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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000927016-02-001497.txt : 20020415
<SEC-HEADER>0000927016-02-001497.hdr.sgml : 20020415
ACCESSION NUMBER: 0000927016-02-001497
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 16
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020319
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RAYTHEON CO/
CENTRAL INDEX KEY: 0001047122
STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812]
IRS NUMBER: 951778500
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13699
FILM NUMBER: 02578216
BUSINESS ADDRESS:
STREET 1: 141 SPRING STREET
STREET 2: C/O RAYTHEON CO
CITY: LEXINGTON
STATE: MA
ZIP: 02421
BUSINESS PHONE: 7818626600
MAIL ADDRESS:
STREET 1: 141 SPRING STREET
STREET 2: BLDG CO1/MS A114
CITY: LEXINGTON
STATE: MA
ZIP: 02421
FORMER COMPANY:
FORMER CONFORMED NAME: HE HOLDINGS INC
DATE OF NAME CHANGE: 19971001
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d10k.txt
<DESCRIPTION>FORM 10-K
<TEXT>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 2001.
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from....... to
........
Commission File Number 1-13699
RAYTHEON COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-1778500
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02421
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (781) 862-6600
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on
Common Stock, $.01 par value Which Registered
Series A Junior Participating New York Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
Pacific Exchange
Equity Security Units New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of February 24, 2002, was approximately $14.9 billion.
Number of shares of Common Stock outstanding as of February 24, 2002:
396,744,000.
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Documents incorporated by reference and made a part of this Form 10-K:
<TABLE>
<S> <C>
Portions of Raytheon's Annual Report to Stockholders Part I, Part II, Part IV
for the fiscal year ended December 31, 2001
Portions of the Proxy Statement for Raytheon's Part III
2002 Annual Meeting which will be filed with the Commission within
120 days after the close of Raytheon's fiscal year
</TABLE>
PART I
Item 1. Business
GENERAL
Raytheon Company ("Raytheon" or the "Company"), with worldwide 2001 sales of
$16.9 billion, is a leader in defense electronics, including missiles; radar;
sensors and electro-optics; intelligence, surveillance and reconnaissance;
command, control, communication and information systems; naval systems; air
traffic control systems; aircraft integration systems; and technical services.
Raytheon's commercial electronics businesses leverage defense technologies in
commercial markets. Raytheon Aircraft is one of the leading providers of
business and special mission aircraft and delivers a broad line of jet,
turboprop, and piston-powered airplanes to corporate and government customers
world-wide.
BUSINESS SEGMENTS
Electronic Systems. The Electronic Systems segment ("ES") focuses on
anti-ballistic missile systems; air defense; air-to-air, surface-to-air, and
air-to-surface missiles; naval and maritime systems; ship self-defense systems;
torpedoes; strike, interdiction and cruise missiles; and advanced munitions. ES
also specializes in radar, electronic warfare, infrared, laser, and GPS
technologies with programs focusing on land, naval, airborne and spaceborne
systems used for surveillance, reconnaissance, targeting, navigation, commercial
and scientific applications.
ES produces the Patriot ground-based air defense missile system, which is
capable of tracking and intercepting enemy aircraft, cruise missiles, and
tactical ballistic missiles. In addition to the U.S., eight nations have
selected Patriot as an integral part of their air defense systems. Since the end
of the Gulf War in 1991, Raytheon has received approximately $3.5 billion in
international orders for Patriot equipment and services. In addition, ES leads
Raytheon's efforts as the prime contractor for the Hawk ground-launched missile,
which is in service with the U.S. and 18 allied nations.
ES develops ground-based phased-array radars, including the X-Band Radar (XBR)
and Upgrade Early Warning Radar (UEWR) for Ground-based Midcourse Defense (GMD),
as well as the Ground-Based Radar (GBR) for the Theater High Altitude Area
Defense (THAAD) system, part of the U.S. Army's Theater Missile Defense Program.
It also is developing next-generation theater missile interceptors for the Navy
Theater Wide (NTW) systems and the Exoatmospheric Kill Vehicle (EKV) for the GMD
program.
ES manufactures the primary air-to-air missile for the U.S. Air Force and Navy
fighter aircraft - the Advanced Medium Range Air-to-Air Missile (AMRAAM), and is
developing the AIM-9X (short-range air-to-air missile). Other missiles produced
by ES include Tomahawk, TOW, Stinger, Maverick, Standard, the High Speed
Anti-Radiation Missile (HARM), Paveway laser-guided bombs, Extended Range Guided
Munitions (ERGM), XM-982, Joint Stand Off Weapon (JSOW), and Javelin (as part of
a joint venture).
ES also leads Raytheon's efforts as the prime contractor for the NATO
Sea-Sparrow Surface to Air Missile System (NSSMS), as well as producing the
air-and surface-launched versions of the Sparrow missile for both the U.S. and
foreign Navies. ES produces Phalanx and the Rolling Airframe Missile (RAM),
which the U.S. and foreign Navies use as part of the ship self-defense system.
ES develops sonars, combat control systems, mine hunting equipment and torpedoes
for submarines and ships in U.S. and allied fleets, in addition to designing
unmanned underwater
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vehicles. ES produces a variety of shipboard radar systems. ES also leads
Raytheon's development efforts on the U.S. Navy's next generation of surface
combatant ships, the DD-X.
ES airborne radars are deployed on four operational tactical fighter aircraft
operated by U.S. forces (the F-14, F-15, F/A-18, and the AV-8B) and
international customers, as well as radars for the AC-130U gunship and the B-2
Stealth Bomber. ES is also part of a joint venture providing the next generation
airborne radar for the F-22 aircraft. The segment provides the Forward Looking
Infrared (FLIR) and designation system for the F-117 Stealth Fighter, the
infrared subsystem for the F/A-18 targeting pod, and the Advanced Targeting FLIR
for the F/A-18.
ES supplies integrated sensor suites for applications such as the Global Hawk
Unmanned Aerial Vehicle Reconnaissance System, which includes a synthetic
aperture radar and electro-optical/infrared sensors. ES surveillance and
reconnaissance systems are used on a variety of aircraft, such as the British
Tornado, the U.S. Air Force U-2 and the U.S. Navy P-3 Orion. Through a joint
venture, ES is developing next generation airborne ground surveillance radar,
which will be scalable for multiple platforms. ES also provides space sensors
for defense and scientific applications.
ES night vision and fire control systems equip combat vehicles like the M1
Abrams tank, Bradley Fighting Vehicle and a host of light armored vehicles,
ships and submarines, and aircraft. The segment also puts state of the art
technology in the hands of the infantry.
The segment's surface radar products include radars for intelligence/data
collection, spacetrack, deep space surveillance, missile warning and imaging and
command and control radars. Tactical radars include battlefield radars for
Forward Area Air Defense Systems and hostile weapons locating radars.
Command, Control, Communication and Information Systems. The Command, Control,
Communication and Information Systems segment ("C3I") is classified into five
principal businesses. They are: Intelligence, Surveillance, Reconnaissance
("ISR"), Air Traffic Management ("ATM"), Command and Control / Battle Management
("C2BM"), Communications and Information Technology / Information Systems.
C3I products include command, control and communication systems; air traffic
control automation and radar systems; tactical radios; satellite communication
and ground control terminals; wide area surveillance systems; ground-based
information processing systems; image processing; large scale information
retrieval, processing and distribution systems; global broadcast systems and
secure information technology solutions.
In the ISR business, C3I is a leading provider of remote sensing and processing
for national intelligence systems as well as control and mission management
systems for Unmanned Aerial Vehicles (UAVs). C3I designed and developed systems
that provide real-time battlefield information, signal intelligence and
multi-source intelligence integration to the US Air Force and several Government
agencies. C3I also participates in the commercial ISR marketplace as the prime
contractor for the Brazilian System for the Vigilance of the Amazon (SIVAM)
program, which will provide an integrated information network that will be used
to enable the Brazilian Government to protect the environment, improve air
safety and weather forecasting, manage land occupation and usage, and enable
effective law enforcement and border control.
C3I designs and installs air traffic and weather management systems around the
world, including large-scale software based control automation systems and
stand-alone radar. C3I is the largest air traffic automation and radar systems
supplier to the Federal Aviation Administration (FAA). Internationally, Raytheon
has installed numerous air traffic control systems and is currently providing
ATM systems and radar for: Australia, Canada, Cyprus, Germany, Hong Kong, India,
Indonesia, Norway, the People's Republic of China, Switzerland and Taiwan.
In communications, C3I is a leading supplier of battlefield tactical radios and
satellite ground terminals. The C3I Satcom programs group supplies Satcom
terminals to the Navy, the Army and Air Force. C3I's C2BM programs group
designs, develops and delivers tactical command and control systems that provide
the means to effectively execute conventional and special operations missions.
C2BM addresses market segments of fire control, joint command and control,
sensor networking, modeling and simulation, command centers, sensor fusion and
correlation, and command vehicles for a variety of military and non-military
users.
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<PAGE>
C3I also performs contracts involving information technology, for several U.S.
Government Departments and Agencies including Energy, Education, the Army and
Navy as well as NASA. C3I efforts in this regard involve providing for
information assurance, knowledge management, data storage and retrieval systems,
web-based information systems and high performance computing.
Raytheon Technical Services Company. Raytheon Technical Services Company
("RTSC") provides technical services, training programs, and logistics and base
operations support throughout the U.S. and in 22 other countries.
RTSC performs complete engineering and depot-level cradle-to-grave support for
Raytheon-manufactured equipment and for various commercial and military
customers. Services provided include installation and test of upgrades to
deployed systems; engineering design, planning, and testing; repair and
refurbishment of U.S. Department of Defense ("DoD") equipment; software
engineering support; data management; preparation of technical manuals; training
for allied forces; system and facility installations; field testing and
evaluation; field engineering; and system operation and maintenance.
RTSC is a world leader in providing and supporting range instrumentation systems
and bases worldwide for the DoD. It also provides missile range calibration
services for the U.S. Air Force, trains U.S. Army personnel in battlefield
tactics and supports undersea testing and evaluation for the U.S. Navy. RTSC
provides operations and engineering support to the Atlantic Underwater Test and
Evaluation Center, range technical support, and facilities maintenance at
several DoD facilities, including the U.S. Army's missile testing range in the
Kwajalein Atoll. It also provides base operations support to DoD facilities on
Guam, Johnston Atoll and other locations.
RTSC supplies professional services to a broad range of customers in the areas
of space and earth sciences, scientific data management, transportation
management, remote sensing, and computer networking. RTSC also supports the U.S.
Government's demilitarization activities in countries of the former Soviet Union
and the development and operation of Space Shuttle and Space Station simulators
for NASA's Johnson Space Center. It also provides logistics and science support
for the National Science Foundation's Antarctica program.
Aircraft Integration Systems. The Aircraft Integration Systems segment ("AIS")
focuses on the integration of airborne surveillance and intelligence systems and
aircraft modifications. AIS develops and integrates complex electronic systems
for airborne Intelligence, Surveillance, and Reconnaissance missions. In
addition, AIS modernizes aging aircraft through structural refurbishment and
electronics upgrades. AIS also provides support to Special Operations forces. In
March 2002, the Company sold AIS.
Commercial Electronics. Raytheon's commercial electronics businesses produce,
among other things, thin film filters for optical communications products,
gallium arsenide MMIC components for direct broadcast satellite television
receivers, gallium arsenide power amplifiers for wireless communications
products, wireless broadband solutions, thermal imaging products for the public
safety, industrial and automotive markets, automobile radar systems, marine
electronics for the commercial and military marine market, and other electronic
components for a wide range of applications.
Aircraft. Raytheon Aircraft offers a broad product line of aircraft and aviation
services in the general aviation market. Raytheon Aircraft manufactures, markets
and supports piston-powered aircraft, turboprops and business jets for the
world's commercial, regional airlines and military aircraft markets.
Raytheon Aircraft's piston-powered aircraft line includes the single-engine
Beech Bonanza and the twin-engine Beech Baron aircraft for business and personal
flying. The segment's King Air turboprop series includes the Beech King Air
C90B, B200, and 350. The jet line includes the Premier I entry-level jet,
Beechjet 400A lightjet and the Hawker 800XP midsize business jet. Raytheon
Aircraft also produces a 19-passenger regional airliner. A new super midsize
business jet, the Hawker Horizon, is currently in development, with anticipated
airplane certification and delivery in 2003.
The segment supplies aircraft training systems, including the T-6A trainer
selected as the next-generation trainer for the U.S. Air Force and Navy under
the Joint Primary Aircraft Training System (JPATS). Raytheon Aircraft produces
special mission aircraft, including militarized versions of the King Airs and
the U-125 search-and-rescue
4
<PAGE>
variant of the Hawker 800.
During 2001, the Company divested a 74 percent interest in Raytheon Aerospace
which provides contractor logistics and training support for military and
government aircraft around the world. Raytheon Aircraft Services operates a
network of business aviation service operations at airports across the U.S., in
the U.K. and Mexico. Raytheon Aircraft Parts and Inventory Distribution (RAPID)
is Raytheon Aircraft's exclusive world-wide parts wholesale distributor.
Raytheon Aircraft Charter and Management offers aircraft charter and management
services to the U.S. market.
Raytheon Travel Air sells fractional shares in aircraft and provides aircraft
management and transportation services for the owners of the shares. The Travel
Air program includes the Hawker 800XP, Beechjet 400A and the King Air B200. The
company has announced its intention to combine the Raytheon Travel Air
fractional aircraft business with Flight Options in a transaction which is
expected to close during the first quarter of 2002.
Divestitures
Consistent with Raytheon's strategy of focusing on and streamlining core
businesses and paying down debt, the Company divested a number of business units
in 2001. Cash proceeds from divestitures and sales of investments totaled $266
million.
SALES TO THE UNITED STATES GOVERNMENT
Sales to the United States Government (the "Government"), principally to the
Department of Defense, were $12.0 billion in 2001 and $11.1 billion in 2000,
representing 71% of total sales in 2001 and 66% of total sales in 2000. Of these
sales, $0.6 billion in 2001 and $0.5 billion in 2000 represented purchases made
by the Government on behalf of foreign governments.
GOVERNMENT CONTRACTS
The Company and its various subsidiaries act as a prime contractor or major
subcontractor for many different Government programs, including those that
involve the development and production of new or improved weapons or other types
of electronic systems or major components of such systems. Over its lifetime, a
program may be implemented by the award of many different individual contracts
and subcontracts. The funding of Government programs is subject to congressional
appropriations. Although multi-year contracts may be authorized in connection
with major procurements, Congress generally appropriates funds on a fiscal year
basis even though a program may continue for many years. Consequently, programs
are often only partially funded initially, and additional funds are committed
only as Congress makes further appropriations. The Government is required to
adjust equitably a contract price for additions or reductions in scope or other
changes ordered by it.
Generally, Government contracts are subject to oversight audits by Government
representatives, and, in addition, they include provisions permitting
termination, in whole or in part, without prior notice at the Government's
convenience upon the payment of compensation only for work done and commitments
made at the time of termination. In the event of termination for convenience,
the contractor will receive some allowance for profit on the work performed. The
right to terminate for convenience has not had any material adverse effect upon
Raytheon's business in light of its total Government business.
The Company's Government business is performed under both cost reimbursement and
fixed price prime contracts and subcontracts. Cost reimbursement contracts
provide for the reimbursement of allowable costs plus the payment of a fee.
These contracts fall into three basic types: (i) cost plus fixed fee contracts
which provide for the payment of a fixed fee irrespective of the final cost of
performance; (ii) cost plus incentive fee contracts which provide for increases
or decreases in the fee, within specified limits, based upon actual results as
compared to contractual targets relating to such factors as cost, performance
and delivery schedule; and (iii) cost plus award fee contracts which provide for
the payment of an award fee determined at the discretion of the customer based
upon the performance of the contractor against pre-established criteria. Under
cost reimbursement type contracts, Raytheon is reimbursed periodically for
allowable costs and is paid a portion of the fee based on contract progress.
Some costs incident to performing contracts have been made partially or wholly
unallowable by statute or regulation. Examples are
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charitable contributions, certain merger and acquisition costs, lobbying costs
and certain litigation defense costs.
The Company's fixed-price contracts are either firm fixed-price contracts or
fixed-price incentive contracts. Under firm fixed-price contracts, Raytheon
agrees to perform a specific scope of work for a fixed price and as a result
benefits from cost savings and carries the burden of cost overruns. Under
fixed-price incentive contracts, Raytheon shares with the Government savings
accrued from contracts performed for less than target costs and costs incurred
in excess of targets up to a negotiated ceiling price (which is higher than the
target cost) and carries the entire burden of costs exceeding the negotiated
ceiling price. Accordingly under such incentive contracts, the Company's profit
may also be adjusted up or down depending upon whether specified performance
objectives are met. Under firm fixed-price and fixed-price incentive type
contracts, the Company usually receives either milestone payments equaling 90%
of the contract price or monthly progress payments from the Government generally
in amounts equaling 75% or 80% of costs incurred under Government contracts. The
remaining amount, including profits or incentive fees, is billed upon delivery
and final acceptance of end items under the contract.
The Company's Government business is subject to specific procurement regulations
and a variety of socio-economic and other requirements. Failure to comply with
such regulations and requirements could lead to suspension or debarment, for
cause, from Government contracting or subcontracting for a period of time. Among
the causes for debarment are violations of various statutes, including those
related to procurement integrity, export control, government security
regulations, employment practices, the protection of the environment, the
accuracy of records and the recording of costs.
Under many Government contracts, the Company is required to maintain facility
and personnel security clearances complying with DoD requirements.
Companies which are engaged in supplying defense-related equipment to the
Government are subject to certain business risks, some of which are peculiar to
that industry. Among these are: the cost of obtaining trained and skilled
employees; the uncertainty and instability of prices for raw materials and
supplies; the problems associated with advanced designs, which may result in
unforeseen technological difficulties and cost overruns; and the intense
competition and the constant necessity for improvement in facilities and
personnel training. Sales to the Government may be affected by changes in
procurement policies, budget considerations, changing concepts of national
defense, political developments abroad and other factors. See the "Risk Factors"
section beginning on page 8 of this Report, for a description of additional
business risks.
See "Sales to the United States Government" on page 5 of this Report for
information regarding the percentage of the Company's revenues generated from
sales to the Government.
BACKLOG
The Company's backlog of orders at December 31, 2001 and 2000 was $26.5 billion.
The 2001 amount includes backlog of approximately $17.8 billion from the
Government compared with $17.4 billion at the end of 2000.
Approximately $4.4 billion of the overall backlog figure represents the
unperformed portion of direct orders from foreign governments. Approximately
$2.3 billion of the overall backlog represents non-government foreign backlog.
Approximately $14.7 billion of the $26.5 billion 2001 year-end backlog is not
expected to be filled during the following twelve months. For additional
information related to backlog figures, see Management's Discussion and Analysis
of Financial Condition and Results of Operations - Segment Results on page 28 of
the Company's 2001 Annual Report to Stockholders.
RESEARCH AND DEVELOPMENT
During 2001, Raytheon expended $475 million on research and development efforts
compared with $526 million in 2000 and $508 million in 1999. These expenditures
principally have been for product development for the Government and for
aircraft products. In addition, Raytheon conducts funded research and
development activities under Government contracts which is included in net
sales. For additional information related to research and
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development efforts, see Note A to the Company's Financial Statements on page 38
of the Company's 2001 Annual Report to Stockholders.
RAW MATERIALS, SUPPLIERS AND SEASONALITY
Delivery of raw materials and supplies to Raytheon is generally satisfactory.
Raytheon is sometimes dependent, for a variety of reasons, upon sole-source
suppliers for procurement requirements. However, Raytheon has experienced no
significant difficulties in meeting production and delivery obligations because
of delays in delivery or reliance on such suppliers. In recent years, revenues
in the second half of the year have generally exceeded revenues in the first
half. The timing of Government awards, the availability of Government funding,
product deliveries and customer acceptance are among the factors affecting the
periods in which revenues are recorded. Management expects this trend to
continue in 2002.
COMPETITION
The Company's defense electronics businesses are direct participants in most
major areas of development in the defense, space, information gathering, data
reduction and automation fields. Technical superiority and reputation, price,
delivery schedules, financing, and reliability are among the principal
competitive factors considered by electronics customers. The on-going
consolidation of the U.S. and global defense, space and aerospace industries
continues to intensify competition. Consolidation among U.S. defense, space and
aerospace companies has resulted in a reduction in the number of principal prime
contractors. As a result of this consolidation, the Company frequently partners
on various programs with its major suppliers, some of whom are, from time to
time, competitors on other programs.
The Aircraft segment competes primarily with four other companies in the
business aviation industry. The principal factors for competition in the
industry are price, financing, operating costs, product reliability, cabin size
and comfort, product quality, travel range and speed, and product support. The
Company believes it possesses competitive advantages in the breadth of our
product line, the performance of our product line, and the strength of our
product support.
PATENTS AND LICENSES
Raytheon and its subsidiaries own a large intellectual property portfolio which
includes, by way of example, United States and foreign patents, unpatented
know-how, trademarks and copyrights, all of which contribute significantly to
the preservation of the Company's competitive position in the market. In certain
instances, Raytheon has augmented its technology base by licensing the
proprietary intellectual property of others. Although these patents and licenses
are, in the aggregate, important to the operation of the Company's business, no
existing patent, license, or similar intellectual property right is of such
importance that its loss or termination would, in the opinion of management,
have a material effect on the Company's business. Raytheon's patent position and
intellectual property portfolio is deemed adequate for the conduct of its
businesses.
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EMPLOYMENT
As of December 31, 2001, Raytheon had approximately 87,200 employees compared
with approximately 93,700 employees at the end of 2000. The decrease is mainly
due to divestitures during 2001.
Raytheon considers its union-management relationships to be positive, with few
exceptions. In 2001, Raytheon successfully reached agreement on 8 labor
contracts, with no work stoppages.
INTERNATIONAL SALES
Raytheon's sales to customers outside the United States (including foreign
military sales) were 21% of total sales in 2001 and 2000 and 23% of total sales
in 1999. These sales were principally in the fields of air defense systems, air
traffic control systems, sonar systems, aircraft products, electronic equipment,
computer software and systems, personnel training, equipment maintenance and
microwave communication. Foreign subsidiary working capital requirements
generally are financed in the countries concerned. Sales and income from
international operations are subject to changes in currency values, domestic and
foreign government policies (including requirements to expend a portion of
program funds in-country) and regulations, embargoes and international
hostilities. Exchange restrictions imposed by various countries could restrict
the transfer of funds between countries and between Raytheon and its
subsidiaries. Raytheon generally has been able to protect itself against most
undue risks through insurance, foreign exchange contracts, contract provisions,
government guarantees or progress payments.
Raytheon utilizes the services of sales representatives and distributors in
connection with foreign sales. Normally representatives are paid commissions and
distributors are granted resale discounts in return for services rendered.
The export from the U.S. of many of Raytheon's products may require the issuance
of a license by the Department of State under the Arms Export Control Act of
1976, as amended (formerly the Foreign Military Sales Act); or by the Department
of Commerce under the Export Administration Act as kept in force by the
International Emergency Economic Powers Act of 1977, as amended ("IEEPA"); or by
the Treasury Department under IEEPA or the Trading with the Enemy Act of 1917,
as amended. Such licenses may be denied for reasons of U.S. national security or
foreign policy. In the case of certain exports of defense equipment and
services, the Department of State must notify Congress at least 15 or 30 days
(depending on the identity of the country that will utilize the equipment and
services) prior to authorizing such exports. During that time, Congress may take
action to block a proposed export by joint resolution which is subject to
Presidential veto.
RISK FACTORS
The following are some of the factors the Company believes could cause its
actual results to differ materially from expected and historical results. Other
factors besides those listed here could also adversely affect the Company.
Because we have sold a number of our business units in recent years, our
business is less diversified, which could reduce our earnings and might make us
more susceptible to negative conditions in our remaining businesses.
Consistent with our strategy of focusing on and streamlining our core businesses
and paying down our debt, during 1999, 2000 and 2001, we divested several
non-core business units. In addition, in March 2002, we sold our Aircraft
Integration Systems business. As a result of these divestitures, we no longer
receive revenues from these operations and, without offsetting increases in
revenues in our other businesses, our overall revenues would decrease, which
would have a negative effect on our financial condition.
In addition, as a result of these divestitures, our business is now less
diversified and thus more dependent on our remaining businesses. As a result, we
are now more sensitive to conditions and trends in the remaining industries in
which we operate. Negative conditions and trends in these remaining industries
could cause our financial condition and results of operations to suffer more
heavily than would occur when our business lines were more diversified. Our
inability to overcome these negative conditions and trends could have a negative
impact on our financial condition.
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We heavily depend on our government contracts, which are only partially funded,
subject to immediate termination and heavily regulated and audited, and the
termination or failure to fund one or more of these contracts could have a
negative impact on our operations.
