender in
bankruptcy or otherwise, the loss of the amount so recovered shall be
ratably shared among all the Lenders in accordance with their
respective Revolving Credit Commitment Percentages (unless the amounts
so recovered by or on behalf of the Borrower pertain to a Swingline
Loan extended after the occurrence and during the continuance of an
Event of Default of which the Administrative Agent has received notice
in the manner required pursuant to Section 13.5 and which such Event of
Default has not been waived by the Required Lenders or the Lenders, as
applicable).
(iii) Each Lender acknowledges and agrees that its obligation
to refund Swingline Loans in accordance with the terms of this Section
2.2 is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation,
non-satisfaction of the conditions set forth in Article VII. Further,
each Lender agrees and acknowledges that if prior to the refunding of
any outstanding Swingline Loans pursuant to this Section 2.2, one of
the events described in Section 12.1(j) or (k) shall have occurred,
each Lender will (subject to clause (a) of the proviso to the initial
sentence of Section 2.1 hereof), on the date the applicable Revolving
Credit Loan would have been made, purchase an undivided participating
interest in the Swingline Loan to be refunded in an amount equal to its
Revolving Credit Commitment Percentage of the aggregate amount of such
Swingline Loan. Each Lender will immediately transfer to the Swingline
Lender, in immediately available funds at the office of the Swingline
Lender, the amount of its participation and upon receipt thereof the
Swingline Lender will deliver to such Lender a certificate evidencing
such participation dated the date of receipt of such funds and for such
amount. Whenever, at any time after the Swingline Lender has received
from any Lender such Lender's participating interest in a Swingline
Loan, the Swingline Lender receives any payment on account thereof, the
Swingline Lender will promptly 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).
SECTION 2.3 PROCEDURE FOR ADVANCES OF REVOLVING CREDIT AND SWINGLINE
LOANS.
(a) REQUESTS FOR BORROWING. The Borrower shall give the Administrative
Agent
24
irrevocable prior written notice substantially in the form attached hereto as
EXHIBIT B (a "NOTICE OF BORROWING") not later than 11:00 a.m. (Charlotte time)
(i) on the same Business Day as each Base Rate Loan and each Swingline Loan and
(ii) at least three (3) Business Days before each LIBOR Rate Loan, of its
intention to borrow, specifying (A) the date of such borrowing, which shall be a
Business Day, (B) the amount of such borrowing, which shall be (x) with respect
to Base Rate Loans (other than Swingline Loans) in an aggregate principal amount
of $2,500,000 or a whole multiple of $100,000 in excess thereof, (y) with
respect to LIBOR Rate Loans in an aggregate principal amount of $2,500,000 or a
whole multiple of $100,000 in excess thereof and (z) with respect to Swingline
Loans in an aggregate principal amount of $50,000 or a whole multiple of $50,000
in excess thereof, (C) whether such Loan is to be a Revolving Credit Loan or
Swingline Loan, (D) whether the Loans are to be LIBOR Rate Loans or Base Rate
Loans, and (E) in the case of a LIBOR Rate Loan, the duration of the Interest
Period applicable thereto. A Notice of Borrowing received after 11:00 a.m.
(Charlotte time) shall be deemed received on the next Business Day. The
Administrative Agent shall promptly notify the Lenders of each Notice of
Borrowing by telecopier (or by telephone promptly confirmed by telecopier).
(b) DISBURSEMENT OF REVOLVING CREDIT AND SWINGLINE LOANS. Not later
than 2:00 p.m. (Charlotte time) on the proposed borrowing date, subject to the
terms and conditions of this Agreement, (i) each Lender will make available to
the Administrative Agent, for the account of the Borrower, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent,
such Lender's Revolving Credit Commitment Percentage of the Revolving Credit
Loans to be made on such borrowing date and (ii) the Swingline Lender will make
available to the Administrative Agent, for the account of the Borrower, at the
office of the Administrative Agent in funds immediately available to the
Administrative Agent, the Swingline Loans to be made on such borrowing date;
PROVIDED that no Lender shall be responsible for any default by any other Lender
in that other Lender's obligation to make a Loan requested hereunder nor shall
the commitment of any Lender to make the particular type of Loan requested be
increased or decreased as a result of a default by any other Lender in that
other Lender's obligation to make a Loan requested hereunder. The Borrower
hereby irrevocably authorizes the Administrative Agent to disburse the proceeds
of each borrowing requested pursuant to this Section 2.3 in immediately
available funds by crediting or wiring such proceeds to the deposit account of
the Borrower identified in the most recent notice substantially in the form of
EXHIBIT C hereto (a "NOTICE OF ACCOUNT DESIGNATION") delivered by the Borrower
to the Administrative Agent or as may be otherwise agreed upon by the Borrower
and the Administrative Agent from time to time. Subject to Section 5.7 hereof,
the Administrative Agent shall not be obligated to disburse the portion of the
proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3 to
the extent that any Lender has not made available to the Administrative Agent
its Revolving Credit Commitment Percentage of such Loan. Revolving Credit Loans
to be made for the purpose of refunding Swingline Loans shall be made by the
Lenders as provided in Section 2.2(b).
SECTION 2.4 REPAYMENT OF LOANS.
(a) REPAYMENT ON TERMINATION DATE. The Borrower hereby agrees to repay
the outstanding principal amount of (i) all Revolving Credit Loans in full on
the Revolving Credit Maturity Date, and (ii) all Swingline Loans in accordance
with Section 2.2(b), together, in each
25
case, with all accrued but unpaid interest thereon.
(b) MANDATORY REPAYMENT OF REVOLVING CREDIT LOANS.
(i) If at any time the Asset Coverage Ratio as set forth on
the most recently delivered Borrowing Base Certificate and adjusted on
a PRO FORMA basis for all Extensions of Credit made and/or repaid since
the date of the financial information used to determine such Asset
Coverage Ratio is less than 1.00 to 1.00, the Borrower agrees to
immediately repay the principal amount of outstanding Revolving Credit
Loans in an amount sufficient to cause the Asset Coverage Ratio
(determined on a PRO FORMA basis after giving effect to such payment)
to equal or exceed 1.00 to 1.00.
(ii) If at any time the outstanding principal amount of all
Revolving Credit Loans PLUS the sum of all outstanding Swingline Loans
and L/C Obligations exceeds the Borrowing Limit, the Borrower agrees to
repay immediately upon notice from the Administrative Agent, by payment
to the Administrative Agent for the account of the Lenders Extensions
of Credit in an amount equal to such excess with each such repayment
applied FIRST to the principal amount of outstanding Swingline Loans,
SECOND to the principal amount of outstanding Revolving Credit Loans
and THIRD, with respect to any Letters of Credit then outstanding, a
payment of cash collateral into a cash collateral account opened by the
Administrative Agent, for the benefit of the Lenders in an amount equal
to the aggregate then undrawn and unexpired Dollar Equivalent amount of
such Letters of Credit (such cash collateral to be applied in
accordance with Section 12.2(b)).
(c) OPTIONAL REPAYMENTS. The Borrower may at any time and from time to
time repay the Loans, in whole or in part, upon at least three (3) Business
Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate
Loans and one (1) Business Day irrevocable notice with respect to Base Rate
Loans and Swingline Loans, substantially in the form attached hereto as EXHIBIT
D (a "NOTICE OF PREPAYMENT") specifying the date and amount of repayment and
whether the repayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans
or a combination thereof, and, if of a combination thereof, the amount allocable
to each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender by telecopier (or by telephone promptly confirmed by
telecopier). If any such notice is given, the amount specified in such notice
shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $2,500,000 or a whole multiple of
$100,000 in excess thereof with respect to Base Rate Loans (other than Swingline
Loans), $2,500,000 or a whole multiple of $100,000 in excess thereof with
respect to LIBOR Rate Loans and $50,000 or a whole multiple of $50,000 in excess
thereof with respect to Swingline Loans. Each such repayment shall be
accompanied by an amount required to be paid pursuant to Section 5.9 hereof.
(d) LIMITATION ON REPAYMENT OF LIBOR RATE LOANS. The Borrower may not
repay any LIBOR Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 5.9 hereof.
26
(e) HEDGING AGREEMENTS. No repayment or prepayment pursuant to this
Section 2.4 shall affect any of the Borrower's obligations under any Hedging
Agreement.
SECTION 2.5 NOTES.
(a) REVOLVING CREDIT NOTES. Except as otherwise provided in Section
14.10 (a) - (e), each Lender's Revolving Credit Loans and the obligation of the
Borrower to repay such Revolving Credit Loans shall be evidenced by a separate
Revolving Credit Note executed by the Borrower payable to the order of such
Lender.
(b) SWINGLINE NOTES. The Swingline Loans and the obligation of the
Borrower to repay such Swingline Loans shall be evidenced by a Swingline Note
executed by the Borrower payable to the order of the Swingline Lender.
SECTION 2.6 PERMANENT REDUCTION OF THE REVOLVING CREDIT COMMITMENT.
(a) VOLUNTARY REDUCTION. The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written notice
to the Administrative Agent, to permanently reduce, without premium or penalty,
(i) the entire Revolving Credit Commitment at any time or (ii) portions of the
Revolving Credit Commitment, from time to time, in an aggregate principal amount
not less than $2,000,000 or any whole multiple of $1,000,000 in excess thereof.
Upon receipt of such notice, the Administrative Agent shall promptly notify each
of the Lenders thereof by telecopier (or by telephone promptly confirmed by
telecopier). The amount of each partial permanent reduction shall permanently
reduce the Lenders' Revolving Credit Commitments PRO RATA in accordance with
their respective Revolving Credit Commitment Percentages.
(b) MANDATORY REDUCTION. The Revolving Credit Commitment shall be
permanently reduced on the date of the required prepayment under Section
4.4(b)(vii) by an amount equal to the amount of such Excess Proceeds, to the
extent a corresponding prepayment was made pursuant to 4.4(b)(iii).
(c) CORRESPONDING PAYMENT. Each permanent reduction permitted or
required pursuant to this Section 2.6 shall be accompanied by a payment of
principal sufficient to reduce the aggregate outstanding Revolving Credit Loans,
Swingline Loans and L/C Obligations, as applicable, after such reduction to the
Revolving Credit Commitment as so reduced and if the Revolving Credit Commitment
as so reduced is less than the aggregate amount of all outstanding Letters of
Credit, the Borrower shall be required to deposit cash collateral in a cash
collateral account opened by the Administrative Agent in an amount equal to the
aggregate then undrawn and unexpired Dollar Equivalent amount of such Letters of
Credit. Such cash collateral shall be applied in accordance with Section
12.2(b). Any reduction of the Revolving Credit Commitment to zero shall be
accompanied by payment of all outstanding Revolving Credit Loans and Swingline
Loans (and furnishing of cash collateral satisfactory to the Administrative
Agent for all L/C Obligations) and shall result in the termination of the
Revolving Credit Commitment and the Swingline Commitment and the Revolving
Credit Facility. Such cash collateral shall be applied in accordance with
Section 12.2(b). If the reduction of the Revolving Credit
27
Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall
be accompanied by any amount required to be paid pursuant to Section 5.9 hereof.
SECTION 2.7 TERMINATION OF REVOLVING CREDIT FACILITY. The Revolving
Credit Facility shall terminate on the earliest of (a) September 30, 2006, (b)
the date of termination by the Borrower pursuant to Section 2.6, or (c) the date
of termination by the Administrative Agent on behalf of the Lenders pursuant to
Section 12.2(a).
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C COMMITMENT. Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 3.4(a), agrees to issue standby Letters of Credit for the account of
the Borrower on any Business Day from the Closing Date through but not including
the Revolving Credit Maturity Date 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, (a) the L/C Obligations would exceed the L/C Commitment or (b) the
aggregate principal amount of outstanding Revolving Credit Loans, PLUS the
aggregate principal amount of outstanding Swingline Loans, PLUS the aggregate
amount of L/C Obligations would exceed the then applicable Borrowing Limit. Each
Letter of Credit shall (i) be denominated in Dollars in a minimum amount of
$100,000 (other than the Existing Foreign Currency Letters of Credit), (ii) be a
standby letter of credit issued to support obligations of the Borrower or any of
its Restricted Subsidiaries, contingent or otherwise, incurred in the ordinary
course of business, (iii) expire on a date satisfactory to the Issuing Lender,
which date shall be no later than ninety (90) Business Days prior to the
Revolving Credit Maturity Date and (iv) be subject to the Uniform Customs and/or
ISP98, as set forth in the Application or as determined by the Issuing Lender
and, to the extent not inconsistent therewith, the laws of the State of North
Carolina. 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 Law. References herein to "issue" and derivations thereof with
respect to Letters of Credit shall also include extensions or modifications of
any existing Letters of Credit, unless the context otherwise requires.
SECTION 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
by delivering to the Issuing Lender at the Administrative Agent's Office 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 request. Upon receipt of any Application, the Issuing Lender
shall 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, subject to Section 3.1 and Article VII hereof,
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 (3)
Business Days after its receipt of the Application therefor and all
28
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 promptly furnish to the Borrower a copy of such Letter
of Credit and promptly notify each Lender of the issuance and upon request by
any Lender, furnish to such Lender a copy of such Letter of Credit and the
amount of such Lender's L/C Participation therein by telecopier (or by telephone
promptly confirmed by telecopier).
SECTION 3.3 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 commission
with respect to each Letter of Credit in an amount equal to the face amount of
such Letter of Credit MULTIPLIED BY the Applicable Margin with respect to
Revolving Credit Loans that are LIBOR Rate Loans (determined on a per annum
basis). Such commission shall be payable quarterly in arrears on the last
Business Day of each calendar quarter and on the Revolving Credit Maturity Date.
The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all commissions
received pursuant to this Section 3.3(a) in accordance with their respective
Revolving Credit Commitment Percentages.
(b) In addition to the foregoing commission, the Borrower shall pay the
Issuing Lender an issuance fee with respect to each Letter of Credit in an
amount equal to the face amount of such Letter of Credit multiplied by 0.125%
per annum; PROVIDED, that such issuance shall not be payable with respect to the
Existing Letter of Credit. Such issuance fee shall be payable quarterly in
arrears on the last Business Day of each calendar quarter and on the Revolving
Credit Maturity Date.
(c) 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.
SECTION 3.4 L/C PARTICIPATIONS.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees (subject to clause (a)
of the proviso to the initial sentence of Section 2.1 hereof) 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 the Dollar Equivalent of such L/C
Participant's Revolving Credit Commitment Percentage in the Issuing Lender's
obligations and rights under and in respect of 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 through a Revolving Credit Loan
or otherwise in accordance with the terms of this Agreement, such L/C
Participant shall (subject to clause (a) of
29
the proviso to the initial sentence of Section 2.1 hereof) pay to the Issuing
Lender upon demand at the Issuing Lender's address for notices specified herein
an amount equal to the Dollar Equivalent of such L/C Participant's Revolving
Credit Commitment Percentage of the amount of such draft, or any part thereof,
which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant by telecopier
(or by telephone promptly confirmed by telecopier) of the amount and due date
(which shall not be less than one (1) Business Day after the giving of such
notice) of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, TIMES (ii) the daily average Federal
Funds Rate as determined by the Administrative Agent during the period from and
including the date such payment is due 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. A certificate of the Issuing Lender with respect to
any amounts owing under this Section 3.4(b) shall be conclusive in the absence
of manifest error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section 3.4(b), if the L/C Participants
receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte
time) on any Business Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.
(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
Revolving Credit Commitment Percentage of such payment in accordance with this
Section 3.4, the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, or any payment of
interest on account thereof, the Issuing Lender will promptly distribute to such
L/C Participant its PRO RATA share thereof; PROVIDED, that in the event that any
such payment received by the Issuing Lender shall be required to be returned by
the Issuing Lender, such L/C Participant shall return to the Issuing Lender the
portion thereof previously distributed by the Issuing Lender to it.
SECTION 3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. In the event of
any drawing under any Letter of Credit, the Borrower agrees to reimburse (either
with the proceeds of a Revolving Credit Loan or a Swingline Loan as provided for
in this Section 3.5 or with funds from other sources), in same day funds, the
Issuing Lender on each date on which the Issuing Lender notifies the Borrower of
the date and amount of a draft paid under any Letter of Credit for the Dollar
Equivalent amount of (a) such draft so paid and (b) any amounts referred to in
Section 3.3(c) incurred by the Issuing Lender in connection with such payment.
Unless the Borrower shall immediately notify the Issuing Lender that the
Borrower intends to reimburse the Issuing Lender for such drawing from other
sources or funds, the Borrower shall be deemed to have timely given a Notice of
Borrowing to the Administrative Agent requesting that the Lenders make a
Revolving Credit Loan or, if less than the minimum amount for such Loan, a
Swingline
30
Loan, bearing interest at the Base Rate on such date in the Dollar Equivalent
amount of (a) such draft so paid and (b) any amounts referred to in Section
3.3(c) incurred by the Issuing Lender in connection with such payment, and (not
later than one (1) Business Day after being given notice thereof by the
Administrative Agent by telecopier (or by telephone promptly confirmed by
telecopier)) the Lenders shall make a Revolving Credit Loan or, if less than the
minimum amount for such Loan, a Swingline Loan, bearing interest at the Base
Rate in such amount, the proceeds of which shall be applied to reimburse the
Issuing Lender for the amount of the related drawing and costs and expenses.
Each Lender acknowledges and agrees that its obligation to fund a Revolving
Credit Loan or, if less than the minimum amount for such Loan, a Swingline Loan,
in accordance with this Section 3.5 to reimburse the Issuing Lender for any
draft paid under a Letter of Credit is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including, without limitation,
non-satisfaction of the conditions set forth in Section 2.3(a) or Article VII.
If the Borrower has elected to pay the amount of such drawing with funds from
other sources and shall fail to reimburse the Issuing Lender as provided above,
the unreimbursed amount of such drawing shall bear interest at the rate which
would be payable on any outstanding Base Rate Loans which were then overdue from
the date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full.
SECTION 3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Article III (including, without limitation, the Reimbursement Obligation) 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 or any beneficiary of a Letter of Credit
or any other Person. The Borrower also agrees that the Issuing Lender and the
L/C Participants shall not be responsible for, and the Borrower's Reimbursement
Obligation under Section 3.5 shall not be affected by, among other things, 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, or 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
any claims whatsoever of the Borrower against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Lender shall not 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. 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, 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. The
responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit 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 are in conformity with such
Letter of Credit.
SECTION 3.7 EFFECT OF APPLICATION. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
31
SECTION 3.8 EXISTING FOREIGN CURRENCY LETTERS OF CREDIT. For purposes
of calculating the amount of L/C Obligations with respect to Existing Foreign
Currency Letters of Credit under (a) Section 2.1, Section 2.2(a), Section 2.4(b)
and Section 3.1, such L/C Obligations shall be calculated at the Dollar
Equivalent amount of such L/C Obligations as of the first Business Day of the
current calendar month and (b) for all other purposes based on the Dollar
Equivalent amount as of the Business Day immediately preceding such date of
determination.
ARTICLE IV
TERM LOAN FACILITY
SECTION 4.1 TERM LOANS. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Term Loans to the Borrower on
the Closing Date. The Term Loans shall be funded by each Lender in a principal
amount equal to such Lender's Term Loan Percentage of the aggregate principal
amount of the Term Loans made on the Closing Date, which aggregate principal
amount shall equal the total Term Loan Commitment as of the Closing Date.
SECTION 4.2 PROCEDURE FOR ADVANCE OF TERM LOAN. The Borrower shall give
the Administrative Agent an irrevocable Notice of Borrowing prior to 11:00 a.m.
(Charlotte time) on the Closing Date requesting that the Lenders make the Term
Loans as Base Rate Loans on such date. Upon receipt of such Notice of Borrowing
from the Borrower, the Administrative Agent shall promptly notify each Lender
thereof by telecopier (or by telephone promptly confirmed by telecopier). Not
later than 2:00 p.m. (Charlotte time) on the Closing Date, each Lender will make
available to the Administrative Agent for the account of the Borrower, at the
office of the Administrative Agent in immediately available funds, the amount of
such Term Loan to be made by such Lender on such borrowing date. The Borrower
hereby irrevocably authorizes the Administrative Agent to disburse the proceeds
of the Term Loans in immediately available funds by wire transfer to such Person
or Persons as may be designated by the Borrower.
SECTION 4.3 REPAYMENT OF TERM LOAN. The Borrower shall repay the
aggregate outstanding principal amount of the Term Loans in consecutive
quarterly installments on the last Business Day of each of March, June,
September and December commencing December 31, 2001 as set forth below, except
as the amounts of individual installments may be adjusted pursuant to Section
4.4 hereof:
32
------------------------------------------ -------------------------------------- -----------------------------------
PAYMENT DATE PRINCIPAL INSTALLMENT TERM LOAN AMOUNT
If the Payment Date specified is not a ($) ($)
Business Day, the Payment Date shall be
deemed to be the Business Day
immediately preceding the date.
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2001 350,000 139,650,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2002 350,000 139,300,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2002 350,000 138,950,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2002 350,000 138,600,000
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2002 350,000 138,250,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2003 350,000 137,900,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2003 350,000 137,550,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2003 350,000 137,200,000
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2003 350,000 136,850,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2004 350,000 136,500,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2004 350,000 136,150,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2004 350,000 135,800,000
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2004 350,000 135,450,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2005 350,000 135,100,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2005 350,000 134,750,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2005 350,000 134,400,000
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2005 350,000 134,050,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2006 350,000 133,700,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2006 350,000 133,350,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2006 350,000 133,000,000
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2006 350,000 132,650,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2007 350,000 132,300,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2007 350,000 131,950,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2007 350,000 131,600,000
------------------------------------------ -------------------------------------- -----------------------------------
December 31, 2007 32,900,000 98,700,000
------------------------------------------ -------------------------------------- -----------------------------------
March 31, 2008 32,900,000 65,800,000
------------------------------------------ -------------------------------------- -----------------------------------
June 30, 2008 32,900,000 32,900,000
------------------------------------------ -------------------------------------- -----------------------------------
September 30, 2008 32,900,000 0
------------------------------------------ -------------------------------------- -----------------------------------
If not sooner paid, the Term Loans shall be paid in full, together with accrued
interest thereon, on the Term Loan Maturity Date.