We act as prime contractor or major subcontractor for many different government
programs. Over its lifetime, a program may be implemented by the award of many
different individual contracts and subcontracts. The funding of government
programs is subject to congressional appropriations. Although multi-year
contracts may be authorized in connection with major procurements, Congress
generally appropriates funds on a fiscal year basis even though a program may
continue for several years. Consequently, programs are often only partially
funded initially, and additional funds are committed only as Congress makes
further appropriations. The termination of funding for a government program
would result in a loss of anticipated future revenues attributable to that
program. That could have a negative impact on our operations. In addition, the
termination of a program or failure to commit additional funds to a program
already started could increase our overall costs of doing business.
Generally, government contracts are subject to oversight audits by government
representatives and contain provisions permitting termination, in whole or in
part, without prior notice at the government's convenience upon the payment of
compensation only for work done and commitments made at the time of termination.
We can give no assurance that one or more of our government contracts will not
be terminated under these circumstances. Also, we can give no assurance that we
would be able to procure new government contracts to offset the revenues lost as
a result of any termination of our contracts. As our revenues are dependent on
our procurement, performance and payment under our contracts, the loss of one or
more critical contracts could have a negative impact on our financial condition.
Our government business is also subject to specific procurement regulations and
a variety of socio-economic and other requirements. These requirements, although
customary in government contracts, increase our performance and compliance
costs. These costs might increase in the future, reducing our margins, which
could have a negative effect on our financial condition. Failure to comply with
these regulations and requirements could lead to suspension or debarment, for
cause, from government contracting or subcontracting for a period of time. Among
the causes for debarment are violations of various statutes, including those
related to:
. procurement integrity
. export control
. government security regulations
. employment practices
. protection of the environment
. accuracy of records and the recording of costs
The termination of a government contract or relationship as a result of any of
these acts would have a negative impact on our operations and could have a
negative effect on our reputation and ability to procure other government
contracts in the future.
In addition, sales to the government may be affected by:
. changes in procurement policies
. budget considerations
. unexpected developments such as the terrorist attacks of September 11,
2001, which change concepts of national defense
. political developments abroad, such as those occurring in the wake of the
September 11 attacks
The influence of any of these factors, which are largely beyond our control,
could also negatively impact our financial condition. We also may experience
problems associated with advanced designs required by the government which may
result in unforeseen technological difficulties and cost overruns. Failure to
overcome these technological difficulties and the occurrence of cost overruns
would have a negative impact on our results.
9
<PAGE>
We depend on the U.S. Government for a significant portion of our sales, and the
loss of this relationship or a shift in Government funding could have severe
consequences on the financial condition of Raytheon.
Approximately 71% of our net sales in 2001 were to the U.S. Government.
Therefore, any significant disruption or deterioration of our relationship with
the U.S. Government would significantly reduce our revenues. Our U.S. Government
programs must compete with programs managed by other defense contractors for a
limited number of programs and for uncertain levels of funding. Our competitors
continuously engage in efforts to expand their business relationships with the
U.S. Government at our expense and are likely to continue these efforts in the
future. The U.S. Government may choose to use other defense contractors for its
limited number of defense programs. In addition, the funding of defense programs
also competes with non-defense spending of the U.S. Government. Budget decisions
made by the U.S. Government are outside of our control and have long-term
consequences for the size and structure of Raytheon. A shift in government
defense spending to other programs in which we are not involved or a reduction
in U.S. Government defense spending generally could have severe consequences for
our results of operations.
We derive a significant portion of our revenues from international sales and are
subject to the risks of doing business in foreign countries.
In 2001, sales to international customers accounted for approximately 21% of our
net sales. We expect that international sales will continue to account for a
significant portion of our revenues for the foreseeable future. As a result, we
are subject to risks of doing business internationally, including:
. changes in regulatory requirements
. domestic and foreign government policies, including requirements to expend
a portion of program funds locally and governmental industrial cooperation
requirements
. fluctuations in foreign currency exchange rates
. delays in placing orders
. the complexity and necessity of using foreign representatives and
consultants
. the uncertainty of adequate and available transportation
. the uncertainty of the ability of foreign customers to finance purchases
. uncertainties and restrictions concerning the availability of funding
credit or guarantees
. imposition of tariffs or embargoes, export controls and other trade
restrictions
. the difficulty of management and operation of an enterprise spread over
various countries
. compliance with a variety of foreign laws, as well as U.S. laws affecting
the activities of U.S. companies abroad
. economic and geopolitical developments and conditions, including
international hostilities, acts of terrorism and governmental reactions,
inflation, trade relationships and military and political alliances
While these factors or the impact of these factors are difficult to predict, any
one or more of these factors could adversely affect our operations in the
future.
We may not be successful in obtaining the necessary licenses to conduct
operations abroad, and Congress may prevent proposed sales to foreign
governments.
Licenses are required from government agencies under the Export Administration
Act, the Trading with the Enemy Act of 1917 and the Arms Export Control Act of
1976 for export of many of our products. We can give no assurance that we will
be successful in obtaining these necessary licenses in order to conduct business
abroad. In the case of certain sales of defense equipment and services to
foreign governments, the U.S. Government's Executive Branch must notify Congress
at least 15 to 30 days, depending on the location of the sale, prior to
authorizing these sales. During that time, Congress may take action to block the
proposed sale.
Competition within our markets may reduce our procurement of future contracts
and our sales.
The military and commercial industries in which we operate are highly
competitive. Our competitors range from highly resourceful small concerns, which
engineer and produce specialized items, to large, diversified firms. Several
10
<PAGE>
established and emerging companies offer a variety of products for applications
similar to those of our products. Our competitors may have more extensive or
more specialized engineering, manufacturing and marketing capabilities than we
do in some areas. There can be no assurance that we can continue to compete
effectively with these firms. In addition, some of our largest customers could
develop the capability to manufacture products similar to products that we
manufacture. This would result in these customers supplying their own products
and competing directly with us for sales of these products, all of which could
significantly reduce our revenues and seriously harm our business.
Furthermore, we are facing increased international competition and cross-border
consolidation of competition. There can be no assurance that we will be able to
compete successfully against our current or future competitors or that the
competitive pressures we face will not result in reduced revenues and market
share or seriously harm our business.
Our future success will depend on our ability to develop new technologies that
achieve market acceptance.
Both our commercial and defense markets are characterized by rapidly changing
technologies and evolving industry standards. Accordingly, our future
performance depends on a number of factors, including our ability to:
. identify emerging technological trends in our target markets
. develop and maintain competitive products.
. enhance our products by adding innovative features that differentiate our
products from those of our competitors
. manufacture and bring products to market quickly at cost-effective prices
. effectively structure our businesses, through the use of joint ventures,
teaming agreements, and other forms of alliances, to the competitive
environment
Specifically, at Raytheon Aircraft Company, our future success is dependent on
our ability to meet scheduled timetables for the development, certification and
delivery of new product offerings.
We believe that, in order to remain competitive in the future, we will need to
continue to develop new products, which will require the investment of
significant financial resources. The need to make these expenditures could
divert our attention and resources from other projects, and we cannot be sure
that these expenditures will ultimately lead to the timely development of new
technology. Due to the design complexity of our products, we may in the future
experience delays in completing development and introduction of new products.
Any delays could result in increased costs of development or deflect resources
from other projects. In addition, there can be no assurance that the market for
our products will develop or continue to expand as we currently anticipate. The
failure of our technology to gain market acceptance could significantly reduce
our revenues and harm our business. Furthermore, we cannot be sure that our
competitors will not develop competing technologies which gain market acceptance
in advance of our products. The possibility that our competitors might develop
new technology or products might cause our existing technology and products to
become obsolete. If we fail in our new product development efforts or our
products fail to achieve market acceptance more rapidly than our competitors,
our revenues will decline and our business, financial condition and results of
operations will be negatively affected.
Our financial performance is dependent on the timely and successful conversion
of our defense products into commercial markets.
In order to leverage technology that we develop for defense applications, we
frequently strive to adapt existing defense technology for commercial markets.
We may not be successful, however, in converting our defense systems and devices
into commercially viable products, and the market for such products may be
limited. Any of these results could have a negative impact on our future
revenues.
We enter into fixed-price contracts which could subject us to losses in the
event that we have cost overruns.
Generally we enter into contracts on a firm, fixed-price basis. This allows us
to benefit from cost savings, but we carry the burden of cost overruns. If our
initial estimates are incorrect, we can lose money on these contracts. In
addition, some of our contracts have provisions relating to cost controls and
audit rights, and if we fail to meet the terms specified in those contracts then
we may not realize their full benefits. Our financial condition is dependent on
our ability to maximize our earnings from our contracts. Lower earnings caused
by cost overruns and cost controls
11
<PAGE>
would have a negative impact on our financial results.
We may incur additional charges in connection with the sale of Raytheon
Engineers & Constructors to Washington Group International, Inc. ("WGI").
We have significant letters of credit, surety bonds, guarantees and other
support agreements in place related to a number of leases and other agreements
of our Raytheon Engineers & Constructors business unit, which we sold to WGI in
July 2000. Many of these relate to ongoing engineering and construction
projects, including two large power plants being built in Massachusetts that WGI
has abandoned. We have recorded losses of $814 million on these two projects in
2001. Also during 2001, we recorded losses of $156 million related to other
construction projects. The cost to complete all of these projects may ultimately
be higher than our estimates. As a result of the sale of our engineering and
construction business to WGI, we have become more heavily dependent upon third
parties, including WGI, to perform construction management and other tasks which
require industry expertise that we no longer possess. Also in connection with
the sale of our engineering and construction business to WGI, we retained
certain liabilities and risks. Some of these liabilities and risks were affected
by the bankruptcy filing of WGI and a settlement (the "WGI Settlement") we
entered into with WGI.
In the course of the bankruptcy proceeding, WGI rejected some ongoing
construction projects. To the extent the Company has outstanding support
agreements, the Company has honored those agreements and is working on those
projects. There are risks that the costs incurred on these projects will
increase beyond the Company's estimates because of factors such as labor
productivity and availability of labor, the nature and complexity of the work to
be performed, the impact of change orders, the recoverability of claims included
in the estimate to complete and the outcome of defending claims asserted against
the Company.
The WGI Settlement provides that WGI is responsible for certain payments and is
required to assume certain obligations in connection with projects that WGI
assumed in its bankruptcy proceeding. If WGI is unwilling or unable to perform
these responsibilities, its obligations could become obligations of the Company
because of the Company's guarantees, surety bonds and letters of credit.
While these potential obligations, liabilities and risks or the impact of them
are difficult to predict, any one or more of these factors could have a material
adverse impact on our financial condition.
The outcome of litigation in which we have been named as a defendant is
unpredictable and an adverse decision in any such matter could have a material
adverse affect on our financial position and results of operations.
We are defendants in a number of litigation matters. These claims may divert
financial and management resources that would otherwise be used to benefit our
operations. Although we believe that we have meritorious defenses to the claims
made in each and all of the litigation matters to which we have been named a
party, and intend to contest each lawsuit vigorously, no assurances can be given
that the results of these matters will be favorable to us. An adverse resolution
of any of these lawsuits could have a material adverse affect on our financial
position and results of operations.
We depend on the recruitment and retention of qualified personnel, and our
failure to attract and retain such personnel could seriously harm our business.
Due to the specialized nature of our businesses, our future performance is
highly dependent upon the continued services of our key engineering personnel
and executive officers. Our prospects depend upon our ability to attract and
retain qualified engineering, manufacturing, marketing, sales and management
personnel for our operations. Competition for personnel is intense, and we may
not be successful in attracting or retaining qualified personnel. Our failure to
compete for these personnel could seriously harm our business, results of
operations and financial condition.
12
<PAGE>
Some of our workforce is represented by labor unions.
Approximately 13,200 of our employees are unionized, which represented
approximately 15% of our employees at December 31, 2001. As a result, we may
experience prolonged work stoppages, which could adversely affect our business,
and we are vulnerable to the demands imposed by our collective bargaining
relationships. We cannot predict how stable these relationships, currently with
10 different U.S. labor organizations and 4 different non-U.S. labor
organizations, will be or whether we will be able to meet the requirements of
these unions without impacting the financial condition of Raytheon. In addition,
the presence of unions may limit our flexibility in dealing with our workforce.
Work stoppages and instability in our union relationships could negatively
impact our ability to manufacture our products on a timely basis, resulting in
strain on our relationships with our customers, as well as a loss of revenues.
That would adversely affect our results of operations.
We may be unable to adequately protect our intellectual property rights, which
could affect our ability to compete.
Protecting our intellectual property rights is critical to our ability to
compete and succeed as a company. We own a large number of United States and
foreign patents and patent applications, as well as trademark, copyright and
semiconductor chip mask work registrations which are necessary and contribute
significantly to the preservation of our competitive position in the market.
There can be no assurance that any of these patents and other intellectual
property will not be challenged, invalidated or circumvented by third parties.
In some instances, we have augmented our technology base by licensing the
proprietary intellectual property of others. In the future, we may not be able
to obtain necessary licenses on commercially reasonable terms. We enter into
confidentiality and invention assignment agreements with our employees, and
enter into non-disclosure agreements with our suppliers and appropriate
customers so as to limit access to and disclosure of our proprietary
information. These measures may not suffice to deter misappropriation or
independent third party development of similar technologies. Moreover, the
protection provided to our intellectual property by the laws and courts of
foreign nations may not be as advantageous to us as the remedies available under
United States law.
Our operations expose us to the risk of material environmental liabilities.
Because we use and generate large quantities of hazardous substances and wastes
in our manufacturing operations, we are subject to potentially material
liabilities related to personal injuries or property damages that may be caused
by hazardous substance releases and exposures. For example, we are investigating
and remediating contamination related to our current or past practices at
numerous properties and, in some cases, have been named as a defendant in
related personal injury or "toxic tort" claims.
We are also subject to increasingly stringent laws and regulations that impose
strict requirements for the proper management, treatment, storage and disposal
of hazardous substances and wastes, restrict air and water emissions from our
manufacturing operations, and require maintenance of a safe workplace. These
laws and regulations can impose substantial fines and criminal sanctions for
violations, and require the installation of costly pollution control equipment
or operational changes to limit pollution emissions and/or decrease the
likelihood of accidental hazardous substance releases. We incur, and expect to
continue to incur, substantial capital and operating costs to comply with these
laws and regulations. In addition, new laws and regulations, stricter
enforcement of existing laws and regulations, the discovery of previously
unknown contamination or the imposition of new clean-up requirements could
require us to incur costs in the future that would have a negative effect on our
financial condition or results of operations.
Provisions in our charter documents and rights agreement could make it more
difficult to acquire Raytheon and may reduce the market price of our stock.
Our certificate of incorporation and by-laws contain certain provisions, such as
a classified board of directors, a provision prohibiting stockholder action by
written consent, a provision prohibiting stockholders from calling special
meetings and a provision authorizing our Board of Directors to consider factors
other than stockholders' short-term interests in evaluating an offer involving a
change in control. Also, we have a shareholder rights plan, which limits the
ability of any person to acquire more than 15% of our common stock. These
provisions could have the effect of delaying or preventing a change in control
of Raytheon or the removal of Raytheon management, of
13
<PAGE>
deterring potential acquirors from making an offer to our stockholders and of
limiting any opportunity to realize premiums over prevailing market prices for
Raytheon common stock. Provisions of the shareholder rights agreement, which is
incorporated as an exhibit to this filing, could also have the effect of
deterring changes of control of Raytheon.
We depend on component availability, subcontractor performance and our key
suppliers to manufacture and deliver our products and services.
Our manufacturing operations are highly dependent upon the delivery of materials
by outside suppliers in a timely manner. In addition, we depend in part upon
subcontractors to assemble major components and subsystems used in our products
in a timely and satisfactory manner. While we enter into long-term or volume
purchase agreements with a few of our suppliers, we cannot be sure that
materials, components, and subsystems will be available in the quantities we
require, if at all. We are dependent for some purposes on sole-source suppliers.
The recent economic downturn, especially in light of the terrorist attacks on
September 11, 2001, may materially adversely affect certain of these suppliers.
If any of them fails to meet our needs, we may not have readily available
alternatives. Our inability to fill our supply needs would jeopardize our
ability to satisfactorily and timely complete our obligations under government
and other contracts. This might result in reduced sales, termination of one or
more of these contracts and damage to our reputation and relationships with our
customers. All of these events could have a negative effect on our financial
condition.
The unpredictability of our results may harm the trading price of our
securities, or contribute to volatility.
Our operating results may vary significantly over time for a variety of reasons,
many of which are outside of our control, and any of which may harm our
business. The value of our securities may fluctuate as a result of
considerations that are difficult to forecast, such as:
. volume and timing of product orders received and delivered
. levels of product demand
. consumer and government spending patterns
. the timing of contract receipt and funding
. our ability and the ability of our key suppliers to respond to changes in
customer orders
. timing of our new product introductions and the new product introductions of
our competitors
. changes in the mix of our products
. cost and availability of components and subsystems
. price erosion
. adoption of new technologies and industry standards
. competitive factors, including pricing, availability and demand for
competing products
. fluctuations in foreign currency exchange rates
. conditions in the capital markets and the availability of project financing
. the impact on recourse obligations at Raytheon Aircraft due to changes in
the collateral value of financed aircraft
. regulatory developments
. general economic conditions, particularly the cyclical nature of the general
aviation market in which we participate
The long-range impact of terrorist attacks, such as those that occurred on
September 11, 2001, upon the markets in which we operate, our business
operations, and our expectations is uncertain.
There can be no assurance that the current armed hostilities will not increase
or that these terrorist attacks, or United States responses, will not lead to
further acts of terrorism and civil disturbances in the United States or
elsewhere, which may further contribute to the economic instability in the
United States. These attacks or armed conflicts may directly impact our physical
facilities or those of our suppliers or customers and could have an impact on
our domestic and international sales, our supply chain, our production
capability, our insurance premiums or the ability to purchase insurance and our
ability to deliver our products to our customers. Political and economic
instability in some regions of the world may also result and could negatively
impact our business. Although we believe we are
14
<PAGE>
positioned well for defense priorities, that could well be offset by a decrease
in civilian use of air travel, adversely affecting civil aircraft sales. In
addition, the consequences of the terrorist attacks and armed conflicts are
unpredictable, and their long-term effect upon the Company is uncertain.
FORWARD-LOOKING STATEMENTS - SAFE HARBOR PROVISIONS
This filing and the information we are incorporating by reference, including any
statements relating to the Company's future plans, objectives, and projected
future financial performance, contain or are based on, forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Specifically, statements that are not historical facts, including
statements accompanied by words such as "believe," "expect," "estimate,"
"intend," or "plan," variations of these words, and similar expressions, are
intended to identify forward-looking statements and convey the uncertainty of
future events or outcomes. The Company cautions readers that any such
forward-looking statements are based on assumptions that the Company believes
are reasonable, but are subject to a wide range of risks, and actual results may
differ materially. Given these uncertainties, readers of this filing should not
rely on forward-looking statements. Forward-looking statements also represent
the Company's estimates and assumptions only as of the date that they were made.
The Company expressly disclaims any current intention to provide updates to
forward-looking statements, and the estimates and assumptions associated with
them, after the date of this filing. Important factors that could cause actual
results to differ include, but are not limited to those discussed in the
immediately preceding section of this Item, under "Risk Factors."
Item 2. Properties
The Company and its subsidiaries operate in a number of plants, laboratories,
warehouses and office facilities in the United States and abroad.
At December 31, 2001, the Company utilized approximately 41 million square feet
of floor space for manufacturing, engineering, research, administration, sales
and warehousing, approximately 95% of which was located in the United States. Of
this total, approximately 38% was owned, approximately 57% was leased, and
approximately 5% was made available under facilities contracts for use in the
performance of U. S. Government contracts. At December 31, 2001 the Company had
approximately 1.1 million square feet of additional floor space that was not in
use, including approximately 418,000 square feet in Company-owned facilities.
There are no major encumbrances on any of the Company's facilities other than
financing arrangements which in the aggregate are not material. In the opinion
of management, the Company's properties have been well maintained, are in sound
operating condition and are adequate for the Company to operate at present
levels.
At December 31, 2001, our business segments had major operations at the
following locations:
. Electronic Systems -- E. Camden, AZ; Tucson, AZ; El Segundo, CA; Goleta, CA;
Long Beach, CA; Louisville, KY; Andover, MA; Bedford, MA; Sudbury, MA;
Tewksbury, MA; Portsmouth, RI; Dallas, TX; Plano, TX; and Sherman, TX;
. Command, Control, Communication and Information Systems -- Fullerton, CA;
Aurora, CO; Largo, FL; St. Petersburg, FL; Ft. Wayne, IN; Landover, MD;
Townson, MD; Marlboro, MA; State College, PA; Garland, TX; and Falls Church,
VA;
. Aircraft Integration Systems -- Lexington, KY; Greenville, TX; and Waco, TX;
. Raytheon Technical Services Company -- Chula Vista, CA; Long Beach, CA;
Indianapolis, IN; Burlington, MA; Norfolk and Reston, VA;
. Commercial Electronics -- Andover, MA; Kiel, Germany; and Midland, Ontario;
. Raytheon Aircraft Company -- Selma, AL; Little Rock, AR; Salina, KS;
and Wichita, KS;
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. Administration and Services -- Lexington, MA; and
. Raytheon United Kingdom -- Harlow, England; and Glenrothes, Scotland;
A summary of the utilized floor space at December 31, 2001, by business
segment, follows:
(in square feet with 000's omitted)
Leased Owned Gov't Owned Total
------ ----- ----------- -----
Electronic Systems 9,484 7,079 1,296 17,859
Command, Control, Communication
and Information Systems 3,684 2,799 0 6,483
Aircraft Integration Systems 4,196 216 961 5,373
Raytheon Technical Services Company 3,076 98 0 3,174
Commercial Electronics 33 924 0 957
Raytheon Aircraft Company 2,643 3,918 0 6,561
Administration and Services (includes
domestic and international sales offices) 255 251 0 506
Raytheon International, Inc. 69 0 0 69
Raytheon United Kingdom 34 409 0 443
Discontinued Operations 0 0 0 0
- --------------------------------------------------------------------------------
TOTAL 23,474 15,694 2,257 41,425
Additional information regarding the effect of compliance with environmental
protection requirements and the resolution of environmental claims against the
Company and its operations is contained in the "Risk Factors" section beginning
on page 8 of this Report, in "Item 3. Legal Proceedings" immediately below, in
Management's Discussion and Analysis of Financial Condition and Results of
Operation - Commitments and Contingencies on page 31 of the Company's 2001
Annual Report to Stockholders and in Note M to the Company's Financial
Statements on page 48 of the Company's 2001 Annual Report to Stockholders.
Item 3. Legal Proceedings
The Company is primarily engaged in providing products and services under
contracts with the U.S. Government and, to a lesser degree, under direct foreign
sales contracts, some of which are funded by the U.S. Government. These
contracts are subject to extensive legal and regulatory requirements and, from
time to time, agencies of the U.S. Government investigate whether the Company's
operations are being conducted in accordance with these requirements. U.S.
Government investigations of the Company, whether relating to these contracts or
conducted for other reasons, could result in administrative, civil or criminal
liabilities, including repayments, fines or penalties being imposed upon the
Company, the suspension of government export licenses, or the suspension or
debarment from future U.S. Government contracting. U.S. Government
investigations often take years to complete and many result in no adverse action
against the Company.
As previously reported, during late 1999, the Company and two of its officers
were named as defendants in several purported class action lawsuits. These
lawsuits were consolidated into a single complaint in June 2000, when four
additional former or present officers were named as defendants in a Consolidated
and Amended Class Action Complaint (the "Consolidated Complaint") with the
caption, In Re Raytheon Securities Litigation (Civil Action No. 12142-PBS),
------------------------------------
filed in the U.S. District Court in Massachusetts. The Consolidated Complaint
principally alleges that the defendants violated federal securities laws by
purportedly making misleading statements and by failing to disclose material
information concerning the Company's financial performance during the purported
class period of October 7, 1998 through October 12, 1999. On September 8, 2000,
the Company and the individual defendants filed a motion to dismiss the
Consolidated Complaint. The plaintiffs opposed the motions. The court heard
arguments on February 9, 2001 and took the motions under advisement. In August
2001, the court issued an order dismissing
16
<PAGE>
most of the claims asserted against the Company and the individual defendants.
Discovery is proceeding on the two circumstances that remain the subject of
claims.
As previously reported, the Company also was named as a nominal defendant and
all of its directors at the time (except one) were named as defendants in
purported derivative lawsuits filed on October 25, 1999 in the Court of Chancery
of the State of Delaware in and for New Castle County by Ralph Mirarchi and
others (No. 17495- NC), and on November 24, 1999 in Middlesex County,
Massachusetts, Superior Court by John Chevedden (No. 99-5782). On February 28,
2000, Mr. Chevedden filed another derivative action in the Delaware Chancery
Court entitled John Chevedden v. Daniel P. Burnham, et al., (No. 17838- NC) and
------------------------------------------
on March 22, 2000, Mr. Chevedden's Massachusetts derivative action was
dismissed. The Mirarchi and Chevedden derivative complaints contain allegations
-------- ---------
similar to those included in the Consolidated Complaint in the In Re Raytheon
-----------
Securities Litigation, and further allege that the defendants purportedly
- ---------------------
breached fiduciary duties to the Company and allegedly failed to exercise due
care and diligence in the management and administration of the affairs of the
Company. On December 11, 2001, the Company and the individual defendants filed a
motion to dismiss the Mirarchi complaint (the only one of these actions for
which service of process of the complaint was by then completed.)