SECTION 4.4 PREPAYMENTS OF TERM LOAN.
(a) OPTIONAL PREPAYMENT OF TERM LOANS. The Borrower shall have the
right at any time and from time to time, upon delivery to the Administrative
Agent of a Notice of Prepayment at least three (3) Business Days prior to any
repayment, to prepay the Term Loans in whole or in part without premium or
penalty except as provided in Section 5.9. The Administrative Agent shall
promptly give each of the Lenders notice of any such proposed
33
prepayment by telecopier (or by telephone promptly confirmed by telecopier).
Each optional prepayment of the Term Loans hereunder shall be in an aggregate
principal amount of at least $2,000,000 or any whole multiple of $1,000,000 in
excess thereof and shall be applied to the outstanding principal installments of
the Term Loans in inverse order of maturity thereof. Each repayment shall be
accompanied by any amount required to be paid pursuant to Section 5.9 hereof.
(b) MANDATORY PREPAYMENT OF TERM LOAN.
(i) DEBT PROCEEDS. The Borrower shall make mandatory principal
prepayments of the Term Loans in the manner set forth in Section
4.4(b)(vii) below in amounts equal to one hundred percent (100%) of the
aggregate Net Cash Proceeds from any incurrence of Debt (excluding Debt
permitted pursuant to Section 11.1) by the Borrower or any of its
Restricted Subsidiaries. Such prepayment shall be made within three (3)
Business Days after the date of receipt of Net Cash Proceeds of any
such transaction.
(ii) EQUITY PROCEEDS. If at any time the Total Leverage Ratio
exceeds 2.00 to 1.00, the Borrower shall make mandatory principal
prepayments of the Term Loans in the manner set forth in Section
4.4(b)(vii) below in amounts equal to fifty percent (50%) of the
aggregate Net Cash Proceeds from any offering of equity securities by
the Borrower or any of its Restricted Subsidiaries (excluding (A)
offerings of equity securities made in connection with employee stock
option or incentive plans or made in connection with compensation or
incentive plans for directors and officers, in each case entered into
in the ordinary course of business and (B) the exercise of warrants
existing on the Closing Date and set forth on SCHEDULE 7.1(B)). Such
prepayment shall be made within three (3) Business Days after the date
of receipt of Net Cash Proceeds of any such transaction.
(iii) ASSET SALE PROCEEDS. No later than one hundred eighty
(180) days following the Borrower's or applicable Restricted
Subsidiary's receipt thereof, the Borrower shall make mandatory
principal prepayments of the Term Loans in the manner set forth in
Section 4.4(b)(vii) below in amounts equal to one hundred percent
(100%) of the aggregate Net Cash Proceeds from the sale or other
disposition or series of related sales or other dispositions of assets,
excluding asset sales and dispositions permitted by Section 11.5(a)
through and including Section 11.5(d) (the "Asset Sale Proceeds") by
the Borrower or any of its Restricted Subsidiaries which have not been
reinvested as of such date in similar replacement assets unless such
Asset Sale Proceeds have been committed to be reinvested within such
one hundred eighty (180) day period and are thereafter actually
reinvested within two hundred seventy (270) days after receipt of such
Asset Sale Proceeds. If such Asset Sale Proceeds are not actually
reinvested in accordance with the terms of this Section 4.4(b)(iii) by
the date which is two hundred seventy (270) days after the receipt
thereof, the Borrower shall make a mandatory prepayment in an amount
equal to such Asset Sale Proceeds as described above on such date.
Notwithstanding any of the foregoing to the contrary, upon and during
the continuance of an Event of Default and upon notice from the
Administrative Agent, all Asset Sale Proceeds, received by the
34
Borrower and its Restricted Subsidiaries shall be applied to make
prepayments of the Term Loans pursuant to Section 4.4(b)(vii), such
prepayments to be made within three (3) Business Days after the
Borrower's receipt of such Asset Sale Proceeds.
(iv) INSURANCE AND CONDEMNATION PROCEEDS. No later than one
hundred eighty (180) days following the date of receipt by the Borrower
or any of its Restricted Subsidiaries of any Net Cash Proceeds under
any of the insurance policies maintained pursuant to Section 9.3 or
from any condemnation proceeding (the "INSURANCE AND CONDEMNATION
PROCEEDS") which have not been reinvested as of such date in similar
replacement assets, the Borrower shall make mandatory principal
prepayments of the Term Loans in the manner set forth in Section
4.4(b)(vii) below in amounts equal to one hundred percent (100%) of the
aggregate amount of such Insurance and Condemnation Proceeds received
by the Borrower or any of its Restricted Subsidiaries unless such
Insurance and Condemnation Proceeds have been committed to be
reinvested within such one hundred eighty (180) day period and are
thereafter actually reinvested within two hundred seventy (270) days
after receipt of such Insurance and Condemnation Proceeds. If such
Insurance and Condemnation Proceeds are not actually reinvested in
accordance with the terms of this Section 4.4(b)(iv) by the date which
is two hundred seventy (270) days after the receipt thereof, the
Borrower shall make a mandatory prepayment in an amount equal to such
Insurance and Condemnation Proceeds as described above on such date.
Notwithstanding any of the foregoing to the contrary, upon and during
the continuance of an Event of Default and upon notice from the
Administrative Agent, all Insurance and Condemnation Proceeds, received
by the Borrower and its Restricted Subsidiaries shall be applied to
make prepayments of the Term Loans, such prepayments to be made within
three (3) Business Days after the Borrower's receipt of such Insurance
and Condemnation Proceeds.
(v) EXCESS CASH FLOW. No later than ninety (90) days after the
end of any Fiscal Year commencing with the Fiscal Year ending March 31,
2002, during the term of this Agreement for which the Total Leverage
Ratio exceeds 2.00 to 1.00, the Borrower shall make a mandatory
principal repayment of the Term Loans in an amount equal to fifty
percent (50%) of Excess Cash Flow, if any, for such Fiscal Year.
(vi) ASSET COVERAGE RATIO. In the event that payments made
under Section 2.4(b)(i) are insufficient to cause the PRO FORMA Asset
Coverage Ratio to equal or exceed 1.00 to 1.00, then Borrower shall
immediately repay remaining principal installments of the Term Loans,
in inverse order of maturity, in an amount sufficient to cause the
Asset Coverage Ratio (determined on a PRO FORMA basis after giving
effect to such payment) to equal or exceed 1.00 to 1.00. Any prepayment
pursuant to this Section 4.4(b)(vi) shall be applied to reduce, in
inverse order of maturity, the remaining scheduled principal
installments of the Term Loans pursuant to Section 4.3.
(vii) NOTICE; MANNER OF PAYMENT. Upon the occurrence of any
event triggering the prepayment requirement under Sections 4.4(b)(i)
through and including 4.4(b)(v), the Borrower shall promptly deliver a
Notice of Prepayment to the Administrative Agent and upon receipt of
such notice, the Administrative Agent shall promptly so notify each of
the
35
Lenders by telecopier (or by telephone promptly confirmed by
telecopier). Each prepayment under this Section 4.4 shall be applied as
follows: (A) FIRST to reduce, in inverse order of maturity, the
remaining scheduled principal installments of the Term Loans pursuant
to Section 4.3, and (B) SECOND to the extent of any excess (the "EXCESS
PROCEEDS"), to prepay the aggregate outstanding amounts under the
Revolving Credit Facility and, to the extent of any prepayments made
pursuant to Section 4.4(b)(iii), to permanently reduce the Revolving
Credit Commitment; PROVIDED, HOWEVER, that (a) to the extent that there
are any amounts outstanding under the Revolving Credit Facility, or (b)
with respect to prepayments resulting from any equity securities
offering pursuant to Section 4.4(b)(ii) consummated on or before
December 31, 2001 (regardless of whether there are amounts outstanding
under the Revolving Credit Facility), any Term Loan Lender shall have
the right to refuse its PRO RATA share (based on Term Loan Percentage)
of any such mandatory prepayment at which time the remaining amount
shall be applied FIRST, to reduce the Revolving Credit Loans in
accordance with the foregoing Section 4.4(b)(vii)(B), and then, to the
extent of any remaining funds, to the Borrower. No prepayment or
repayment pursuant to this Section 4.4 shall affect any of the
Borrower's obligations under any Hedging Agreement.
Amounts prepaid under the Term Loans pursuant to this Section 4.4 may not be
reborrowed and will constitute a permanent reduction in such Term Loan
Commitment. Each prepayment shall be accompanied by any amount required to be
paid pursuant to Section 5.9 hereof.
SECTION 4.5 TERM NOTES. Except as otherwise provided in Section 14.10
(a) - (e), each Lender's Term Loan and the obligation of the Borrower to repay
such Term Loan shall be evidenced by a separate Term Note executed by the
Borrower payable to the order of such Lender.
SECTION 4.6 OPTIONAL INCREASE IN TERM LOAN COMMITMENT.
(a) Subject to the conditions set forth below, the Borrower shall have
the option, at any time after the Closing Date until the Term Loan Increase
Termination Date to incur additional indebtedness under this Agreement in the
form of an increase of the Term Loan Commitment of up to Fifty Million
($50,000,000) Dollars. The Borrower, by providing an Increase Notification, may
request that additional Term Loans be made on the Additional Term Loan Effective
Date pursuant to such increase in the Term Loan Commitment (each such additional
Term Loan, an "ADDITIONAL TERM LOAN, and collectively, the "ADDITIONAL TERM
LOANS").
(b) Each Additional Term Loan shall be obtained from existing Lenders,
entities that qualify as Eligible Assignees, or from other banks, financial
institutions or investment funds, in each case in accordance with this Section
4.6. Participation in any Additional Term Loan shall be offered first to each of
the existing Lenders; PROVIDED that each such Lender shall have no obligation to
provide any portion of such Additional Term Loans. If the amount of the
Additional Term Loans requested by the Borrower shall exceed the commitments
which the existing Lenders are willing to provide with respect to such
Additional Term Loans, then the Borrower may invite other banks, financial
institutions and investment funds which meet the
36
requirements of an Eligible Assignee to join this Agreement as Lenders for the
portion of such Additional Term Loans not committed to by existing Lenders (each
such other bank, financial institution or investment fund, a "NEW LENDER" and
collectively with the existing Lenders providing increased Commitments, the
"INCREASE LENDERS"). The Administrative Agent is authorized to enter into, on
behalf of the Lenders, any amendment to this Agreement or any other Loan
Document as may be necessary to incorporate the terms of any Additional Term
Loan herein or therein; PROVIDED that such amendment shall not modify the Credit
Agreement or any other Loan Document in any manner materially adverse to any
Lender and shall otherwise be in accordance with Section 14.11 hereof.
(c) The following terms and conditions shall apply to each Additional
Term Loan: (i) the Additional Term Loans made under this Section 4.6 shall
constitute Obligations of the Borrower and shall be secured and guaranteed with
the other Extensions of Credit on a PARI PASSU basis; (ii) any New Lender making
Additional Term Loans shall be entitled to the same voting rights as the
existing Lenders under the Term Loan Facility and the Additional Term Loans
shall receive proceeds of prepayments on the same basis as the Term Loans; (iii)
the Borrower shall execute such Term Loan Notes as are necessary to reflect the
Additional Term Loans under this Section 4.6; (iv) the Administrative Agent and
the Lenders shall have received from the Borrower updated financial projections
and an Officer's Compliance Certificate, in each case in form and substance
satisfactory to the Administrative Agent, demonstrating that, after giving
effect to any such Additional Term Loan, the Borrower will be in pro forma
compliance with the financial covenants set forth in Article X; (v) no Default
or Event of Default shall have occurred and be continuing hereunder as of the
Additional Term Loan Effective Date or after giving effect to the making of any
such Additional Term Loans; (vi) the representations and warranties made by the
Borrower and contained in Article VII shall be true and correct on and as of the
Additional Term Loan Effective Date with the same effect as if made on and as of
such date (other than those representations and warranties that by their terms
speak as of a particular date, which representations and warranties shall be
true and correct as of such particular date); (vii) the Borrower shall
demonstrate, on a PRO FORMA basis (as of the date of, and after giving effect
to, the making of any such Additional Term Loan), an Asset Coverage Ratio equal
to or exceeding 1.00 to 1.00; (viii) the amount of such increase in the Term
Loan Commitment and any Additional Term Loans obtained thereunder shall not (A)
be less than a minimum principal amount of $10,000,000, or any whole multiple of
$5,000,000 in excess thereof and (B) shall not cause the Term Loan Commitment to
exceed $190,000,000; (ix) the Borrower and each such Lender or lender not
theretofore a Lender shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register, a Lender Addition and
Acknowledgment Agreement acknowledged by the Administrative Agent and each
Subsidiary Guarantor and substantially in the form of EXHIBIT J attached hereto,
and (x) the Administrative Agent shall have received any documents or
information, including any joinder agreements, in connection with such increase
in the Term Loan Commitment as it may request in its reasonable discretion.
(d) Upon the execution, delivery, acceptance and recording of the
Lender Addition and Acknowledgement Agreement, from and after the Additional
Term Loan Effective Date, each such Increase Lender shall have a Term Loan
Commitment as therein set forth and all the rights and obligations of a Lender
with such a Term Loan Commitment hereunder. The Increase Lenders shall make
Additional Term Loans to the Borrower on the Additional Term Loan
37
Effective Date in an amount equal to each such Lender's Term Loan Commitment.
(e) The Administrative Agent shall maintain a copy of each Lender
Addition and Acknowledgement Agreement delivered to it in accordance with
Section 14.10(d).
(f) Within five (5) Business Days after receipt of notice, the Borrower
shall execute and deliver to the Administrative Agent, in exchange for any
surrendered Term Loan Note or Term Loan Notes of any existing Lender or with
respect to any Lender not theretofore a Lender, a new Term Loan Note or Term
Loan Notes to the order of the applicable Lenders in amounts equal to the Term
Loan Commitment of such Lenders pursuant to the Lender Addition and
Acknowledgement Agreement. Such new Term Loan Note or Term Loan Notes shall be
in an aggregate principal amount equal to the aggregate principal amount of such
Term Loan Commitments, shall be dated as of the Additional Term Loan Effective
Date and shall otherwise be in substantially the form of the existing Term Loan
Notes. Each surrendered Term Loan Note and/or Term Loan Notes shall be canceled
and returned to the Borrower.
(g) The Applicable Margin and pricing grid, if applicable, for the
Additional Term Loans shall be determined on the Additional Term Loan Effective
Date. If the Applicable Margin and pricing grid, if applicable, for such
Additional Term Loans at such time exceeds the Applicable Margin or existing
pricing grid, as applicable, for Term Loans set forth in Section 5.1(c), then
the Applicable Margin and pricing grid, if applicable, for all Term Loans shall
be increased to be equal to the Applicable Margin and pricing grid, if
applicable, for the Additional Term Loans as determined on the Additional Loan
Effective Date. In addition, the amortization schedule set forth in Section 4.3
shall be replaced with a new amortization schedule reflecting a pro RATA
increase in the remaining installment payments and to provide for the repayment
of both the existing Term Loans and the Additional Term Loans.
ARTICLE V
GENERAL LOAN PROVISIONS
SECTION 5.1 INTEREST.
(a) INTEREST RATE OPTIONS. Subject to the provisions of this Section
5.1, at the election of the Borrower, (i) Revolving Credit Loans and Term Loans
shall bear interest at (A) the Base Rate PLUS the Applicable Margin as set forth
in Section 5.1(c) or (B) the LIBOR Rate PLUS the Applicable Margin as set forth
in Section 5.1(c) (PROVIDED that the LIBOR Rate shall not be available until
three (3) Business Days after the Closing Date) and (ii) any Swingline Loan
shall bear interest at the Base Rate PLUS the Applicable Margin as set forth in
Section 5.1(c). The Borrower shall select the rate of interest and Interest
Period, if any, applicable to any Loan at the time a Notice of Borrowing is
given or at the time a Notice of Conversion/Continuation is given pursuant to
Section 5.2. Each Loan or portion thereof bearing interest based on the Base
Rate shall be a "BASE RATE LOAN", each Loan or portion thereof bearing interest
based on the LIBOR Rate shall be a "LIBOR RATE LOAN." Any Loan or any portion
thereof as to which the Borrower has not duly specified an interest rate as
provided herein shall be deemed a Base Rate Loan.
38
(b) INTEREST PERIODS. In connection with each LIBOR Rate Loan, the
Borrower, by giving notice at the times described in Section 5.1(a), shall elect
an interest period (each, an "INTEREST PERIOD") to be applicable to such Loan,
which Interest Period shall be a period of one (1), two (2), three (3), or six
(6) months with respect to each LIBOR Rate Loan; PROVIDED that:
(i) the Interest Period shall commence on the date of advance
of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the date on which the immediately preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; PROVIDED, that if any Interest Period
with respect to a LIBOR Rate Loan would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on
the immediately preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate 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 at the end of such Interest Period) shall end on the last
Business Day of the relevant calendar month at the end of such Interest
Period;
(iv) no Interest Period shall extend beyond the Revolving
Credit Maturity Date or the Term Loan Maturity Date, as applicable, and
Interest Periods shall be selected by the Borrower so as to permit the
Borrower to make mandatory reductions of the Revolving Credit
Commitment pursuant to Section 2.6(b) and the quarterly principal
installment payments pursuant to Section 4.3 without payment of any
amounts pursuant to Section 5.9; and
(v) there shall be no more than six (6) Interest Periods in
effect at any time.
(c) APPLICABLE MARGIN.
(i) The Applicable Margin provided for in Section 5.1(a) with
respect to any Revolving Credit Loans and Swingline Loans (the
"APPLICABLE MARGIN") shall be based upon the table set forth below and
shall be determined and adjusted quarterly on the date (each a
"CALCULATION DATE") ten (10) Business Days after the date by which the
Borrower is required to provide an Officer's Compliance Certificate for
the most recently ended fiscal quarter of the Borrower; PROVIDED,
HOWEVER, that (A) the initial Applicable Margin for the Revolving
Credit Loans and Swingline Loans shall be based on Pricing Level IV (as
shown below) and shall remain at Pricing Level IV until December 31,
2001, and, thereafter the Pricing Level shall be determined by
reference to the Total Leverage Ratio as of the last day of the most
recently ended fiscal quarter of the Borrower preceding the applicable
Calculation Date, and (B) if the Borrower fails to provide the
Officer's Compliance Certificate as required by Section 8.2 for the
most recently ended fiscal
39
quarter of the Borrower preceding the applicable Calculation Date, the
Applicable Margin for Revolving Credit Loans and Swingline Loans from
such Calculation Date shall be based on Pricing Level IV (as shown
below) until such time as an appropriate Officer's Compliance
Certificate is provided, at which time the Pricing Level shall be
determined by reference to the Total Leverage Ratio as of the last day
of the most recently ended fiscal quarter of the Borrower preceding
such Calculation Date. The Applicable Margin for Revolving Credit Loans
and Swingline Loans shall be effective from one Calculation Date until
the next Calculation Date. Any adjustment in the Applicable Margin
shall be applicable to all Extensions of Credit then existing or
subsequently made or issued.
---------------------- ----------------------------- ---------------------------- ----------------------
PRICING LEVEL TOTAL LEVERAGE RATIO LIBOR BASE RATE
---------------------- ----------------------------- ---------------------------- ----------------------
I < 2.00x 2.25% 1.25%
---------------------- ----------------------------- ---------------------------- ----------------------
II > 2.00x but < 2.50x 2.50% 1.50%
-
---------------------- ----------------------------- ---------------------------- ----------------------
III > 2.50x but < 3.00x 2.75% 1.75%
-
---------------------- ----------------------------- ---------------------------- ----------------------
IV > 3.00x 3.00% 2.00%
-
---------------------- ----------------------------- ---------------------------- ----------------------
(ii) Subject to the provisions of Section 4.6(g), the
Applicable Margin for Term Loans shall be based on the table set forth
below and shall be determined and adjusted on each Calculation Date
until such time as any change in the Applicable Margin or pricing grid,
as applicable for Term Loans pursuant to Section 4.6; PROVIDED, however
that (A) the initial Applicable Margin for Term Loans shall be based on
Pricing Level II until the Calculation Date of March 31, 2002 and (B)
if the Borrower fails to provide the Officer's Compliance Certificate
as required by Section 8.2 for the most recently ended fiscal quarter
of the Borrower preceding the applicable Calculation Date, the
Applicable Margin for Term Loans from such Calculation Date shall be
based on Pricing Level II (as shown below) until such time as an
appropriate Officer's Compliance Certificate is provided, at which time
the Pricing Level shall be determined by reference to the Total
Leverage Ratio as of the last day of the most recently ended fiscal
quarter of the Borrower preceding such Calculation Date. The Applicable
Margin for Term Loans shall be effective from one Calculation Date
until the next Calculation Date. Any adjustment in the Applicable
Margin shall be applicable to all Term Loans then existing or
subsequently made or issued.
------------------ -------------------------- -------------------------- --------------------------
Applicable LIBOR Applicable Base Rate
Level Total Leverage Ratio Rate Margin (bps) Margin (bps)
------------------ -------------------------- -------------------------- --------------------------
I < 2.50x 300.0 200.0
------------------ -------------------------- -------------------------- --------------------------
II > 2.50x 325.0 225.0
-
------------------ -------------------------- -------------------------- --------------------------
(d) DEFAULT RATE. Subject to Section 13.3, at the discretion of the
Administrative Agent or as directed by the Required Lenders, upon the occurrence
and during the continuance of an Event of Default, (i) the Borrower shall no
longer have the option to request LIBOR Rate Loans or Swingline Loans, (ii) all
outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two
percent (2%) in excess of the rate then applicable to LIBOR Rate Loans until the
40
end of the applicable Interest Period and thereafter at a rate equal to two
percent (2%) in excess of the rate then applicable to Base Rate Loans, and (iii)
all outstanding Base Rate Loans and other Obligations arising hereunder or under
any other Loan Document shall bear interest at a rate per annum equal to two
percent (2%) in excess of the rate then applicable to Base Rate Loans or such
other Obligations arising hereunder or under any other Loan Document. Interest
shall continue to accrue on the Notes after the filing by or against the
Borrower of any petition seeking any relief in bankruptcy or under any act or
law pertaining to insolvency or debtor relief, whether state, federal or
foreign.
(e) INTEREST PAYMENT AND COMPUTATION. Interest on each Base Rate Loan
shall be payable in arrears on the last Business Day of each calendar quarter
commencing September 30, 2001; and interest on each LIBOR Rate Loan shall be
payable on the last day of each Interest Period applicable thereto, and if such
Interest Period extends over three (3) months, at the end of each three (3)
month interval during such Interest Period. Interest on LIBOR Rate Loans and all
fees payable hereunder shall be computed on the basis of a 360-day year and
assessed for the actual number of days elapsed and interest on Base Rate Loans
shall be computed on the basis of a 365/66-day year and assessed for the actual
number of days elapsed.
(f) MAXIMUM RATE. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option (i) promptly refund to the Borrower any interest received by the
Lenders in excess of the maximum lawful rate or (ii) shall apply such excess to
the principal balance of the Obligations on a PRO RATA basis. It is the intent
hereof that the Borrower not pay or contract to pay, and that neither the
Administrative Agent nor any Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrower under Applicable Law.
SECTION 5.2 NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS.
Provided that no Default or Event of Default has occurred and is then
continuing, the Borrower shall have the option to (a) convert at any time
following the third Business Day after the Closing Date all or any portion of
any outstanding Base Rate Loans (other than Swingline Loans) in a principal
amount equal to $2,500,000 or any whole multiple of $100,000 in excess thereof
into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest
Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a
principal amount equal to $2,500,000 or a whole multiple of $100,000 in excess
thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such
LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrower desires to convert
or continue Loans as provided above, the Borrower shall give the Administrative
Agent irrevocable prior written notice substantially in the form attached hereto
as EXHIBIT E (a "NOTICE OF CONVERSION/CONTINUATION") not later than 11:00 a.m.
(Charlotte time) three (3) Business Days before the day on which a proposed
conversion or continuation of such Loan is to be effective specifying (A) the
Loans to be converted or continued, and, in the case of
41
any LIBOR Rate Loan to be converted or continued, the last day of the Interest
Period therefor, (B) the effective date of such conversion or continuation
(which shall be a Business Day), (C) the principal amount of such Loans to be
converted or continued, and (D) the Interest Period to be applicable to such
converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly
notify the Lenders of such Notice of Conversion/Continuation by telecopier (or
by telephone promptly confirmed by telecopier).
SECTION 5.3 FEES.
(a) COMMITMENT FEE. Commencing on the Closing Date, the Borrower shall
pay to the Administrative Agent, for the account of the Lenders, a
non-refundable commitment fee at a rate per annum equal to 0.50% on the average
daily unused portion of the Revolving Credit Commitment; PROVIDED, that the
amount of outstanding Swingline Loans shall not be considered usage of the
Revolving Credit Commitment for the purpose of calculating such commitment fee.
The commitment fee shall be payable in arrears on the last Business Day of each
calendar quarter during the term of this Agreement with the first payment due on
September 30, 2001, and on the Revolving Credit Maturity Date. Such commitment
fee shall be promptly distributed by the Administrative Agent to the Lenders PRO
RATA in accordance with the Lenders' respective Revolving Credit Commitment
Percentages.
(b) ADMINISTRATIVE AGENT'S AND OTHER FEES. In order to compensate the
Administrative Agent for structuring and syndicating the Loans and for its
obligations hereunder, the Borrower agrees to pay to the Administrative Agent,
for its account, the fees set forth in the separate fee letter agreement
executed by the Borrower and the Administrative Agent dated June 22, 2001.
SECTION 5.4 MANNER OF PAYMENT. Each payment by the Borrower on account
of the principal of or interest on the Loans or of any fee, commission or other
amounts (including the Reimbursement Obligation) payable to the Lenders under
this Agreement or any Note shall be made not later than 1:00 p.m. (Charlotte
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lenders (other than as set forth below) PRO RATA in accordance with their
respective Revolving Credit Commitment Percentages or Term Loan Percentages, as
applicable, (except as specified below), in Dollars, in immediately available
funds and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 2:00 p.m. (Charlotte
time) on such day shall be deemed a payment on such date for the purposes of
Section 12.1, but for all other purposes shall be deemed to have been made on
the next succeeding Business Day. Any payment received after 2:00 p.m.
(Charlotte time) shall be deemed to have been made on the next succeeding
Business Day for all purposes. Upon receipt by the Administrative Agent of each
such payment, the Administrative Agent shall promptly distribute to each Lender
at its address for notices set forth herein its PRO RATA share of such payment
in accordance with such Lender's Revolving Credit Commitment Percentage or Term
Loan Percentage, as applicable, (except as specified below) and shall wire
advice of the amount of such credit to each Lender. Each payment to the
Administrative Agent of the Issuing Lender's fees or L/C Participants'
commissions shall be made in like manner, but for the account of the Issuing
Lender or the L/C Participants, as the case may be. Each payment to the
42
Administrative Agent of Administrative Agent's fees or expenses shall be made
for the account of the Administrative Agent and any amount payable to any Lender
under Sections 5.8, 5.9, 5.10, 5.11 or 14.2 shall be promptly paid to the
Administrative Agent for the account of the applicable Lender. Subject to
Section 5.1(b)(ii) if any payment under this Agreement or any Note shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day and such extension of time shall
in such case be included in computing any interest if payable along with such
payment.
SECTION 5.5 CREDITING OF PAYMENTS AND PROCEEDS. In the event that the
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 12.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied: (a) first, to all expenses then
due and payable by the Borrower hereunder and under the other Loan Documents,
(b) then to all indemnity obligations then due and payable by the Borrower
hereunder and under the other Loan Documents, (c) then to all Administrative
Agent's and Issuing Lender's fees then due and payable, (d) then to all
commitment and other fees and commissions then due and payable, (e) then to
accrued and unpaid interest on the Swingline Note to the Swingline Lender, (f)
then to the principal amount outstanding under the Swingline Note to the
Swingline Lender, (g) then to accrued and unpaid interest on the other Notes,
accrued and unpaid interest on the Reimbursement Obligation and any payments
(including any termination payments and any accrued and unpaid interest thereon)
due in respect of a Hedging Agreement with any Lender or the Administrative
Agent (which such Hedging Agreement is permitted or required hereunder) (PRO
RATA in accordance with all such amounts due), (h) then to the principal amount
of the other Notes and Reimbursement Obligation (PRO RATA in accordance with all
such amounts due) and (i) then to the cash collateral account described in
Section 12.2(b) hereof to the extent of any L/C Obligations then outstanding, in
that order.
SECTION 5.6 ADJUSTMENTS. If any Lender (a "BENEFITED LENDER") shall at
any time receive any payment of all or part of the Obligations owing to it, or
interest thereon, or if any Lender shall at any time receive any collateral in
respect to the Obligations owing to it (whether voluntarily or involuntarily, by
set-off or otherwise) (other than as a result of the operation of the proviso to
Section 4.4(b)(vii) hereof or pursuant to Sections 5.8, 5.9, 5.10, 5.11 or 14.2
hereof) in a greater proportion than any such payment to and collateral received
by any other Lender, if any, in respect of the similar Obligations owing to such
other Lender, or interest thereon, such Benefited Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's Extensions of
Credit, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; PROVIDED, that if all or any portion
of such excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned to the extent of such recovery, but without interest. The Borrower
agrees that each Lender so purchasing a portion of another Lender's Extensions
of Credit may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
SECTION 5.7 NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS OF
CREDIT;
43
ASSUMPTION BY THE ADMINISTRATIVE AGENT. The obligations of the Lenders under
this Agreement to make the Loans and issue or participate in Letters of Credit
are several and are not joint or joint and several. Unless the Administrative
Agent shall have received written notice from a Lender prior to a proposed
borrowing date that such Lender will not make available to the Administrative
Agent such Lender's ratable portion of the amount to be borrowed on such date
(which notice shall not release such Lender of its obligations hereunder), the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the proposed borrowing date in accordance with
Sections 2.3(b) and 4.2, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If such amount is made available to the Administrative Agent on a date after
such borrowing date, such Lender shall pay to the Administrative Agent on demand
an amount, until paid, equal to the product of (a) the amount not made available
by such Lender in accordance with the terms hereof, TIMES (b) the daily average
Federal Funds Rate during such period as determined by the Administrative Agent,
TIMES (c) a fraction the numerator of which is the number of days that elapse
from and including such borrowing date to the date on which such amount not made
available by such Lender in accordance with the terms hereof shall have become
immediately available to the Administrative Agent and the denominator of which
is 360. A certificate of the Administrative Agent with respect to any amounts
owing under this Section 5.7 shall be conclusive, absent manifest error. If such
Lender's Revolving Credit Commitment Percentage or Term Loan Percentage, as
applicable, of such borrowing is not made available to the Administrative Agent
by such Lender within three (3) Business Days after such borrowing date, the
Administrative Agent shall be entitled to recover such amount made available by
the Administrative Agent with interest thereon at the rate per annum applicable
to such borrowing hereunder, on demand, from the Borrower. The failure of any
Lender to make available its Revolving Credit Commitment Percentage or Term Loan
Percentage, as applicable, of any Loan requested by the Borrower shall not
relieve it or any other Lender of its obligation, if any, hereunder to make its
Revolving Credit Commitment Percentage or Term Loan Percentage, as applicable,
of such Loan available on the borrowing date, but no Lender shall be responsible
for the failure of any other Lender to make its Revolving Credit Commitment
Percentage or Term Loan Percentage, as applicable, of such Loan available on the
borrowing date. Notwithstanding anything set forth herein to the contrary, any
Lender that fails to make available its Revolving Credit Commitment Percentage
or Term Loan Percentage, as applicable, shall not (a) have any voting or consent
rights under or with respect to any Loan Document or (b) constitute a "LENDER"
for purposes of the calculation of Required Lenders hereunder for any voting or
consent rights under or with respect to any Loan Document; so long as such
Lender fails to make available such Revolving Credit Commitment Percentage or
Term Loan Percentage. Notwithstanding the foregoing, in no event shall any of
the amendments, changes or modifications specifically enumerated in Section
14.11(a) - (d) be effective with respect to any Lender that has not consented
thereto.
SECTION 5.8 CHANGED CIRCUMSTANCES.
(a) CIRCUMSTANCES AFFECTING LIBOR RATE AVAILABILITY. If with respect to
any Interest Period the Administrative Agent or any Lender (after consultation
with the Administrative Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars, in the applicable amounts are not being
44
quoted via the Dow Jones Market Screen 3750 or offered to the Administrative
Agent or such Lender for such Interest Period, then the Administrative Agent
shall forthwith give notice thereof to the Borrower and the Lenders by
telecopier (or by telephone promptly confirmed by telecopier). Thereafter, until
the Administrative Agent notifies the Borrower and the Lenders by telecopier (or
by telephone promptly confirmed by telecopier) that such circumstances no longer
exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of
the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan
shall be suspended, and the Borrower shall repay in full (or cause to be repaid
in full) the then outstanding principal amount of each such LIBOR Rate Loan
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as
of the last day of such Interest Period.
(b) LAWS AFFECTING LIBOR RATE AVAILABILITY. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any of the Lenders (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor their obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give notice
to the Borrower and the other Lenders by telecopier (or by telephone promptly
confirmed by telecopier). Thereafter, until the Administrative Agent notifies
the Borrower and the other Lenders by telecopier (or by telephone promptly
confirmed by telecopier) that such circumstances no longer exist, (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of the
Borrower to convert any Loan or continue any Loan as a LIBOR Rate Loan shall be
suspended and thereafter the Borrower may select only Base Rate Loans hereunder,
and (ii) if any of the Lenders may not lawfully continue to maintain a LIBOR
Rate Loan to the end of the then current Interest Period applicable thereto as a
LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately be converted
to a Base Rate Loan for the remainder of such Interest Period and the Borrower
shall pay any amount required to be paid under Section 5.9 hereof.
(c) INCREASED COSTS. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall (except as provided in Section 5.11(e)) subject any
of the Lenders (or any of their respective Lending Offices) to any tax,
duty or other charge with respect to any Note, Letter of Credit or
Application or shall change the basis of taxation of payments to any of
the Lenders (or any of their respective Lending Offices) of the
principal of or interest on any Note, Letter of Credit or Application
or any other amounts
45
due under this Agreement in respect thereof (except for changes in the
rate of franchise tax or tax on the overall net income of any of the
Lenders or any of their respective Lending Offices imposed by the
jurisdiction in which such Lender is organized or is or should be
qualified to do business or such Lending Office is located); PROVIDED
that the Borrower shall not be obligated to pay any amounts pursuant to
this Section 5.8(c)(i) to the extent that such amounts are duplicative
of any amounts paid by the Borrower pursuant to Section 5.11; or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit, insurance or
capital or similar requirement against assets of, deposits with or for
the account of, or credit extended by any of the Lenders (or any of
their respective Lending Offices) or shall impose on any of the Lenders
(or any of their respective Lending Offices) or the foreign exchange
and interbank markets any other condition affecting any Note; and the
result of any of the foregoing events described in clause (i) or (ii)
above is to increase the costs to any of the Lenders of maintaining any
LIBOR Rate Loan or issuing or participating in Letters of Credit or to
reduce the yield or amount of any sum received or receivable by any of
the Lenders under this Agreement or under the Notes in respect of a
LIBOR Rate Loan or Letter of Credit or Application, then such Lender
shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrower of such fact and demand
compensation therefor and, within fifteen (15) days after such notice
by the Administrative Agent, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or Lenders
for such increased cost or reduction.
The Administrative Agent will promptly notify the Borrower of any event
of which it has knowledge which will entitle such Lender to
compensation pursuant to this Section 5.8(c); PROVIDED, that the
Administrative Agent shall incur no liability whatsoever to the Lenders
or the Borrower in the event it fails to do so. The amount of such
compensation shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its
Revolving Credit Commitment Percentage or Term Loan Percentage, as
applicable, of the LIBOR Rate Loans in the London interbank market and
using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical. A certificate of such Lender setting
forth the basis for determining such amount or amounts necessary to
compensate such Lender shall be forwarded to the Borrower through the
Administrative Agent and shall be conclusively presumed to be correct
save for manifest error.
SECTION 5.9 INDEMNITY. The Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow,
continue or convert on a date specified therefor in a Notice of Borrowing or
Notice of Continuation/Conversion or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor. The amount
46
of such loss or expense shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its Revolving
Credit Commitment Percentage or Term Loan Percentage, as applicable, of the
LIBOR Rate Loans in the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded to
the Borrower through the Administrative Agent and shall be conclusively presumed
to be correct save for manifest error.
SECTION 5.10 CAPITAL REQUIREMENTS. If either (a) the introduction of,
or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of law),
has or would have the effect of reducing the rate of return on the capital of,
or has affected or would affect the amount of capital required to be maintained
by, any Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this type, below
the rate which such Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrower shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrower and the Administrative Agent by such
Lender, shall, in the absence of manifest error, be presumed to be correct and
binding for all purposes.
SECTION 5.11 TAXES.
(a) PAYMENTS FREE AND CLEAR. Except as otherwise provided in Section
5.11(e), any and all payments by the Borrower hereunder or under the Notes or
the Letters of Credit shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholding, and all liabilities with respect thereto excluding, (i) in the case
of each Lender and the Administrative Agent, income and franchise taxes imposed
by the jurisdiction under the laws of which such Lender or the Administrative
Agent (as the case may be) is organized or is or should be qualified to do
business or any political subdivision thereof and (ii) in the case of each
Lender, income and franchise taxes imposed by the jurisdiction of such Lender's
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder or
under any Note or in respect of any Letter of Credit to any Lender or the
Administrative Agent, (A) except as otherwise provided in Section 5.11(e), the
sum payable shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section 5.11) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
amount such party would have received had no such deductions or withholdings
been made, (B) the Borrower shall make such deductions or withholdings, (C) the
Borrower shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with Applicable Law, and (D) the Borrower shall
deliver to the Administrative Agent and such Lender evidence of such payment to
the
47
relevant taxing authority or other Governmental Authority in the manner provided
in Section 5.11(d).
(b) STAMP AND OTHER TAXES. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit or the other Loan Documents, or the perfection of
any rights or security interest in respect thereof (hereinafter referred to as
"OTHER TAXES").
(c) INDEMNITY. Except as otherwise provided in Section 5.11(e), the
Borrower shall indemnify each Lender and the Administrative Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes and
Other Taxes imposed by any jurisdiction on amounts payable under this Section
5.11) paid by such Lender or the Administrative Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Such indemnification shall be made within thirty (30) days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) EVIDENCE OF PAYMENT. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent and the applicable Lender, at its address referred to in
Section 14.1, the original or a certified copy of a receipt evidencing payment
thereof or other evidence of payment satisfactory to the Administrative Agent.
(e) DELIVERY OF TAX FORMS. To the extent required by Applicable Law to
reduce or eliminate withholding or payment of taxes, each Lender and the
Administrative Agent shall deliver to the Borrower, with a copy to the
Administrative Agent, on the Closing Date or concurrently with the delivery of
the relevant Assignment and Acceptance, as applicable, (i) two United States
Internal Revenue Service Forms W-9, Forms W-8ECI or Forms W-8BEN, as applicable
(or successor forms) properly completed and certifying in each case that such
Lender is entitled to a complete exemption from withholding or deduction for or
on account of any United States federal income taxes, and (ii) an Internal
Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case
may be, to establish an exemption from United States backup withholding taxes.
Each such Lender further agrees to deliver to the Borrower, with a copy to the
Administrative Agent, as applicable, two Form W-9, Form W-8BEN or W-8ECI, or
successor applicable forms or manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower, certifying in the case of a Form W-9, Form
W-8BEN or W-8ECI (or successor forms) that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes (unless in any such case an event (including,
without limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
such forms inapplicable or the exemption to which such forms relate unavailable
and such Lender notifies the Borrower and the
48
Administrative Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-9, Form W-8BEN or W-8ECI, establishing an exemption from United
States backup withholding tax. Notwithstanding anything in any Loan Document to
the contrary, the Borrower shall not be required to pay additional amounts to
any Lender or the Administrative Agent under Section 5.11 or Section 5.8(c), (i)
if such Lender or the Administrative Agent fails to comply with the requirements
of this Section 5.11(e), other than to the extent (i) that such failure is due
to a change in law occurring after the date on which such Lender or the
Administrative Agent became a party to this Agreement or (ii) that such
additional amounts are the result of such Lender's or the Administrative Agent's
gross negligence or willful misconduct, as applicable.
(f) SURVIVAL. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 5.11 shall survive the payment in full of the
Obligations and the termination of the Commitments until the expiration of the
applicable statute of limitations.
SECTION 5.12 SECURITY. The Obligations of the Borrower and the
Subsidiary Guaranteed Obligations shall be secured as provided in the Security
Documents.
SECTION 5.13 MITIGATION OBLIGATIONS/REPLACEMENT OF LENDERS. (a) If any
Lender requests compensation under Section 5.8(c), or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.11, then such
Lender shall use its reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 5.8(c) or 5.11, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 5.8(c), or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 5.11,
or if any Lender defaults in its obligations to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 14.10), all its interests, rights and obligations under this Agreement
to an Eligible Assignee that shall assume such obligations (which Eligible
Assignee may be another Lender, if a Lender accepts such assignment); PROVIDED
that (i) the Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Revolving Commitment is being assigned, the
Issuing Bank and Swingline Lender), which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in L/C Obligations and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other
49
amounts (including, without limitation, any amounts then payable to such Lender
under Section 5.8(c) or Section 5.11 hereof)) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 5.8(c) or
payments required to be made pursuant to Section 5.11, such assignment will
result in a material reduction in such compensation or payments. A Lender shall
not be required to make any such assignment and delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment and delegation cease to apply.
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 6.1 CLOSING. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on September 28, 2001,
or on such other place, date and time as the parties hereto shall mutually
agree.
SECTION 6.2 CONDITIONS TO CLOSING AND INITIAL EXTENSIONS OF CREDIT. The
obligation of the Lenders to close this Agreement and to make the initial Loan
or issue or participate in the initial Letter of Credit, if any, is subject to
the satisfaction of each of the following conditions:
(a) EXECUTED LOAN DOCUMENTS. This Agreement, the Revolving Credit
Notes, the Term Notes, the Swingline Note, the Security Documents, together with
any other applicable Loan Documents, shall have been duly authorized, executed
and delivered to the Administrative Agent by the parties thereto, shall be in
full force and effect and no Default or Event of Default shall exist thereunder,
and the Borrower shall have delivered original counterparts thereof to the
Administrative Agent.
(b) CLOSING CERTIFICATES; ETC.