As previously reported, in March 2001, Washington Group International, Inc.
(f/k/a Morrison Knudsen Corporation, and referred to below as "WGI") sued the
Company in the District Court of the Fourth Judicial District of the State of
Idaho in an action entitled, Washington Group International v. Raytheon Company,
--------------------------------------------------
et. al., (Case No. CV OC 0101422D) alleging breach of contract and fraud in
- ------
connection with the sale of the Raytheon Engineers & Constructors ("RE&C")
business. WGI also sought specific performance of the purchase price adjustment
provision in the Stock Purchase Agreement. The court appointed an independent
accountant to resolve the purchase price adjustment dispute, and ordered that
WGI's fraud and breach of contract claims be submitted to arbitration as the
Company had requested. On November 8, 2001 the litigation with WGI was suspended
upon the announcement of an agreement in principle of a settlement, which is
noted below.
As previously reported, in May 2001, WGI filed for protection under Chapter 11
of the U.S. Bankruptcy Code in Reno, Nevada in an action entitled, In re
-----
Washington Group International, Inc., et al. (Case No. BK-N-01-21627-GWZ). In
- -------------------------------------------
connection with the filing, WGI filed a proposed plan of reorganization, which
was amended and modified several times. In early August 2001, WGI filed an
adversary proceeding against the Company alleging that the sale and various
other transactions constituted "fraudulent transfers" (Docket #1, No. 01-3084).
Also in early August 2001, the Company filed a proof of claim as an unsecured
creditor in the bankruptcy case.
As previously reported, in June 2001, a purported class action lawsuit entitled,
Muzinich & Co., Inc. et al v. Raytheon Company, et. al., (Civil Action No.
- ------------------------------------------------------
01-0284-S-BLW) was filed in federal court in Boise, Idaho allegedly on behalf of
all purchasers of common stock or senior notes of WGI during the period April
17, 2000 through March 1, 2001 (the class period). The putative plaintiff class
claims to have suffered harm by purchasing WGI securities because the Company
and certain of its officers allegedly violated federal securities laws by
purportedly misrepresenting the true financial condition of RE&C in order to
sell RE&C to WGI at an artificially inflated price. An amended complaint was
filed on October 1, 2001 alleging similar claims. The Company and the individual
defendants filed a motion seeking to dismiss the action in mid-November 2001.
The Court heard arguments on that motion on March 7, 2002 and it is currently
evaluating the parties' arguments regarding dismissal.
As previously reported, the Company has been named as a nominal defendant and
all of its directors have been named as defendants in two identical purported
derivative lawsuits filed in Chancery Court in New Castle County, Delaware in
July 2001, entitled Melvin P. Harr v. Barbara M. Barrett, et. al., (Civil Action
--------------------------------------------
No. 19018) and Howard Lasker v. Barbara M. Barrett, et. al., (Civil Action No.
--------------------------------------------
19027). The Harr and Lasker derivative complaints contain allegations similar to
---- ------
those included in the Muzinich class action complaint and further allege that
--------
the individual defendants breached fiduciary duties to the Company and
purportedly failed to maintain systems necessary for prudent management and
control of the Company's operations. On December 11, 2001, the Company and the
individual defendants filed a motion to dismiss the Harr complaint, the only one
of these actions for which service was by then completed. In addition, the
Company has been named as a nominal defendant and members of its Board of
Directors and several current and former officers have been named as defendants
in another purported shareholder derivative action entitled Richard J. Kager v.
------------------
Daniel P. Burnham, et. al., (Civil Action No. 01-11180-JLT) filed in July 2001
- --------------------------
in the U. S. District Court in Massachusetts. The Kager derivative complaint
-----
contains
17
<PAGE>
allegations similar to those included in the Muzinich complaint, and further
--------
alleges that the individual defendants breached fiduciary duties to the Company
and purportedly failed to maintain systems necessary for prudent management and
control of the Company's operations.
On November 8, 2001, all claims and litigation between the Company and WGI
referenced above were suspended upon the announcement of an agreement in
principle of a settlement that, among other things, would end all pending
litigation between the Company and WGI. The settlement between the Company and
WGI was part of WGI's plan of reorganization (the "Plan"), which was confirmed
by the Bankruptcy Court on December 21, 2001. On January 4, 2002, the Bankruptcy
Court approved the WGI settlement documents. On January 25, 2002, the parties
executed and delivered the WGI settlement documents and the Plan became
effective. Appeals have been filed challenging the Bankruptcy Court's orders
approving the Plan and approving the settlement between the Company and WGI,
however the WGI settlement documents are now effective and are being implemented
and the litigation between the Company and WGI has been dismissed. For
additional information related to the settlement between the Company and WGI and
liability relating to the Company's former engineering and construction
business, see Management's Discussion and Analysis of Financial Condition and
Results of Operations - Discontinued Operations on page 28 of the Company's 2001
Annual Report to Stockholders and Note B Discontinued Operations to the
Company's Financial Statements on page 40 of the Company's 2001 Annual Report to
Stockholders.
Although the Company believes that it and the other defendants have meritorious
defenses to the claims made in each and all of the aforementioned complaints and
intends to contest each lawsuit vigorously, an adverse resolution of any of the
lawsuits could have a material adverse effect on the Company's financial
position and results of operations in the period in which the lawsuits are
resolved. The Company is not presently able to reasonably estimate potential
losses, if any, related to any of the lawsuits.
Defense contractors are subject to many levels of audit and investigation.
Agencies which oversee contract performance include: the Defense Contract Audit
Agency, the Department of Defense Inspector General, the General Accounting
Office, the Department of Justice and Congressional Committees. The Department
of Justice from time to time has convened grand juries to investigate possible
irregularities by the Company in government contracting.
As previously reported, the Department of Justice has informed the Company that
the Government has concluded its investigation of the contemplated sale by
Raytheon Canada Ltd., a subsidiary of the Company, of troposcatter radio
equipment to a customer in Pakistan. The Company has produced documents in
response to grand jury subpoenas, and grand jury appearances have taken place.
The Company has cooperated fully with the investigation. The Government has not
informed the Company of a final decision with respect to this matter. An adverse
decision relating to this matter ultimately could have a material adverse effect
on the Company's results of operations or financial condition.
As previously reported, the Company has been cooperating with the staff of the
Securities and Exchange Commission, which is conducting an investigation
relating to the Company's former engineering and construction business and
related accounting and other matters. The Company has been responding to
subpoenas, providing documents and information to the SEC staff, and is
continuing to cooperate with the SEC staff in its investigation. The Company is
unable to predict the outcome of the inquiry or any action that the SEC might
take.
The Company is permitted to charge to its Government contracts an allocable
portion of the amount that the Company accrues for self-insurance. There is a
disagreement between the Company and the Government about the way that the
Company allocated self-insurance charges for product liability risks associated
with its Raytheon Aircraft business units. The Government has not asserted a
claim for a specific amount, but the allocation practice at issue was adopted in
1988 and the Government claim could be material when it is quantified.
The Company is involved in various stages of investigation and cleanup relative
to remediation of various environmental sites. All appropriate costs incurred in
connection therewith have been accrued. Due to the complexity of environmental
laws and regulations, the varying costs and effectiveness of alternative cleanup
methods and technologies, the uncertainty of insurance coverage and the
unresolved extent of the Company's responsibility, it is difficult to determine
the ultimate outcome of these matters. However, in the opinion of management,
any liability will not have a material effect on the Company's financial
position, liquidity or results of
18
<PAGE>
operations. Additional information regarding the effect of compliance with
environmental protection requirements and the resolution of environmental claims
against the Company and its operations is contained in the "Risk Factors"
section beginning on page 8 of this Report, in Management's Discussion and
Analysis of Financial Condition and Results of Operation - Commitments and
Contingencies on page 31 of the Company's 2001 Annual Report to Stockholders and
in Note M to the Company's Financial Statements on page 48 of the Company's 2001
Annual Report to Stockholders.
Accidents involving personal injuries and property damage occur in general
aviation travel. When permitted by appropriate government agencies, Raytheon
Aircraft investigates accidents related to its products involving fatalities or
serious injuries. Through a relationship with FlightSafety International,
Raytheon Aircraft provides initial and recurrent pilot and maintenance training
services to reduce the frequency of accidents involving its products.
Raytheon Aircraft is a defendant in a number of product liability lawsuits which
allege personal injury and property damage and seek substantial recoveries
including, in some cases, punitive and exemplary damages. Raytheon Aircraft
maintains partial insurance coverage against such claims and maintains a level
of uninsured risk determined by management to be prudent. Additional information
regarding aircraft product liability insurance is contained in Note M to the
Company's Financial Statements on page 47 of the Company's 2001 Annual Report to
Stockholders.
The insurance policies for product liability coverage held by Raytheon Aircraft
do not exclude punitive damages, and it is the position of Raytheon Aircraft and
its counsel that punitive damage claims are therefore covered. Historically, the
defense of punitive damage claims has been undertaken and paid by insurance
carriers. Under the law of some states, however, insurers are not required to
respond to judgments for punitive damages. Nevertheless, to date no judgments
for punitive damages have been sustained.
Various other claims and legal proceedings generally incidental to the normal
course of business are pending or threatened on behalf of or against the
Company. While the Company cannot predict the outcome of these matters, in the
opinion of management, any liability arising from them will not have a material
adverse effect on the Company's financial position, liquidity or results of
operations after giving effect to provisions already recorded.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 4(A). Executive Officers of the Registrant
The executive officers of the Company are listed below. Each executive officer
was elected by the Board of Directors to serve for a term of one year and until
his or her successor is elected and qualified or until his or her earlier
removal, resignation or death.
Daniel P. Burnham: Chairman and Chief Executive Officer since July 31, 1999.
Prior thereto, Mr. Burnham served as President and Chief Executive Officer from
December 1, 1998 to July 31, 1999 and as President and Chief Operating Officer
from July 1, 1998 to December 1, 1998. Prior to joining the Company, Mr. Burnham
was Vice Chairman of AlliedSignal, Inc. from October 1997 and President of
AlliedSignal Aerospace and an Executive Vice President of AlliedSignal, Inc.
from 1992 until becoming Vice Chairman in 1997. Age: 55.
Franklyn A. Caine: Senior Vice President and Chief Financial Officer since April
1999. Prior to assuming his present position, Mr. Caine was Executive Vice
President and Chief Financial Officer of Wang Laboratories, Inc. from 1994. Age:
52.
Richard J. Foley: Vice President and Corporate Director of Contracts since
February 1999. Prior to assuming his present position, Mr. Foley was appointed
Corporate Director of Contracts in April 1998. Between 1995 and 1998, Mr. Foley
was the Manager of Contracts of Raytheon's Electronic Systems Division. Mr.
Foley has served Raytheon for more than 35 years holding senior contract
management positions with the Company. Age: 57.
Richard A. Goglia: Vice President and Treasurer since January 1999. Prior to
assuming such position, Mr. Goglia was Director, International Finance from
March 1997. Prior to joining the Company, Mr. Goglia was Senior Vice
President--Corporate Finance, GE Capital
19
<PAGE>
Corporation from 1989. Age: 50.
Francis S. Marchilena: Executive Vice President of Raytheon Company and
President - Command, Control, Communication and Information Systems since June
2000. Prior to assuming his present position, Mr. Marchilena was Senior Vice
President and General Manager of the Command, Control and Communication Systems
Segment and Executive Vice President and General Manager of the Training and
Services Segment of the former Raytheon Systems Company. Between 1996 and 1998,
Mr. Marchilena was the Assistant General Manager for Raytheon Electronic
Systems. Mr. Marchilena has served Raytheon for more than 33 years holding
increasingly responsible management positions with the Company. Age: 56.
Neal E. Minahan: Senior Vice President and General Counsel since July 2001.
Prior to assuming his present position, Mr. Minahan was Vice President and
Deputy General Counsel from December 1999 to June 2001; Senior Vice President,
Raytheon Systems Company from December 1998 to November 1999; Deputy General
Counsel Raytheon Company, January 1998 to November 1998 and Assistant General
Counsel from 1990 to January 1998. Prior to that, he was Counsel from 1972 to
1990. Age: 57.
Keith J. Peden: Senior Vice President - Human Resources since March 2001. Prior
to assuming his present position, Mr. Peden was Vice President Deputy Director -
Human Resources since November 1997 and Corporate Director of Benefits and
Compensation since April 1993. Age: 51.
Edward S. Pliner: Vice President and Corporate Controller since April 2000.
Prior to assuming his present position, Mr. Pliner was a Partner of
PricewaterhouseCoopers LLP from September 1995. Age: 44.
Rebecca B. Rhoads: Vice President and Chief Information Officer since April
2001. Prior to assuming her present position, Ms. Rhoads was Vice President of
Information Systems Technology for Raytheon Electronic Systems from February
2000 and Vice President of Information Technology, Defense Systems Segment since
July 1999. Between 1996 and 1999, Ms. Rhoads was Director of the Raytheon Test
Systems Design Center. Age: 44.
James E. Schuster: Executive Vice President of Raytheon Company and Chairman and
Chief Executive Officer - Raytheon Aircraft Company since May 2001. Prior to
assuming his present position, Mr. Schuster was Vice President of Raytheon
Company and President of Aircraft Integration Systems from April 2000 and Senior
Vice President and Deputy General Manager for Aircraft Integration Systems since
September 1999. Prior to joining the Company, Mr. Schuster was President, Motors
& Generators, Magnetex, Inc. since 1996. Age: 48.
Gregory S. Shelton: Vice President - Engineering and Technology since May 2001.
Prior to assuming his present position, Mr. Shelton served as Vice President of
Engineering for Raytheon's missiles business since 1998. Prior to that, he was
Vice President, Engineering for Hughes Weapons Systems segment from 1996 to
1997. He also served as Vice President and Product Line Manager, Air Missiles
and Advanced Programs and Technology for Hughes Missile Systems Company from
1995 to 1996. Age: 51.
William H. Swanson: Executive Vice President of Raytheon Company and President -
Electronic Systems since January 2000. Prior to assuming his present position,
Mr. Swanson was Executive Vice President and Chairman and Chief Executive
Officer of Raytheon Systems Company from December 1997; Executive Vice President
and General Manager - Raytheon Electronic Systems Division from March 1995; and
Senior Vice President and General Manager - Missile Systems Division from 1990.
Mr. Swanson has served Raytheon for more than 28 years holding increasingly
responsible management positions with the Company. Age: 53.
PART II
Item 5. Market For Registrant's Common Equity and Related Stockholder Matters
At December 31, 2001, there were 76,041 record holders of the Company's common
stock. Additional information required by this Item 5 is contained on page 56 of
the Company's 2001 Annual Report to Stockholders and in Note Q to the Company's
Financial Statements on page 53 of the Company's 2001 Annual Report to
Stockholders and is incorporated herein by reference.
During 2001, the Company eliminated its dual class capital structure and
reclassified its Class A and Class B
20
<PAGE>
common stock into a single new class of common stock. The Company also effected
a 20-for-1 reverse-forward stock split that resulted in holders of fewer than 20
shares of common stock being cashed out of their holdings.
In May 2001, the Company issued 17,250,000, 8.25 percent, equity security units
for $50 per unit totaling $837 million, net of offering costs. Also, in May
2001, the Company issued 14,375,000 shares of common stock for $27.50 per share.
In October 2001, the Company issued 31,578,900 shares of common stock for $33.25
per share. Sales of the foregoing securities were registered under the
Securities Act of 1933, as amended. The proceeds of the offerings were used to
reduce debt and for general corporate purposes.
Item 6. Selected Financial Data
The information required by this Item 6 is included in the "Five Year
Statistical Summary" contained in the Company's 2001 Annual Report to
Stockholders on page 23 and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this Item 7 is contained in the Company's 2001
Annual Report to Stockholders on pages 24 through 33 and is incorporated herein
by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this Item 7A is contained in the Company's 2001
Annual Report to Stockholders on page 33 and is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
Selected quarterly financial data is contained in Note Q on page 53 and the
financial statements and supplementary data of the Company are on pages 34
through 54, respectively, of the Company's 2001 Annual Report to Stockholders
and are incorporated herein by reference. Schedules required under Regulation
S-X are filed as "Financial Statement Schedules" pursuant to Item 14 of this
Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the directors of the Company is contained in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be held on
April 24, 2002 under the captions "The Board of Directors and Board Committees"
and "Election of Directors" and is incorporated herein by reference. Information
regarding the executive officers of the Company is contained in Part I, Item
4(A) of this Form 10-K.
Item 11. Executive Compensation
This information is contained in the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held on April 24, 2002 under the
caption "Executive Compensation" and, except for the information required by
Items 402(k) and 402(l) of Regulation S-K, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is contained in the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held on April 24, 2002 under the
caption "Stock Ownership" and is incorporated herein by reference.
21
<PAGE>
Item 13. Certain Relationships and Related Transactions
This information is contained in the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held on April 24, 2002 under the
caption "Certain Relationships and Related Transactions" and is incorporated
herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements and Schedules
(1) The following financial statements of Raytheon Company as
contained in Raytheon's 2001 Annual Report to Stockholders, are
hereby incorporated by reference:
Balance Sheets at December 31, 2001 and 2000
Statements of Income for the Years Ended December 31, 2001, 2000
and 1999
Statements of Stockholders' Equity for the Years Ended December
31, 2001, 2000 and 1999
Statements of Cash Flows for the Years Ended December 31, 2001,
2000 and 1999
Notes to Consolidated Financial Statements for the Year Ended
December 31, 2001
(2) The following financial statement schedule is included herein:
Schedule II, Reserves for the Three Years Ended December 31,
2001
Schedules I, III and IV are omitted because they are not
required, not applicable or the information is otherwise
included.
(3) The reports of Raytheon's independent auditors with respect to
the above referenced financial statements and financial statement
schedule are hereby incorporated by reference
(b) Reports on Form 8-K
Raytheon Company Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 19, 2001
Raytheon Company Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 31, 2001
(c) Exhibits
3.1 Raytheon Company Restated Certificate of Incorporation, restated
as of February 11, 1998 filed as an exhibit to Raytheon's Annual
Report on Form 10-K for the year ended December 31, 1997, is
hereby incorporated by reference.
3.2 Raytheon Company Amended and Restated By-Laws, as amended through
January 28, 1998 filed as an exhibit to Raytheon's Annual Report
on Form 10-K for the year ended December 31, 1997, is
22
<PAGE>
hereby incorporated by reference.
3.3 Certificate of Amendment of Restated Certificate of Incorporation
of Raytheon Company to effect a reverse stock split of the
Registrant's Class A and Class B common stock, filed as an
exhibit to Raytheon's Registration Statement on Form S-8, File
No. 333-52535, is hereby incorporated by reference.
3.4 Certificate of Amendment of Restated Certificate of Incorporation
of Raytheon Company to effect a forward stock split of the
Registrant's Class A and Class B common stock, filed as an
exhibit to Raytheon's Registration Statement on Form S-8, File
No. 333-52535, is hereby incorporated by reference.
3.5 Certificate of Amendment of Restated Certificate of Incorporation
of Raytheon Company to reclassify the Registrant's Class A and
Class B common stock into a single new class of common stock,
filed as an exhibit to Raytheon's Registration Statement on Form
S-8, File No. 333-52535, is hereby incorporated by reference.
4.1 Indenture relating to Senior Debt Securities dated as of July 3,
1995 between Raytheon Company and The Bank of New York, Trustee,
filed as an exhibit to Former Raytheon's Registration Statement
on Form S-3, File No. 33-59241, is hereby incorporated by
reference.
4.2 Indenture relating to Subordinated Debt Securities dated as of July
3, 1995 between Raytheon Company and The Bank of New York, Trustee,
filed as an exhibit to Former Raytheon's Registration Statement on
Form S-3, File No. 33-59241, is hereby incorporated by reference.
4.3 Supplemental Indenture dated as of December 17, 1997 between
Raytheon Company and The Bank of New York, Trustee filed as an
exhibit to Raytheon's Annual Report on Form 10-K for the year
ended December 31, 1997, is hereby incorporated by reference.
4.4 Second Supplemental Indenture, dated as of May 9, 2001, between
Raytheon Company and the Bank of New York, filed as an exhibit to
Raytheon's Form 8-K, dated May 10, 2001, is hereby incorporated by
reference.
4.5 Rights Agreement dated as of December 15, 1997 between the Company
and State Street Bank and Trust Company, as Rights Agent, filed as
an exhibit to the Company's Registration Statement on Form 8-A,
File No. 1-13699, is hereby incorporated by reference.
4.6 Amendment to Rights Agreement dated as of May 15, 2001 between the
Company and State Street Bank and Trust Company, as Rights Agent.*
4.7 Agreement of Substitution and Amendment of Rights Agreement dated
as of March 5, 2002 between the Company and American Stock
Transfer and Trust Company.*
4.8 Form of Senior Debt Securities filed as an exhibit to Raytheon's
Registration Statement on Form S-3, File No. 333-58474, is hereby
incorporated by reference.
4.9 Form of Subordinated Debt Securities filed as an exhibit to
Raytheon's Registration Statement on Form S-3, File No. 333-58474,
is hereby incorporated by reference.
4.10 Certificate of Trust of RC Trust I filed as an exhibit to
Raytheon's Registration Statement on Form S-3, File No.
333-58474, is hereby incorporated by reference.
4.11 Amended and Restated Declaration of Trust of RC Trust I, dated as
of May 9, 2001, among Raytheon Company, The Bank of New York as
initial Property Trustee, The Bank of New York (Delaware) as
initial Delaware Trustee, and the Regular Trustee, filed as an
exhibit to Raytheon's Form 8-K, dated May 10, 2001, is hereby
incorporated by reference.
23
<PAGE>
4.12 Certificate of Trust of RC Trust II filed as an exhibit to Raytheon's
Registration Statement on Form S-3, File No. 333-58474, is hereby
incorporated by reference.
4.13 Declaration of Trust of RC Trust II filed as an exhibit to Raytheon's
Registration Statement on Form S-3, File No. 333-58474, is hereby
incorporated by reference.
4.14 Purchase Contract Agreement dated May 9, 2001, filed as an exhibit to
Raytheon's filing on Form 8-K, dated May 10, 2001, is hereby
incorporated by reference.
4.15 Form of Preferred Security filed as an exhibit to Raytheon's Form
8-K, dated May 10, 2001, is hereby incorporated by reference.
4.16 Pledge Agreement dated May 9, 2001, among Raytheon Company, Bank One
Trust Company, N.A., as Collateral Agent, Custodial Agent and
Securities Intermediary and the Bank of New York, as Purchase
Contract Agent, filed as an exhibit to Raytheon's Form 8-K/A, dated
May 10, 2001, is hereby incorporated by reference.
4.17 Form of Remarketing Agreement among Raytheon Company and The Bank of
New York as Purchase Contract Agent, filed as an exhibit to
Raytheon's Form 8-K, dated May 10, 2001, is hereby incorporated by
reference.
10.1 Raytheon Company 1976 Stock Option Plan, as amended, filed as an
exhibit to the Company's Registration Statement on Form S-8, File No.
333-45629, is hereby incorporated by reference.
10.2 Raytheon Company 1991 Stock Plan, as amended, filed as an exhibit to
the Company's Quarterly Report on Form 10-Q for the quarter ended
July 4, 1999, is hereby incorporated by reference.
10.3 Raytheon Company 1995 Stock Option Plan, as amended, filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended July 4, 1999, is hereby incorporated by reference.
10.4 Raytheon Company 2001 Stock Plan, filed as an exhibit to the
Company's Registration Statement on Form S-8, File No. 333-52535, is
hereby incorporated by reference.
10.5 Plan for Granting Stock Options in Substitution for Stock Options
Granted by Texas Instruments Incorporated, filed as an exhibit to the
Company's Registration Statement on Form S-8, File No. 333- 45629, is
hereby incorporated by reference.
10.6 Plan for Granting Stock Options in Substitution for Stock Options
Granted by Hughes Electronics Corporation, filed as an exhibit to the
Company's Registration Statement on Form S-8, File No. 333- 45629, is
hereby incorporated by reference.
10.7 Raytheon Company 1997 Nonemployee Directors Restricted Stock Plan,
filed as an exhibit to the Company's Registration Statement on Form
S-8, File No. 333-45629, is hereby incorporated by reference.
10.8 Raytheon Company Deferral Plan for Directors, filed as an exhibit to
Former Raytheon's Registration Statement on Form S-8, File No.
333-22969, is hereby incorporated by reference.
24
<PAGE>
10.9 Form of Executive Change in Control Severance Agreement between
the Company and each of the following executives: Franklyn A.
Caine, Francis S. Marchilena, Neal E. Minahan, Keith J. Peden,
James E. Schuster and William H. Swanson.*
10.10 Form of Executive Change in Control Severance Agreement between
the Company and each of the following executives: Richard A.
Goglia, Edward S. Pliner, Rebecca R. Rhoads, and Gregory S.
Shelton.*
10.11 Employment Agreement between Raytheon Company and Daniel P.
Burnham, filed as an exhibit to Raytheon's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998, is hereby
incorporated by reference.
10.12 Severance Agreement between Raytheon Company and Daniel P.
Burnham, filed as an exhibit to Raytheon's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998, is hereby
incorporated by reference.
10.13 Employment Agreement between Raytheon Company and Franklyn A.
Caine, filed as an exhibit to Raytheon's Quarterly Report on Form
10-Q for the quarter ended April 4, 1999, is hereby incorporated
by reference.
10.14 Amendment to William H. Swanson's Change in Control Severance
Agreement, filed as an exhibit to Raytheon's Annual Report on
Form 10-K for the year ended December 31, 1999, is hereby
incorporated by reference.
10.15 Employment Agreement between Raytheon Company and Edward S.
Pliner.*
10.16 Retention Agreement between Raytheon Company and Hansel E.
Tookes, II, filed as an exhibit to Raytheon's Annual Report on
Form 10-K for the year ended December 31, 2000, is hereby
incorporated by reference.
10.17 Letter Agreement between Raytheon Company and Hansel E. Tookes,
II amending the Retention Agreement referenced in Exhibit
10.16 between the parties dated as of April 7, 2000.*
10.18 Employment Agreement between Raytheon Company and Keith J.
Peden.*
10.19 HE Holdings, Inc. Five Year Competitive Advance and Revolving
Credit Facility, filed as an exhibit to the Company's Registration
Statement on Form S-4, File No. 333-37223, is hereby incorporated
by reference.
10.20 Third Amended and Restated Purchase and Sale Agreement dated as of
March 9, 2001 among
25
<PAGE>
Raytheon Aircraft Credit Corporation, Raytheon Aircraft
Receivables Corporation and the Purchasers named therein, filed
as an exhibit to Raytheon's Quarterly Report on Form 10-Q for the
quarter ended April 1, 2001, is hereby incorporated by reference.
10.21 Reaffirmation of Amended and Restated Repurchase Agreement dated
as of March 9, 2001 among Raytheon Aircraft Company and the
Purchasers named therein, filed as an exhibit to Raytheon's
Quarterly Report on Form 10-Q for the quarter ended April 1,
2001, is hereby incorporated by reference.
10.22 Amendment and Reaffirmation of Amended and Restated Guarantee
dated as of March 9, 2001 among Raytheon Company and the
Purchasers named therein, filed as an exhibit to Raytheon's
Quarterly Report on Form 10-Q for the quarter ended April 1,
2001, is hereby incorporated by reference.
10.23 364 Day Competitive Advance and Revolving Credit Facility dated
as of November 28, 2001, among Raytheon Company, as Borrower,
Raytheon Technical Services Company and Raytheon Aircraft
Company, as Guarantors, the lenders named therein, and J.P.
Morgan Chase Bank as Administrative Agent for the lenders.*
10.24 Five-Year Competitive Advance and Revolving Credit Facility
dated as of November 28, 2001, among Raytheon Company, as
Borrower, Raytheon Technical Services Company and Raytheon
Aircraft Company, as Guarantors, the lenders named therein, and
J.P. Morgan Chase Bank as Administrative Agent for the lenders.*
10.25 Raytheon Savings and Investment Plan, as amended and restated
effective January 1, 1999, filed as an exhibit to Raytheon's
Annual Report on Form 10-K for the year ended December 31, 1999
and incorporated by reference.
10.26 Raytheon Employee Savings and Investment Plan, as amended and
restated effective January 1, 1999, filed as an exhibit to
Raytheon's Annual Report on Form 10-K for the year ended December
31, 1999 and incorporated by reference.
10.27 Raytheon Excess Savings Plan, filed as an exhibit to
Post-Effective Amendment No. 1 to the Company's Registration
Statement on Form S-8, File No. 333-56117, is hereby incorporated
by reference.
10.28 Raytheon Deferred Compensation Plan, filed as an exhibit to Post-
Effective Amendment No. 1 to the Company's Registration Statement
on Form S-8, File No. 333-56117, is hereby incorporated by
reference.
10.29 Guarantee Agreement, dated as of May 9, 2001, between Raytheon
Company and The Bank of New York as initial Guarantee Trustee,
filed as an exhibit to Raytheon's Form 8-K, dated May 10, 2001,
is hereby incorporated by reference.
10.30 Raytheon Supplemental Executive Retirement Plan.*
12 Statement regarding Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Dividends for the year ended
December 31, 2001.*
13 Raytheon Company 2001 Annual Report to Stockholders (furnished
for the information of the Commission and not to be deemed
"filed" as part of this Report except to the extent that portions
thereof are expressly incorporated herein by reference).*
26
<PAGE>
21 Subsidiaries of Raytheon Company.*
23.1 Consent of Independent Accountants.*
23.2 Reports of Independent Accountants.*
(Exhibits marked with an asterisk (*) are filed electronically
herewith.)
27
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RAYTHEON COMPANY
/s/ Franklyn A. Caine
Franklyn A. Caine
Senior Vice President and Chief Financial
Officer for the Registrant
Dated: March 18, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
/s/ Daniel P. Burnham
Chairman and Chief March 18, 2002
- ----------------------- Executive Officer
Daniel P. Burnham (Principal Executive
Officer)
/s/ Barbara M. Barrett
- ---------------------- Director March 18, 2002
Barbara M. Barrett
/s/ Ferdinand Colloredo-Mansfeld
- -------------------------------- Director March 18, 2002
Ferdinand Colloredo-Mansfeld
/s/ John M. Deutch
- -------------------- Director March 18, 2002
John M. Deutch
/s/ Thomas E. Everhart
Director March 18, 2002
- ----------------------
Thomas E. Everhart
/s/ John R. Galvin
- -------------------- Director March 18, 2002
John R. Galvin
/s/ L. Dennis Kozlowski
- ------------------- Director March 18, 2002
L. Dennis Kozlowski
/s/ Henrique de Campos Meirelles
- --------------------------- Director March 18, 2002
Henrique de Campos Meirelles
/s/ Frederic M. Poses
- --------------------- Director March 18, 2002
Frederic M. Poses
28
<PAGE>
/s/ Warren B. Rudman
- ----------------- Director March 18, 2002
Warren B. Rudman
/s/ Michael C. Ruettgers
Director March 18, 2002
- ----------------------
Michael C. Ruettgers
/s/ William R. Spivey
- --------------------- Director March 18, 2002
William R. Spivey
/s/ Alfred M. Zeien
Director March 18, 2002
- ----------------------
Alfred M. Zeien
/s/ Edward S. Pliner
- ---------------------- Vice President and March 18, 2002
Edward S. Pliner Corporate Controller
(Chief Accounting Officer)
29
<PAGE>
RAYTHEON COMPANY
----------------
SCHEDULE II - RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 2001
-------------------------------------------
(In millions)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Charged to Charged to Deductions Balance at
beginning costs other Note (1) end of
Description of period and expenses accounts Period
----------- --------- ------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 2001:
Allowance for doubtful
accounts receivable $22.9 $2.3 - $2.9 $22.3
Year ended December 31, 2000:
Allowance for doubtful
accounts receivable $26.6 $3.9 - $7.6 $22.9
Year ended December 31, 1999:
Allowance for doubtful $20.8 $8.3 - $2.5 $26.6
Accounts receivable
</TABLE>
Note (1) - Uncollectible accounts and adjustments, less recoveries.
30
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.6
<SEQUENCE>3
<FILENAME>dex46.txt
<DESCRIPTION>AMENDMENT TO RIGHTS AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 4.6
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of May 15, 2001, to the Rights Agreement, dated as of
December 15, 1997 (the "Rights Agreement"), between Raytheon Company, a Delaware
corporation (the "Company', and State Street Bank and Trust Company, as Rights
Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement. Pursuant to Section 27 of the Rights
Agreement, the Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement in accordance with the provisions thereof. All acts
and things necessary to make this Amendment a valid agreement, enforceable
according to its terns, have been done and performed, and the execution and
delivery of this Amendment by the Company and the Rights Agent have been in all
respects duly authorized by the Company and the Rights Agent.
WHEREAS, the Board of Directors and the Shareholders of the Company have
each approved, and the Company has filed, certain amendments to the Restated
Certificate of Incorporation and By-laws of the Company, pursuant to which the
Company has reclassified (the "Reclassification") each outstanding share of
Class A Common Stock, par value $.01 ("Class A Common Stock") and Class B Common
Stock, par value $.01 ("Class B Common Stock") into a single class of new Common
Stock, par value $.01 ("Common Stock").
WHEREAS, The Board of Directors has determined that it is in the best
interest of the Company and its shareholders to amend the Rights Agreement in
light of the Reclassification.
In consideration of the foregoing and the mutual agreements set forth
herein, and intending to be legally bound, the parties hereto agree as follows:
1. Section 1 of the Rights Agreement is hereby modified and amended as
follows:
The first sentence of the definition of Common Shares is deleted and
replaced with the following:
"Common Shares" when used with reference to the Company shall mean the
shares of Common Stock $.01 par value per share of the Company.
The definition of Triggering Holding is deleted and replaced with the
following:
"Triggering Holding" shall mean any holding that includes 15% or more
of the Common Shares of the Company then outstanding.
2. Both Section 11(a)(ii) and Section 11(d)(ii) of the Rights Agreement are
hereby modified and amended so that each reference in Section 11(a)(ii) and in
Section 11(d)(ii) to Class B Common Shares is replaced with, and shall be deemed
to refer to, Common Shares.
<PAGE>
3. Section 24 of the Rights Agreement is hereby modified and amended so
that each reference in section 24 to Class B Common Shares is replaced with, and
shall be deemed to refer to, Common Shares.
4. Clause (i) of Section 24 of the Rights Agreement is hereby modified and
amended to read as follows "the sum of .001% and the largest percentage of
outstanding Common Shares then known by the Company to be beneficially owned by
any Person (other than an Exempt Person) and"
5. This Amendment to the Rights Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
6. This Amendment to the Rights Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument. Terms not defined herein shall,
unless the context otherwise requires, have the meanings assigned to such terms
in the Rights Agreement.
7. In all respects not inconsistent with the terms and provisions of this
Amendment to the Rights Agreement, the Rights Agreement is hereby ratified,
adopted, approved and confirmed. In executing and delivering this Amendment, the
Rights Agent shall be entitled to all the privileges and immunities afforded to
the Rights Agent under the terms and conditions of the Rights Agreement.
8. If any term, provision, covenant or restriction of the Amendment to the
Rights Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Amendment to the Rights Agreement, and of the
Rights Agreement, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
9. If any term, provision, covenant or restriction of this Amendment to the
Rights Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Amendment to the Rights Agreement, and of the
Rights Agreement, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
-2-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
duly executed and attested, all as of the date and year first above written.
Attest: RAYTHEON COMPANY
By: /s/ John W. Kapples By: /s/ Thomas D. Hyde
---------------------------- ----------------------------------
John W. Kapples Thomas D. Hyde
Vice President and Secretary Senior Vice President and General Counsel
Attest: STATE STREET BANK AND TRUST COMPANY
By: /s/ Peter P. Harrington By: /s/ Stephen Cesso
---------------------------- -----------------------------------
-3-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>4
<FILENAME>dex47.txt
<DESCRIPTION>AGREEMENT OF SUBSTITUTION
<TEXT>
<PAGE>
EXHIBIT 4.7
AGREEMENT OF SUBSTITUTION AND AMENDMENT OF RIGHTS AGREEMENT
This Agreement of Substitution and Amendment is entered into as of March 5,
2002, by and between Raytheon Company, a Delaware corporation (the "Company")
and American Stock Transfer and Trust Company, a New York banking corporation
("AST").
RECITALS
A. On or about December 15, 1997, HE Holdings, Inc., the predecessor in
interest to the Company, entered into a Rights Agreement, as amended
by the First Amendment to Rights Agreement dated May 15, 2001 (the
"Rights Agreement"), with State Street Bank and Trust Company, the
predecessor in interest to EquiServe (the "Predecessor Agent") as
rights agent.
B. On or about February 1, 2002, the Predecessor Agent notified the
Company in writing of its resignation as rights agent pursuant to
Section 21 of the Agreement. Such resignation was effective as of
March 4, 2002.
C. The Company wishes to substitute AST as rights agent pursuant to
Section 21 of the Rights Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of other
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. Section 21 of the Rights Agreement is hereby amended to provide that
any successor rights agent shall, at the time of its appointment as
rights agent, have a combined capital and surplus of at least $10
million, rather than $50 million.
2. The Company hereby appoints AST as rights agent pursuant to Section 21
of the Rights Agreement, to serve in that capacity for the
consideration and subject to all of the terms and conditions of the
Rights Agreement.
3. AST hereby accepts the appointment as rights agent pursuant to Section
21 of the Rights Agreement and agrees to serve in that capacity for
the consideration and subject to all of the terms and conditions of
the Rights Agreement.
4. From and after the effective date hereof, each and every reference in
the Rights Agreement to a "Rights Agent" shall be deemed to be a
reference to AST.
5. Section 26 of the Rights Agreement is amended to provide that notices
or demands shall be addressed as follows (until another address is
filed):
<PAGE>
If to the Company:
Raytheon Company
141 Spring Street
Lexington, MA 02421
Attn: Corporate Secretary
If to AST:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Attention: Corporate Trust Department
6. Except as expressly modified herein, the Rights Agreement shall remain
in full force and effect.
7. This Agreement of Substitution and Amendment may be executed in one or
more counterparts, each of which shall together constitute one and the
same document.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date indicated above.
RAYTHEON COMPANY
By: /s/ Neal E. Minahan
---------------------------------
Name:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Herbert Lemmer
---------------------------------
Name:
3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>5
<FILENAME>dex109.txt
<DESCRIPTION>FORM OF EXECUTIVE CHANGE IN CONTROL
<TEXT>
<PAGE>
Exhibit 10.9
Raytheon Company
Change In Control Severance Agreement
Agreement by and between Raytheon Company, a Delaware corporation (the
"Company"), and ("Executive") dated as of ,
---------------- ----------------
2001.
The Board of Directors of Company believes it is in the best interests of
the Company and its stockholders to have the continued dedication of Executive
notwithstanding the possibility, threat or occurrence of a Change in Control (as
defined in Section 1.5); to diminish the inevitable distraction of Executive due
to personal uncertainties and risks created by a threatened or pending Change in
Control; and to provide Executive with compensation and benefits arrangements
upon a Change in Control which are competitive with those offered by other
corporations.
Therefore, the Board of Directors has caused the Company to enter into this
Agreement, and the Company and Executive agree as follows:
1 DEFINITIONS
For purposes of this Agreement, the following terms have the following meanings.
1.1 "Affiliated Company" means an affiliated company as defined in Rule 12b-2 of
------------------
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
1.2 "Base Salary" means Executive's annual base salary paid or payable
-----------
(including any base salary which has been earned but deferred) to Executive by
the Company or an affiliated company immediately preceding the date of a Change
in Control.
1.3 "Board" means the Board of Directors of the Company.
-----
1.4 "Cause" means Executive's:
-----
(i) willful and continued failure to perform substantially Executive's
duties with the Company or one of its affiliates as such duties are
constituted as of a Change in Control after the Company delivers to
Executive written demand for substantial performance specifically
identifying the manner in which Executive has not substantially
performed Executive's duties;
<PAGE>
(ii) conviction for a felony; or
(iii)willfully engaging in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this Section 1.4, no act or omission by Executive shall be
considered "willful" unless it is done or omitted in bad faith or without
reasonable belief that Executive's action or omission was in the best interests
of the Company. Any act or failure to act based upon (a) authority given
pursuant to a resolution duly adopted by the Board, (b) instructions of the
Chief Executive Officer or a senior officer of the Company, or (c) advice of
counsel for the Company shall be conclusively presumed to be done or omitted to
be done by Executive in good faith and in the best interests of the Company. For
purposes of subsections (i) and (iii) above, Executive shall not be deemed to be
terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters of the entire membership of the Board at a meeting
called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel, to be
heard before the Board) finding that in the good faith opinion of the Board
Executive is guilty of the conduct described in subsection (i) or (iii) above
and specifying the particulars thereof in detail.
1.5 "Change in Control" of the Company shall be deemed to have occurred as of
-----------------
the first day that any one or more of the following conditions shall have been
satisfied:
(i) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person"), other than
those Persons in control of the Company as of the date hereof or a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, become
the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding securities; or
(ii) A change in the Board such that individuals who as of the date hereof
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then
comprising the Incumbent
2
<PAGE>
Board shall be considered as though such individual were a member of
the Incumbent Board; or
(iii) The stockholders of the Company approve: (a) a plan of complete
liquidation of the Company; (b) an agreement for the sale or
disposition of all or substantially all of the Company's assets; (c) a
merger, consolidation or reorganization of the Company with or
involving any other corporation, other than a merger, consolidation or
reorganization that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the combined
voting power of the voting securities of the Company (or such
surviving entity) outstanding immediately after such merger,
consolidation or reorganization.
However, in no event shall a Change in Control be deemed to have occurred for
purposes of this Agreement if Executive is included in a Person that consummates
the Change in Control. Executive shall not be deemed to be included in a Person
by reason of ownership of (i) less than 3% of the equity in the Person or (ii)
an equity interest in the Person which is otherwise not significant as
determined prior to the Change of Control by a majority of the non-employee
continuing directors of the Company.
1.6 "Code" means the Internal Revenue Code of 1986, as amended.
----
1.7 "Good Reason" means any of the following acts or omissions by the Company
-----------
without Executive's express written consent:
(i) assigning to Executive duties materially inconsistent with Executive's
position (including status, offices, titles and reporting
requirements), authority or responsibilities immediately prior to a
Change in Control or any other action by the Company which results in
a material diminution of Executive's position, authority, duties or
responsibilities as constituted immediately prior to a Change in
Control;
(ii) requiring Executive (a) to be based at any office or location in
excess of 50 miles from Executive's office or location immediately
prior to a Change in Control or (b) to travel on Company business to a
substantially greater extent than required immediately prior to a
Change in Control;
(iii) reducing Executive's Base Salary;
3
<PAGE>
(iv) materially reducing in the aggregate Executive's incentive
opportunities under the Company's or an affiliated company's short-
and long-term incentive programs as such opportunities exist
immediately prior to a Change in Control;
(v) materially reducing Executive's targeted annualized award
opportunities and/or the degree of probability of attainment of such
annualized award opportunities as such opportunities exist immediately
prior to a Change in Control;
(vi) failing to maintain Executive's amount of benefits under or relative
level of participation in the Company's or an affiliated Company's
employee benefit or retirement plans, policies, practices or
arrangements in which the Executive participates immediately prior to
a Change in Control;
(vii) purportedly terminating Executive's employment otherwise than as
expressly permitted by this Agreement; or
(viii) failing to comply with and satisfy Section 8.3 hereof by requiring
any successor to the Company to assume and agree to perform the
Company's obligations hereunder.
1.8 "Qualifying Termination" means the occurrence of any of the following events
----------------------
within twenty-four (24) calendar months after a Change in Control:
(i) the Company terminates the employment of Executive for any reason
other than for Cause including, without limitation, forcing Executive
to retire on any date not of Executive's choosing;
(ii) Executive terminates employment with the Company for Good Reason;
(iii)the Company fails to require a successor to assume, or a successor
refuses to assume, the Company's obligations as required by Section 8
hereof; or
(iv) the Company or any successor breaches any of the provisions hereof.
1.9 "Severance Benefits" means:
------------------
(i) an amount equal to the product of Executive's Base Salary multiplied
by three (3);
4
<PAGE>
(ii) an amount equal to Executive's unpaid Base Salary through a Qualifying
Termination;
(iii) an amount equal to the product of the greater of (a) Executive's
annual bonus earned for the fiscal year immediately prior to a Change
in Control and (b) Executive's target annual bonus established for the
plan year in which a Qualifying Termination occurs multiplied by three
(3);
(iv) an amount equal to the product of Executive's unpaid targeted annual
bonus established for the plan year in which a Change in Control
occurs multiplied by a fraction the numerator of which is the number
of days elapsed in the current fiscal year to the Qualifying
Termination and the denominator of which is 365;
(v) an amount equal to the dollar value of Executive's accrued vacation
through a Qualifying Termination;
(vi) an amount equal to all compensation deferred by Executive together
with all interest thereon;
(vii) an amount equal to the actuarial present value of the aggregate
benefits accrued by Executive as of a Qualifying Termination under the
Company's supplemental retirement plan calculated assuming that
Executive's employment continued for three years following a
Qualifying Termination; provided, however, that for purposes of
determining Executive's final average pay under the supplemental
retirement plan, Executive's actual pay history as of the Qualifying
Termination shall be used; and
(viii) fringe benefits pursuant to all welfare, benefit and retirement
plans under which Executive and Executive's family are eligible to
receive benefits or coverage as of a Change in Control, including but
not limited to life insurance, hospitalization, disability, medical,
dental, pension and thrift plans.
2 QUALIFYING TERMINATION
2.1 Severance Benefits. Following a Qualifying Termination Executive shall be
------------------
entitled to all Severance Benefits, conditioned upon receipt of a written
release by the Executive of any claims against the Company or its subsidiaries,
except those claims arising under this Agreement or any other written plan or
agreement, which shall be specifically noted in such release. The Severance
Benefits under this Agreement shall be the exclusive source of separation
payments to the Executive. By receipt of the
5
<PAGE>
Severance Benefits provided herein and the execution of the written release
provided above, the Executive waives any and all claims the Executive may have
to payment upon separation from employment that may arise under any other
agreement with the Company, including but not limited to the Severance Agreement
dated July 1, 1998, or under any Company-sponsored employee welfare plan.
2.2 Payment of Benefits. The Severance Benefits described in Sections 1.9 (i)
-------------------
through 1.9(vii) shall be paid in cash within 30 days of a Qualifying
Termination.
2.3 Duration of Benefits. The Severance Benefits described in Section 1.9(viii)
--------------------
shall be provided to Executive at the same premium cost as in effect immediately
prior to the Qualifying Termination. The welfare Severance Benefits described in
Section 1.9(viii) shall be provided following the Qualifying Termination until
the earlier of (i) the second anniversary of the Qualifying Termination or (ii)
the date Executive receives substantially equivalent welfare benefits from a
subsequent employer.
3 NON-QUALIFYING TERMINATIONS
3.1 Voluntary; for Cause; Death. Following a Change in Control, if Executive's
---------------------------
employment is terminated (i) voluntarily by Executive without Good Reason, (ii)
involuntarily by the Company for Cause or (iii) due to death, Executive shall be
entitled to Base Salary and benefits accrued through the date of termination and
Executive's entitlement to all other benefits shall be determined in accordance
with the Company's retirement, insurance and other applicable plans, policies,
practices and arrangements. Thereafter, the Company shall have no further
obligations to Executive hereunder.
4 NOTICE OF TERMINATION
4.1 Notice by Executive or Company. Any termination by Executive for Good Reason
------------------------------
or by the Company for Cause shall be communicated by written notice given to the
other in accordance with Section 9.2 hereof and which:
(i) indicates the specific termination provision in this Agreement relied
upon;
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision indicated to the
extent possible; and
(iii) specifies the termination date (which date shall not be more than 30
days after the giving of such notice).
6
<PAGE>
4.2 Failure to Give Notice. The failure by Executive or the Company to set forth
----------------------
in the notice of termination required by Section 4.1 any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of Executive or the Company, respectively, hereunder or preclude Executive or
the Company, respectively, from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
5 TAX PAYMENTS
5.1 Excise Tax Payments. (i) Anything in this Agreement to the contrary
-------------------
notwithstanding and except as set forth below, if it is determined that any
payment or distribution by the Company to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 5) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this
Subsection 5(i), if it is determined that Executive is entitled to a Gross-Up
Payment, but that Executive, after taking into account the Payments and the
Gross-Up Payment, would not receive a net after-tax benefit of at least $50,000
(taking into account both income taxes and any Excise Tax) as compared to the
net after-tax proceeds to Executive resulting from an elimination of the
Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount
(the "Reduced Amount") such that the receipt of Payments would not give rise to
any Excise Tax, then no Gross-Up Payment shall be made to Executive and the
Payments, in the aggregate, shall be reduced to the Reduced Amount.
(ii) Subject to the provisions of Subsection 5(iii), all determinations required
to be made under this Section 5, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
PricewaterhouseCoopers or such other certified public accounting firm as may be
designated by Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within 15 business
days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company. If the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in
7
<PAGE>
Control, Executive shall appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5, shall be paid by the Company to Executive
within five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. If the Company exhausts its remedies
pursuant to Subsection 5(iii) and Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of Executive.