(i) OFFICER'S CERTIFICATE OF THE BORROWER. The Administrative
Agent shall have received a certificate from a Responsible Officer, in
form and substance satisfactory to the Administrative Agent, to the
effect that all representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents are true,
correct and complete; that the Borrower is not in violation of any of
the covenants contained in this Agreement and the other Loan Documents;
that, after giving effect to the transactions contemplated by this
Agreement, no Default or Event of Default has occurred and is
continuing; and that the Borrower has satisfied each of the closing
conditions.
(ii) CERTIFICATE OF SECRETARY OF THE BORROWER AND SUBSIDIARY
GUARANTORS. The Administrative Agent shall have received a certificate
of the secretary or assistant secretary of each of the Borrower and the
Subsidiary Guarantors certifying as to the incumbency and genuineness
of the signature of each officer of the Borrower or such Subsidiary
Guarantor executing the Loan Documents to which it is a party and
certifying that attached thereto is a true, correct and complete copy
of (A) the certificate of limited partnership, articles of
incorporation or other organizational document of the Borrower or
50
such Subsidiary Guarantor and all amendments thereto, certified as of a
recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation, (B) the bylaws, partnership agreement,
operating agreement or other operative document of the Borrower or such
Subsidiary Guarantor as in effect on the date of such certifications,
(C) resolutions duly adopted by the Board of Directors, partners or
members of the Borrower or such Subsidiary Guarantor authorizing the
borrowings contemplated hereunder and the execution, delivery and
performance of this Agreement and the other Loan Documents to which it
is a party, and (D) each certificate required to be delivered pursuant
to Section 6.2(b)(iii).
(iii) CERTIFICATES OF GOOD STANDING. The Administrative Agent
shall have received certificates as of a recent date of the good
standing of the Borrower and each Subsidiary Guarantor under the laws
of its jurisdiction of organization and, to the extent requested by the
Administrative Agent in its reasonable judgment, each other
jurisdiction where the Borrower and each Subsidiary Guarantor is
qualified to do business and a certificate of the relevant taxing
authorities of such jurisdictions certifying that such Person has filed
required tax returns and owes no delinquent taxes.
(iv) OPINIONS OF COUNSEL. The Administrative Agent shall have
received favorable opinions of counsel to the Borrower and Subsidiary
Guarantors addressed to the Administrative Agent and the Lenders with
respect to the Borrower and Subsidiary Guarantors, the Loan Documents
and such other matters as the Administrative Agent shall reasonably
request.
(v) TAX FORMS. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by
Section 5.11(e) hereof.
(vi) BORROWING BASE CERTIFICATE. The Administrative Agent
shall have received from the Borrower a Borrowing Base Certificate
dated as of the last day of the month preceding the Closing Date
executed by a Responsible Officer of the Borrower which shall be
accurate and complete in all material respects.
(c) COLLATERAL.
(i) FILINGS AND RECORDINGS. All filings and recordations that
are necessary to perfect the security interests of the Lenders in the
collateral described in the Security Documents shall have been received
by the Administrative Agent and the Administrative Agent shall have
received evidence satisfactory to the Administrative Agent that upon
such filings and recordations such security interests constitute valid
and perfected first priority Liens therein.
(ii) PLEDGED COLLATERAL. The Administrative Agent shall have
received (A) original stock certificates or other certificates
evidencing the capital stock or other ownership interests pledged
pursuant to the Collateral Agreement or the Pledge Agreements together
with an undated stock power for each such certificate duly executed in
blank by the registered owner thereof and (B) each original promissory
note pledged
51
pursuant to the Collateral Agreement or any Pledge Agreement.
(iii) LIEN SEARCH. The Administrative Agent shall have
received the results of a Lien search (including a search as to
judgments and tax matters) made against the Borrower and its Restricted
Subsidiaries under the Uniform Commercial Code as in effect in any
state in which any of its assets are located, indicating among other
things that its assets are free and clear of any Lien except for Liens
permitted hereunder.
(iv) HAZARD AND LIABILITY INSURANCE. The Administrative Agent
shall have received certificates of insurance, evidence of payment of
all insurance premiums for the current policy year of each, and, if
requested by the Administrative Agent, copies (certified by a
Responsible Officer) of insurance policies in the form required under
the Security Documents and otherwise in form and substance reasonably
satisfactory to the Administrative Agent.
(v) ENVIRONMENTAL ASSESSMENTS. The Administrative Agent shall
have received the environmental assessments and the other environmental
reports set forth on SCHEDULE 6.2(C)(V).
(d) CONSENTS; DEFAULTS.
(i) GOVERNMENTAL AND THIRD PARTY APPROVALS. The Borrower shall
have obtained all necessary approvals, authorizations and consents of
any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents.
(ii) NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any Governmental Authority to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is
related to or arises out of this Agreement or the other Loan Documents
or the consummation of the transactions contemplated hereby or thereby,
or which, in the Administrative Agent's sole discretion, would make it
inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(iii) NO EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing.
(e) FINANCIAL MATTERS.
(i) FINANCIAL STATEMENTS. The Administrative Agent shall have
received the March 31, 2001 audited Consolidated financial statements
of the Borrower and its Subsidiaries, and unaudited pro forma
Consolidated financial statements for the twelve month period ended
June 30, 2001, of the Borrower and its Subsidiaries and for Sensors,
all in form and substance satisfactory to the Administrative Agent and
prepared in accordance with GAAP, except that such financial statements
of Sensors shall not be prepared in accordance with GAAP.
52
(ii) CLOSING BALANCE SHEET. The Administrative Agent shall
have received a closing balance sheet of the Borrower dated as of the
last day of the month preceding the Closing Date that, after giving
effect to the Acquisition, shall not be materially different from the
projections previously delivered to the Administrative Agent and
otherwise be in form and substance satisfactory to the Administrative
Agent.
(iii) FINANCIAL CONDITION CERTIFICATE. The Borrower shall have
delivered to the Administrative Agent a certificate, in form and
substance satisfactory to the Administrative Agent, and certified as
accurate by a Responsible Officer, that (A) the Borrower and its
Restricted Subsidiaries taken as a whole are Solvent, (B) the
Borrower's and its Restricted Subsidiaries' payables are not past due
beyond customary trade terms, (C) attached thereto are calculations
evidencing compliance basis with the covenants contained in Article X
hereof and an Asset Coverage Ratio equal to or exceeding 1.00 to 1.00,
in each case, determined on a PRO FORMA basis, as of the Closing Date
and after giving effect to the proposed Extensions of Credit to be made
on such date, (D) the financial projections previously delivered to the
Administrative Agent represent the good faith estimates (utilizing
assumptions believed by the Borrower's management to be reasonable) of
the financial condition and operations of the Borrower and its
Restricted Subsidiaries and (E) attached thereto is a calculation of
the Applicable Margin pursuant to Section 5.1(c).
(iv) FINANCIAL PROJECTIONS. The Administrative Agent shall
have received management approved five (5) year projected financial
statements of the Borrower and its Subsidiaries.
(v) DEBT RATINGS. The Administrative Agent shall have received
senior secured debt ratings for the Borrower from both Standard &
Poor's Corporation and Moody's Investors Service.
(vi) PAYMENT AT CLOSING; FEE LETTERS. The Borrower shall have
paid to the Administrative Agent and the Lenders the fees set forth or
referenced in Section 5.3 and any other accrued and unpaid fees or
commissions due hereunder (including, without limitation, legal fees
and expenses) and to any other Person such amount as may be due thereto
in connection with the transactions contemplated hereby, including all
taxes, fees and other charges in connection with the execution,
delivery, recording, filing and registration of any of the Loan
Documents.
(f) ACQUISITION DOCUMENTS.
(i) The Administrative Agent shall have received all
documentation (including amendments, modifications, and waivers
thereof) relating to the Acquisition (and all closing conditions
therein shall be satisfied to the satisfaction of the Administrative
Agent and the Acquisition shall be consummated in accordance with the
terms of such provided documentation on or before the Closing Date).
53
(ii) The Administrative Agent shall be satisfied that the
maximum amount paid for the Acquisition (including the fees and
expenses paid in connection with such Acquisition) does not exceed
$95,000,000.
(iii) The Administrative Agent shall have received evidence
satisfactory thereto that all governmental (including approvals
required under the Hart Scott Rodino Antitrust Improvements Act of
1976, as amended), shareholder and third party consents and approvals
necessary or desirable in connection with the Acquisition shall have
been obtained and remain in effect.
(iv) The Administrative Agent shall have received copies (i)
of each employment agreement between the Borrower and its respective
key employees and (ii) each non-competition agreement entered into by
any seller or any member of management of the Borrower in favor of the
Borrower, each of the foregoing in form and substance satisfactory to
the Administrative Agent.
(v) The Administrative Agent shall have received copies of all
such other Acquisition documents and information as it may reasonably
request, including, without limitation, copies of (A) the Estimated
Closing Net Assets as such term is defined in Section 2.4(b) of the
Asset Purchase Agreement, (B) the Closing Statement of Assets and
Liabilities as such term is defined in Section 2.5(a) of the Asset
Purchase Agreement, (C) copies of any Notice of Disagreement as such
term is defined in the Asset Purchase Agreement and (D) copies of the
final Tax Allocation pursuant to the terms of Section 2.7 of the Asset
Purchase Agreement.
(vi) The Administrative Agent shall have received satisfactory
evidence that all Debt of the Borrower and its Restricted Subsidiaries
other than Debt permitted by Section 11.1, including any Debt incurred
in connection with the Acquisition, has been repaid in full and any
Liens or other security interests related thereto have been terminated.
(g) MISCELLANEOUS.
(i) NOTICE OF BORROWING. The Administrative Agent shall have
received a Notice of Borrowing, as applicable, from the Borrower in
accordance with Section 2.3(a) and Section 4.2, and a Notice of Account
Designation specifying the account or accounts to which the proceeds of
any Loans made after the Closing Date are to be disbursed.
(ii) EXISTING FACILITY. The Existing Facility (except for the
Existing Letters of Credit) shall be repaid in full and terminated and
all collateral security therefor shall be released, and the
Administrative Agent shall have received a pay-off letter in form and
substance satisfactory to it evidencing such repayment, termination,
reconveyance and release. On the Closing Date, the Existing Letters of
Credit shall be deemed to be Letters of Credit issued under this
Agreement.
(iii) OTHER DOCUMENTS. All opinions, certificates and other
instruments and all
54
proceedings in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the
Administrative Agent. The Administrative Agent shall have received
copies of all other documents, certificates and instruments reasonably
requested thereby, with respect to the transactions contemplated by
this Agreement.
SECTION 6.3 CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligations of
the Lenders to make any Extensions of Credit (including the initial Extension of
Credit), convert or continue any Loan and/or the Issuing Lender to issue or
extend any Letter of Credit are subject to the satisfaction of the following
conditions precedent on the relevant borrowing continuation, conversion,
issuance or extension date:
(a) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Article VII shall be true and correct on and as of
such borrowing or issuance date or such date of continuation or conversion with
the same effect as if made on and as of such date; except for any representation
and warranty made as of an earlier date, which representation and warranty shall
remain true and correct as of such earlier date.
(b) ASSET COVERAGE RATIO. After giving effect to any requested
Extension of Credit on a PRO FORMA basis, the Asset Coverage Ratio of the
Borrower and its Restricted Subsidiaries shall be greater than or equal to 1.00
to 1.00.
(c) NO EXISTING DEFAULT. No Default or Event of Default shall have
occurred and be continuing (i) on the borrowing date with respect to such Loan
or after giving effect to the Loans to be made on such date or (ii) on the issue
date with respect to such Letter of Credit or after giving effect to the
issuance of such Letter of Credit on such date or on such continuation or
conversion date after giving effect to such continuation or conversion.
(d) NOTICES. The Administrative Agent shall have received a Notice of
Borrowing or Notice of Conversion/Continuation, as applicable, from the Borrower
in accordance with Section 2.3(a) and Section 4.2.
(e) ADDITIONAL DOCUMENTS. The Administrative Agent shall have received
each additional document, instrument, legal opinion or other item reasonably
requested by it.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 7.1 REPRESENTATIONS AND WARRANTIES. To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make Extensions of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and Lenders both before and after giving
effect to the transactions contemplated hereunder that:
(a) ORGANIZATION; POWER; QUALIFICATION. Each of the Borrower and its
Restricted
55
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation and (ii) except
to the extent as could not reasonably be expected to have a Material Adverse
Effect, has the power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted and is duly
qualified and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification and authorization. The jurisdictions in which the Borrower and its
Restricted Subsidiaries are organized and qualified to do business as of the
Closing Date are described on SCHEDULE 7.1(A).
(b) OWNERSHIP. Each Subsidiary of the Borrower as of the Closing Date
is listed on SCHEDULE 7.1(b). As of the Closing Date, the capitalization of the
Borrower and its Subsidiaries consists of the number of shares, authorized,
issued and outstanding, of such classes and series, with or without par value,
described on SCHEDULE 7.1(B). All outstanding shares have been duly authorized
and validly issued and are fully paid and nonassessable, with no personal
liability attaching to the ownership thereof, and not subject to any preemptive
or similar rights. The shareholders of the Subsidiaries of the Borrower and the
number of shares owned by each as of the Closing Date are described on SCHEDULE
7.1(B). As of the Closing Date, there are no outstanding stock purchase
warrants, subscriptions, options, securities, instruments or other rights of any
type or nature whatsoever, which are convertible into, exchangeable for or
otherwise provide for or permit the issuance of capital stock of the Borrower or
its Restricted Subsidiaries, except as described on SCHEDULE 7.1(B).
(c) AUTHORIZATION OF AGREEMENT, LOAN DOCUMENTS AND BORROWING. Each of
the Borrower and its Restricted Subsidiaries has the right, power and authority
and has taken all necessary corporate and other action to authorize the
execution, delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms. This
Agreement and each of the other Loan Documents have been duly executed and
delivered by the duly authorized officers of the Borrower and each of its
Restricted Subsidiaries party thereto, and each such document constitutes the
legal, valid and binding obligation of the Borrower or its Restricted Subsidiary
party thereto, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors' rights in general and the
availability of equitable remedies.
(d) COMPLIANCE OF AGREEMENT, LOAN DOCUMENTS AND BORROWING WITH LAWS,
ETC. The execution, delivery and performance by the Borrower and its Restricted
Subsidiaries of the Loan Documents to which each such Person is a party, in
accordance with their respective terms, the Extensions of Credit hereunder and
the transactions contemplated hereby do not and will not, by the passage of
time, the giving of notice or otherwise, (i) require any Governmental Approval
or violate any Applicable Law relating to the Borrower or any of its Restricted
Subsidiaries, (ii) conflict with, result in a breach of or constitute a default
under the articles of incorporation, bylaws or other organizational documents of
the Borrower or any of its Restricted Subsidiaries or any indenture, agreement
or other instrument to which such Person is a party or by which any of its
properties may be bound or any Governmental Approval relating to such Person,
(iii) result in or require the creation or imposition of any Lien upon or with
respect to any property now
56
owned or hereafter acquired by such Person other than Liens arising under the
Loan Documents or (iv) require any consent or authorization of, filing with, or
other act in respect of, an arbitrator or Governmental Authority and no consent
of any other Person is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
(e) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Except where the
failure to do so could not reasonably be expected to create a Material Adverse
Effect, each of the Borrower and its Restricted Subsidiaries (i) has all
Governmental Approvals required by any Applicable Law for it to conduct its
business, each of which is in full force and effect, is final and not subject to
review on appeal and is not the subject of any pending or, to the best of its
knowledge, threatened attack by direct or collateral proceeding, (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws relating to it or any of its respective
properties and (iii) has timely filed all material reports, documents and other
materials required to be filed by it under all Applicable Laws with any
Governmental Authority and has retained all material records and documents
required to be retained by it under Applicable Law.
(f) TAX RETURNS AND PAYMENTS. Each of the Borrower and its Restricted
Subsidiaries has duly filed or caused to be filed all federal, state, local and
other tax returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, all federal, state, local and other
taxes, assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable, except (a) any taxes that
are being contested in good faith by appropriate proceedings and for which the
Borrower or such Restricted Subsidiary, as applicable, has set aside on its
books adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect. Such returns
accurately reflect in all material respects all liability for taxes of the
Borrower and its Subsidiaries for the periods covered thereby. There is no
ongoing audit or examination or, to the knowledge of the Borrower, other
investigation by any Governmental Authority of the tax liability of the Borrower
and its Restricted Subsidiaries. No Governmental Authority has asserted any Lien
or other claim against the Borrower or any Restricted Subsidiary thereof with
respect to unpaid taxes which has not been discharged or resolved other than
Liens for taxes not yet due and payable. The charges, accruals and reserves on
the books of the Borrower and any of its Subsidiaries in respect of federal,
state, local and other taxes for all Fiscal Years and portions thereof for all
open years of the Borrower and any of its Restricted Subsidiaries are in the
judgment of the Borrower adequate, and the Borrower does not anticipate any
additional material taxes or assessments for any of such years.
(g) INTELLECTUAL PROPERTY MATTERS. Except where the failure to do so
could not reasonably be expected to create a Material Adverse Effect, each of
the Borrower and its Restricted Subsidiaries owns or possesses rights to use all
franchises, licenses, copyright registrations, copyright applications, issued
patents, patent applications, trademarks, trademark applications, trademark
registrations, trademark rights, service marks, service mark rights, trade
names, trade name rights, copyrights and rights with respect to the foregoing
which are required to conduct its business. To the knowledge of the Borrower and
its Restricted Subsidiaries, no event has occurred which permits, or after
notice or lapse of time or both would permit, the revocation or termination of
any such rights (except for the expiration of patents in the ordinary
57
course), and neither the Borrower nor any Restricted Subsidiary thereof is
liable to any Person for infringement under Applicable Law with respect to any
such rights as a result of its business operations except to the extent any such
revocation, termination, or infringement could not reasonably be expected to
have a Material Adverse Effect.
(h) ENVIRONMENTAL MATTERS. Except for any such matter that could not
reasonably be expected to create a Material Adverse Effect,
(i) The properties presently owned, leased or operated by the
Borrower and its Restricted Subsidiaries do not contain, and to their
knowledge have not previously contained, any Hazardous Materials in
amounts or concentrations which (A) constitute or constituted a
violation of applicable Environmental Laws or (B) could reasonably be
expected to give rise to liability under applicable Environmental Laws;
(ii) The Borrower, each Restricted Subsidiary and such
properties and all operations conducted in connection therewith are in
compliance, and have been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about
such properties or such operations which could interfere with the
continued operation of such properties;
(iii) Neither the Borrower nor any Restricted Subsidiary
thereof has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters, Hazardous Materials, or compliance with
Environmental Laws, nor does the Borrower or any Restricted Subsidiary
thereof have knowledge or reason to believe that any such notice will
be received or is being threatened;
(iv) Hazardous Materials have not been transported or disposed
of to or from the properties owned, leased or operated by of the
Borrower and its Restricted Subsidiaries in violation of, or in a
manner or to a location which could reasonably be expected to give rise
to liability under, Environmental Laws, nor have any Hazardous
Materials been generated, treated, stored or disposed of at, on or
under any of such properties in violation of, or in a manner that could
give rise to liability under, any applicable Environmental Laws; and
(v) No judicial proceedings or governmental or administrative
action is pending under any Environmental Law to which the Borrower or
any Restricted Subsidiary thereof has been named as a potentially
responsible party with respect to such properties or operations
conducted in connection therewith, 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 Borrower or any Restricted
Subsidiary.
(i) ERISA.
(i) As of the Closing Date, neither the Borrower nor any ERISA
Affiliate
58
maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on SCHEDULE 7.1(I);
(ii) The Borrower and each ERISA Affiliate is in material
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee
Benefit Plans except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has not yet
expired and except where a failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Each Employee Benefit Plan
that is intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified, and
each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code except for such plans that have not yet
received determination letters but for which the remedial amendment
period for submitting a determination letter has not yet expired. No
liability has been incurred by the Borrower or any ERISA Affiliate
which remains unsatisfied for any taxes or penalties with respect to
any Employee Benefit Plan or any Multiemployer Plan except for a
liability that could not reasonably be expected to have a Material
Adverse Effect;
(iii) Except for any such matter that could not reasonably be
expected to create a Material Adverse Effect, as of the Closing Date,
no Pension Plan has been terminated, nor has any accumulated funding
deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been
received or requested with respect to any Pension Plan, nor has the
Borrower or any ERISA Affiliate failed to make any contributions or to
pay any amounts due and owing as required by Section 412 of the Code,
Section 302 of ERISA or the terms of any Pension Plan prior to the due
dates of such contributions under Section 412 of the Code or Section
302 of ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Pension Plan;
(iv) Except where the failure of any of the following
representations to be correct in all material respects could not
reasonably be expected to have a Material Adverse Effect, neither the
Borrower nor any ERISA Affiliate has: (A) engaged in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code, (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid, (C) failed to make a required
contribution or payment to a Multiemployer Plan, or (D) failed to make
a required installment or other required payment under Section 412 of
the Code;
(v) No Termination Event has occurred or is reasonably
expected to occur; and
(vi) Except where the failure of any of the following
representations to be correct in all material respects could not
reasonably be expected to have a Material Adverse Effect, no
proceeding, claim (other than a benefits claim in the ordinary course
59
of business), lawsuit and/or investigation is existing or, to the best
knowledge of the Borrower after due inquiry, threatened concerning or
involving any (A) employee welfare benefit plan (as defined in Section
3(1) of ERISA) currently maintained or contributed to by the Borrower
or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(j) MARGIN STOCK. Neither the Borrower nor any Restricted Subsidiary
thereof is engaged principally or as one of its activities in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" (as each such term is defined or used, directly or indirectly, in
Regulation U of the Board of Governors of the Federal Reserve System). No part
of the proceeds of any of the Loans or Letters of Credit will be used for
purchasing or carrying margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation T, U or X of such Board
of Governors.
(k) GOVERNMENT REGULATION. Neither the Borrower nor any Restricted
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company" (as each such term is defined or used in the Investment
Company Act of 1940, as amended) and neither the Borrower nor any Restricted
Subsidiary thereof is, or after giving effect to any Extension of Credit will
be, subject to regulation under the Public Utility Holding Company Act of 1935
or the Interstate Commerce Act, each as amended, or any other Applicable Law
which limits its ability to incur or consummate the transactions contemplated
hereby.
(l) MATERIAL CONTRACTS. SCHEDULE 7.1(L) sets forth a complete and
accurate list of all Material Contracts of the Borrower and its Restricted
Subsidiaries in effect as of the Closing Date not listed on any other Schedule
hereto; other than as set forth in SCHEDULE 7.1(L), each such Material Contract
is, and after giving effect to the consummation of the transactions contemplated
by the Loan Documents will be, in full force and effect in accordance with the
terms thereof. The Borrower and its Subsidiaries have made available to the
Administrative Agent a true and complete copy of each Material Contract required
to be listed on SCHEDULE 7.1(L) or any other Schedule hereto. Neither the
Borrower nor any Restricted Subsidiary (nor, to the knowledge of the Borrower,
any other party thereto) is in breach of or in default under any Material
Contract which could reasonably be expected to have a Material Adverse Effect.
(m) EMPLOYEE RELATIONS. Each of the Borrower and its Restricted
Subsidiaries is not, as of the Closing Date, party to any collective bargaining
agreement nor has any labor union been recognized as the representative of its
employees except as set forth on SCHEDULE 7.1(M). The Borrower knows of no
pending, threatened or contemplated strikes, work stoppage or other collective
labor disputes involving its employees or those of its Restricted Subsidiaries.
(n) BURDENSOME PROVISIONS. Neither the Borrower nor any Restricted
Subsidiary thereof is a party to any indenture, agreement, lease or other
instrument, or subject to any corporate or partnership restriction, Governmental
Approval or Applicable Law which is so unusual or burdensome as in the
foreseeable future could be reasonably expected to have a Material Adverse
Effect. The Borrower and its Restricted Subsidiaries do not presently anticipate
that future expenditures needed to meet the provisions of any statutes, orders,
rules or regulations of a Governmental Authority will be so burdensome as could
reasonably be expected to have a Material Adverse Effect. No Restricted
Subsidiary is party to any agreement or
60
instrument or otherwise subject to any restriction or encumbrance that restricts
or limits its ability to make dividend payments or other distributions in
respect of its capital stock to the Borrower or any Restricted Subsidiary or to
transfer any of its assets or properties to the Borrower or any other Restricted
Subsidiary in each case other than existing under or by reason of the Loan
Documents or Applicable Law.
(o) FINANCIAL STATEMENTS. The financial statements required pursuant to
Section 6.2(e) and related unaudited interim statements of income and retained
earnings, copies of which have been furnished to the Administrative Agent and
each Lender, are complete and correct and fairly present on a Consolidated basis
the assets, liabilities and financial position of the Borrower and its
Restricted Subsidiaries as at such dates, and the results of the operations and
changes of financial position for the periods then ended (other than customary
year-end adjustments for unaudited financial statements). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP.
(p) NO MATERIAL ADVERSE CHANGE. Since March 31, 2001, there has been no
material adverse change in the properties, business, operations, prospects, or
condition (financial or otherwise) of the Borrower, its Restricted Subsidiaries
or Sensors and no event has occurred or condition arisen that could reasonably
be expected to have a Material Adverse Effect.
(q) SOLVENCY. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder, the Borrower and its Restricted Subsidiaries
taken as a whole will be Solvent.
(r) TITLES TO PROPERTIES. Each of the Borrower and its Restricted
Subsidiaries has such title to the real property owned or leased by it as is
necessary or desirable to the conduct of its business and valid and legal title
to all of its personal property and assets, including, but not limited to, those
reflected on the balance sheets of the Borrower and its Restricted Subsidiaries
delivered pursuant to Section 7.1(o), except those which have been disposed of
by the Borrower or its Restricted Subsidiaries subsequent to such date which
dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder. As of the Closing Date, all real property owned
or leased by the Borrower or any Restricted Subsidiary is set forth on SCHEDULE
7.1(R).
(s) LIENS. None of the properties and assets of the Borrower or any
Restricted Subsidiary thereof is subject to any Lien, except Permitted Liens. No
financing statement under the Uniform Commercial Code of any state which names
the Borrower or any Restricted Subsidiary thereof or any of their respective
trade names or divisions as debtor and which has not been terminated, has been
filed in any state or other jurisdiction and neither the Borrower nor any
Restricted Subsidiary thereof has signed any such financing statement or any
security agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect those Liens permitted by Section 11.2
hereof.
(t) DEBT AND GUARANTY OBLIGATIONS. SCHEDULE 7.1(T) is a complete and
correct listing of all Debt, Guaranty Obligations and Bonding Obligations of the
Borrower and its Restricted Subsidiaries as of the date set forth on such
Schedule 7.1(t) in excess of $1,000,000. The
61
Borrower and its Restricted Subsidiaries have performed and are in compliance
with all of the terms of such Debt and Guaranty Obligations and all instruments
and agreements relating thereto, and no default or event of default, or event or
condition which with notice or lapse of time or both would constitute such a
default or event of default on the part of the Borrower or any of its Restricted
Subsidiaries exists with respect to any such Debt or Guaranty Obligation.
(u) LITIGATION. Except for any such matter that could not reasonably be
expected to create a Material Adverse Effect, and except for matters existing on
the Closing Date and set forth on SCHEDULE 7.1(U), there are no actions, suits
or proceedings pending nor, to the knowledge of the Borrower, threatened against
or in any other way relating adversely to or affecting the Borrower, any
Restricted Subsidiary thereof or Sensors or any of their respective properties
in any court or before any arbitrator of any kind or before or by any
Governmental Authority.
(v) ABSENCE OF DEFAULTS. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by the Borrower or any Restricted Subsidiary thereof under
any Material Contract (which such default under such Material Contract, either
individually, or in the aggregate with all other outstanding defaults under
other Material Contracts (including, for purposes hereof, the effect of
termination of any other Material Contracts that could reasonably be expected to
be terminated as a result of such existing default or defaults), could
reasonably be expected to have a Material Adverse Effect) or judgment, decree or
order to which the Borrower or any of its Restricted Subsidiaries is a party or
by which the Borrower or any of its Subsidiaries or any of their respective
properties may be bound or which would require the Borrower or any of its
Restricted Subsidiaries to make any payment thereunder prior to the scheduled
maturity date therefor.
(w) SENIOR DEBT STATUS. The Obligations of the Borrower and each of its
Restricted Subsidiaries under this Agreement, the Subsidiary Guaranteed
Obligations and each of the other Loan Documents ranks and shall continue to
rank at least senior in priority of payment to all Subordinated Debt and the
Obligations of the Borrower and each Restricted Subsidiary under this Agreement
are hereby designated as "Senior Indebtedness" under all instruments and
documents, now or in the future, relating to all Subordinated Debt.
(x) ACCURACY AND COMPLETENESS OF INFORMATION. All written information,
reports and other papers and data, when taken as a whole, produced by or on
behalf of the Borrower or any Restricted Subsidiary thereof (other than
financial projections, which shall be subject to the standard set forth in
Section 8.1(c)) and furnished to the Lenders were, at the time the same were so
furnished, complete and correct in all material respects to the extent necessary
to give the recipient a true and accurate knowledge of the subject matter. No
document furnished or written statement made to the Administrative Agent or the
Lenders by the Borrower or any Restricted Subsidiary thereof in connection with
the negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of the Borrower or its Restricted Subsidiaries or omits or
will omit to state a fact necessary in order to make the statements contained
therein not misleading. The Borrower is not aware of any facts which it has not
disclosed in writing to the
62
Administrative Agent having a Material Adverse Effect, or insofar as the
Borrower can now foresee, which could reasonably be expected to have a Material
Adverse Effect.
SECTION 7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including, but not limited to, any such representation or warranty
made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date (except those that are expressly made as of a
specific date), shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 14.11, the Borrower will furnish or cause to be furnished to (a)
Standard & Poor's Corporation, (b) Moody's Investors Service and (c) the
Administrative Agent at the Administrative Agent's Office at the address set
forth in Section 14.1 and to the Lenders at their respective addresses as set
forth on SCHEDULE 1, or such other office as may be designated by the
Administrative Agent and Lenders from time to time:
SECTION 8.1 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within forty-five (45) days after the end of each fiscal quarter of each
Fiscal Year, an unaudited Consolidated and consolidating balance sheet of the
Borrower and its Restricted Subsidiaries as of the close of such fiscal quarter
and unaudited Consolidated and consolidating statements of income, retained
earnings and cash flows for the fiscal quarter then ended and that portion of
the Fiscal Year then ended, including the notes thereto, all in reasonable
detail setting forth in comparative form the corresponding figures as of the end
of and for the corresponding period in the preceding Fiscal Year and prepared by
the Borrower in accordance with GAAP and, if applicable, containing disclosure
of the effect on the financial position or results of operations of any change
in the application of accounting principles and practices during the period, and
certified by the chief financial officer of the Borrower to present fairly in
all material respects the financial condition of the Borrower and its Restricted
Subsidiaries on a Consolidated and consolidating basis as of their respective
dates and the results of operations of the Borrower and its Restricted
Subsidiaries for the respective periods then ended, subject to normal year end
adjustments.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as practicable and in any
event within ninety (90) days after the end of each Fiscal Year, an audited
Consolidated balance sheet of the
63
Borrower and its Restricted Subsidiaries as of the close of such Fiscal Year and
audited Consolidated statements of income, retained earnings and cash flows for
the Fiscal Year then ended, including the notes thereto, all in reasonable
detail setting forth in comparative form the corresponding figures as of the end
of and for the preceding Fiscal Year and prepared by an independent certified
public accounting firm acceptable to the Administrative Agent in accordance with
GAAP and, if applicable, containing disclosure of the effect on the financial
position or results of operations of any change in the application of accounting
principles and practices during the year, and accompanied by a report thereon by
such certified public accountants that is not qualified with respect to scope
limitations imposed by the Borrower or any of its Restricted Subsidiaries or
with respect to accounting principles followed by the Borrower or any of its
Restricted Subsidiaries not in accordance with GAAP.
(c) ANNUAL BUSINESS PLAN AND FINANCIAL PROJECTIONS. As soon as
practicable and in any event within thirty (30) days prior to the beginning of
each Fiscal Year, a business plan of the Borrower and its Restricted
Subsidiaries for the ensuing four (4) fiscal quarters, such plan to be prepared
in accordance with GAAP and to include, on a quarterly basis, the following: a
quarterly operating and capital budget, a projected income statement, statement
of cash flows and balance sheet and a report containing management's discussion
and analysis of such projections, accompanied by a certificate from the chief
financial officer of the Borrower to the effect that, to the best of such
officer's knowledge, such projections are good faith estimates (utilizing
assumptions believed by Borrower's management to be reasonable) of the financial
condition and operations of the Borrower and its Restricted Subsidiaries for
such four (4) quarter period.
SECTION 8.2 OFFICER'S COMPLIANCE CERTIFICATE. At each time financial
statements are delivered pursuant to Sections 8.1 (a) or (b) and at such other
times as the Administrative Agent shall reasonably request (including, without
limitation, in connection with any Permitted Acquisition), a certificate of the
chief financial officer or the treasurer of the Borrower in the form of EXHIBIT
F attached hereto (an "OFFICER'S COMPLIANCE CERTIFICATE").
SECTION 8.3 ACCOUNTANTS' CERTIFICATE. At each time financial statements
are delivered pursuant to Section 8.1(b), a certificate of the independent
public accountants certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of any
Default or Event of Default or, if such is not the case, specifying such Default
or Event of Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants required to
establish whether or not the Borrower and its Restricted Subsidiaries are in
compliance with the financial covenants set forth in Article X hereof as at the
end of each respective period.
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SECTION 8.4 OTHER REPORTS.
(a) AUDITOR'S MANAGEMENT LETTERS. Promptly upon receipt thereof, copies
of all reports, if any, submitted to the Borrower or its Board of Directors by
its independent public accountants in connection with their auditing function,
including, without limitation, any management report and any management
responses thereto; and
(b) BORROWING BASE CERTIFICATE. As soon as available, but in any event
within twenty-five (25) days after the end of each calendar month (and, upon the
occurrence and during the continuation of an Event of Default, on a more
frequent basis if requested by the Administrative Agent or at such other times
as required pursuant to the terms of this Agreement), a Borrowing Base
Certificate which shall include a calculation of the Asset Coverage Ratio as of
such date.
(c) ACCOUNTS RECEIVABLE AGING REPORT. As soon as available, but in any
event within twenty-five (25) days after the end of each calendar month (and,
upon the occurrence and during the continuation of an Event of Default, on a
more frequent basis if requested by the Administrative Agent), a summary
accounts receivable aging report as of the last Business Day of such month which
report shall include such information as the Administrative Agent may require,
all in form and substance satisfactory to the Administrative Agent. Upon the
Administrative Agent's reasonable request, the Borrowers shall deliver annually
on the first day of the second quarter of each Fiscal Year and upon the
occurrence and during the continuation of a Default or Event of Default, within
thirty (30) days upon the request of the Administrative Agent, the name and
mailing address of each Account Debtor.
(d) ACCOUNTS PAYABLE AGING REPORT. As soon as available, but in any
event within twenty-five (25) days after the end of each calendar month (and,
upon the occurrence and during the continuation of an Event of Default, on a
more frequent basis if requested by the Administrative Agent), a summary
accounts payable aging report which report shall include such information as the
Administrative Agent may require, all in form and substance satisfactory to the
Administrative Agent.
(e) GOVERNMENT CONTRACT REPORT. Upon the request of the Administrative
Agent, which such requests shall be limited to one per fiscal quarter (and, upon
the occurrence and during the continuance of an Event of Default, as often as
requested by the Administrative Agent), a status report with respect to all
Governmental Contracts in excess of $1,000,000 of the Borrowers and their
Restricted Subsidiaries, in form and substance satisfactory to the
Administrative Agent.
(f) ACQUISITION RELATED REPORTS. As soon as available, a copy of any
report issued by an Accounting Arbitrator pursuant to the terms of the Asset
Purchase Agreement, including, without limitation, reports issued pursuant to
Section 2.5(d) of the Asset Purchase Agreement.
(g) CONTRACT BACKLOG REPORT. As soon as available, but in any event
within forty-five (45) days after the close of each fiscal quarter of each
Fiscal Year of the Borrower, a contract backlog report for the Borrower, its
Restricted Subsidiaries and Affiliates signed by a Responsible Officer of the
Borrower.
65
(h) OTHER INFORMATION. Such other information regarding the operations,
business affairs and financial condition of the Borrower or any of its
Restricted Subsidiaries, including any reports delivered to the Securities and
Exchange Commission as the Administrative Agent or any Lender may reasonably
request.
SECTION 8.5 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt (but in no
event later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) Except for any such matter that could not reasonably be expected to
create a Material Adverse Effect, the commencement of all proceedings and
investigations by or before any Governmental Authority and all actions and
proceedings in any court or before any arbitrator against or involving the
Borrower or any Restricted Subsidiary thereof or any of their respective
properties, assets or businesses;
(b) Except for any such matter that could not reasonably be expected to
create a Material Adverse Effect, any notice of any violation received by the
Borrower or any Restricted Subsidiary thereof from any Governmental Authority
including, without limitation, any notice of violation of Environmental Laws;
(c) Except for any such matter that could not reasonably be expected to
create a Material Adverse Effect, any labor controversy that has resulted in, or
threatens to result in, a strike or other work action against the Borrower or
any Restricted Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding $2,500,000
that may be assessed against or threatened in writing against the Borrower or
any Restricted Subsidiary thereof;
(e) (i) any Default or Event of Default, (ii) the occurrence or
existence of any event or circumstance that foreseeably will become a Default or
Event of Default or (iii) any event which constitutes or which with the passage
of time or giving of notice or both would constitute a default or event of
default under any Material Contract to which the Borrower or any of its
Restricted Subsidiaries is a party or by which the Borrower or any Restricted
Subsidiary thereof or any of their respective properties may be bound;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by the
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan, (iii) all
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA;
66
(g) any event which makes any of the representations set forth in
Section 7.1 inaccurate in any respect; and
(h) any change in the government contracting status of the Borrower or
its Restricted Subsidiaries with respect to the government of the United States
or any department or agency thereof that could reasonably be expected to have a
Material Adverse Effect.
SECTION 8.6 ACCURACY OF INFORMATION. All written information, reports,
statements and other papers and data furnished by or on behalf of the Borrower
to the Administrative Agent or any Lender whether pursuant to this Article VIII
or any other provision of this Agreement, or any of the Security Documents,
shall, at the time the same is so furnished, comply with the representations and
warranties set forth in Section 7.1.
ARTICLE IX
AFFIRMATIVE COVENANTS
Until all of the Obligations have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner
provided for in Section 14.11, the Borrower will, and will cause each of its
Restricted Subsidiaries to:
SECTION 9.1 PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.
Except as permitted by Section 11.4, preserve and maintain (a) its separate
corporate existence and (b) all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction where the
nature and scope of its activities require it to so qualify under Applicable Law
except (with respect to this clause (b) only) to the extent such failure to
preserve or maintain could not reasonably be expected to have a Materially
Adverse Effect.
SECTION 9.2 MAINTENANCE OF PROPERTY. In addition to the requirements of
any of the Security Documents, protect and preserve all properties useful in and
material to its business, including copyrights, patents, trade names, service
marks and trademarks; maintain in good working order and condition all
buildings, equipment and other tangible real and personal property; and from
time to time make or cause to be made all renewals, replacements and additions
to such property necessary for the conduct of its business, so that the business
carried on in connection therewith may be conducted in a commercially reasonable
manner.
SECTION 9.3 INSURANCE. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law and as are required by any Security Documents, and on the Closing
Date and from time to time thereafter deliver to the Administrative Agent upon
its request a reasonably detailed list of the insurance then in effect, stating
the names of the insurance companies, the amounts and rates of the insurance,
the dates of the expiration thereof and the properties and risks covered
thereby.
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SECTION 9.4 ACCOUNTING METHODS AND FINANCIAL RECORDS. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 9.5 PAYMENT AND PERFORMANCE OF OBLIGATIONS. Pay and perform all
Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) except where the failure to do so could not reasonably be expected
to create a Material Adverse Effect, all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of its
property, and (b) except where the failure to do so could not reasonably be
expected to create a Material Adverse Effect, all other indebtedness,
obligations and liabilities in accordance with customary trade practices;
PROVIDED, that the Borrower or such Restricted Subsidiary may contest any item
described in clauses (a) or (b) of this Section 9.5 in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.
SECTION 9.6 COMPLIANCE WITH LAWS AND APPROVALS. Except where the
failure to do so could not reasonably be expected to create a Material Adverse
Effect, observe and remain in compliance in all respects with all Applicable
Laws and maintain in full force and effect all Governmental Approvals, in each
case applicable to the conduct of its business.
SECTION 9.7 ENVIRONMENTAL LAWS. Except where the failure to do so could
not reasonably be expected to create a Material Adverse Effect, in addition to
and without limiting the generality of Section 9.6, (a) comply with, and make
commercially reasonable efforts to ensure such compliance by all tenants and
subtenants with all applicable Environmental Laws and obtain and comply with and
maintain, and make commercially reasonable efforts to ensure that all tenants
and subtenants, if any, obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws, and promptly comply with all lawful orders
and directives of any Governmental Authority regarding Environmental Laws, and
(c) defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the presence of Hazardous Materials, or the violation of,
noncompliance with or liability under any Environmental Laws applicable to the
operations of the Borrower or any such Restricted Subsidiary, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation expenses, except
to the extent that any of the foregoing directly result from the gross
negligence or willful misconduct of the party seeking indemnification therefor.
SECTION 9.8 COMPLIANCE WITH ERISA. In addition to and without limiting
the generality of Section 9.6, (a) except where the failure to so comply could
not, individually or in
68
the aggregate, reasonably be expected to have a Material Adverse Effect, (i)
comply with all material applicable provisions of ERISA and the regulations and
published interpretations thereunder with respect to all Employee Benefit Plans,
(ii) not take any action or fail to take action the result of which could be a
liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any
prohibited transaction that could result in any civil penalty under ERISA or tax
under the Code and (iv) operate each Employee Benefit Plan in such a manner that
will not incur any tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the Code
and (b) furnish to the Administrative Agent upon the Administrative Agent's
request such additional information about any Employee Benefit Plan as may be
reasonably requested by the Administrative Agent.
SECTION 9.9 COMPLIANCE WITH AGREEMENTS. Except where the failure to do
so could not reasonably be expected to create a Material Adverse Effect, comply
in all respects with each term, condition and provision of all leases,
agreements and other instruments entered into in the conduct of its business
including, without limitation, any Material Contract; PROVIDED, that the
Borrower or any such Restricted Subsidiary may contest any such lease, agreement
or other instrument in good faith through applicable proceedings so long as
adequate reserves are maintained in accordance with GAAP.