(iii) Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies Executive in writing prior to the expiration of such period that it
desires to contest such claim, Executive shall:
(a) give the Company any information reasonable requested by the Company
relating to such claim,
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith in order effectively to
contest such claim, and
(d) permit the Company to participate in any proceedings relating to such
claim;
8
<PAGE>
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Subsection 5(iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or to contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder, and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by Executive of an amount advanced by the Company
pursuant to Subsection 5(iii), Executive becomes entitled to receive any refund
with respect to such claim, Executive shall (subject to the Company's complying
with the requirements of Subsection 5(iii) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If after the receipt by Executive of an amount
advanced by the Company pursuant to Subsection 5(iii), a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
5.2 Tax Withholding. The Company may withhold from any amounts payable under
---------------
this Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
9
<PAGE>
6 EXTENT OF COMPANY'S OBLIGATIONS
6.1 No Set-Off, Etc. The Company's obligation to make the payments and perform
---------------
it obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Executive or others. All payments by the Company hereunder shall be
final, and the Company shall not seek to recover from Executive any part of any
payment for any reason whatsoever.
6.2 No Mitigation. In no event shall Executive be obligated to seek other
-------------
employment or take any other action by way of mitigation of the amounts payable
to Executive under any provision hereof, and such amounts shall not be reduced
whether or not Executive obtains other employment except to the extent
contemplated by Section 2.3 hereof.
6.3 Payment of Legal Fees and Costs. The Company agrees to pay as incurred, to
-------------------------------
the full extent permitted by law, all legal fees and expenses which Executive
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code.
6.4 Arbitration. Executive shall have the right to have settled by arbitration
-----------
any dispute or controversy arising in connection herewith. Such arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association before a panel of three arbitrators sitting in a location selected
by Executive. Judgment may be entered on the award of the arbitrators in any
court having proper jurisdiction. All expenses of such arbitration shall be
borne by the Company in accordance with Section 6.3 hereof.
7 TERM
7.1 Initial Term. The term of this Agreement shall be two years from the date
------------
hereof.
7.2 Renewal. The terms of this Agreement automatically shall be extended for
-------
successive one-year terms unless canceled by the Company by written notice to
Executive not less than six months prior to the end of any term.
7.3 Effect of Change in Control. Notwithstanding Sections 7.1 and 7.2 to the
---------------------------
contrary, the Company may not cancel this Agreement following a Change in
Control.
8 SUCCESSORS
10
<PAGE>
8.1 This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall be inure to
the benefit of and be enforceable by Executive's legal representatives.
Executive may from time to time designate in writing one or more persons or
entities as primary and/or contingent beneficiaries of any Severance Benefit
owing to Executive hereunder.
8.2 This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.
8.3 The Company shall require any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. For purposes
hereof, "Company" means the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
9 MISCELLANEOUS
9.1 Heading. The headings are not part of the provisions hereof and shall have
-------
no force or effect.
9.2 Notices. All notices and other communications hereunder shall be in writing
-------
and shall be given by hand delivery or by registered or certified mail, return
receipt required, postage prepaid, addressed as follows:
if to the Company: Raytheon Company
141 Spring Street
Lexington, Massachusetts 02421
Attention: General Counsel
if to Executive:
----------------------
----------------------
----------------------
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received.
11
<PAGE>
9.3 Severability. The invalidity or unenforceability of any provision of this
------------
Agreement shall not affect the validity or enforceability of any other provision
hereof.
9.4 Compliance; Waiver. Executive's or the Company's failure to insist upon
------------------
strict compliance with any provision hereof or failure to assert any right
hereunder, including without limitation the right of Executive to terminate
employment for Good Reason pursuant to Section 2.1 hereof, shall not be deemed
to be a waiver of such provision or right or any other provision or right
hereof.
9.5 Employment Status. Executive and Company acknowledge that except as may
-----------------
otherwise be provided under any other written agreement between Executive and
the Company, the employment of Executive by the Company is "at will" and prior
to a Change in Control may be terminated at any time by Executive or the
Company. Following a Change in Control, the provisions of this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Raytheon Company
By:
--------------------------------- ------------------------------------
Keith J. Peden Executive
Senior Vice President,
Human Resources
12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>6
<FILENAME>dex1010.txt
<DESCRIPTION>FORM OF EXECUTIVE CHANGE IN CONTROL
<TEXT>
<PAGE>
Exhibit 10.10
Raytheon Company
Change In Control Severance Agreement
Agreement by and between Raytheon Company, a Delaware corporation (the
"Company"), and ("Executive") dated as of , 2001.
-------------- ---------------
The Board of Directors of Company believes it is in the best interests of
the Company and its stockholders to have the continued dedication of Executive
notwithstanding the possibility, threat or occurrence of a Change in Control (as
defined in Section 1.5); to diminish the inevitable distraction of Executive due
to personal uncertainties and risks created by a threatened or pending Change in
Control; and to provide Executive with compensation and benefits arrangements
upon a Change in Control which are competitive with those offered by other
corporations.
Therefore, the Board of Directors has caused the Company to enter into this
Agreement, and the Company and Executive agree as follows:
1 DEFINITIONS
For purposes of this Agreement, the following terms have the following meanings.
1.1 "Affiliated Company" means an affiliated company as defined in Rule 12b-2 of
------------------
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
1.2 "Base Salary" means Executive's annual base salary paid or payable
-----------
(including any base salary which has been earned but deferred) to Executive by
the Company or an affiliated company immediately preceding the date of a Change
in Control.
1.3 "Board" means the Board of Directors of the Company.
-----
1.4 "Cause" means Executive's:
-----
(i) willful and continued failure to perform substantially Executive's
duties with the Company or one of its affiliates as such duties are
constituted as of a Change in Control after the Company delivers to
Executive written demand for substantial performance specifically
identifying the manner in which Executive has not substantially
performed Executive's duties;
(ii) conviction for a felony; or
(iii) willfully engaging in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
<PAGE>
For purposes of this Section 1.4, no act or omission by Executive shall be
considered "willful" unless it is done or omitted in bad faith or without
reasonable belief that Executive's action or omission was in the best interests
of the Company. Any act or failure to act based upon (a) authority given
pursuant to a resolution duly adopted by the Board, (b) instructions of the
Chief Executive Officer or a senior officer of the Company, or (c) advice of
counsel for the Company shall be conclusively presumed to be done or omitted to
be done by Executive in good faith and in the best interests of the Company. For
purposes of subsections (i) and (iii) above, Executive shall not be deemed to be
terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters of the entire membership of the Board at a meeting
called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel, to be
heard before the Board) finding that in the good faith opinion of the Board
Executive is guilty of the conduct described in subsection (i) or (iii) above
and specifying the particulars thereof in detail.
1.5 "Change in Control" of the Company shall be deemed to have occurred as of
-----------------
the first day that any one or more of the following conditions shall have
been satisfied:
(i) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person"), other than
those Persons in control of the Company as of the date hereof or a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, become
the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding securities; or
(ii) A change in the Board such that individuals who as of the date hereof
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; or
(iii) The stockholders of the Company approve: (a) a plan of complete
liquidation of the Company; (b) an agreement for the sale or
disposition of all or substantially all of the Company's assets; (c) a
merger, consolidation or reorganization of the Company with or
involving any other corporation, other than a merger, consolidation or
reorganization that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the combined
voting power of the voting
2
<PAGE>
securities of the Company (or such surviving entity) outstanding
immediately after such merger, consolidation or reorganization.
However, in no event shall a Change in Control be deemed to have occurred for
purposes of this Agreement if Executive is included in a Person that consummates
the Change in Control. Executive shall not be deemed to be included in a Person
by reason of ownership of (i) less than 3% of the equity in the Person or (ii)
an equity interest in the Person which is otherwise not significant as
determined prior to the Change of Control by a majority of the non-employee
continuing directors of the Company.
1.6 "Code" means the Internal Revenue Code of 1986, as amended.
----
1.7 "Good Reason" means any of the following acts or omissions by the Company
-----------
without Executive's express written consent:
(i) assigning to Executive duties materially inconsistent with Executive's
position (including status, offices, titles and reporting
requirements), authority or responsibilities immediately prior to a
Change in Control or any other action by the Company which results in
a material diminution of Executive's position, authority, duties or
responsibilities as constituted immediately prior to a Change in
Control;
(ii) requiring Executive (a) to be based at any office or location in
excess of 50 miles from Executive's office or location immediately
prior to a Change in Control or (b) to travel on Company business to a
substantially greater extent than required immediately prior to a
Change in Control;
(iii) reducing Executive's Base Salary;
(iv) materially reducing in the aggregate Executive's incentive
opportunities under the Company's or an affiliated company's short-
and long-term incentive programs as such opportunities exist
immediately prior to a Change in Control;
(v) materially reducing Executive's targeted annualized award
opportunities and/or the degree of probability of attainment of such
annualized award opportunities as such opportunities exist immediately
prior to a Change in Control;
(vi) failing to maintain Executive's amount of benefits under or relative
level of participation in the Company's or an affiliated Company's
employee benefit or retirement plans, policies, practices or
arrangements in which the Executive participates immediately prior to
a Change in Control;
(vii) purportedly terminating Executive's employment otherwise than as
expressly permitted by this Agreement; or
3
<PAGE>
(viii) failing to comply with and satisfy Section 8.3 hereof by requiring
any successor to the Company to assume and agree to perform the
Company's obligations hereunder.
1.8 "Qualifying Termination" means the occurrence of any of the following events
----------------------
within twenty-four (24) calendar months after a Change in Control:
(i) the Company terminates the employment of Executive for any reason
other than for Cause including, without limitation, forcing Executive
to retire on any date not of Executive's choosing;
(ii) Executive terminates employment with the Company for Good Reason;
(iii) the Company fails to require a successor to assume, or a successor
refuses to assume, the Company's obligations as required by Section 8
hereof; or
(iv) the Company or any successor breaches any of the provisions hereof.
1.9 "Severance Benefits" means:
------------------
(i) an amount equal to the product of Executive's Base Salary multiplied
by two (2);
(ii) an amount equal to Executive's unpaid Base Salary through a Qualifying
Termination;
(iii) an amount equal to the product of the greater of (a) Executive's
annual bonus earned for the fiscal year immediately prior to a Change
in Control or (b) Executive's target annual bonus established for the
plan year in which a Qualifying Termination occurs multiplied by two
(2);
(iv) an amount equal to the product of Executive's unpaid targeted annual
bonus established for the plan year in which a Change in Control
occurs multiplied by a fraction the numerator of which is the number
of days elapsed in the current fiscal year to the Qualifying
Termination and the denominator of which is 365;
(v) an amount equal to the dollar value of Executive's accrued vacation
through a Qualifying Termination;
(vi) an amount equal to all compensation deferred by Executive together
with all interest thereon;
(vii) an amount equal to the actuarial present value of the aggregate
benefits accrued by Executive as of a Qualifying Termination under the
Company's supplemental retirement plan calculated assuming that
Executive's employment continued for two years following a Qualifying
Termination; provided, however, that for
4
<PAGE>
purposes of determining Executive's final average pay under the
supplemental retirement plan, Executive's actual pay history as of the
Qualifying Termination shall be used; and
(viii) fringe benefits pursuant to all welfare, benefit and retirement
plans under which Executive and Executive's family are eligible to
receive benefits or coverage as of a Change in Control, including but
not limited to life insurance, hospitalization, disability, medical,
dental, pension and thrift plans.
2 QUALIFYING TERMINATION
2.1 Severance Benefits. Following a Qualifying Termination Executive shall be
------------------
entitled to all Severance Benefits, conditioned upon receipt of a written
release by the Executive of any claims against the Company or its subsidiaries,
except those claims arising under this Agreement or any other written plan or
agreement, which shall be specifically noted in such release.
2.2 Payment of Benefits. The Severance Benefits described in Sections 1.9 (i)
-------------------
through 1.9(vii) shall be paid in cash within 30 days of a Qualifying
Termination.
2.3 Duration of Benefits. The Severance Benefits described in Section 1.9(viii)
--------------------
shall be provided to Executive at the same premium cost as in effect immediately
prior to the Qualifying Termination. The welfare Severance Benefits described in
Section 1.9(viii) shall be provided following the Qualifying Termination until
the earlier of (i) the second anniversary of the Qualifying Termination or (ii)
the date Executive receives substantially equivalent welfare benefits from a
subsequent employer.
3 NON-QUALIFYING TERMINATIONS
3.1 Voluntary; for Cause; Death. Following a Change in Control, if Executive's
---------------------------
employment is terminated (i) voluntarily by Executive without Good Reason, (ii)
involuntarily by the Company for Cause or (iii) due to death, Executive shall be
entitled to Base Salary and benefits accrued through the date of termination and
Executive's entitlement to all other benefits shall be determined in accordance
with the Company's retirement, insurance and other applicable plans, policies,
practices and arrangements. Thereafter, the Company shall have no further
obligations to Executive hereunder.
4 NOTICE OF TERMINATION
4.1 Notice by Executive or Company. Any termination by Executive for Good Reason
------------------------------
or by the Company for Cause shall be communicated by written notice given to the
other in accordance with Section 9.2 hereof and which:
(i) indicates the specific termination provision in this Agreement relied
upon;
5
<PAGE>
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision indicated to the
extent possible; and
(iii) specifies the termination date (which date shall not be more than 30
days after the giving of such notice).
4.2 Failure to Give Notice. The failure by Executive or the Company to set forth
----------------------
in the notice of termination required by Section 4.1 any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of Executive or the Company, respectively, hereunder or preclude Executive or
the Company, respectively, from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
6
<PAGE>
5 TAX PAYMENTS
5.1 Excise Tax Payments. (i) Anything in this Agreement to the contrary
-------------------
notwithstanding and except as set forth below, if it is determined that any
payment or distribution by the Company to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 5) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this
Subsection 5(i), if it is determined that Executive is entitled to a Gross-Up
Payment, but that Executive, after taking into account the Payments and the
Gross-Up Payment, would not receive a net after-tax benefit of at least $50,000
(taking into account both income taxes and any Excise Tax) as compared to the
net after-tax proceeds to Executive resulting from an elimination of the
Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount
(the "Reduced Amount") such that the receipt of Payments would not give rise to
any Excise Tax, then no Gross-Up Payment shall be made to Executive and the
Payments, in the aggregate, shall be reduced to the Reduced Amount.
(ii) Subject to the provisions of Subsection 5(iii), all determinations required
to be made under this Section 5, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
PricewaterhouseCoopers or such other certified public accounting firm as may be
designated by Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within 15 business
days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company. If the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the
Company to Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. If the Company exhausts its
remedies pursuant to Subsection 5(iii) and Executive thereafter is required to
make a payment of any Excise Tax, the
7
<PAGE>
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.
(iii) Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies Executive in writing prior to the expiration of such period that it
desires to contest such claim, Executive shall:
(a) give the Company any information reasonable requested by the Company
relating to such claim,
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith in order effectively to
contest such claim, and
(d) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Subsection 5(iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or to contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
8
<PAGE>
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder, and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by Executive of an amount advanced by the Company
pursuant to Subsection 5(iii), Executive becomes entitled to receive any refund
with respect to such claim, Executive shall (subject to the Company's complying
with the requirements of Subsection 5(iii) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If after the receipt by Executive of an amount
advanced by the Company pursuant to Subsection 5(iii), a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
5.2 Tax Withholding. The Company may withhold from any amounts payable under
---------------
this Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
6 EXTENT OF COMPANY'S OBLIGATIONS
6.1 No Set-Off, Etc. The Company's obligation to make the payments and perform
---------------
it obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Executive or others. All payments by the Company hereunder shall be
final, and the Company shall not seek to recover from Executive any part of any
payment for any reason whatsoever.
6.2 No Mitigation. In no event shall Executive be obligated to seek other
-------------
employment or take any other action by way of mitigation of the amounts payable
to Executive under any provision hereof, and such amounts shall not be reduced
whether or not Executive obtains other employment except to the extent
contemplated by Section 2.3 hereof.
6.3 Payment of Legal Fees and Costs. The Company agrees to pay as incurred, to
-------------------------------
the full extent permitted by law, all legal fees and expenses which Executive
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code.
6.4 Arbitration. Executive shall have the right to have settled by arbitration
-----------
any dispute or controversy arising in connection herewith. Such arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association before a panel of three arbitrators sitting
9
<PAGE>
in a location selected by Executive. Judgment may be entered on the award of the
arbitrators in any court having proper jurisdiction. All expenses of such
arbitration shall be borne by the Company in accordance with Section 6.3 hereof.
7 TERM
7.1 Initial Term. The term of this Agreement shall be two years from the date
------------
hereof.
7.2 Renewal. The terms of this Agreement automatically shall be extended for
-------
successive one-year terms unless canceled by the Company by written notice to
Executive not less than six months prior to the end of any term.
7.3 Effect of Change in Control. Notwithstanding Sections 7.1 and 7.2 to the
---------------------------
contrary, the Company may not cancel this Agreement following a Change in
Control.
8 SUCCESSORS
8.1 This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall be inure to
the benefit of and be enforceable by Executive's legal representatives.
Executive may from time to time designate in writing one or more persons or
entities as primary and/or contingent beneficiaries of any Severance Benefit
owing to Executive hereunder.
8.2 This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.
8.3 The Company shall require any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. For purposes
hereof, "Company" means the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
9 MISCELLANEOUS
9.1 Heading. The headings are not part of the provisions hereof and shall have
-------
no force or effect.
9.2 Notices. All notices and other communications hereunder shall be in writing
-------
and shall be given by hand delivery or by registered or certified mail, return
receipt required, postage prepaid, addressed as follows:
if to the Company: Raytheon Company
10
<PAGE>
141 Spring Street
Lexington, Massachusetts 02421
Attention: General Counsel
if to Executive:
--------------------------
--------------------------
--------------------------
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received.
9.3 Severability. The invalidity or unenforceability of any provision of this
------------
Agreement shall not affect the validity or enforceability of any other provision
hereof.
9.4 Compliance; Waiver. Executive's or the Company's failure to insist upon
------------------
strict compliance with any provision hereof or failure to assert any right
hereunder, including without limitation the right of Executive to terminate
employment for Good Reason pursuant to Section 2.1 hereof, shall not be deemed
to be a waiver of such provision or right or any other provision or right
hereof.
9.5 Employment Status. Executive and Company acknowledge that except as may
-----------------
otherwise be provided under any other written agreement between Executive and
the Company, the employment of Executive by the Company is "at will" and prior
to a Change in Control may be terminated at any time by Executive or the
Company. Following a Change in Control, the provisions of this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Raytheon Company
By:
------------------------------------- -------------------------------------
Keith J. Peden Executive
Senior Vice President,
Human Resources
11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>7
<FILENAME>dex1015.txt
<DESCRIPTION>EMPLOYMENT AGMT - PLINER
<TEXT>
<PAGE>
Exhibit 10.15
March 8, 2000
Mr. Edward S. Pliner
Dear Edward:
It is my sincere pleasure to extend to you an offer for the position of Vice
President, Controller reporting to me. Pending Raytheon Board of Directors
approval, you will be elected a Vice President of the Raytheon Company. The
offer, subject to the approval of the Management Development and Compensation
Committee of the Board of Directors, has an annual base salary of $325,000 and
consists of the following additional elements:
. You will be eligible for the Results Based Incentive Program with a
targeted incentive of 50% of base salary.
. You will be authorized 25,000 shares of Raytheon stock options. These
options will vest at one-third each year, over 3 years.
. You will be eligible to participate in Raytheon's Long Term
Achievement Program (LTAP) and will be granted stock options
equivalent to a present value of 50% of your current base salary. See
attached compensation program description sheet for LTAP explanation.
Participation in this plan is subject to annual CEO review.
. An automobile allowance of $14,000.
. Financial planning assistance: $10,000 first year and $7,500
thereafter.
. Eligible for Executive Life insurance of 5X your annual base salary
including basic life.
. Excess liability coverage of $5,000,000.
. Deferred compensation eligibility.
. First class domestic air travel.
. Twenty (20) days per year of Paid Time Off.
With respect to your pension, at the time of your retirement we will provide a
pension equal to at least 40% of the average of the highest five out of the last
ten years cash compensation (base and bonus), offset by social security or any
other pension payments from your previous employers. In our pension
calculations, we will include service from your prior employers.
Please correct PTO to reflect the above stated 20 days.
- ---------------------------------
Keith Peden Vice President Human Resources
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>8
<FILENAME>dex1017.txt
<DESCRIPTION>LETTER AGMT - TOOKES
<TEXT>
<PAGE>
Exhibit 10.17
June 11, 2001
Mr. Hansel Tookes II
Dear Hansel:
Please let this letter confirm our recent conversation in which I informed
you that the Company reaffirms the applicability of the severance/retirement
transition payment contained in your July 6, 1999, employment offer letter. This
provision provides that, if the company involuntarily separates you from
employment without cause, or if you retire on a mutually agreed-upon date before
your normal retirement date of age 62, or if you retire at age 62 or beyond, the
company will pay to you a severance/retirement transition payment of two and
one-half times your annual base salary.
Please note that this severance/retirement transition payment is in lieu of
any change in control provision in the July 6, 1999 offer letter and the April
7, 2000 retention bonus letter related to the disposition of Raytheon Aircraft
Company.
If you have any questions, please feel free to contact me.
Best regards,
Keith J. Peden
Senior Vice President, Human Resources
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>9
<FILENAME>dex1018.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - PEDEN
<TEXT>
<PAGE>
Exhibit 10.18
April 9, 2001
Mr. Keith Peden
Dear Keith:
It is my sincere pleasure to extend to you an offer for the position of Senior
Vice President Human Resources for Raytheon Company reporting to me. The offer
has a bi-weekly rate of pay of $12,692.00, which, if annualized, equates to
$330,000. This position resides in our Corporate Headquarters in Lexington, MA.
Additional elements of this offer will consist of the following:
. You will be eligible for the Results Based Incentive Program (RBI)
with a targeted incentive of 75% of base salary.
. Pending approval of the Management Development Compensation Committee
of the Raytheon Board of Directors, you will be awarded 40,000 shares
of Raytheon stock options subject to the provisions of the Raytheon
Stock Option Plan. These options will vest at one-third each year,
over 3 years.
. Pending approval of the Management Development Compensation Committee
of the Raytheon Board of Directors, you will be awarded 10,000 shares
of restricted stock subject to the provisions of the Raytheon
Restricted Stock Plan. These options will lapse at one-third each
year, over 3 years.
. You will be eligible to participate in Raytheon's Long Term
Achievement Program (LTAP). You will be granted 24,000 stock options
as part of this plan. Participation in this plan is subject to annual
CEO review.
. 20 days per year of Paid Time Off.
. Company provided automobile.
. Eligibility to participate in Raytheon's Deferred Bonus Program.
. Eligibility for executive life insurance of 5 times your annual base
salary, including basic life insurance.
. Financial planning assistance of $15,000 in 2001, and $12,000 each
year thereafter.
. First Class Domestic Air Travel.
. Your retirement benefit will be calculated using your 8 years of
service with Raytheon Company plus any future Raytheon service. Your
retirement benefit will be provided under the Raytheon Qualified and
Supplemental Executive Retirement Plans and will be calculated in
accordance with the attached Benefit Table. This will be offset by
social security.
. If the Company involuntarily separates you from employment without
cause, you will be entitled to a Separation Payment equal to twice
your base salary and target RBI bonus, and benefit and perquisite
extension for two years.
<PAGE>
. In addition, you shall be entitled to a Separation Payment of three
times your base salary and target RBI bonus and benefit and perquisite
extension for three years if, as a result of a Change in Corporate
Control, you are assigned, without your expressed written consent, to
duties inconsistent with the position of Senior Vice President Human
Resources for Raytheon Company. You are subject to the provisions of
the Change in Control agreement per the attached document.
I look forward to you accepting this offer and the valuable contributions you
will make to your team.
Sincerely,
Dan Burnham
Chairman and Chief Executive Officer
Enclosures: Duplicate Offer Letter
Change in Control Agreement
Severance Agreement
Retirement Benefits Agreement
[_] I hereby accept this offer of employment and agree to the terms and
conditions of this offer.
[_] I hereby decline this offer of employment. Reason for decline:
- --------------------------------------------------------------------------------
- -------------------------------- ----------------------
Signature Date
<PAGE>
Keith J. Peden
Benefits at Retirement
- --------------------------------------------------------------------------------
. Recognition of mid-career status hire
. Hired March of 1993, current service 8 years, age as of 5/2/01 is 51
. Credit double service for each month Raytheon service prior to age 55,
regular service after age 55
Benefit Percentage of Final Average Earnings
--------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Age Credit under Benefit Voluntary Involuntary
Raytheon Pension Plan Granted Termination Termination
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
51 14.4% 28.8% Per Raytheon Plan Involuntary
Termination
- -----------------------------------------------------------------------------------------
52 16.2% 34.4% Per Raytheon Plan 40.8%
- -----------------------------------------------------------------------------------------
53 18.0% 36.0% Per Raytheon Plan 40.8%
- -----------------------------------------------------------------------------------------
54 19.8% 38.4% Per Raytheon Plan 40.8%
- -----------------------------------------------------------------------------------------
55 21.6% 40.8% 40.8% 40.8%
- -----------------------------------------------------------------------------------------
56 23.4% 43.2% 43.2% 50%
- -----------------------------------------------------------------------------------------
57 25.2% 45.6% 45.6% 50%
- -----------------------------------------------------------------------------------------
58 27.0% 48.0% 48.0% 50%
- -----------------------------------------------------------------------------------------
59 28.8% 50% 50% 50%
Maximum benefit Maximum benefit Maximum benefit
- -----------------------------------------------------------------------------------------
60 30.6% 50% 50% 50%
Maximum benefit Maximum benefit Maximum benefit
- -----------------------------------------------------------------------------------------
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>10
<FILENAME>dex1023.txt
<DESCRIPTION>364 DAY COMPETITIVE ADVANCE
<TEXT>
<PAGE>
Exhibit 10.23
EXECUTION COPY
================================================================================
$1,000,000,000
364-DAY COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY
among
RAYTHEON COMPANY
as the Borrower,
RAYTHEON TECHNICAL SERVICES COMPANY and
RAYTHEON AIRCRAFT COMPANY,
each as a Guarantor,
THE LENDERS NAMED HEREIN,
BANK OF AMERICA, N.A.,
as Syndication Agent,
CITICORP USA, INC., CREDIT SUISSE FIRST BOSTON and MIZUHO FINANCIAL
GROUP,
as Documentation Agents,
and
JPMORGAN CHASE BANK,
as Administrative Agent,
Dated as of November 28, 2001
================================================================================
J.P. MORGAN SECURITIES INC. and
BANC of AMERICA SECURITIES LLC
as Joint Lead Arrangers and Joint Bookrunners
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Definitions.............................................................................................1
SECTION 1.01. Defined Terms.................................................................1
SECTION 1.02. Terms Generally..............................................................13
ARTICLE II The Credits...........................................................................................13
SECTION 2.01. Commitments..................................................................13
SECTION 2.02. Loans........................................................................13
SECTION 2.03. Competitive Bid Procedure....................................................14
SECTION 2.04. Borrowing Procedure..........................................................16
SECTION 2.05. Evidence of Debt; Repayment of Loans.........................................16
SECTION 2.06. Fees.........................................................................17
SECTION 2.07. Interest on Loans............................................................18
SECTION 2.08. Default Interest.............................................................18
SECTION 2.09. Alternate Rate of Interest...................................................18
SECTION 2.10. Termination and Reduction of Commitments.....................................19
SECTION 2.11. Conversion and Continuation of Revolving Credit Borrowings...................19
SECTION 2.12. Prepayment...................................................................20
SECTION 2.13. Reserve Requirements; Change in Circumstances................................21
SECTION 2.14. Change in Legality...........................................................22
SECTION 2.15. Indemnity....................................................................22
SECTION 2.16. Pro Rata Treatment...........................................................23
SECTION 2.17. Sharing of Setoffs...........................................................23
SECTION 2.18. Payments.....................................................................23
SECTION 2.19. Taxes........................................................................24
SECTION 2.20. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate......26
ARTICLE III Representations And Warranties.......................................................................26
SECTION 3.01. Organization; Powers.........................................................26
SECTION 3.02. Authorization................................................................27
SECTION 3.03. Enforceability...............................................................27
SECTION 3.04. Governmental Approvals.......................................................27
SECTION 3.05. Financial Statements.........................................................27
SECTION 3.06. No Material Adverse Change...................................................27
SECTION 3.07. Litigation; Compliance with Laws.............................................27
SECTION 3.08. Federal Reserve Regulations..................................................28
SECTION 3.09. Investment Company Act; Public Utility Holding Company Act...................28
SECTION 3.10. Tax Returns..................................................................28
SECTION 3.11. No Material Misstatements....................................................28
SECTION 3.12. Employee Benefit Plans.......................................................28
SECTION 3.13. No Default...................................................................29
SECTION 3.14. Ownership of Property; Liens; Insurance......................................29
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 3.15. Intellectual Property........................................................29
SECTION 3.16. Labor Matters................................................................29
SECTION 3.17. Environmental Matters........................................................29
SECTION 3.18. Solvency.....................................................................30
ARTICLE IV Conditions Of Effectiveness and Lending...............................................................30
SECTION 4.01. All Borrowings...............................................................30
SECTION 4.02. Effectiveness................................................................31
ARTICLE V Affirmative Covenants..................................................................................32
SECTION 5.01. Existence; Businesses and Properties.........................................32
SECTION 5.02. Insurance....................................................................33
SECTION 5.03. Payment of Obligations; Taxes................................................33
SECTION 5.04. Financial Statements, Reports, etc...........................................33
SECTION 5.05. Litigation and Other Notices.................................................34
SECTION 5.06. Employee Benefits............................................................34
SECTION 5.07. Maintaining Records; Access to Properties and Inspections....................35
SECTION 5.08. Use of Proceeds..............................................................35
SECTION 5.09. Environmental Laws...........................................................35
SECTION 5.10. Termination of Existing Credit Agreement.....................................35
ARTICLE VI Negative Covenants....................................................................................35
SECTION 6.01. Liens........................................................................35
SECTION 6.02. Sale and Lease-Back Transactions.............................................37
SECTION 6.03. Mergers, Consolidations and Sales of Assets..................................37
SECTION 6.04. Subsidiary Indebtedness......................................................37
SECTION 6.05. Financial Covenants..........................................................38
ARTICLE VII Events Of Default....................................................................................38
ARTICLE VIII The Administrative Agent............................................................................40
ARTICLE IX Guarantee.............................................................................................42
ARTICLE X Miscellaneous..........................................................................................43
SECTION 10.01. Notices......................................................................43
SECTION 10.02. Survival of Agreement........................................................44
SECTION 10.03. Binding Effect...............................................................44
SECTION 10.04. Successors and Assigns.......................................................44
SECTION 10.05. Expenses; Indemnity..........................................................47
SECTION 10.06. Right of Setoff..............................................................48
SECTION 10.07. APPLICABLE LAW...............................................................48
SECTION 10.08. Waivers; Amendment...........................................................48
SECTION 10.09. Interest Rate Limitation.....................................................48
SECTION 10.10. Entire Agreement.............................................................49
SECTION 10.11. WAIVER OF JURY TRIAL.........................................................49
SECTION 10.12. Severability.................................................................49
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 10.13. Counterparts.................................................................49
SECTION 10.14. Headings.....................................................................49
SECTION 10.15. Jurisdiction; Consent to Service of Process..................................49
SECTION 10.16. Confidentiality..............................................................50
SECTION 10.17. Release of Guarantees........................................................50
SECTION 10.18. Waiver and Consent of the Existing Credit Agreement..........................51
</TABLE>
EXHIBITS
- --------
Exhibit A Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D-1 Form of Competitive Bid Request
Exhibit D-2 Form of Notice of Competitive Bid Request
Exhibit D-3 Form of Competitive Bid
Exhibit D-4 Form of Competitive Bid Accept/Reject Letter
Exhibit E Form of Opinion of Neal E. Minahan
Exhibit F Form of Opinion of Bingham Dana LLP
SCHEDULES
- ---------
Schedule 2.01 Lenders and Commitments
Schedule 3.01 Significant Subsidiaries
Schedule 3.05 Financial Statements/Material Liabilities
Schedule 3.07 Litigation
Schedule 6.01 Existing Liens
Schedule 6.04 Existing Subsidiary Indebtedness
iii
<PAGE>
364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY, dated as of
November 28, 2001, among Raytheon Company, a Delaware corporation (the
"Borrower"), Raytheon Technical Services Company, a Delaware corporation, and
Raytheon Aircraft Company, a Kansas corporation, each as a Guarantor (in such
capacity, each a "Guarantor" and, collectively, the "Guarantors"), the Lenders
(as defined in Article I), J.P. Morgan SECURITIES, INC. and BANC OF AMERICA
SECURITIES LLC., as joint lead arrangers and joint bookrunners (in such
capacity, the "Arrangers"), Bank of America, N.A, as syndication agent (in such
capacity, the "Syndication Agent"), Citicorp USA, Inc., Credit Suisse First
Boston and Mizuho Financial Group, as documentation agents (in such capacity,
each a "Documentation Agent" and, collectively, the "Documentation Agents"), and
JPMORGAN CHASE BANK, a New York banking corporation, as administrative agent (in
such capacity, the "Administrative Agent", and, collectively with the
Syndication Agent and the Documentation Agents, the "Agents") for the Lenders.
The Borrower has requested the Lenders, and the Lenders have agreed, to
extend credit in the form of Revolving Loans at any time and from time to time
prior to the Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $1,000,000,000. The Borrower also has requested the
Lenders to provide a procedure pursuant to which the Borrower may invite the
Lenders to bid on an uncommitted basis on short-term borrowings by the Borrower.
The proceeds of the Loans are to be used by the Borrower for working capital and
general corporate purposes of the Borrower and its Subsidiaries.
The Lenders are willing to extend such credit to the Borrower on the terms
and subject to the conditions set forth herein. Accordingly, the parties hereto
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at the Alternate Base Rate
in accordance with the provisions of Article II.
"Administrative Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Agents" shall have the meaning assigned to such term in the preamble.
"Agents' Fees" shall have the meaning assigned to such term in Section
2.06(b).
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount of
the Lenders' Revolving Credit Exposures.
<PAGE>
2
"Agreement" shall mean this 364-Day Competitive Advance and Revolving
Credit Facility, as amended, supplemented or otherwise modified from time to
time.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) or (c), or both, of the
preceding sentence, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" shall mean, with respect to any Eurodollar Loan
(other than any Eurodollar Competitive Loan), with respect to any ABR Loan or
with respect to the Facility Fees, as the case may be, with respect to the day
of, and any day after, the Closing Date, the applicable percentage set forth
below under the caption "Eurodollar Spread", "ABR Spread" or "Fee Percentage",
as the case may be, based upon the ratings by S&P and Moody's, respectively,
applicable on such date to the Index Debt:
Eurodollar Spread ABR Spread Fee Percentage
----------------- ---------- --------------
Category 1
- ----------
BBB+ or higher by S&P or
Baa1 or higher by Moody's 0.625% 0.000% 0.125%
Category 2
- ----------
BBB by S&P or
Baa2 by Moody's 0.725% 0.000% 0.150%
Category 3
- ----------
BBB- by S&P or
Baa3 by Moody's 0.950% 0.000% 0.175%
Category 4
- ----------
BB+ by S&P
or Ba1 by Moody's 1.275% 0.500% 0.225%
Category 5
- ----------
BB or lower by S&P
or Ba2 or lower by Moody's 1.675% 1.000% 0.325%
For purposes of this definition, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by r eason of the
circumstances referred to in the last sentence of this paragra ph), then such
rating agency shall be deemed to have established a rating in Category 5; (ii)
if the ratings established or deemed to have been established by Moody's and S&P
for the Index Debt shall fall within different Categories, the Applicable
Percentage shall be based on the higher of the two ratings unless the ratings
differ by more than one category, in which case the governing rating shall be
the rating next below the higher of the two; and (iii) if the ratings
established or deemed to have been established by Moody's and S&P for the Index
Debt shall be changed (other than as a result of a change in the rating
<PAGE>
3
system of Moody's or S&P), such change shall be effective as of the date on
which it is first announced by the applicable rating agency. Each change in the
Applicable Percentage shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the non-availability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Percentage shall be
determined by reference to the rating most recently in effect prior to such
change or cessation.
"Arrangers" shall have the meaning assigned to such term in the preamble.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate. The
term "Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other domestic banking authority to which the
Administrative Agent or any Lender (including any branch, Affiliate, or other
fronting office making or holding a Loan) is subject with respect to the Base CD
Rate, for new negotiable nonpersonal time deposits in Dollars of over $100,000
with maturities approximately equal to three months. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage. The term "Assessment Rate" shall mean for any date the
annual rate (rounded upwards, if necessary, to the next 1/100 of 1%) most
recently estimated by the Administrative Agent as the then current net annual
assessment rate that will be employed in determining amounts payable by the
Administrative Agent to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in Dollars at the Administrative Agent's domestic offices.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose Competitive Bids have been accepted pursuant to Section 2.03) on a single
date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance with
the terms of Section 2.04 and substantially in the form of Exhibit C.
"Business" shall have the meaning assigned to such term in Section 3.17.
"Business Day" shall mean any day other than a Saturday, Sunday or day on
which banks in New York City are authorized or required by law to close;
provided, however, that, when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in Dollar deposits in the London interbank market.
"Capital Lease Obligations" shall mean as to any person, the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as
<PAGE>
4
capital leases on a balance sheet of such person under GAAP and, for the
purposes of this Agreement, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) any "person"
or "group" as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) shall become the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
Act), directly or indirectly, of more than 50% of the outstanding common stock
of the Borrower, or (b) a majority of the seats (other than vacant seats) on the
board of directors of the Borrower shall at any time have been occupied by
persons who were neither (i) nominated by the board of directors of the Borrower
nor (ii) appointed by directors so nominated.
"Closing Date" shall mean November 28, 2001.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder in an aggregate principal and/or
face amount not to exceed the amount set forth opposite such Lender's name on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be (a) reduced from time to time pursuant
to Section 2.10 or pursuant to Section 2.16, and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04. The aggregate initial Commitments shall be $1,000,000,000.
"Competitive Bid" shall mean an offer by a Lender to make a Competitive
Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification made by
the Borrower pursuant to Section 2.03(d) in the form of Exhibit D-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Competitive
Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to Section
2.03 in the form of Exhibit D-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a Competitive
Loan or concurrent Competitive Loans from the Lender or Lenders whose
Competitive Bids for such Borrowing have been accepted by the Borrower under the
bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Lender to the Borrower pursuant
to the bidding procedure described in Section 2.03. Each Competitive Loan shall
be a Eurodollar Competitive Loan or a Fixed Rate Loan.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated October 2001, as revised, amended,
modified or otherwise supplemented prior to the date hereof.
<PAGE>
5
"Consolidated EBITDA" " shall mean, for any period, the sum of (a)
Consolidated Net Income for such period and (b) the aggregate amounts deducted
in determining Consolidated Net Income in respect of (i) Consolidated Net
Interest Expense for such period, (ii) income taxes, depreciation and
amortization of the Borrower and its consolidated Subsidiaries for such period
determined in accordance with GAAP and (iii) write-offs of goodwill as required,
or as would be required in the next succeeding fiscal year of the Borrower, by
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets.
"Consolidated Interest Coverage Ratio" shall mean for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Net Interest
Expense for such period.
"Consolidated Net Income": for any period, the consolidated net income (or
deficit) of the Borrower and its consolidated Subsidiaries for such period,
determined in accordance with GAAP; provided that (i) for the fiscal quarter of
the Borrower and its consolidated Subsidiaries ending April 1, 2001, such
Consolidated Net Income shall be increased by $325,000,000 representing one-time
charges recorded in connection with the discontinued operations of Raytheon
Engineers and Constructors, (ii) for the fiscal quarter of the Borrower and its
consolidated Subsidiaries ending July 1, 2001, such Consolidated Net Income
shall be increased by an aggregate amount not to exceed $272,000,000 for such
fiscal quarter, representing additional one-time charges to the extent recorded
in connection with the discontinued operations of Raytheon Engineers and
Constructors during such fiscal quarter and (iii) for the fiscal quarter of the
Borrower and its consolidated Subsidiaries ending September 30, 2001, such
Consolidated Net Income shall be increased by an aggregate amount not to exceed
$750,000,000 representing one-time charges recorded in connection with the
inventory write-down and valuation reserve related to various aircraft.
"Consolidated Net Interest Expense" shall mean, for any period, net
interest expense of the Borrower and its consolidated Subsidiaries for such
period, determined in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean, as at any date of
determination, the total amount of assets of the Borrower and the Subsidiaries
(less applicable depreciation, amortization and other valuation reserves) at
such date, after deducting therefrom (a) all current liabilities of the Borrower
and the Subsidiaries at such date and (b) all goodwill, trade names, trademarks,
patents, unamortized debt issuance fees and expenses and other like intangibles
at such date.
"Contractual Obligations" shall mean, as to any person, any provision of
any security issued by such person or of any agreement, instrument or other
undertaking to which such person is a party or by which it or any of its
property is bound.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and "Controlling" and "Controlled" shall have meanings correlative thereto.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Dollars" or "$" shall mean lawful money of the United States of America.
"Environmental Laws" shall mean any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other applicable laws or
regulations (including common law) regulating, relating to or
<PAGE>
6
imposing liability or standards of conduct concerning protection of human health
or the environment, as now or may at any time hereafter be in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Borrower or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g)
the receipt by the Borrower or any ERISA Affiliate of any notice that Withdrawal
Liability is being imposed or a determination that a Multiemployer Plan is, or
is expected to be, insolvent or in reorganization, within the meaning of Title
IV of ERISA; and (h) the occurrence of a non-exempt "prohibited transaction"
with respect to which the Borrower or any of its Subsidiaries is a "disqualified
person" (within the meaning of Section 4975) of the Code, or with respect to
which the Borrower or any such Subsidiary could otherwise be liable.
"Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Telerate screen (or otherwise on such
screen), the "Eurodollar Base Rate" shall be determined by reference to such
other comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
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7
"Eurodollar Competitive Borrowing" shall mean a Borrowing comprised of
Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
interest at a rate determined by reference to the Eurodollar Rate in accordance
with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar
Competitive Loan.
"Eurodollar Rate" shall mean with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Revolving Credit Borrowing" shall mean a Borrowing comprised of
Eurodollar Revolving Loans.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VII.
"Excess Utilization Day" shall mean each day on which the Utilization
Percentage exceeds 33.3%.
"Existing Credit Agreement" shall mean the Five-Year Competitive Advance
and Revolving Credit Facility Credit Agreement, dated as of May 30, 1997 (as
amended, supplemented or otherwise modified through the date hereof), among HE
Holdings, Inc, as the borrower, Hughes Aircraft Company, as the guarantor, the
lenders from time to time parties thereto, Bank of America, N.A., as syndication
agent, and The Chase Manhattan Bank (now known as JPMorgan Chase Bank), as
administrative agent.
"Facility Fee" shall have the meaning assigned to such term in Section
2.06(a).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter, dated October 4, 2001, between the
Borrower, the Administrative Agent, the Syndication Agent and the Arrangers.
"Fees" shall mean the Facility Fees and the Agents' Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer or
Controller of such corporation.
"Five-Year Credit Agreement" shall mean the Five-Year Credit Agreement,
dated as of the date hereof, among the Borrower, Raytheon Technical Services
Company, a Delaware corporation, and
<PAGE>
8
Raytheon Aircraft Company, a Kansas corporation, each as a Guarantor, the
several lenders from time to time parties thereto, J.P. Morgan Securities Inc.
and Banc of America Securities LLC, as joint lead arrangers and joint
bookrunners, Citicorp USA, Inc., Credit Suisse First Boston and Mizuho Financial
Group, each as a documentation agent, Bank of America, N.A, as the syndication
agent, and JPMorgan Chase Bank, as the administrative agent.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed Rate
Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at a
fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other liability of any other person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligations of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
liability or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness or liability, (b) to purchase
property, securities or services for the purpose of assuring the owner of such
Indebtedness or liability of the payment of such Indebtedness or liability or
(c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or liability.
"Guarantor" shall have the meaning assigned to such term in the preamble.
"Hedge Agreements" shall mean all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Indebtedness" of any person shall mean, as at any date of determination,
all indebtedness (including capitalized lease obligations) of such person and
its consolidated subsidiaries at such date that would be required to be included
as a liability on a consolidated balance sheet (excluding the footnotes thereto)
of such person prepared in accordance with GAAP applied on a basis consistent
with the application used in the financial statements referred to in Section
3.05.
"Index Debt" shall mean the senior, unsecured, non-credit enhanced,
long-term indebtedness for borrowed money of the Borrower.
"Interest Payment Date" shall mean, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months' duration, each day that would have been an Interest Payment Date
had successive Interest Periods of three months' duration been applicable to
such Borrowing, and, in addition, except with respect to any ABR Loan, the date
of any prepayment of such Loan or conversion of such Loan to a Loan of a
different Type.
<PAGE>
9
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower may elect, (b) as to any ABR Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the earlier of (i) the next succeeding March 31, June 30,
September 30 or December 31 and (ii) subject to Section 2.05(a), the Maturity
Date and (c) as to any Fixed Rate Borrowing, the period commencing on the date
of such Borrowing and ending on the date specified in the Competitive Bids in
which the offer to make the Fixed Rate Loans comprising such Borrowing was
extended, which shall not be earlier than seven days after the date of such
Borrowing or later than 360 days after the date of such Borrowing; provided,
however, that, if any Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless, in the case of a Eurodollar Borrowing only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period. Notwithstanding anything to the contrary in this
definition of "Interest Period", and except as provided in Section 2.05(a), any
Interest Period that would otherwise extend beyond the Maturity Date shall end
on the Maturity Date.
"Lender Affiliate" shall mean (a) any Affiliate of any Lender, (b) any
person that is administered or managed by any Lender or any Affiliate of any
Lender and that is engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of
its business and (c) with respect to any Lender which is a fund that invests in
commercial loans and similar extensions of credit, any other fund that invests
in commercial loans and similar extensions of credit and is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such Lender
or investment advisor.
"Lenders" shall mean (a) the financial institutions listed on Schedule 2.01
(other than any such financial institution that has ceased to be a party hereto
pursuant to an Assignment and Acceptance) and (b) any financial institution that
has become a party hereto pursuant to an Assignment and Acceptance.
"Lien" shall mean, with respect to any asset of any person, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities that
constitute assets of such person, any purchase option, call or similar right of
a third party with respect to such securities.
"Loans" shall mean the Revolving Loans and the Competitive Loans.
"Mandatorily Redeemable Equity Securities" shall mean the 17,250,000 equity
security units, including any remarketed securities, issued by the Borrower in
May 2001. Each equity security unit consists of a contract to purchase shares of
the Borrower's common stock on May 15, 2004, and a mandatorily redeemable equity
security, with a stated liquidation amount of $50.00 due on May 15, 2004. The
mandatorily redeemable equity security represents an undivided interest in the
assets of RC Trust I, a Delaware business trust, formed for the purpose of
issuing these securities and whose assets consist solely of subordinated notes
issued by the Borrower.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the margin
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) to be added to or
<PAGE>
10
subtracted from the Eurodollar Rate in order to determine the interest rate
applicable to such Loan, as specified in the Competitive Bid relating to such
Loan.
"Margin Stock" shall have the meaning assigned to such term in Regulation
U.
"Material Adverse Effect" shall mean a materially adverse effect on the
business, assets, operations or condition, financial or otherwise, of the
Borrower and the Subsidiaries taken as a whole.
"Materials of Environmental Concern" shall mean all explosive or
radioactive substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, urea-formaldehyde
insulation, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
"Maturity Date" shall mean the date which is 364 days after the Closing
Date.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Obligations" shall mean (a) the due and punctual payment of (i) the
principal of and interest (including interest accruing during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations, including
Fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) of
the Borrower to the Lenders under this Agreement and (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Permitted Receivables Program" shall mean any receivables securitization
program pursuant to which the Borrower or any of the Subsidiaries sells accounts
receivable and related receivables to any non-Affiliate in a "true sale"
transaction; provided, however, that any related indebtedness incurred to
finance the purchase of such accounts receivable is not includible on the
balance sheet of the Borrower or any Subsidiary in accordance with GAAP and
applicable regulations of the Securities and Exchange Commission.
"person" shall mean any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
<PAGE>
11
"Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being effective.
"Property" shall have the meaning assigned to such term in Section 3.17.
"Ratio Certificate" shall mean a certificate, signed on behalf of the
Borrower by a Financial Officer of the Borrower, delivered to the Administrative
Agent on the Closing Date and as may be required by Section 5.04(c), and setting
forth the calculations, in reasonable detail, required to determine compliance
with all covenants set forth in Sections 6.05 (a) and (b) on the Closing Date or
on the last day of any fiscal quarter, as the case may be.
"Register" shall have the meaning given such term in Section 10.04(d).
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Required Lenders" shall mean, at any time, the holders of more than 50% of
the Commitments then in effect or, if the Commitments have been terminated, the
Aggregate Revolving Credit Exposure then outstanding.
"Responsible Officer" of any corporation shall mean any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
"Revolving Credit Exposure" shall mean, as to any Lender at any time, an
amount equal to the aggregate principal amount of all Revolving Loans held by
such Lender then outstanding.
"Revolving Loans" shall mean the revolving loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Revolving Loan shall be a Eurodollar
Revolving Loan or an ABR Loan.