SECTION 9.10 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Except for information and records which the Borrower may not under Applicable
Law disseminate or disclose to the Administrative Agent and/or the Lenders, the
Borrower, its Restricted Subsidiaries and Affiliates shall permit any authorized
representative(s) designated by the Administrative Agent and/or the Lenders to
visit, to conduct a field audit or to otherwise inspect any of the Borrower's,
its Restricted Subsidiaries' and/or Affiliates' respective properties, including
their financial and accounting records, and to make copies and take extracts
therefrom, and to discuss the Borrower's, its Restricted Subsidiaries' and/or
Affiliates' respective affairs, finances and accounts with the Administrative
Agent's and the Lenders' officers, employees, representatives or independent
certified public accountants, upon reasonable notice and during normal business
hours. All information furnished to the Administrative Agent and/or the Lenders
shall be received and maintained by the Administrative Agent and the Lenders in
strict confidence and in accordance with Applicable Law, and they shall not
disseminate said information to any Person for so long as said information has
or retains a confidential or proprietary nature, except where required by and in
accordance with Applicable Law, or pursuant to subpoena or other legal process
or where contemplated by the Loan Documents (including, without limitation, in
connection with the enforcement of any rights or remedies thereunder). The
Administrative Agent and the Lenders agree that it shall not take any action or
omit to take any action which would cause or result in the violation of
Applicable Law (including without limitation, any export control law) by the
Borrower, its Restricted Subsidiaries and Affiliates. Each such visitation and
inspection by or on behalf of the Administrative Agent and/or the Lenders after
the occurrence and during the continuance of an Event of Default shall be at the
Borrower's own reasonable cost and expense. The Borrower shall, and shall cause
its Restricted Subsidiaries and Affiliates, to keep proper books and records and
account in accordance with GAAP and Applicable Law.
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SECTION 9.11 ADDITIONAL SUBSIDIARIES.
(a) Within forty-five (45) days after (i) the redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary in accordance with Section
9.11(c) below or (ii) the creation or acquisition of any Domestic Subsidiary
(any such Subsidiary, a "New Subsidiary") of the Borrower or any Restricted
Subsidiary (including in connection with any Permitted Acquisition), cause to be
executed and delivered to the Administrative Agent (A) a duly executed joinder
agreement in form and substance reasonably satisfactory to the Administrative
Agent joining such New Subsidiary (to the extent such New Subsidiary is a
Restricted Subsidiary) to the Subsidiary Guaranty Agreement, the Collateral
Agreement and any other applicable Security Documents, (B) updated Schedules
7.1(a) and 7.1(b) reflecting the creation or acquisition of such Subsidiary, (C)
favorable legal opinions covering such matters consistent with opinions for this
Agreement and addressed to the Administrative Agent and Lenders in form and
substance reasonably satisfactory thereto with respect to such joinder
agreement, (D) original stock or other certificates and stock or other transfer
powers evidencing the ownership interests of the Borrower or Restricted
Subsidiary, as applicable, in such New Subsidiary, and (E) any other documents
and certificates as may be reasonably requested by the Administrative Agent or
the Required Lenders (through the Administrative Agent).
(b) Within forty-five (45) days after the creation of any first tier
Foreign Subsidiary of the Borrower or any Restricted Subsidiary (including in
connection with a Permitted Acquisition), cause to be executed and delivered to
the Administrative Agent, (A) a supplement to the applicable Security Documents
previously executed and delivery by the Borrower or such Restricted Subsidiary,
as applicable, to provide for the pledge of sixty-five percent (65%) of the
capital stock or other ownership interests of such Foreign Subsidiary, (B)
updated Schedules 7.1(a) and 7.1(b) reflecting the creation or acquisition of
such Subsidiary, (C) favorable legal opinions addressed to the Administrative
Agent and Lenders in form and substance reasonably satisfactory thereto with
respect to such supplement, (D) original stock or other certificates and stock
or other transfer powers evidencing the ownership interests of the Borrower or
such Restricted Subsidiary in such Foreign Subsidiary, and (E) any other
documents and certificates as may be reasonably requested by the Administrative
Agent or the Required Lenders (through the Administrative Agent).
(c) The Borrower may, at any time and upon written notice to the
Administrative Agent, redesignate an Unrestricted Subsidiary as a Restricted
Subsidiary. Further, promptly after the date on which the Borrower or the
Administrative Agent determines that:
(i) any individual Unrestricted Subsidiary and its respective
Subsidiaries (A) represent five percent (5%) or more of (I) the
Consolidated assets of the Borrower and its Subsidiaries as of the most
recently ended fiscal quarter prior to such date or (II) Consolidated
EBITDA (notwithstanding the definition thereof, calculated to include
all Unrestricted Subsidiaries) of the Borrower and its Subsidiaries for
the four (4) consecutive fiscal quarters most recently ended prior to
such date or (B) is or becomes the obligor on any Debt (notwithstanding
the definition thereof, determined by reference to such Unrestricted
Subsidiary) which is guaranteed by, credit supported by, or recourse to
the Borrower or any Restricted Subsidiary, or
70
(ii) all Unrestricted Subsidiaries and their respective
Subsidiaries represent ten percent (10%) or more of (A) the
Consolidated assets of the Borrower and its Subsidiaries as of the most
recently ended fiscal quarter prior to such date or (B) Consolidated
EBITDA (notwithstanding the definition thereof, calculated to include
all Unrestricted Subsidiaries) for the four consecutive fiscal quarters
most recently ended prior to such date,
then, in the case of clause (i), such Unrestricted Subsidiary shall be
redesignated as a Restricted Subsidiary and in the case of clause (ii), the
Borrower shall promptly identify in writing to the Administrative Agent such
Unrestricted Subsidiaries to be redesignated as Restricted Subsidiaries to cause
such remaining Unrestricted Subsidiaries and their Subsidiaries (after giving
effect to such redesignation) to represent less than ten percent (10%) of (A)
the Consolidated assets of the Borrower and its Subsidiaries as of the most
recently ended fiscal quarter prior to such date and (B) Consolidated EBITDA
(notwithstanding the definition thereof, calculated to include all Unrestricted
Subsidiaries) for the four consecutive fiscal quarters most recently ended prior
to such date.
(d) So long as no Default or Event of Default has occurred and is
continuing, the Borrower shall be permitted, on prior written notice to the
Administrative Agent, to redesignate any Restricted Subsidiary as an
Unrestricted Subsidiary (or designate any newly formed or acquired Subsidiary as
an Unrestricted Subsidiary; PROVIDED that such formation or acquisition is
otherwise permitted hereunder), so long as the following conditions have been
satisfied as reasonably determined by the Administrative Agent:
(i) any such individual Subsidiary and its respective
Subsidiaries to be designated (or redesignated, as applicable) as an
Unrestricted Subsidiary (A) represent less than five percent (5%) of
(I) the Consolidated assets of the Borrower and its Subsidiaries as of
the most recently ended fiscal quarter prior to such date and (II)
Consolidated EBITDA (notwithstanding the definition thereof, calculated
to include all Unrestricted Subsidiaries) of the Borrower and its
Subsidiaries for the four (4) consecutive fiscal quarters most recently
ended prior to such date and (B) is not the obligor on any Debt
(notwithstanding the definition thereof, determined by reference to
such Unrestricted Subsidiary) which is guaranteed by, credit supported
by, or recourse to the Borrower or any Restricted Subsidiary; and
(ii) at the time of such proposed designation (or
redesignation, as applicable), and after giving effect thereto, all
Unrestricted Subsidiaries and their respective Subsidiaries (including
the Subsidiary and its respective Subsidiaries to be designated (or
redesignated, as applicable) as an Unrestricted Subsidiary) represent
less than ten percent (10%) of (A) the Consolidated assets of the
Borrower and its Subsidiaries as of the most recently ended fiscal
quarter prior to such date and (B) Consolidated EBITDA (notwithstanding
the definition thereof, calculated to include all Unrestricted
Subsidiaries) for the four consecutive fiscal quarters most recently
ended prior to such date.
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Such designation (or redesignation, as applicable) shall have an
effective date mutually acceptable to the Administrative Agent and Borrower, but
in no event earlier than five (5) Business Days following receipt by the
Administrative Agent of such written notice.
SECTION 9.12 RESERVED.
SECTION 9.13 USE OF PROCEEDS. The Borrower shall use the proceeds of
the Extensions of Credit (a) to finance the Acquisition (b) to finance Permitted
Acquisitions, (c) to refinance existing indebtedness of the Borrower, (d) to
finance Capital Expenditures of the Borrower, and (e) for working capital and
general corporate requirements of the Borrower and its Restricted Subsidiaries,
including the payment of certain fees and expenses incurred in connection with
the Acquisition and the other transactions contemplated hereby and Letters of
Credit.
SECTION 9.14 CONDUCT OF BUSINESS. Engage only in businesses in
substantially the same fields as the business conducted on the Closing Date and
in lines of business reasonably related thereto.
SECTION 9.15 ACCOUNT DESIGNATION. Designate only accounts with the
Administrative Agent as the location for all deposits and payments required to
be made to the Borrower as Buyer pursuant to the terms of the Asset Purchase
Agreement.
SECTION 9.16 DEBT RATING. Maintain an up to date debt rating with both
Standard & Poor's Corporation and Moody's Investors Service or, in the event one
or both such entities cease to provide any such rating, such other rating agency
or agencies that are reasonably acceptable to the Administrative Agent.
SECTION 9.17 EXISTING LETTERS OF CREDIT. Cause each Existing Letter of
Credit to be replaced (if required by the beneficiary thereof) on or before the
current expiration date of such Existing Letter of Credit.
SECTION 9.18 FURTHER ASSURANCES. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or the Required Lenders (through the Administrative Agent) may reasonably
require to document and consummate the transactions contemplated hereby and to
vest completely in and insure the Administrative Agent and the Lenders their
respective rights under this Agreement, the Notes, the Letters of Credit and the
other Loan Documents.
ARTICLE X
FINANCIAL COVENANTS
Until all of the Obligations have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner set
forth in Section 14.11, the Borrower and its Restricted Subsidiaries on a
Consolidated basis will not:
72
SECTION 10.1 MAXIMUM TOTAL LEVERAGE RATIO: As of any fiscal quarter
end, permit the ratio (the "Total Leverage Ratio") of (a) the sum of (i) Debt
LESS (ii) the outstanding amount of all Performance Based Letters of Credit, in
each case as of such date to (b) EBITDA for the period of four (4) consecutive
fiscal quarters ending on or immediately prior to such date to be greater than
the corresponding ratio set forth in Table A below; PROVIDED, HOWEVER, that if
the Borrower consummates an equity issuance in a minimum amount of $40,000,000
(a "Qualifying Equity Issuance"), the ratios set forth in Table B shall apply.
For purposes of calculating the Total Leverage Ratio, any prepayment of Debt
with the proceeds of a Qualifying Equity Issuance occurring within five (5)
Business Days following any fiscal quarter end shall be deemed to have been made
as of the last day of such fiscal quarter.
TABLE A
---------------------------- ------------------------
Period Ratio
---------------------------- ------------------------
Fiscal quarter ending 3.50 to 1.00
12/31/01
---------------------------- ------------------------
Fiscal quarters ending 3.25 to 1.00
3/31/02 and 6/30/02
---------------------------- ------------------------
Fiscal quarters ending 3.00 to 1.00
9/30/02 and 12/31/02
---------------------------- ------------------------
Fiscal quarters ending 2.75 to 1.00
3/31/03, 6/30/03, 9/30/03
and 12/31/03
---------------------------- ------------------------
Fiscal quarters ending 2.50 to 1.00
3/31/04 and thereafter
---------------------------- ------------------------
TABLE B
---------------------------- ------------------------
Period Ratio
---------------------------- ------------------------
Fiscal quarter end 12/31/01 3.00 to 1.00
---------------------------- ------------------------
Fiscal quarters ending 2.75 to 1.00
3/31/02 and 6/30/02
---------------------------- ------------------------
Fiscal quarters ending 2.50 to 1.00
9/30/02 and thereafter
---------------------------- ------------------------
SECTION 10.2 MINIMUM FIXED CHARGE COVERAGE RATIO: As of any fiscal
quarter end, permit the ratio of (a) the sum of (i) EBITDA for the period of
four (4) consecutive fiscal quarters ending on or immediately prior to such date
MINUS (ii) Capital Expenditures for such period to (b) Fixed Charges for the
period of four (4) consecutive fiscal quarters ending on
73
or immediately prior to such date to be less than the corresponding ratio set
forth below; PROVIDED that (i) for the fiscal quarter ending 12/31/01, Fixed
Charges (other than cash taxes) shall be calculated by multiplying the actual
amount of Fixed Charges (other than cash taxes) for such fiscal quarter by four
(4), (ii) for the fiscal quarter ending 3/31/02, Fixed Charges (other than cash
taxes) shall be calculated by multiplying the actual amount of Fixed Charges
(other than cash taxes) for such two fiscal quarters by two (2), and (iii) for
the fiscal quarter ending 6/30/02, Fixed Charges (other than cash taxes) shall
be calculated by multiplying the actual amount of Fixed Charges (other than cash
taxes) for such three fiscal quarters by four-thirds (4/3), and for each of the
foregoing fiscal quarters, cash taxes shall be calculated on the basis of actual
cash taxes during the four (4) consecutive fiscal quarter period ending on such
date.
---------------------------- ------------------------
Period Ratio
---------------------------- ------------------------
Fiscal quarters ending 1.20 to 1.00
12/31/01 through 3/31/02
---------------------------- ------------------------
Fiscal quarters ending 1.25 to 1.00
6/30/02 through 12/31/03
---------------------------- ------------------------
Fiscal quarters ending 1.50 to 1.00
3/31/04 and thereafter
---------------------------- ------------------------
SECTION 10.3 MAXIMUM CAPITAL EXPENDITURES. Permit Capital Expenditures
during any Fiscal Year to be greater than the maximum aggregate amount
corresponding to such Fiscal Year set forth below:
-------------------------------- ----------------------------
FISCAL YEAR MAXIMUM CAPITAL EXPENDITURES
-------------------------------- ----------------------------
2002 $22,000,000
-------------------------------- ----------------------------
2003 $25,000,000
-------------------------------- ----------------------------
2004 and thereafter $20,000,000
-------------------------------- ----------------------------
Notwithstanding the foregoing, the maximum amount of Capital
Expenditures permitted by this Section 10.3 in any Fiscal Year shall be
increased by an amount equal to the lesser of (a) $5,000,000 and (b) the excess
of (i) the amount of Capital Expenditures that were permitted to be made under
this Section 10.3 in the immediately preceding Fiscal Year (without giving
effect to any carryover amount from prior Fiscal Years) over (ii) the amount of
Capital Expenditures actually made during such preceding Fiscal Year.
ARTICLE XI
NEGATIVE COVENANTS
Until all of the Obligations have been paid and satisfied in full and
the Commitments terminated, unless consent has been obtained in the manner set
forth in Section 14.11, the Borrower has not and will not and will not permit
any of its Restricted Subsidiaries to:
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SECTION 11.1 LIMITATIONS ON DEBT. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations (excluding Hedging Obligations permitted pursuant
to Section 11.1(b));
(b) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions (including interest rate) reasonably
satisfactory to the Administrative Agent; PROVIDED, that any counterparty that
is a Lender shall be deemed satisfactory to the Administrative Agent.
(c) Debt existing on the Closing Date and not otherwise permitted under
this Section 11.1, as set forth on SCHEDULE 7.1(T) and the renewal, refinancing,
extensions and replacements (but not the increase in the aggregate principal
amount) thereof;
(d) Debt of the Borrower and its Restricted Subsidiaries incurred in
connection with Capitalized Leases in an aggregate amount not to exceed
$5,000,000 on any date of determination;
(e) purchase money Debt of the Borrower and its Restricted Subsidiaries
in an aggregate amount not to exceed $5,000,000 on any date of determination;
(f) Guaranty Obligations in favor of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders;
(g) other unsecured Debt in an aggregate principal amount not exceeding
$2,000,000 at any time outstanding;
(h) Debt of the Borrower to any Restricted Subsidiary and of any
Restricted Subsidiary to the Borrower or any other Restricted Subsidiary;
PROVIDED that if requested by the Administrative Agent any such loans and
advances made by a Borrower or any other Restricted Subsidiary that are
evidenced by a promissory note or other instrument shall be pledged pursuant to
the Collateral Agreement;
(i) Guaranty Obligations with respect to Debt permitted pursuant to
subsections (a) through (f) of this Section 11.1; and
(j) Unsecured Debt of DRS Technologies Canada Company in an aggregate
amount not to exceed $15,000,000 (US Dollars) on any date of determination;
PROVIDED, that no agreement or instrument with respect to Debt permitted to be
incurred by this Section shall restrict, limit or otherwise encumber (by
covenant or otherwise) the ability of any Restricted Subsidiary of the Borrower
to make any payment to the Borrower or any of its Restricted Subsidiaries (in
the form of dividends, intercompany advances or otherwise) for the purpose of
enabling the Borrower to pay the Obligations.
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SECTION 11.2 LIMITATIONS ON LIENS. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties
(including, without limitation, shares of capital stock or other ownership
interests), real or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(f) Liens not otherwise permitted by this Section 11.2 and in existence
on the Closing Date and described on SCHEDULE 11.2; -------------
(g) Liens securing Debt permitted under Sections 11.1(d) and (e);
PROVIDED that (i) such Liens shall be created substantially simultaneously with
the acquisition or lease of the related asset, (ii) such Liens do not at any
time encumber any property other than the property financed by such Debt, (iii)
the amount of Debt secured thereby is not increased and (iv) the principal
amount of Debt secured by any such Lien shall at no time exceed one hundred
percent (100%) of the original purchase price or lease payment amount of such
property at the time it was acquired; and
(h) any Lien existing on any property or asset (other than properties
or assets acquired pursuant to the Acquisition) prior to the acquisition thereof
by the Borrower or any Restricted Subsidiary or existing on any property or
asset of any Person that becomes a Restricted Subsidiary after the date of
consummation of the Acquisition prior to the time such Person becomes a
Restricted Subsidiary; PROVIDED that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Restricted
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Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Restricted Subsidiary and (iii) such
Lien shall secure only those obligations that it secures on the date of such
acquisition or the date such Person becomes a Restricted Subsidiary, as the case
may be, and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof; and
(i) deposits to secure the performance of bids, trade contracts,
obligations for utilities, leases, Bonding Obligations permitted pursuant to
Section 11.14 and other obligations of a like nature (other than obligations for
borrowed money of other Debt), in each case in the ordinary course of business.
SECTION 11.3 LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND
ACQUISITIONS. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture
(including, without limitation, the creation or capitalization of any Restricted
Subsidiary), evidence of Debt or other obligation or security, substantially all
or a portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person, or make or permit to
exist, directly or indirectly, any loans, advances or extensions of credit to,
or any investment in cash or by delivery of property in, any Person except:
(a) investments (i) in Restricted Subsidiaries existing on the Closing
Date, (ii) in Restricted Subsidiaries formed or acquired after the Closing Date
so long as the Borrower and its Restricted Subsidiaries comply with the
applicable provisions of Section 9.11 and Section 11.3(d) and (iii) the other
loans, advances and investments described on SCHEDULE 11.3 existing on the
Closing Date;
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one hundred twenty (120) days from the date of acquisition
thereof, (ii) commercial paper maturing no more than one hundred twenty (120)
days from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc., (iii)
certificates of deposit maturing no more than one hundred twenty (120) days from
the date of creation thereof issued by commercial banks incorporated under the
laws of the United States of America, each having combined capital, surplus and
undivided profits of not less than $500,000,000 and having a rating of "A" or
better by a nationally recognized rating agency; PROVIDED, that the aggregate
amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, (iv) time deposits maturing no more than thirty (30) days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder; or (v) repurchase agreements with a Lender or a bank or
trust company or a recognized securities dealer having capital and surplus in
excess of $500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America (such investments described in items (i) through
(v) above, "CASH EQUIVALENTS"); and
77
(c) the Acquisition;
(d) investments by the Borrower or any Restricted Subsidiary thereof in
the form of acquisitions of all or substantially all of the business or a line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person if each such acquisition meets all of
the following requirements (such acquisitions being, "Permitted Acquisitions"):
(i) the Person to be acquired shall be in a substantially
similar line of business as the Borrower,
(ii) evidence of approval of the acquisition by the acquiree's
board of directors or equivalent governing body or a copy of the
opinion of counsel delivered by legal counsel to the acquiree in
connection with the acquisition which evidences such approval shall be
delivered to the Administrative Agent at the time the documents
referred to in clause (vi) of this Section 11.3(d) are required to be
delivered;
(iii) a description of the acquisition in the form customarily
prepared by the Borrower shall have been delivered to the
Administrative Agent and the Lenders prior to the consummation of the
acquisition;
(iv) the Borrower or any Restricted Subsidiary shall be the
surviving Person and no Change of Control shall have been effected
thereby;
(v) the Borrower shall have demonstrated to the Administrative
Agent (A) PRO FORMA compliance (as of the date of the proposed
acquisition and after giving effect thereto and any Extensions of
Credit made or to be made in connection therewith) with each covenant
contained in and in the manner set forth in, Article X, (B) PRO FORMA
Asset Coverage Ratio (as of the date of the proposed acquisition and
after giving effect thereto and any Extensions of Credit made or to be
made in connection therewith) equal to or exceeding 1.00 to 1.00, (C)
maintenance of at least $25,000,000 of availability under the Revolving
Credit Facility both before and after giving effect to the proposed
acquisition; and (D) a Maximum Total Leverage Ratio at least .25 below
the applicable ratio set forth in Section 10.1 prior to consummating
the acquisition, and no Default or Event of Default shall have occurred
and be continuing both before and after giving effect to the
acquisition;
(vi) the Borrower shall have delivered to the Administrative
Agent such documents reasonably requested by the Administrative Agent
or the Required Lenders (through the Administrative Agent) pursuant to
Section 8.11 to be delivered at the time required pursuant to Section
8.11 confirming that such Person is or will be a Subsidiary Guarantor
hereunder, and its Subsidiary Guaranteed Obligations incurred in such
capacity are secured by the Security Documents, said documents to
include a favorable opinion of counsel to the Borrower acceptable to
the
78
Administrative Agent addressed to the Administrative Agent and the
Lenders with respect to the Borrower, the Person to be acquired and the
acquisition in form and substance reasonably acceptable to the
Administrative Agent;
(vii) the aggregate amount of Permitted Acquisition
Consideration for such acquisition shall not exceed (A) $15,000,000 in
the aggregate per Fiscal Year for all such Permitted Acquisitions;
provided, HOWEVER, that any time Maximum Total Leverage Ratio is less
than 2.50 to 1.00, the aggregate amount of Permitted Acquisition
Consideration for such acquisitions shall not exceed $25,000,000 for
any one such Permitted Acquisition;
(viii) the Person to be acquired shall demonstrate positive
EBITDA for the most recent twelve (12) month period then ended, both
prior to the acquisition and after giving effect thereto, by providing
the Administrative Agent and Lenders copies of the most recent
financial statements and projections, all in form and substance
reasonably satisfactory to the Administrative Agent and Lenders;
(ix) the Borrower shall provide such other documents and other
information as may be reasonably requested by the Administrative Agent
or the Required Lenders (through the Administrative Agent) in
connection with the proposed acquisition;
(e) Hedging Agreements permitted pursuant to Section 11.1;
(f) loans or advances made by the Borrower to any Restricted Subsidiary
and made by any Subsidiary to the Borrower or any other Subsidiary; PROVIDED
that any such loans and advances made by a Borrower or any other Restricted
Subsidiary that are evidenced by a promissory note or other instrument shall be
pledged pursuant to the Collateral Agreement;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(h) investments made after the Closing Date in joint ventures and other
business entities (in each case that are not Subsidiaries of the Borrower) that
are engaged in the same line or lines of business as the Borrower and its
Restricted Subsidiaries in an aggregate amount not to exceed $5,000,000;
(i) loans to employees of the Borrower and the Restricted Subsidiaries
in their capacity as such, in an aggregate principal amount not to exceed
$1,000,000 at any time outstanding;
(j) any investment received as consideration, in whole or in part, for
any asset sale otherwise permitted hereunder in an aggregate principal amount
not to exceed $5,000,000; and
(k) purchases of assets in the ordinary course of business.