"S&P" shall mean Standard & Poor's Ratings Service.
"Significant Subsidiary" shall mean any Subsidiary that would be a
"Significant Subsidiary" at such time, as such term is defined in Regulation S-X
promulgated by the Securities and Exchange Commission as in effect on the
Closing Date. Notwithstanding Regulation S-X, each Guarantor will at all times
be deemed to be a Significant Subsidiary.
"Solvent" when used with respect to any person, shall mean that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such person will, as of such date, exceed the amount of all
"liabilities of such person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such person will, as of such date, be greater
than the amount that will be required to pay the liability of such person on its
debts as such debts become absolute and matured, (c) such person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such person will be able
<PAGE>
12
to pay its debts as they mature. For purposes of this definition, (i) "debt"
means liability on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured, disputed, undisputed, secured or unsecured.
"Stockholders' Equity" shall mean, as at any date of determination, the
stockholders' equity of the Borrower and its consolidated Subsidiaries as of
such date, as determined in accordance with GAAP.
"subsidiary" shall mean, with respect to any person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Term-out Loans" shall mean Loans the principal amount of which the
Borrower allows to remain outstanding after the Maturity Date, but prior to the
first anniversary of the Maturity Date, in accordance with subsection 2.05(a).
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Total Capitalization" shall mean, as at any date of determination, the sum
of Total Debt at such date and Mandatorily Redeemable Equity Securities and
Stockholders' Equity at such date.
"Total Commitment" shall mean, at any time, the aggregate amount of the
Commitments, as in effect at such time.
"Total Debt" shall mean, at a particular date, all amounts which would be
included as indebtedness (including capitalized leases) on a consolidated
balance sheet of the Borrower and its consolidated Subsidiaries, determined in
accordance with GAAP.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "Rate" shall include the
Eurodollar Rate and the Alternate Base Rate.
<PAGE>
13
"Utilization Fee" shall have the meaning assigned to such term in Section
2.06(b).
"Utilization Percentage" shall mean on any day the percentage equivalent to
a fraction (a) the numerator of which is the sum of the aggregate outstanding
principal amount of (i) the Loans, (ii) the Loans (as defined under the
Five-Year Credit Agreement) and (iii) the L/C Obligations (as defined under the
Five-Year Credit Agreement); and (b) the denominator of which is the sum of (y)
the aggregate Commitments (or, on any day after termination of the Commitments,
the aggregate Commitments in effect immediately preceding such termination) and
(z) the aggregate Commitments (as defined under the Five-Year Credit Agreement)
(or, on any day after termination of the Commitments (as defined under the
Five-Year Credit Agreement), the aggregate Commitments (as defined under the
Five-Year Credit Agreement) in effect immediately preceding such termination).
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, (a) any reference to this Agreement shall mean this Agreement
as amended, restated, supplemented or otherwise modified from time to time and
(b) all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided, however, that
for purposes of determining compliance with the covenants contained in Article
VI, all accounting terms herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP as in effect on
the date of this Agreement and applied on a basis consistent with the
application used in the financial statements referred to in Section 3.05.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, to make Revolving Loans to the Borrower, at any time
and from time to time on or after the Closing Date, and until the earlier of the
Maturity Date and the termination of the Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not result in (a)(i) such Lender's Revolving Credit Exposure exceeding
(ii) such Lender's Commitment or (b)(i) the aggregate amount of outstanding
Loans exceeding (ii) the Total Commitment. Within the limits set forth in the
preceding sentence, the Borrower may borrow, pay or prepay and reborrow
Revolving Loans on or after the Closing Date and prior to the Maturity Date,
subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Revolving Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments; provided, however, that the failure of any Lender
to make any Loan shall not in itself relieve any other Lender of its obligation
to lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in
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14
Section 2.03. The Loans comprising any Borrowing shall be in an aggregate
principal amount that is (i) an integral multiple of $1,000,000 and not less
than $10,000,000 or (ii) equal to the remaining available balance of the Total
Commitment.
(b) Subject to Sections 2.09 and 2.14, each Competitive Borrowing shall be
comprised entirely of Eurodollar Competitive Loans or Fixed Rate Loans, and each
Revolving Credit Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request pursuant to Section 2.03 or 2.04,
as applicable. Each Lender may at its option make any Eurodollar Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time; provided,
however, that the Borrower shall not be entitled to request any Borrowing that,
if made, would result in more than 15 Eurodollar Borrowings outstanding
hereunder at any time. For purposes of the foregoing, Borrowings having
different Interest Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the Administrative Agent shall by 12:00
(noon), New York City time, credit the amounts so received to an account with
the Administrative Agent designated by the Borrower in the applicable Borrowing
Request or Competitive Bid Request, which account must be in the name of the
Borrower or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent within one Business Day of demand
therefor such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of the Borrower,
the interest rate applicable at the time to the Loans comprising such Borrowing
and (ii) in the case of such Lender, a rate determined by the Administrative
Agent to represent its cost of overnight or short-term funds (which
determination shall be conclusive absent manifest error). If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date, unless the Borrower has
given notice to extend payment of the principal amount of the Loans until the
first anniversary of the Maturity Date in accordance with subsection 2.05(a).
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
Competitive Bids, the Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Competitive Bid Request (i) in the case of
a Eurodollar Competitive Borrowing, not later than 10:00 a.m., New York City
time, four Business Days before the proposed date of such Borrowing and (ii) in
the case of a Fixed Rate
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15
Borrowing, not later than 10:00 a.m., New York City time, one Business Day
before the proposed date of such Borrowing. A Competitive Bid Request shall not
be made within five Business Days after the date of any previous Competitive Bid
Request. No ABR Loan shall be requested in, or made pursuant to, a Competitive
Bid Request. A Competitive Bid Request that does not conform substantially to
the format of Exhibit D-1 may be rejected by the Administrative Agent and the
Administrative Agent shall notify the Borrower of such rejection as promptly as
practicable. Each Competitive Bid Request shall refer to this Agreement and
specify (i) whether the Borrowing being requested is to be a Eurodollar
Competitive Borrowing or a Fixed Rate Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day); (iii) the number and the location of the
account to which funds are to be disbursed (which shall be an account that
complies with the requirements of Section 2.02(c)); (iv) the aggregate principal
amount of such Borrowing, which shall be a minimum of $10,000,000 and an
integral multiple of $1,000,000 and not greater than the Total Commitment then
available; and (v) the Interest Period with respect thereto (which may not end
after the Maturity Date unless the Borrower has given notice to extend payment
of the principal amount of the Loans until the first anniversary of the Maturity
Date in accordance with subsection 2.05(a)). Promptly after its receipt of a
Competitive Bid Request that is not rejected, the Administrative Agent shall by
telecopy in the form set forth in Exhibit D-2 invite the Lenders to bid to make
Competitive Loans pursuant to the Competitive Bid Request.
(b) Each Lender may make one or more Competitive Bids to the Borrower
responsive to a Competitive Bid Request. Each Competitive Bid by a Lender must
be received by the Administrative Agent by telecopy in the form of Exhibit D-3,
(i) in the case of a Eurodollar Competitive Borrowing, not later than 9:30 a.m.,
New York City time, three Business Days before the proposed date of such
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 9:30 a.m., New York City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform substantially to the format of
Exhibit D-3 may be rejected by the Administrative Agent, and the Administrative
Agent shall notify the applicable Lender as promptly as practicable. Each
Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be a minimum of $5,000,000 and an integral multiple of
$1,000,000 and which may equal the entire principal amount of the Competitive
Borrowing requested by the Borrower) of the Competitive Loan or Loans that the
Lender is willing to make, (y) the Competitive Bid Rate or Rates at which the
Lender is prepared to make such Loan or Loans and (z) the Interest Period
applicable to such Loan or Loans and the last day thereof.
(c) The Administrative Agent shall promptly notify the Borrower by telecopy
of the Competitive Bid Rate and the principal amount of each Competitive Loan in
respect of which a Competitive Bid shall have been made and the identity of the
Lender that shall have made each bid.
(d) The Borrower may, subject only to the provisions of this paragraph (d),
accept or reject any Competitive Bid. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject each Competitive Bid, (x) in the case of a Eurodollar
Competitive Borrowing, not later than 10:30 a.m., New York City time, three
Business Days before the date of the proposed Competitive Borrowing and (y) in
the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City
time, on the proposed date of the Competitive Borrowing; provided, however, that
(i) the failure of the Borrower to give such notice shall be deemed to be a
rejection of each Competitive Bid, (ii) the Borrower shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if the Borrower has
decided to reject a Competitive Bid made at a lower Competitive Bid Rate, (iii)
the aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed (but may be less than) the principal amount specified in the Competitive
Bid Request, (iv) if the Borrower shall accept a Competitive Bid or Bids made at
a particular Competitive Bid Rate but the amount of such Competitive Bid or Bids
would cause the total amount to be accepted by the Borrower to exceed the amount
specified in the Competitive Bid Request, then the Borrower shall accept a
portion of such Competitive Bid or Bids in an amount equal to
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16
the amount specified in the Competitive Bid Request less the amount of all other
Competitive Bids so accepted, which acceptance, in the case of multiple
Competitive Bids at such Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such Bid and (v) except pursuant to clause
(iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless
such Competitive Loan is in a minimum principal amount of $5,000,000 and an
integral multiple of $1,000,000; provided further, however, that if a
Competitive Loan must be in an amount less than $5,000,000 because of the
provisions of clause (iv) above, such Competitive Loan may be for a minimum of
$1,000,000 or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be
rounded to integral multiples of $1,000,000 in a manner determined by the
Borrower. A notice given by the Borrower pursuant to this paragraph (d) shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender by
telecopy whether or not its Competitive Bid has been accepted (and, if so, in
what amount and at what Competitive Bid Rate), and each successful bidder will
thereupon become bound, upon the terms and subject to the conditions hereof, to
make the Competitive Loan in respect of which its Competitive Bid has been
accepted.
(f) If the Administrative Agent shall elect to submit a Competitive Bid in
its capacity as a Lender, it shall submit such Competitive Bid directly to the
Borrower at least one quarter of an hour earlier than the time by which the
other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) above.
SECTION 2.04. Borrowing Procedure. In order to request a Borrowing (other
than a Competitive Borrowing, as to which this Section 2.04 shall not apply),
the Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed Borrowing Request (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before a proposed
Borrowing and (b) in the case of an ABR Borrowing, not later than 10:00 a.m.,
New York City time, on the day of a proposed Borrowing. Each Borrowing Request
shall be irrevocable, signed by or on behalf of the Borrower, and shall specify
the following information: (i) whether the Borrowing then being requested is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day); (iii) the number and location of the account to
which funds are to be disbursed (which shall be an account that complies with
the requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v)
if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with
respect thereto; provided, however, that, notwithstanding any contrary
specification in any Borrowing Request, each requested Borrowing shall comply
with the requirements set forth in Section 2.02. If no election as to the Type
of Borrowing is specified in any such notice, then the requested Borrowing shall
be an ABR Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. The Administrative
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.04 (and the contents thereof), and of each Lender's portion of the
requested Borrowing.
SECTION 2.05. Evidence of Debt; Repayment of Loans. (a) The Borrower hereby
agrees that the outstanding principal balance of each Revolving Loan shall be
payable on the Maturity Date and the outstanding principal balance of each
Competitive Loan shall be payable on the last day of the Interest Period
applicable thereto. Each Loan shall bear interest from and including the date of
such Loan on the outstanding principal balance thereof as set forth in Section
2.07. The Borrower may, upon written notice to the Administrative Agent given
not more than 60 days and at least 30 days prior to the Maturity Date, extend
the date upon which the principal amount of the Loans of the Lenders outstanding
as of the Maturity Date will be due and payable to the first anniversary of the
Maturity Date. If the Borrower gives notice to the Administrative Agent in
accordance with the preceding sentence, the Borrower hereby
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17
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of the Loans of such Lender on the
first anniversary of the Maturity Date (or such earlier date on which the Loans
become due and payable pursuant to Article VII).
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid by such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) of this Section 2.05 shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the failure
of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event any
Lender shall request and receive a promissory note payable to such Lender and
its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 10.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.06. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a facility fee (a "Facility Fee") for the
period from and including the Closing Date to the later of (i) the Maturity Date
(or if the Borrower gives notice to the Administrative Agent pursuant to Section
2.05(a), the first anniversary of the Maturity Date) and (ii) the date the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under this Agreement shall
have been paid in full, computed at the Applicable Percentage on the average
daily amount of the Commitments (whether used or unused) or, after the Maturity
Date or after the Commitments have been otherwise terminated hereunder, the
average daily amount of the Loans outstanding, of such Lender during the period
for which payment is made, payable quarterly in arrears on the last day of each
March, June, September and December and on the later of (i) the Maturity Date
(or if the Borrower gives notice to the Administrative Agent pursuant to Section
2.05(a), the first anniversary of the Maturity Date) and (ii) the date the
Commitments have been terminated and the principal of and interest on each Loan,
all Fees and all other expenses or amounts payable under this Agreement shall
have been paid in full, commencing on the first of such dates to occur after the
date hereof. All Facility Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days.
(b) The Borrower agrees to pay to the Administrative Agent for the ratable
account of each Lender, a utilization fee (a "Utilization Fee") at a rate per
annum equal to 0.125% for each Excess Utilization Day during the period for
which payment is made on the outstanding Loans of such Lender on such Excess
Utilization Day. Such Utilization Fees shall be payable quarterly in arrears on
the last day of each March, June, September and December and on the later of (i)
the Maturity Date (or if the Borrower gives notice to the Administrative Agent
pursuant to Section 2.05(a), the first anniversary of the Maturity Date) and
(ii) the date the Commitments have been terminated and the principal of and
interest on each
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18
Loan, all Fees and all other expenses or amounts payable under this Agreement
shall have been paid in full, commencing on the first of such dates to occur
after the Closing Date.
(c) The Borrower agrees to pay to each of the Agents or their Affiliates,
for their own account, the fees set forth in the Fee Letter at the times and in
the amounts specified therein (the "Agents' Fees").
(d) All Fees shall be paid on the dates due, in immediately available
funds. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.07. Interest on Loans. (a) Subject to the provisions of Section
2.08, the Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Alternate Base Rate is determined by reference to
the Prime Rate and over a year of 360 days at all other times) at a rate per
annum equal to the Alternate Base Rate plus the Applicable Percentage in effect
from time to time.
(b) Subject to the provisions of Section 2.08, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to (i)
in the case of each Revolving Loan, the Eurodollar Rate for the Interest Period
in effect for such Borrowing plus the Applicable Percentage in effect from time
to time and (ii) in the case of each Competitive Loan, the Eurodollar Rate for
the Interest Period in effect for such Borrowing plus the Margin offered by the
Lender making such Loan and accepted by the Borrower pursuant to Section 2.03.
(c) Subject to the provisions of Section 2.08, each Fixed Rate Loan shall
bear interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to the fixed rate of interest
offered by the Lender making such Loan and accepted by the Borrower pursuant to
Section 2.03.
(d) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. Any
change in the interest rate on a Loan resulting from a change in the Alternate
Base Rate or the Eurocurrency Reserve Requirements shall become effective as of
the opening of business on the day on which such change becomes effective. The
applicable Alternate Base Rate or Eurodollar Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.08. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, the Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount to but excluding the date of actual payment (after as well as before
judgment) (a) in the case of overdue principal, at the rate otherwise applicable
to such Loan pursuant to Section 2.07 plus 2.00% per annum and (b) in all other
cases, at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when determined by
reference to the Prime Rate and over a year of 360 days at all other times)
equal to the sum of the Alternate Base Rate plus 2.00%.
SECTION 2.09. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that (a) Dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or (b) the rates at
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19
which such Dollar deposits are being offered will not adequately and fairly
reflect the cost to Lenders having Commitments representing at least 20% of the
Total Commitment of making or maintaining Eurodollar Loans during such Interest
Period, or (c) reasonable means do not exist for ascertaining the Eurodollar
Rate, the Administrative Agent shall, as soon as practicable thereafter, give
written or telecopy notice of such determination to the Borrower and the
Lenders. In the event of any such determination (other than any such
determination pursuant to clause (b) of the preceding sentence, to the extent
the circumstances giving rise to such determination would also give Lenders the
right to demand additional amounts pursuant to Section 2.13), until the
Administrative Agent shall have advised the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any request by the
Borrower for a Eurodollar Revolving Credit Borrowing pursuant to Section 2.04
shall be deemed to be a request for an ABR Borrowing and (ii) any request by the
Borrower for a Eurodollar Competitive Borrowing pursuant to Section 2.03 shall
be of no force and effect and shall be denied by the Administrative Agent. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.10. Termination and Reduction of Commitments. (a) The Commitments
shall automatically terminate on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Commitments; provided, however, that (i) each partial reduction of the
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $10,000,000 and (ii) the Total Commitment shall not be reduced to an
amount that is less than the sum of the Aggregate Revolving Credit Exposure and
the aggregate outstanding principal amount of the Competitive Loans at the time.
(c) Each reduction in the Commitments hereunder shall be made ratably among
the Lenders in accordance with their respective Commitments. The Borrower shall
pay to the Administrative Agent for the account of the applicable Lenders, on
the date of each termination or reduction, the Facility Fees on the amount of
the Commitments so terminated or reduced accrued to but excluding the date of
such termination or reduction.
SECTION 2.11. Conversion and Continuation of Revolving Credit Borrowings.
The Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (a) not later than 10:00 a.m., New York City time, on
the day of conversion, to convert any Eurodollar Borrowing into an ABR
Borrowing, (b) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 10:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, then each resulting Borrowing shall
satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding
the principal amount and maximum number of Borrowings of the relevant Type;
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20
(iii) each conversion shall be effected by each Lender by recording for the
account of such Lender the new Loan of such Lender resulting from such
conversion and reducing the Loan (or portion thereof) of such Lender being
converted by an equivalent principal amount; accrued interest on any
Eurodollar Loan (or portion thereof) being converted shall be paid by the
Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than the end
of the Interest Period applicable thereto, the Borrower shall pay, upon
demand, any amounts due to the Lenders pursuant to Section 2.15;
(v) subject to Section 2.05(a), any portion of a Borrowing maturing or
required to be repaid in less than one month may not be converted into or
continued as a Eurodollar Borrowing; and
(vi) any portion of a Eurodollar Borrowing that cannot be converted into or
continued as a Eurodollar Borrowing by reason of the immediately preceding
clause shall be automatically converted at the end of the Interest Period
in effect for such Borrowing into an ABR Borrowing.
Each notice pursuant to this Section 2.11 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted into or continued as a Eurodollar Borrowing or an
ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted into or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto (which, subject to Section 2.05(a), may not end after the
Maturity Date). If no Interest Period is specified in any such notice with
respect to any conversion into or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the other Lenders of any notice
given pursuant to this Section 2.11 and of each Lender's portion of any
converted or continued Borrowing. If the Borrower shall not have given notice in
accordance with this Section 2.11 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.11 to convert such Borrowing), such Borrowing shall, at the end
of the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically be continued into a new Interest Period as an ABR
Borrowing. The Borrower shall not have the right to continue or convert the
Interest Period with respect to any Competitive Borrowing pursuant to this
Section 2.11.
SECTION 2.12. Prepayment. (a) The Borrower shall have the right at any time
and from time to time to prepay any Borrowing (other than a Competitive
Borrowing), in whole or in part, upon at least three Business Days' prior
written or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) to the Administrative Agent before 11:00 a.m., New York City
time; provided, however, that each partial prepayment shall be in an amount that
is an integral multiple of $1,000,000 and not less than $10,000,000. The
Borrower shall not have the right to prepay any Competitive Borrowing without
the prior written consent of the relevant Lender.
(b) In the event of any termination of the Commitments, the Borrower shall
repay or prepay all its outstanding Revolving Credit Borrowings on the date of
such termination. In the event of any partial reduction of the Commitments, then
(i) at or prior to the effective date of such reduction, the Administrative
Agent shall notify the Borrower and the Lenders of the Aggregate Revolving
Credit Exposure and (ii) if the Aggregate Revolving Credit Exposure would exceed
the available Total Commitment after giving effect to such reduction, the
Borrower shall, on the date of such reduction, repay or prepay Revolving Credit
Borrowings in an amount sufficient to eliminate such excess.
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21
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.15 but otherwise without premium or penalty.
All prepayments of Eurodollar Loans under this Section 2.12 shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement the adoption of, or any change in, applicable law or regulation or in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or not having
the force of law) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Lender or shall impose on such Lender or
the London interbank market any other condition affecting this Agreement or
Eurodollar Loans or Fixed Rate Loans made by such Lender, and the result of any
of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise) by an amount deemed by such Lender to be material, then
the Borrower will pay to such Lender upon demand such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender shall have determined that the adoption after the date
hereof of any law, rule, regulation, agreement or guideline regarding capital
adequacy, or any change after the date hereof in any such law, rule, regulation,
agreement or guideline (whether such law, rule, regulation, agreement or
guideline has been adopted) or in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's
capital or on the capital of such Lender's holding company, if any, as a
consequence of this Agreement or the Loans made by such Lender pursuant hereto
to a level below that which such Lender or such Lender's holding company could
have achieved but for such applicability, adoption, change or compliance (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company (including the calculation
thereof) as specified in paragraph (a) or (b) above shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
to such Lender the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender to demand compensation for
any increased costs or reduction in amounts received or receivable or reduction
in return on capital shall not constitute a waiver of such Lender's right to
demand such compensation. The protection of this Section shall be available to
each Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed. Notwithstanding
any other provision of this Section, no Lender shall be entitled to demand
compensation hereunder in respect of any Competitive Loan if it shall have been
aware of the event or
<PAGE>
22
circumstance giving rise to such demand at the time it submitted the Competitive
Bid pursuant to which such Loan was made.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other provision
of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not thereafter (for
the duration of such unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods and ABR Loans will not thereafter
(for such duration) be converted into Eurodollar Loans), whereupon such
Lender shall not submit a Competitive Bid in response to a request for a
Eurodollar Competitive Loan and any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to such
Lender only, be deemed a request for an ABR Loan unless such declaration
shall be subsequently withdrawn (or a request to continue an ABR Loan as
such for an additional Interest Period or to convert a Eurodollar Loan into
an ABR Loan, as the case may be); and
(ii) such Lender may require that all outstanding Eurodollar Loans made by
it be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date of
such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender against
any loss or expense that such Lender may sustain or incur as a consequence of
any event, other than a default by such Lender in the performance of its
obligations hereunder, that results in (i) such Lender receiving or being deemed
to receive any amount on account of the principal of any Fixed Rate Loan or
Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii)
the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the
Interest Period with respect to any Eurodollar Loan, in each case prior to the
end of the Interest Period in effect therefor or (iii) any Fixed Rate Loan or
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.11) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this sentence being called a "Breakage Event"). In
the case of any Breakage Event, such loss shall include an amount equal to the
excess, as reasonably determined by such Lender, of (i) its cost of obtaining
funds for the Eurodollar Loan or Fixed Rate Loan that is the subject of such
Breakage Event for the period from the date of such Breakage Event to the last
day of the Interest Period in effect (or that would have been in effect) for
such Loan over (ii) the amount of interest likely to be realized by such Lender
in redeploying the funds released or not utilized by reason
<PAGE>
23
of such Breakage Event for such period. A certificate of any Lender setting
forth any amount or amounts that such Lender is entitled to receive pursuant to
this Section 2.15 shall be delivered to the Borrower and shall be conclusive
absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as provided in the two succeeding
sentences with respect to Competitive Borrowings and as required under Section
2.14, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Facility Fees, each
reduction of the Commitments and each continuation or conversion of any
Borrowing to a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). Each payment of principal of any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective principal
amounts of their outstanding Competitive Loans comprising such Borrowing. Each
payment of interest on any Competitive Borrowing shall be allocated pro rata
among the Lenders participating in such Borrowing in accordance with the
respective amounts of accrued and unpaid interest on their outstanding
Competitive Loans comprising such Borrowing. For purposes of determining the
available Commitments of the Lenders at any time, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Lenders
(including those Lenders that shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with such respective Commitments.
Each Lender agrees that in computing such Lender's portion of any Borrowing to
be made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole Dollar
amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Revolving Loan or Loans as
a result of which the unpaid principal portion of its Revolving Loans shall be
proportionately less than the unpaid principal portion of the Revolving Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Revolving Loans of such other Lender,
so that the aggregate unpaid principal amount of the Revolving Loans and
participations in Revolving Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Revolving Loans then
outstanding as the principal amount of its Revolving Loans prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Revolving Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment restored without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Revolving Loan deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Revolving Loan
directly to the Borrower in the amount of such participation.
SECTION 2.18. Payments. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any Fees or other amounts)
hereunder not later than 12:00 (noon), New York City time, on the date when due
in immediately available Dollars, without defense, setoff or counterclaim. Each
such payment shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York.