SECTION 11.4 LIMITATIONS ON MERGERS AND LIQUIDATION. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself
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(or suffer any liquidation or dissolution) except:
(a) any Wholly-Owned Subsidiary of the Borrower may merge with the
Borrower or any other Wholly-Owned Restricted Subsidiary of the Borrower;
PROVIDED that (i) in any merger involving the Borrower, the Borrower shall be
the surviving entity and (ii) in any merger involving a Restricted Subsidiary,
the Restricted Subsidiary shall be the surviving entity;
(b) any Wholly-Owned Subsidiary of the Borrower may merge into the
Person such Wholly-Owned Subsidiary was formed to acquire in connection with a
Permitted Acquisition (and, in the case of any merger involving a Restricted
Subsidiary, such Person is or becomes a Restricted Subsidiary); and
(c) any Wholly-Owned Subsidiary of the Borrower may wind-up into the
Borrower or any other Wholly-Owned Restricted Subsidiary of the Borrower.
SECTION 11.5 LIMITATIONS ON SALE OF ASSETS. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of the Borrower or any of its Subsidiaries;
(c) the transfer of assets to the Borrower or any Restricted Subsidiary
of the Borrower pursuant to Section 11.4 (c);
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof;
(e) the sale of DRS Data Systems, Inc.;
(f) the sale, transfer and other disposition of assets of the Borrower
or its Restricted Subsidiaries (other than less than 100% of the equity
ownership interest in a Subsidiary) that are not permitted by any other clause
of this Section 11,5; PROVIDED that (i) the aggregate fair market value of all
assets sold, transferred or otherwise disposed of in reliance upon this clause
(f) in the aggregate shall not exceed $2,000,000 in a Fiscal Year and (ii) the
Borrower or applicable Restricted Subsidiary complies with the provisions of
Section 4.4(b); and
(g) assets acquired in connection with any Permitted Acquisition that
the Borrower intended to sell at the time of such Permitted Acquisition;
PROVIDED (i) such assets were identified in writing to the Administrative Agent
at the time of such Permitted Acquisition and (ii) the aggregate amount of such
assets does NOT exceed $2,000,000 per each such Permitted Acquisition and (iii)
the Borrower or applicable Restricted Subsidiary complies with the provisions of
Section 4.4(b).
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SECTION 11.6 LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS. Declare or pay
any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares of
its capital stock, or make any change in its capital structure which such change
in its capital structure could reasonably be expected to have a Material Adverse
Effect; PROVIDED that:
(a) the Borrower or any Restricted Subsidiary may pay dividends in
shares of its own capital stock;
(b) any Restricted Subsidiary may pay cash dividends to the Borrower;
and
(c) the Borrower or any Restricted Subsidiary may make any distribution
(whether direct or indirect and whether in the form of cash, property,
securities or otherwise) to shareholders, employees or other permitted
distributees under Borrower's 1996 Omnibus Plan and other benefit or retirement
plans maintained and created by the Borrower, its Restricted Subsidiaries and
Affiliates.
SECTION 11.7 LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK.
Issue, sell or otherwise dispose of any class or series of capital stock that,
by its terms or by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of an event or passage of time would be,
(a) convertible or exchangeable into Debt or (b) required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or has,
or upon the happening of an event or passage of time would have, a redemption or
similar payment due, except for any class or series of capital stock that is not
required to be redeemed or repurchased prior to the date which is one (1) year
and one (1) day following the Term Loan Maturity Date.
SECTION 11.8 TRANSACTIONS WITH AFFILIATES. Except for transactions
permitted by 11.6, 11.7, 11.3 and those listed on Schedule 11.8, directly or
indirectly (a) make any loan or advance to, or purchase or assume any note or
other obligation to or from, any of its officers, directors, shareholders or
other Affiliates, or to or from any member of the immediate family of any of its
officers, directors, shareholders or other Affiliates, or subcontract any
operations to any of its Affiliates or (b) enter into, or be a party to, any
other transaction not described in clause (a) above with any of its Affiliates,
except pursuant to the reasonable requirements of its business and upon fair and
reasonable terms that are fully disclosed to and approved in writing by the
Required Lenders prior to the consummation thereof and are no less favorable to
it than it would obtain in a comparable arm's length transaction with a Person
not its Affiliate.
SECTION 11.9 CERTAIN ACCOUNTING CHANGES; ORGANIZATIONAL DOCUMENTS. (a)
Change its Fiscal Year end, or make any change in its accounting treatment and
reporting practices except as required by GAAP or (b) amend, modify or change
its articles of incorporation (or corporate charter or other similar
organizational documents) or amend, modify or change its bylaws (or other
similar documents) in any manner materially adverse in any respect to the rights
or interests of the Lenders.
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SECTION 11.10 AMENDMENTS; PAYMENTS AND PREPAYMENTS OF SUBORDINATED
DEBT. Amend or modify (or permit the modification or amendment of) any of the
terms or provisions of any Subordinated Debt, or cancel or forgive, make any
voluntary or optional payment or prepayment on, or redeem or acquire for value
(including, without limitation, by way of depositing with any trustee with
respect thereto money or securities before due for the purpose of paying when
due) any Subordinated Debt.
SECTION 11.11 AMENDMENTS, CONSENTS AND WAIVERS UNDER ASSET PURCHASE
AGREEMENT. Materially amend, modify, waive (or permit the material amendment,
modification of or waiver of) any of the terms or provisions of the Asset
Purchase Agreement without the prior written approval of the Administrative
Agent and Required Lenders, which shall not be unreasonably withheld.
SECTION 11.12 RESTRICTIVE AGREEMENTS.
(a) Enter into any Debt which contains any negative pledge on assets or
any covenants more restrictive than the provisions of Articles IX, X, XI hereof,
or which restricts, limits or otherwise encumbers its ability to incur Liens on
or with respect to any of its assets or properties other than the assets or
properties securing such Debt.
(b) Enter into or permit to exist any agreement which impairs or limits
the ability of any Restricted Subsidiary of the Borrower to pay dividends to the
Borrower.
SECTION 11.13 NATURE OF BUSINESS. Alter in any material respect the
character or conduct of the business conducted by the Borrower and its
Restricted Subsidiaries as of the Closing Date.
SECTION 11.14 LIMITATION ON BONDING OBLIGATIONS. Create, incur, assume
or suffer to exist Bonding Obligations in an aggregate amount in excess of
$5,000,000 outstanding at any time during the term hereof.
SECTION 11.15 IMPAIRMENT OF SECURITY INTERESTS. Take or omit to take
any action, which might or would have the result of materially impairing the
security interests in favor of the Administrative Agent with respect to the
Collateral or grant to any Person (other than the Administrative Agent for the
benefit of itself and the Lenders pursuant to the Security Documents) any
interest whatsoever in the Collateral, except for Liens permitted under Section
11.2 and asset sales permitted under Section 11.5.
ARTICLE XII
DEFAULT AND REMEDIES
SECTION 12.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or
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be effected by operation of law or pursuant to any judgment or order of any
court or any order, rule or regulation of any Governmental Authority or
otherwise:
(a) DEFAULT IN PAYMENT OF PRINCIPAL OF LOANS AND REIMBURSEMENT
OBLIGATIONS. The Borrower shall default in any payment of principal of any Loan,
Note or Reimbursement Obligation when and as due (whether at maturity, by reason
of acceleration or otherwise).
(b) OTHER PAYMENT DEFAULT. The Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation and such default shall continue for a period of three (3)
Business Days.
(c) MISREPRESENTATION. Any representation or warranty made or deemed to
be made by the Borrower or any of its Restricted Subsidiaries under this
Agreement, any other Loan Document or any amendment hereto or thereto, shall at
any time prove to have been incorrect or misleading in any material respect when
made or deemed made.
(d) DEFAULT IN PERFORMANCE OF CERTAIN COVENANTS. The Borrower shall
default in the performance or observance of any covenant or agreement contained
in Sections 8.1, 8.2, 8.4(b), (c) or (d) or 8.5(e)(i) or Articles X or XI of
this Agreement.
(e) DEFAULT IN PERFORMANCE OF OTHER COVENANTS AND CONDITIONS. The
Borrower or any Restricted Subsidiary thereof shall default in the performance
or observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
12.1) or any other Loan Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given to the Borrower by
the Administrative Agent.
(f) HEDGING AGREEMENT. The Borrower shall default in the performance or
observance of any terms, covenant, condition or agreement (after giving effect
to any applicable grace or cure period) under any Hedging Agreement and such
default causes the termination of such Hedging Agreement or permits any counter
party to such Hedging Agreement to terminate any such Hedging Agreement.
(g) DEBT CROSS-DEFAULT. The Borrower or any of its Restricted
Subsidiaries shall (i) default in the payment of any Debt (other than the Notes
or any Reimbursement Obligation) the aggregate outstanding amount of which Debt
is in excess of $5,000,000 beyond the period of grace if any, provided in the
instrument or agreement under which such Debt was created, or (ii) default in
the observance or performance of any other agreement or condition relating to
any Debt (other than the Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $5,000,000 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 Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
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(h) OTHER CROSS-DEFAULTS. The Borrower or any of its Restricted
Subsidiaries shall default in the payment when due, or in the performance or
observance, of any obligation or condition of any Material Contract, which such
default, either individually, or in the aggregate with all other outstanding
defaults under other Material Contracts (including, for purposes hereof, the
effect of termination of any other Material Contracts that could reasonably be
expected to be terminated as a result of such existing default or defaults),
could reasonably be expected to have a Material Adverse Effect.
(i) CHANGE IN CONTROL. Any person or group of persons (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended)
shall obtain ownership or control in one or more series of transactions of more
than thirty percent (30%) of the common stock or thirty percent (30%) of the
voting power of the Borrower entitled to vote in the election of members of the
board of directors of the Borrower or there shall have occurred under any
indenture or other instrument evidencing any Debt in excess of $5,000,000 any
"change in control" (as defined in such indenture or other evidence of Debt)
obligating the Borrower to repurchase, redeem or repay all or any part of the
Debt or capital stock provided for therein (any such event, a "CHANGE IN
Control").
(j) VOLUNTARY BANKRUPTCY PROCEEDING. The Borrower or any Restricted
Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of authorizing any
of the foregoing.
(k) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding shall
be commenced against the Borrower or any Restricted Subsidiary thereof in any
court of competent jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like for the Borrower or any Restricted Subsidiary thereof or
for all or any substantial part of their respective assets, domestic or foreign,
and such case or proceeding shall continue without dismissal or stay for a
period of sixty (60) consecutive days, or an order granting the relief requested
in such case or proceeding (including, but not limited to, an order for relief
under such federal bankruptcy laws) shall be entered.
(l) FAILURE OF AGREEMENTS. Any provision of this Agreement or any
provision of any other Loan Document shall for any reason cease to be valid and
binding on the Borrower or any Restricted Subsidiary party thereto or any such
Person shall so state in writing, or any Loan Document shall for any reason
cease to create a valid and perfected first priority Lien on, or
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security interest in, any of the collateral purported to be covered thereby, in
each case other than in accordance with the express terms hereof or thereof.
(m) TERMINATION EVENT. Except where the failure to do so could not
reasonably be expected to create a Material Adverse Effect, the occurrence of
any of the following events: (i) the Borrower or any ERISA Affiliate fails to
make full payment when due of all amounts which, under the provisions of any
Pension Plan or Section 412 of the Code, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, (ii) an accumulated funding deficiency
occurs or exists, whether or not waived, with respect to any Pension Plan, (iii)
a Termination Event or (iv) the Borrower or any ERISA Affiliate as employers
under one or more Multiemployer Plans makes a complete or partial withdrawal
from any such Multiemployer Plan and the plan sponsor of such Multiemployer
Plans notifies such withdrawing employer that such employer has incurred a
withdrawal liability.
(n) JUDGMENT. A judgment or order for the payment of money which causes
the aggregate amount of all such judgments to exceed $5,000,000 in any Fiscal
Year shall be entered against the Borrower or any of its Restricted Subsidiaries
by any court and such judgment or order shall continue without discharge or stay
for a period of thirty (30) days.
(o) ENVIRONMENTAL. Any one or more Environmental Claims shall have been
asserted against the Borrower or any of its Restricted Subsidiaries; the
Borrower and its Restricted Subsidiaries would be reasonably likely to incur
liability as a result thereof; and such liability would be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
(p) GOVERNMENT CONTRACTS. Any of the Borrower, its Restricted
Subsidiaries or Affiliates, (i) is debarred or suspended by any Governmental
Authority, or has been issued a notice of proposed debarment or notice of
proposed suspension by any Governmental Authority; (ii) is the subject of an
investigation by any Governmental Authority (other than a normal and customary
review) involving or possibly involving fraud or willful misconduct which could
reasonably be expected to result in criminal liability, civil liability or
expense in excess of $250,000, suspension, debarment or any other adverse
administrative action; and (iii) is a party to any Material Contract with any
Governmental Authority which has been actually terminated due to the Borrower's,
such Restricted Subsidiary's or Affiliate's alleged fraud or willful misconduct.
SECTION 12.2 REMEDIES. Upon the occurrence of an Event of Default
(which such Event of Default has not previously been cured or waived in
accordance with Section 14.11), 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:
(a) ACCELERATION; TERMINATION OF FACILITIES. Declare the principal of
and interest on the Loans, the Notes and the Reimbursement Obligations at the
time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the other Loan Documents
(including, without limitation, all L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented or
shall be entitled to present the documents required thereunder) and all other
Obligations (other than Hedging
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Obligations), to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facility and any right of the Borrower to request
borrowings or Letters of Credit thereunder; PROVIDED, that upon the occurrence
of an Event of Default specified in Section 12.1(j) or (k), the Credit Facility
shall be automatically terminated and all Obligations (other than Hedging
Obligations) shall automatically become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
anything in this Agreement or in any other Loan Document to the contrary
notwithstanding.
(b) LETTERS OF CREDIT. 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 Dollar Equivalent
amount of such Letters of Credit. 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 the other Obligations on a PRO RATA basis. After all such
Letters of Credit shall have expired or been fully drawn upon, the Reimbursement
Obligation shall have been satisfied and all other Obligations shall have been
paid in full, the balance, if any, in such cash collateral account shall be
returned to the Borrower.
(c) RIGHTS OF COLLECTION. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.
SECTION 12.3 RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the other Loan Documents or that may now or hereafter exist
at law or in equity or by suit or otherwise. No delay or failure to take action
on the part of the Administrative Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default. No course of
dealing between the Borrower, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
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ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1 APPOINTMENT. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this Agreement and the other Loan Documents for the term hereof and each such
Lender irrevocably authorizes First Union, as Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and such other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or such other Loan Documents, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Administrative Agent. Any reference to the
Administrative Agent in this Article XIII shall be deemed to refer to the
Administrative Agent solely in its capacity as Administrative Agent and not in
its capacity as a Lender. In performing its functions and duties under this
Agreement and each of the other Loan Documents or in connection with them and in
respect of anything relating to them, the Administrative Agent shall act solely
as the administrative agent of (but not as trustee for (except to the extent
specifically required pursuant to the Security Documents)) the Lenders, and the
Administrative Agent shall not have any fiduciary duty towards any Person
(except as expressly referred to above) or be under any obligation other than
those expressly provided for in this Agreement and any of the other Loan
Documents.
The Administrative Agent shall not in any way whatsoever assume, nor
shall it be deemed to have assumed, any obligation as agent of or trustee for,
or any relationship of agency or trust with or for, the Borrower or any
Subsidiary thereof.
SECTION 13.2 DELEGATION OF DUTIES. The Administrative Agent may execute
any of its respective duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care.
SECTION 13.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any of its Subsidiaries or
any officer thereof contained in this Agreement or the other Loan Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness,
87
enforceability or sufficiency of this Agreement or the other Loan Documents or
for any failure of the Borrower or any of its Subsidiaries to perform its
obligations hereunder or thereunder. The Administrative Agent shall not 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 to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, 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 the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 14.10. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
and the other Loan Documents unless it shall first receive such advice or
concurrence of the Required Lenders (or, when expressly required hereby or by
the relevant other Loan Documents, all the 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 except for its own gross negligence or
willful misconduct. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Notes in accordance with a request of the Required Lenders (or, when expressly
required hereby, all the 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 Notes.
SECTION 13.5 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless it 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 the Administrative Agent
receives such a notice, it shall promptly give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or,
when expressly required hereby, all the Lenders); PROVIDED that unless and until
the Administrative Agent shall have received such directions, the Administrative
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, EXCEPT to the extent that
other provisions of this Agreement expressly require that any such action be
taken or not be taken only with the consent and authorization or the request of
the Lenders or Required Lenders, as applicable.
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER
LENDERS. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has
88
made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent 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 creditworthiness of the Borrower and its
Subsidiaries and made its own decision to make its Loans and issue or
participate in Letters of Credit hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon 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 analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower and its
Subsidiaries. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder or by the
other Loan Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower or any of its Subsidiaries which may come into
the possession of the Administrative Agent or any of its respective officers,
directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 13.7 INDEMNIFICATION. The Lenders severally agree to indemnify
the Administrative Agent in its capacity as such and (to the extent that the
Administrative Agent shall be entitled to be, and shall not have been reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to the respective amounts of their Revolving Credit Commitment
Percentages and/or Term Loan Percentages, as applicable, 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 Notes or any Reimbursement Obligation) be imposed on, incurred by
or asserted against the Administrative Agent in any way relating to or arising
out of this Agreement or the other Loan Documents, or any documents, reports or
other information provided to the Administrative Agent or any Lender or
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent 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 the Administrative
Agent's bad faith, gross negligence or willful misconduct. The agreements in
this Section 13.7 shall survive the payment of the Notes, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of this
Agreement.
SECTION 13.8 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrower as though the
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Administrative Agent were not the Administrative Agent hereunder. With respect
to any Loans made or renewed by it and any Note issued to it and with respect to
any Letter of Credit issued by it or participated in by it, the Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
SECTION 13.9 RESIGNATION OF THE ADMINISTRATIVE AGENT; SUCCESSOR
ADMINISTRATIVE AGENT. Subject to the appointment and acceptance of a successor
as provided below, the Administrative Agent may resign at any time by giving
thirty (30) days notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000 (so long as no Default or Event of Default has occurred
and is continuing) and be reasonably acceptable to the Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the
Administrative Agent's giving of notice of resignation, then the Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which successor shall have minimum capital and surplus of at least $500,000,000
and be reasonably acceptable to the Borrower (so long as no Default or Event of
Default has occurred and is continuing). Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 13.9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
SECTION 13.10 TRUSTEE POWERS. Except as otherwise expressly provided in
this Agreement and any of the other Loan Documents, in its capacity as trustee
under certain of the Security Documents the Administrative Agent shall have:
(a) the benefit of all the provisions in this Article XIII and all
other agency, indemnification and exculpatory provisions set
forth in any other Loan Documents;
(b) all the powers of an absolute owner of the Lien constituted by
such Security Documents;
(c) the power of appointing new and/or additional trustees; and
(d) all the powers and discretions conferred on trustees by the
Trustee Act 1925 of the laws of England (to the extent not
inconsistent with this Agreement and the other Loan Documents)
and on the Administrative Agent by this Agreement and the
other Loan Documents (including without limitation the power
to invest all monies which are received by the Administrative
Agent under the trusts contained
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in such Security Documents in its name or under its control in
any investment for the time being authorized by United States,
English or other applicable law for the investment by trustees
of trust money or in any other investments which may be
selected by the Administrative Agent). Additionally, the
Administrative Agent shall have the power to place such monies
on deposit in its name or under its control at such bank or
institution (including at the Administrative Agent) and on
such terms as the Administrative Agent may determine.
SECTION 13.11 DOCUMENTATION AND SYNDICATION AGENT. The Documentation
and Syndication Agents, in their respective capacities as documentation and
syndication agents, shall have no duties or responsibilities under this
Agreement or any other Loan Document.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
(a) METHOD OF COMMUNICATION. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrower: DRS Technologies, Inc.
Corporate Headquarters
5 Sylvan Way
Parsippany, New Jersey 07054
Attention: Richard Schneider,
Executive Vice-President
Telephone No.: (973) 898-6021
Telecopy No.: (973) 898-0952
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If to First Union as First Union National Bank
Administrative Agent: Charlotte Plaza, CP-23
201 South College Street
Charlotte, North Carolina 28288-0680
Attention: Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
If to any Lender: To the address set forth on SCHEDULE 1 hereto
(c) ADMINISTRATIVE AGENT'S OFFICE. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Administrative Agent's Office referred to herein,
to which payments due are to be made and at which Loans will be disbursed and
Letters of Credit issued.
SECTION 14.2 EXPENSES; INDEMNITY. The Borrower will (a) pay all
reasonable out-of-pocket expenses of the Administrative Agent in connection with
(i) the preparation, execution and delivery of this Agreement and each other
Loan Document, whenever the same shall be executed and delivered, including,
without limitation, all out-of-pocket syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Administrative Agent and
(ii) the preparation, execution and delivery of any waiver, amendment or consent
by the Administrative Agent or the Lenders relating to this Agreement or any
other Loan Document, including, without limitation, reasonable fees and
disbursements of counsel for the Administrative Agent, (b) after the occurrence
and during the continuance of an Event of Default, pay all reasonable
out-of-pocket expenses of the Administrative Agent and each Lender actually
incurred in connection with the administration and enforcement of any rights and
remedies of the Administrative Agent and Lenders under the Credit Facility
including, without limitation, in connection with any workout, restructuring,
bankruptcy or other similar proceeding, creating and perfecting Liens in favor
of Administrative Agent on behalf of Lenders pursuant to any Security Document,
enforcing any Obligations of or collecting any payments due from the Borrower or
any Subsidiary Guarantor by reason of an Event of Default (including in
connection with the sale of, collection from, or other realization upon any of
the Collateral or the enforcement of the Subsidiary Guaranty Agreement,
consulting with appraisers, accountants, engineers, attorneys and other Persons
concerning the nature, scope or value of any right or remedy of the
Administrative Agent or any Lender hereunder or under any other Loan Document or
any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such Persons, and
(c) defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any losses, penalties, fines,
liabilities, settlements, damages, costs and expenses, suffered by any such
Person in connection with any claim (including, without limitation, any
Environmental Claims), investigation, litigation or other proceeding (whether or
not the Administrative Agent or any Lender is a party thereto) and the
prosecution and defense thereof, arising out of or in any way connected with the
Loans, this Agreement, any other Loan Document, or any documents, reports or
other information provided to the Administrative Agent or any Lender or
contemplated by or referred
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to herein or therein or the transactions contemplated hereby or thereby,
including, without limitation, reasonable attorney's and consultant's fees,
except to the extent that any of the foregoing directly result from the gross
negligence or willful misconduct of the party seeking indemnification therefor.
SECTION 14.3 SET-OFF. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 14.10 are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrower against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 12.2 and although such Obligations shall be contingent or unmatured.
Notwithstanding the preceding sentence, each Lender agrees to notify within
three (3) Business Days the Borrower and the Administrative Agent after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
SECTION 14.4 GOVERNING LAW. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of New York
(including Section 5-1401 and Section 5-1402 of the General Obligations Law of
the State of New York), without regard to the conflicts of law provisions of
such state.
SECTION 14.5 JURISDICTION AND VENUE.
(a) JURISDICTION. The Borrower hereby irrevocably consents to the
personal jurisdiction of the state and federal courts located in New York, New
York (and any courts from which an appeal from any of such courts must or may be
taken), in any action, claim or other proceeding arising out of any dispute in
connection with this Agreement, the Notes and the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations. The Borrower hereby irrevocably consents to the service of a
summons and complaint and other process in any action, claim or proceeding
brought by the Administrative Agent or any Lender in connection with this
Agreement, the Notes or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its property, in the manner specified in Section 14.1.
Nothing in this Section 14.5 shall affect the right of the Administrative Agent
or any Lender to serve legal process in any other manner permitted by Applicable
Law or affect the right of the Administrative Agent or any Lender to bring any
action or proceeding against the Borrower or its properties in the courts of any
other jurisdictions.
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(b) VENUE. The Borrower hereby irrevocably waives any objection it may
have now or in the future to the laying of venue in the aforesaid jurisdiction
in any action, claim or other proceeding arising out of or in connection with
this Agreement, any other Loan Document or the rights and obligations of the
parties hereunder or thereunder. The Borrower irrevocably waives, in connection
with such action, claim or proceeding, any plea or claim that the action, claim
or other proceeding has been brought in an inconvenient forum.
SECTION 14.6 BINDING ARBITRATION; WAIVER OF JURY TRIAL.
(a) BINDING ARBITRATION. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Agreement or any
other Loan Document ("DISPUTES"), between or among parties hereto and to the
other Loan Documents shall be resolved by binding arbitration as provided
herein. Institution of a judicial proceeding by a party does not waive the right
of that party to demand arbitration hereunder. Disputes may include, without
limitation, tort claims, counterclaims, claims brought as class actions, claims
arising from Loan Documents executed in the future, disputes as to whether a
matter is subject to arbitration, or claims concerning any aspect of the past,
present or future relationships arising out of or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "ARBITRATION RULES") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. All
arbitration hearings shall be conducted in New York, New York or Charlotte,
North Carolina. The expedited procedures set forth in Rule 51, ET SEQ. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitations shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. Notwithstanding
anything foregoing to the contrary, any arbitration proceeding demanded
hereunder shall begin within ninety (90) days after such demand thereof and
shall be concluded within one hundred twenty (120) days after such demand. These
time limitations may not be extended unless a party hereto shows cause for
extension and then such extension shall not exceed a total of sixty (60) days.
The panel from which all arbitrators are selected shall be comprised of licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted. The parties hereto do not
waive any applicable Federal or state substantive law except as provided herein.
Notwithstanding the foregoing, this paragraph shall not apply to any Hedging
Agreement.
(b) JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWER
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY
WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) PRESERVATION OF CERTAIN REMEDIES. Notwithstanding the preceding
binding
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arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale granted in the
Loan Documents or under Applicable Law or by judicial foreclosure and sale,
including a proceeding to confirm the sale, (ii) all rights of self help
including peaceful occupation of property and collection of rents, set off, and
peaceful possession of property, (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and in filing an involuntary bankruptcy proceeding, and
(iv) when applicable, a judgment by confession of judgment. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
SECTION 14.7 REVERSAL OF PAYMENTS. To the extent the Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
otherwise required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause (whether
by demand, settlement, litigation or otherwise), then, to the extent of such
payment or proceeds repaid, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if such
payment or proceeds had not been received by the Administrative Agent.
SECTION 14.8 INJUNCTIVE RELIEF; PUNITIVE DAMAGES.
(a) The Borrower recognizes that, in the event the Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, the Borrower agrees that the Lenders, at the Lenders' option, shall
be entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(b) The Administrative Agent, the Lenders and the Borrower (on behalf
of itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
SECTION 14.9 ACCOUNTING MATTERS. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time, provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the
95
Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance therewith.
SECTION 14.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that the Borrower shall not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) ASSIGNMENT BY LENDERS. Each Lender may, in the ordinary course of
its business and in accordance with Applicable Law, sell or assign to any
Lender, any Affiliate of a Lender or in the case of the Term Loans any Approved
Fund and with the consent of the Borrower (so long as no Default or Event of
Default has occurred and is continuing) and the consent of the Administrative
Agent, which consents shall not be unreasonably withheld or delayed, assign to
one or more other Eligible Assignees (any of the forgoing assignees or
purchasers, a "Purchasing Lender") all or a portion of its interests, rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of the Extensions of Credit at the time
owing to it and the Notes held by it); PROVIDED that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of the Revolving Credit Commitment and/or the Term
Loan Commitment, as applicable, of the assigning Lender's rights and
obligations under this Agreement;
(ii) if less than all of the assigning Lender's Revolving
Credit Commitment or Term Loan Commitment, as applicable, is to be
assigned, the Commitment so assigned shall not be less than $5,000,000
with respect to the Revolving Credit Facility and $1,000,000 (or
otherwise agreed by the Administrative Agent and Borrower) with respect
to the Term Loan Facility, UNLESS such sale or assignment is made to an
existing Lender, to an Affiliate thereof, or (with respect to any Term
Loan) to an Approved Fund, in which case no minimum amount shall apply;
(iii) the Purchasing Lender shall have delivered to the
Administrative Agent all United States Internal Revenue Service Forms
required pursuant to Section 5.11(e) and all of the parties to each
such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register, an Assignment and
Acceptance substantially in the form of EXHIBIT G attached hereto (an
"ASSIGNMENT AND ACCEPTANCE"), together with (to the extent requested by
any Purchasing Lender) any Note or Notes subject to such assignment;
(iv) no assignment of a Revolving Credit Commitment, or
participation in L/C Obligations or Swingline Loans shall be made
without the prior written consent of the
96
Administrative Agent, the Swingline Lender, the Issuing Lender and (so
long as no Default or Event of Default has occurred and is continuing)
the Borrower (which consents shall not be unreasonably withheld);
(v) where consent of the Borrower to an assignment to a
Purchasing Lender is required hereunder (including consent to an
assignment to an Approved Fund), the Borrower shall be deemed to have
given its consent five (5) Business Days after the date written notice
thereof has been delivered by the assigning Lender (through the
Administrative Agent) unless such consent is expressly refused by the
Borrower prior to such fifth (5th) Business Day;
(vi) such assignment shall not, without the consent of the
Borrower, require the Borrower to file a registration statement with
the Securities and Exchange Commission or apply to or qualify the Loans
or the Notes under the blue sky laws of any state; and
(vii) the assigning Lender shall pay to the Administrative
Agent an assignment fee of $2,500 upon the execution by such Lender of
the Assignment and Acceptance; PROVIDED that no such fee shall be
payable upon any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof (unless
otherwise agreed to by the Administrative Agent), (A) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) RIGHTS AND DUTIES UPON ASSIGNMENT. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the Purchasing
Lender thereunder confirm to and agree with each other and the other parties
hereto as set forth in such Assignment and Acceptance.
(d) REGISTER. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance and each Lender Addition and Acknowledgment delivered
to it and a register for the recordation of the names and addresses of the
Lenders and the amount of the Extensions of Credit with respect to each Lender
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) ISSUANCE OF NEW NOTES. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and a Purchasing Lender together with
any Note or Notes (if
97
applicable) subject to such assignment and (if applicable) the written consent
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of EXHIBIT G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower; and
(iv) promptly deliver a copy of such Assignment and Acceptance
to the Borrower.
Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Purchasing Lender (to
the extent requested thereby) in amounts equal to the Revolving Credit
Commitment and/or Term Loan Commitment assumed by it pursuant to such Assignment
and Acceptance and a new Note or Notes to the order of the assigning Lender (to
the extent requested thereby) in an amount equal to the Revolving Credit
Commitment and/or Term Loan Commitment retained by it hereunder. Such new Note
or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of the assigned Notes delivered to the assigning Lender. Each
surrendered Note or Notes shall be canceled and returned to the Borrower.
Notwithstanding anything in this Agreement to the contrary, any Lender which has
not been issued a Note or Notes hereunder may at any time deliver a written
request for a Note or Notes to the Administrative Agent and Borrower. Within
five (5) Business Days after receipt of notice, the Borrower shall execute and
deliver to the Administrative Agent, a Note or Notes (as applicable) to the
order of such Lender in amounts equal to the Revolving Credit Commitment and/or
Term Loan Commitment of such Lender. Upon receipt thereby, the Administrative
Agent shall promptly deliver such Note or Notes to such Lender.
(f) PARTICIPATIONS. Each Lender may, without notice to or the consent
of the Borrower or the Administrative Agent, in the ordinary course of its
commercial banking business and in accordance with Applicable Law, sell
participations to one or more banks or other entities (any such bank or other
entity, a "Participant") in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); PROVIDED that:
(i) such Lender's obligations under this Agreement (including,
without limitation, its Revolving Credit Commitment and/or Term Loan
Commitment, as applicable) shall remain unchanged;
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
98
(iii) such Lender shall remain the holder of the Notes held by
it for all purposes of this Agreement;
(iv) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement;
(v) such Lender shall not permit such Participant the right to
approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan or Reimbursement Obligation, extend the term or increase
the amount of the Revolving Credit Commitment and/or Term Loan
Commitment of such Lender, reduce the amount of any fees to which such
Participant is entitled, extend any scheduled payment date for
principal of any Loan or, except as expressly contemplated hereby or
thereby, release substantially all of the Collateral; and
(vi) any such disposition shall not, without the consent of
the Borrower, require the Borrower to file a registration statement
with the Securities and Exchange Commission or apply to qualify the
Loans or the Notes under the blue sky law of any state.
The Borrower agrees that each Participant shall be entitled to the
benefits of Section 5.7, Section 5.8, Section 5.9, Section 5.10, Section 5.11
and Section 14.3 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section 14.10; PROVIDED
that a Participant shall not be entitled to receive any greater payment under
Section 5.7, Section 5.8, Section 5.9, Section 5.10, and Section 5.11 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent and such
Participant shall have delivered to the Administrative Agent all United States
Internal Revenue Service Forms required pursuant to Section 5.11(e).
(g) DISCLOSURE OF INFORMATION; CONFIDENTIALITY. The Administrative
Agent and the Lenders shall hold all non-public information with respect to the
Borrower obtained pursuant to the Loan Documents (or any Hedging Agreement with
a Lender or the Administrative Agent) in accordance with their customary
procedures for handling confidential information; PROVIDED, that the
Administrative Agent may disclose information relating to this Agreement to GOLD
SHEETS and other similar bank trade publications, such information to consist of
deal terms and other information customarily found in such publications and
PROVIDED FURTHER, that the Administrative Agent or any Lender may disclose any
such information to the extent such disclosure is (i) required by law or
requested or required pursuant to any legal process, (ii) requested by, or
required to be disclosed to, any rating agency, or regulatory or similar
authority (including, without limitation, the National Association of Insurance
Commissioners) or (iii) used in any suit, action or proceeding for the purpose
of defending itself, reducing its liability or protecting any of its claims,
rights, remedies or interests under or in connection with the Loan Documents (or
any Hedging Agreement with a Lender or the Administrative Agent). Any Lender
may, in connection with any assignment, proposed assignment, participation or
proposed participation
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pursuant to this Section 14.10, disclose to the Purchasing Lender, proposed
Purchasing Lender, Participant, proposed Participant, or to any direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; PROVIDED, that prior
to any such disclosure, each such Purchasing Lender, proposed Purchasing Lender,
Participant, proposed Participant, contractual counterparty or professional
advisor shall agree to be bound by the provisions of this Section 14.10(g).
(h) CERTAIN PLEDGES OR ASSIGNMENTS. Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement or any other Loan Document to secure obligations of such Lender,
including without limitation any pledge or assignment to secure obligations to a
Federal Reserve Bank; PROVIDED that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 14.11 AMENDMENTS, WAIVERS AND CONSENTS. Except as set forth
below or as specifically provided in any Loan Document, any term, covenant,
agreement or condition of this Agreement or any of the other Loan Documents may
be amended or waived by the Lenders, and any consent given by the Lenders, if,
but only if, such amendment, waiver or consent is in writing signed by the
Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and delivered to the Administrative Agent and, in the case of
an amendment, signed by the Borrower; PROVIDED, that no amendment, waiver or
consent shall:
(a) (i) increase the Revolving Credit Commitment of any
Lender, (ii) reduce the rate of, or forgive any, interest or fees
payable on any Revolving Credit Loan or Reimbursement Obligation, (iii)
reduce or forgive the principal amount of any Revolving Credit Loan or
Reimbursement Obligation, (iv) extend the originally scheduled time or
times of payment of the principal of any Revolving Credit Loan or
Reimbursement Obligation or the time or times of payment of interest on
any Revolving Credit Loan or Reimbursement Obligation or any fee or
commission with respect hereto, (v) permit any subordination of the
principal or interest on any Revolving Credit Loan or Reimbursement
Obligation or (vi) extend the time of the obligation of the Revolving
Credit Commitment Lenders to make or issue or participate in Letters or
Credit or Swingline Loans, in any case, without the written consent of
each Lender holding Revolving Credit Loans or a Revolving Credit
Commitment;
(b) (i) except as otherwise provided in Section 4.6, increase
the Term Loan Commitment of any Lender, (ii) reduce the rate of, or
forgive any, interest or fees payable on any Term Loan, (iii) reduce or
forgive the principal amount of any Term Loan, (iv) permit any
subordination of the principal or interest on, or any Lien securing,
any Term Loan or (v) extend the originally scheduled time or times of
payment of the principal of any Term Loan or the time or times of
payment of interest on any Term Loan or any fee or commission with
respect thereto, in any case, without the written consent of each
Lender holding a Term Loan or a Term Loan Commitment;
(c) release any material portion of the Collateral or release
any Security
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Document or release any Subsidiary Guarantor (other than in connection
with the redesignation of a Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with Section 9.11, with a sale of assets
permitted pursuant to Section 11.5, or as otherwise specifically
permitted in this Agreement or the applicable Security Document), amend
the provisions of this Section 14.11, or amend the definition or
percentage of Required Lenders without the written consent of each
Lender or amend the definition, or any percentage therein, of Borrowing
Base; or
(d) release any Borrower from all or any material portion of
the Obligations (other than Hedging Obligations) hereunder or under any
other Loan Document or permit any assignment (other than as
specifically permitted or contemplated in this Agreement or any other
Loan Document) of any Borrower's rights and obligations hereunder or
under any other Loan Document without the written consent of each
Lender.
In addition, no amendment, waiver or consent to the provisions of (a) Article
XIII shall be made without the written consent of the Administrative Agent and
(b) Article III without the written consent of the Issuing Lender.
SECTION 14.12 PERFORMANCE OF DUTIES. The Borrower's obligations under
this Agreement and each of the other Loan Documents shall be performed by the
Borrower at its sole cost and expense.
SECTION 14.13 SYNDICATION OF CREDIT FACILITY. The Administrative Agent
shall be entitled, after consultation with the Borrower, to change the pricing,
terms or structure of the Credit Facility, either before or after the Closing
Date, if the Administrative Agent determines in its sole discretion that such
changes are advisable in order to ensure a successful syndication or an optimal
capital structure; PROVIDED, that the aggregate amount of the Credit Facility
shall remain unchanged.
SECTION 14.14 ALL POWERS COUPLED WITH INTEREST. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied, any of the Commitments remain in
effect or the Credit Facility has not been terminated.
SECTION 14.15 SURVIVAL OF INDEMNITIES. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XV and any other
provision of this Agreement and the other Loan Documents shall continue in full
force and effect and shall protect the Administrative Agent and the Lenders
against events arising after such termination as well as before.
SECTION 14.16 TITLES AND CAPTIONS. Titles and captions of Articles,
Sections and subsections in, and the table of contents of, this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement.
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SECTION 14.17 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 14.18 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 14.19 TERM OF AGREEMENT. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
arising hereunder or under any other Loan Document shall have been indefeasibly
and irrevocably paid and satisfied in full and all Commitments have been
terminated. The Administrative Agent is hereby permitted to release all Liens on
the Collateral in favor of the Administrative Agent, for the ratable benefit of
itself and the Lenders, upon repayment of the outstanding principal of and all
accrued interest on the Loans, payment of all outstanding fees and expenses
hereunder and the termination of the Lender's Commitments. No termination of
this Agreement shall affect the rights and obligations of the parties hereto
arising prior to such termination or in respect of any provision of this
Agreement which survives such termination.
SECTION 14.20 ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Agreement with its counsel.
SECTION 14.21 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
SECTION 14.22 INCONSISTENCIES WITH OTHER DOCUMENTS; INDEPENDENT EFFECT
OF COVENANTS.
(a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control; PROVIDED, that any provision of the Security Documents which imposes
additional burdens on the Borrower or its Subsidiaries or further restricts the
rights of the Borrower or its Subsidiaries or gives the Administrative Agent or
Lenders additional rights shall not be deemed to be in conflict or inconsistent
with this Agreement and shall be given full force and effect.
(b) The Borrower expressly acknowledges and agrees that each covenant
contained in Articles IX, X, or XI hereof shall be given independent effect.
Accordingly, the Borrower shall not engage in any transaction or other act
otherwise permitted under any covenant contained in Articles IX, X, or XI if,
before or after giving effect to such transaction or act, the Borrower shall or
would be in breach of any other covenant contained in Articles IX, X, or XI.
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[Signature pages to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
[CORPORATE SEAL] DRS TECHNOLOGIES, INC., as Borrower
By:
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Name:
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Title:
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FIRST UNION NATIONAL BANK,
as Administrative Agent and Lender
By:
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Name:
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Title:
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[ADDITIONAL LENDERS], as Lender
By:
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Name:
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Title:
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ACKNOWLEDGED AND AGREED: [SUBSIDIARY GUARANTORS],
as Subsidiary Guarantor
By:
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Name:
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Title:
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