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24
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.18, free and clear of and without
deduction for any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding (i)
income taxes imposed on the net income of the Administrative Agent or any Lender
(or any transferee or assignee thereof, including a participation holder (any
such entity a "Transferee")) and (ii) franchise taxes imposed on the net income
of the Administrative Agent or any Lender (or Transferee), in each case by the
jurisdiction under the laws of which the Administrative Agent or such Lender (or
Transferee) is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, being called "Taxes"). If the
Borrower shall be required to deduct any Taxes from or in respect of any sum
payable hereunder to the Administrative Agent or any Lender (or any Transferee),
(i) the sum payable shall be increased by the amount (an "additional amount")
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.19) the
Administrative Agent or such Lender (or Transferee), as the case may be, shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
("Other Taxes").
(c) The Borrower will indemnify the Administrative Agent and each Lender
(or Transferee) for the full amount of Taxes and Other Taxes paid by the
Administrative Agent or such Lender (or Transferee), as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by the Administrative Agent or a Lender (or
Transferee), or the Administrative Agent on its behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Administrative Agent or any
Lender (or Transferee), as the case may be, makes written demand therefor.
(d) If the Administrative Agent or a Lender (or Transferee) receives a
refund in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.19, it shall within 30 days from
the date of such receipt pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.19 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender (or Transferee) and without interest (other than interest paid by
the relevant Governmental Authority with respect to such refund); provided,
however, that the Borrower, upon the request of the Administrative Agent or such
Lender (or Transferee), shall repay the amount paid over to the Borrower (plus
penalties, interest or other charges) to the Administrative Agent or such Lender
(or Transferee) in the event the Administrative Agent or such Lender (or
Transferee) is required to repay such refund to such Governmental Authority.
<PAGE>
25
(e) As soon as practicable after the date of any payment of Taxes or Other
Taxes by the Borrower to the relevant Governmental Authority, the Borrower will
deliver to the Administrative Agent, at its address referred to in Section
10.01, the original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.19 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(g) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") shall deliver to each of the Borrower and the
Administrative Agent two copies of either United States Internal Revenue Service
Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8BEN, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8BEN, a certificate representing that such Non-U.S. Lender is
not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.19(g), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.19(g) that
such Non-U.S. Lender is not legally able to deliver.
(h) The Borrower shall not be required to indemnify any Non-U.S. Lender or
to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed under applicable laws and regulations on the
date such Non-U.S. Lender became a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on the date such participation holder
became a Transferee hereunder) or, with respect to payments to a New Lending
Office, the date such Non-U.S. Lender designated such New Lending Office with
respect to a Loan; provided, however, that this paragraph (h) shall not apply
(x) to any Transferee or New Lending Office that becomes a Transferee or New
Lending Office as a result of an assignment, participation, transfer or
designation made at the request of the Borrower and (y) to the extent the
indemnity payment or additional amounts any Transferee, or any Lender (or
Transferee), acting through a New Lending Office, would be entitled to receive
(without regard to this paragraph (h)) do not exceed the indemnity payment or
additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender (or Transferee) making the designation of
such New Lending Office, would have been entitled to receive in the absence of
such assignment, participation, transfer or designation or (ii) the obligation
to pay such additional amounts would not have arisen but for a failure by such
Non-U.S. Lender to comply with the provisions of paragraph (g) above.
(i) Nothing contained in this Section 2.19 shall require any Lender (or any
Transferee) or the Administrative Agent to make available any of its tax returns
(or any other information that it deems to be confidential or proprietary).
<PAGE>
26
SECTION 2.20. Assignment of Commitments Under Certain Circumstances; Duty
to Mitigate. (a) In the event (i) any Lender delivers a certificate requesting
compensation pursuant to Section 2.13, (ii) any Lender delivers a notice
described in Section 2.14 or (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority on account of any
Lender pursuant to Section 2.19, the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such
Lender to transfer and assign, without recourse (in accordance with and subject
to the restrictions contained in Section 10.04), all of its interests, rights
and obligations under this Agreement to an assignee which shall assume such
assigned obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (x) such assignment shall not conflict with any
law, rule or regulation or order of any court or other Governmental Authority
having jurisdiction, (y) the Borrower shall have received the prior written
consent of the Administrative Agent, which consent shall not unreasonably be
withheld, and (z) the Borrower or such assignee shall have paid to the affected
Lender in immediately available funds an amount equal to the sum of the
principal of and interest accrued to the date of such payment on the outstanding
Loans of such Lender plus all Fees and other amounts accrued for the account of
such Lender hereunder (including any amounts under Section 2.13 and Section
2.15); provided further that if prior to any such transfer and assignment the
circumstances or event that resulted in such Lender's claim for compensation
under Section 2.13 or notice under Section 2.14 or the amounts paid pursuant to
Section 2.19, as the case may be, cease to cause such Lender to suffer increased
costs or reductions in amounts received or receivable or reduction in return on
capital, or cease to have the consequences specified in Section 2.14, or cease
to result in amounts being payable under Section 2.19, as the case may be
(including as a result of any action taken by such Lender pursuant to paragraph
(b) below), or if such Lender shall waive its right to claim further
compensation under Section 2.13 in respect of such circumstances or event or
shall withdraw its notice under Section 2.14 or shall waive its right to further
payments under Section 2.19 in respect of such circumstances or event, as the
case may be, then such Lender shall not thereafter be required to make any such
transfer and assignment hereunder.
(b) If (i) any Lender shall request compensation under Section 2.13, (ii)
any Lender delivers a notice described in Section 2.14 or (iii) the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority on account of any Lender, pursuant to Section 2.19, then, such Lender
shall use reasonable efforts (which shall not require such Lender to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any action
inconsistent with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be significant) (x) to file
any certificate or document reasonably requested in writing by the Borrower or
(y) to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.13 or enable it to
withdraw its notice pursuant to Section 2.14 or would reduce amounts payable
pursuant to Section 2.19, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such filing, assignment, delegation and transfer.
ARTICLE III
Representations And Warranties
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower represents and warrants to the
Administrative Agent and each of the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Significant Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted and (c)
is qualified to do
<PAGE>
27
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect. The Borrower has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to borrow hereunder. Schedule 3.01 sets
forth each Significant Subsidiary of the Borrower in existence on the Closing
Date.
SECTION 3.02. Authorization. The execution, delivery and performance by the
Borrower of this Agreement and the borrowings hereunder (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or any
Significant Subsidiary, (B) any order of any Governmental Authority or (C) any
material provision of any material indenture, agreement or other instrument to
which the Borrower or any Significant Subsidiary is a party or by which any of
them or any of their property is or may be bound, (ii) be in material conflict
with, result in a material breach of or constitute (alone or with notice or
lapse of time or both) a material default under, or give rise to any right to
accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such material indenture, agreement or other instrument or
(iii) result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by the Borrower or any
Significant Subsidiary.
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except those which have
been made or obtained.
SECTION 3.05. Financial Statements. The Borrower has heretofore furnished
to the Lenders the consolidated balance sheet, statement of income and statement
of cash flows of the Borrower and its Subsidiaries as of and for the fiscal year
ended December 31, 2000, audited by and accompanied by the opinion of
PricewaterhouseCoopers LLP, independent public accountants. Such financial
statements present fairly the financial condition and results of operations of
the Borrower and its Subsidiaries as of such date and for such period and were
prepared in accordance with GAAP applied on a consistent basis. The unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as at April 1,
2001, July 1, 2001 and September 30, 2001, and the related unaudited
consolidated statements of income and cash flows for the three-month periods
ended on such dates, present fairly the consolidated financial condition of the
Borrower and its Subsidiaries as at such dates, and the consolidated results of
its operations and its consolidated cash flows for the three-month periods then
ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as disclosed therein). Such financial statements and the notes
thereto, and Schedule 3.05, when taken together, disclose all material
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the date thereof.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, since
December 31, 2000.
SECTION 3.07. Litigation; Compliance with Laws. (a) Except as set forth on
Schedule 3.07, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the
<PAGE>
28
Borrower or any Subsidiary or any business, property or rights of any such
person (i) that involve this Agreement or the Transactions or (ii) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries or any of their
respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation, or is in default with respect to
any judgment, writ, injunction, decree or order of any Governmental Authority
(including any of the foregoing relating to the environment), where such
violation or default could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.08. Federal Reserve Regulations. (a) Neither the Borrower nor any
of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately for any purpose
that entails a violation of, or that is inconsistent with, the provisions of the
Regulations of the Board, including Regulation U or X. Margin Stocks do not
constitute 25% or more of the fair market value of the assets of the Borrower
and the Subsidiaries subject to the restrictions of Section 6.01.
SECTION 3.09. Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is (a) an "investment company", or a
company "controlled" by an "investment company", as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 3.10. Tax Returns. Each of the Borrower and the Subsidiaries has
filed or caused to be filed all Federal and all material state, local and
foreign tax returns or materials required to have been filed by it and has paid
or caused to be paid all taxes shown to be due and payable by it on such returns
and all assessments received by it, except taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower or such
Subsidiaries, as applicable, shall have set aside on its books adequate reserves
in accordance with GAAP.
SECTION 3.11. No Material Misstatements. Neither (a) the Confidential
Information Memorandum nor (b) any other information, report, financial
statement, exhibit or schedule furnished in writing by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or included herein or delivered pursuant hereto
contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, the Borrower represents only that it acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.12. Employee Benefit Plans. Each of the Borrower and its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in a Material Adverse Effect. The present
value of all benefit liabilities under all Plans
<PAGE>
29
(based on those assumptions used to fund each such Plan) did not, as of the last
annual valuation date applicable thereto before the Closing Date, exceed the
fair market value of the assets of all Plans as of such date, and the present
value of all benefit liabilities of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of the last annual
valuation dates applicable thereto before the Closing Date, exceed by more than
$280 million the fair market value of the assets of all such underfunded Plans
as of such dates.
SECTION 3.13. No Default. Neither the Borrower nor any Subsidiary is in
default under or with respect to any of its Contractual Obligations in any
respect that has had or would reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
SECTION 3.14. Ownership of Property; Liens; Insurance. The Borrower and
each of its Significant Subsidiaries has title in fee simple to, or a valid
leasehold interest in, all its material real property, and good title to, or a
valid leasehold interest in, all its other material property, and none of such
property is subject to any Lien except as permitted by Section 6.01. The
Borrower and each of its Subsidiaries maintains with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business, provided that nothing in this Section 3.14 shall preclude the Borrower
or any Subsidiary from being self-insured (to the extent deemed prudent by the
Borrower or such Subsidiary and customary with companies in the same or similar
business).
SECTION 3.15. Intellectual Property. The Borrower and each of its
Subsidiaries owns, is licensed to use or otherwise has the right to use all
Intellectual Property necessary for the conduct of its business as currently
conducted, except where the failure of the Borrower and its Subsidiaries to have
any such rights has had or would reasonably be expected to have a Material
Adverse Effect. To the knowledge of the Borrower, no material claim that would
reasonably be expected to have a Material Adverse Effect if adversely decided,
has been asserted and is currently active and pending by any person (i) alleging
that the business of the Borrower or its Subsidiaries as currently conducted
infringes the Intellectual Property rights of a third party or (ii) challenging
or questioning the use of any Intellectual Property of the Borrower or its
Subsidiaries or the validity or effectiveness of any Intellectual Property of
the Borrower or its Subsidiaries. Except for such activities as may be subject
to authorization and consent pursuant to 28 U.S.C. Section 1498 or substantially
equivalent law or regulation, to the Borrower's knowledge, the operation of the
businesses of the Borrower and its Subsidiaries as currently conducted do not
infringe any valid and enforceable Intellectual Property rights of any third
party where a finding of such infringement would reasonably be expected to have
a Material Adverse Effect.
SECTION 3.16. Labor Matters. Except as, in the aggregate, has not had or
would not reasonably be expected to have a Material Adverse Effect: (a) there
are no strikes or other labor disputes against the Borrower or any of its
Subsidiaries pending or, to the knowledge of the Borrower, threatened; (b) hours
worked by and payment made to employees of the Borrower and each of its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable law or regulation dealing with such matters; and (c) all
payments due from the Borrower or any of its Subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the Borrower or the relevant Subsidiary, as applicable.
SECTION 3.17. Environmental Matters. Except as, in the aggregate, has not
had or would not reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by the Borrower
or any Subsidiary (the "Properties") do not contain, and have not previously
----------
contained, any Materials of Environmental
<PAGE>
30
Concern in amounts or concentrations or under circumstances that constitute or
constituted a violation of, or could give rise to liability under, any
Environmental Law;
(b) neither the Borrower nor any Subsidiary has received or is aware of any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the business operated by the Borrower or
any Subsidiary (the "Business"), nor does any Responsible Officer of the
Borrower have actual knowledge or a reasonable basis to believe that any such
notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action is
pending or, to the knowledge of any Responsible Officer of the Borrower,
threatened, under any Environmental Law to which the Borrower or any Subsidiary
is or will be named as a party with respect to the Properties or the Business,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Properties or the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws;
(f) the Properties and all operations at the Properties are in compliance,
and have in the last five years been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the Business; and
(g) neither the Borrower nor any Subsidiary has assumed any liability of
any other person under Environmental Laws.
SECTION 3.18. Solvency. The Borrower is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith will be and will continue to be, Solvent.
ARTICLE IV
Conditions Of Effectiveness and Lending
The obligations of the Lenders to make Loans (including the initial
Borrowing) hereunder are subject to the satisfaction of the following
conditions:
SECTION 4.01. All Borrowings. On the date of each Borrowing (other than, in
the case of paragraph (b) below, a Borrowing that does not increase the
aggregate principal amount of Loans outstanding of any Lender) and on the date
of the conversion of Revolving Loans to Term-out Loans in accordance with
Section 2.05(a):
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(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 or 2.04, as applicable, or conversion
as required by Section 2.05, as the case may be.
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of
such Borrowing or conversion, as the case may be, with the same effect as
though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing or conversion,
as the case may be, no Event of Default or Default shall have occurred and
be continuing.
Each Borrowing and the conversion of Revolving Loans to Term-out Loans pursuant
to Section 2.05(a) by the Borrower shall be deemed to constitute a
representation and warranty by the Borrower on the date of such Borrowing or
conversion as to the matters specified in paragraphs (b) (except as aforesaid)
and (c) of this Section 4.01.
SECTION 4.02. Effectiveness. On the date of effectiveness (which may or may
not be the date of the initial Borrowing):
(a) Credit Agreement. The Administrative Agent shall have received
this Agreement, executed and delivered by the Administrative Agent, the
Borrower, each Guarantor and each person listed on Schedule 2.01.
(b) Legal Opinions. The Administrative Agent shall have received, on
behalf of itself and the Lenders and the Agents, the favorable written
opinions of (i) Neal E. Minahan, Senior Vice President, Secretary and
General Counsel of the Borrower and other appropriate in-house counsel with
respect to the Guarantors and (ii) Bingham Dana LLP, special counsel for
the Borrower, substantially to the effect set forth in Exhibits E and F,
respectively, each (A) dated the date of the initial Borrowing, (B)
addressed to the Administrative Agent, the Lenders and the Agents, and (C)
covering such other matters relating to this Agreement and the transactions
contemplated hereby as the Administrative Agent and the Syndication Agent
may reasonably request as a result of any change in law or regulation after
the Closing Date relating to such transactions or any material change in
facts previously disclosed to the Lenders, or disclosure of facts not
previously disclosed to the Lenders, and the Borrower hereby requests such
counsel deliver such opinions.
(c) Legal Matters. All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder shall be reasonably
satisfactory to the Lenders and to Simpson Thacher & Bartlett, counsel for
the Administrative Agent and the Syndication Agent.
(d) Closing Certificates. The Administrative Agent and the Syndication
Agent shall have received (i) a copy of the certificate of incorporation,
including all amendments thereto, of the Borrower and each Guarantor, each
certified by the relevant authority of the jurisdiction of organization,
and a certificate as to the good standing of the Borrower and each
Guarantor as of a recent date, from such relevant authority; (ii) a
certificate of the Secretary or Assistant Secretary of the Borrower and
each Guarantor, each dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws of the Borrower
or the relevant Guarantor, as applicable, as in effect on the Closing Date
and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of the
Borrower or the relevant Guarantor, as
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32
applicable, authorizing the execution, delivery and performance of this
Agreement and, in the case of the Borrower, the borrowings hereunder, and
that such resolutions have not been modified, rescinded or amended and are
in full force and effect, (C) that the certificate of incorporation of the
Borrower or the relevant Guarantor, as applicable, has not been amended
since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to clause (i) above, and (D) as to the
incumbency and specimen signature of each officer executing this Agreement
or any other document delivered in connection herewith on behalf of the
Borrower or the relevant Guarantor, as applicable; (iii) a certificate of
another officer of the Borrower or the relevant Guarantor, as applicable,
as to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (ii) above; and (iv) such
other documents as the Lenders or Simpson Thacher & Bartlett, counsel for
the Administrative Agent and the Syndication Agent, may reasonably request.
(e) Financial Officer's Certificate. The Administrative Agent and the
Syndication Agent shall each have received (i)a certificate, dated the date
of the initial Borrowing and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions precedent set forth in paragraphs
(b) and (c) of Section 4.01 and (ii) a Ratio Certificate, setting forth the
calculations, in reasonable detail, required to determine compliance with
all covenants set forth in Sections 6.05(a) and (b) on the Closing Date and
on the date of the initial Borrowing.
(f) Fees and Expenses. The Administrative Agent and the other Agents
and their Affiliates shall have received all Fees and other amounts due and
payable on or prior to the Closing Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.
(g) Five-Year Credit Agreement. The Five-Year Credit Agreement shall
have been, or shall simultaneously be, executed and delivered by the
parties thereto and shall be in full force and effect.
(h) Existing Credit Agreement. The Borrower shall have prepaid the
Loans and permanently reduced the amount of the Commitments (as defined
under the Existing Credit Agreement) under the Existing Credit Agreement to
an aggregate amount of no more than $140,000,000.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under this Agreement shall have been paid in full, unless the
Required Lenders shall otherwise consent in writing, the Borrower will, and will
cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. In the case of the
Borrower and the Significant Subsidiaries:
(a) do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and franchises,
except as otherwise expressly permitted under Section 6.03;
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33
(b) comply in all material respects with all applicable laws, rules,
regulations and decrees and orders of any Governmental Authority, whether
now in effect or hereafter enacted; and at all times maintain, preserve and
protect all property material to the conduct of its business; and
(c) comply with all Contractual Obligations except to the extent that
failure to comply therewith, in the aggregate, has not had or would not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.02. Insurance. Keep its insurable properties adequately insured
at all times by financially sound and reputable insurers; and maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses, provided that nothing in this Section 5.02 shall
preclude the Borrower or any Subsidiary from being self-insured (to the extent
deemed prudent by the Borrower or such Subsidiary and customary with companies
in the same or similar business).
SECTION 5.03. Payment of Obligations; Taxes(a) . (a) Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all its material obligations (which , with respect to payment
obligations, shall be any obligation of $50,000,000 or greater) of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and adequate reserves with respect
thereto shall, to the extent required by GAAP, have been set aside; and
(b) Pay and discharge promptly when due all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise that, if unpaid, might give rise to a Lien upon such
properties or any part thereof unless and to the extent the same are being
contested in good faith by appropriate proceedings and adequate reserves with
respect thereto shall, to the extent required by GAAP, have been set aside.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, a consolidated
balance sheet, statement of income and statement of cash flows showing the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries as of and for the fiscal year then ended, all
audited by PricewaterhouseCoopers LLP or other independent public
accountants of recognized national standing and accompanied by an opinion
of such accountants (which shall not be qualified in any material respect)
to the effect that such consolidated financial statements fairly present
the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries, as the case may be, on a consolidated basis in
accordance with GAAP;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, a consolidated balance sheet, statement of
income and statement of cash flows showing the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries as
of and for the fiscal quarter then ended and the then elapsed portion of
the fiscal year, all certified by a Financial Officer of the Borrower as
fairly presenting the financial condition and results of operations of the
Borrower, as the case may be, on a consolidated basis in accordance with
GAAP, subject to normal year-end audit adjustments;
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34
(c) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, (i) a Ratio Certificate and (ii) a certificate
of a Financial Officer of the Borrower certifying that no Event of Default
or Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto;
(d) promptly, after their becoming available, copies of all financial
statements, stockholders reports and proxy statements that the Borrower
shall have sent to its stockholders generally, and copies of all
registration statements filed by the Borrower under the Securities Act of
1933, as amended (other than registration statements on Form S-8 or any
registration statement filed in connection with a dividend reinvestment
plan), and regular and periodic reports, if any, which the Borrower shall
have filed with the Securities and Exchange Commission (or any governmental
agency or agencies substituted therefor) under Section 13 or Section 15(d)
of the Securities and Exchange Act of 1934, as amended, or with any
national securities exchange (other than those on Form 11-K or any
successor form); provided, that documents required to be delivered under
this clause (d) which are made available on the internet via the EDGAR, or
any successor, system of the Securities and Exchange Commission shall be
deemed delivered; and
(e) promptly, from time to time, such other information regarding the
Borrower or any Significant Subsidiary (including the operations, business
affairs and financial condition of the Borrower or any Significant
Subsidiary), or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Promptly upon any Responsible
Officer of the Borrower obtaining knowledge of any of the following, furnish to
the Administrative Agent and each Lender written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any notice of intention of any
person to file or commence, any action, suit or proceeding, whether at law
or in equity or by or before any Governmental Authority, against the
Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect or materially impair the Borrower's
ability to perform its obligations under this Agreement;
(c) any change in the ratings by S&P or Moody's of the Index Debt; and
(d) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent and each Lender as soon as possible after, and in any event
within 30 days after any Responsible Officer of the Borrower or any ERISA
Affiliate knows that, any ERISA Event has occurred that, alone or together with
any other ERISA Event known to have occurred, could reasonably be expected to
result in liability of the Borrower in an aggregate amount exceeding $75,000,000
in any year, a statement of a Financial Officer of the Borrower setting forth
details as to such ERISA Event and the action, if any, that the Borrower
proposes to take with respect thereto
<PAGE>
35
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.
Maintain financial records in accordance with GAAP and, upon reasonable notice,
permit any representatives designated by the Administrative Agent or any Lender
to visit and inspect the financial records and the properties of the Borrower or
any Significant Subsidiary during normal business hours and to discuss the
affairs, finances and condition of the Borrower or any Significant Subsidiary
with the officers thereof and independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only for the
purposes set forth in the preamble to this Agreement.
SECTION 5.09. Environmental Laws. Except as, in the aggregate, has not had
or would not reasonably be expected to have a Material Adverse Effect:
(a) Comply in all material respects with, and undertake all reasonable
efforts to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects 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 comply as required in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.
SECTION 5.10. Termination of Existing Credit Agreement. On or before May
30, 2002, pay the Loans (as defined under the Existing Credit Agreement),
liabilities and other obligations under the Existing Credit Agreement in full
and terminate the Commitments (as defined under the Existing Credit Agreement)
thereunder.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under this Agreement have been paid in full, unless the
Required Lenders shall otherwise consent in writing, the Borrower will not, and
will not cause or permit any of the Subsidiaries to:
SECTION 6.01. Liens. Create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower or any of its
Subsidiaries existing on the date hereof except, in the case of the
Borrower, any such Lien securing Indebtedness for borrowed money in excess
of $5,000,000 that is not set forth in Schedule 6.01, provided that all
Liens permitted by this paragraph (a) shall secure only those obligations
which they secure on the date hereof;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary, provided that (i)
such Lien is not created in contemplation of or in
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36
connection with such acquisition and (ii) such Lien does not apply to any
other property or assets of the Borrower or any Subsidiary;
(c) Liens for taxes not yet past due or which are being contested in
compliance with Section 5.03;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or which are being contested in
compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(f) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than capital leases), statutory
obligations, surety and appeal bonds, advance payment bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount
and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(h) Liens upon any property acquired, constructed or improved by the
Borrower or any Subsidiary which are created or incurred within 360 days of
such acquisition, construction or improvement to secure or provide for the
payment of any part of the purchase price of such property or the cost of
such construction or improvement, including carrying costs (but no other
amounts), provided that any such Lien shall not apply to any other property
of the Borrower or any Subsidiary;
(i) Liens on the property or assets of any Subsidiary in favor of the
Borrower;
(j) extensions, renewals and replacements of Liens referred to in
paragraphs (a) through (i) of this Section 6.01, provided that any such
extension, renewal or replacement Lien shall be limited to the property or
assets covered by the Lien extended, renewed or replaced and that the
obligations secured by any such extension, renewal or replacement Lien
shall be in an amount not greater than the amount of the obligations
secured by the Lien extended, renewed or replaced;
(k) any Lien of the type described in clause (c) of the definition of
the term "Lien" on securities imposed pursuant to an agreement entered into
for the sale or disposition of such securities pending the closing of such
sale or disposition; provided such sale or disposition is otherwise
permitted hereunder;
(l) Liens arising in connection with any Permitted Receivables Program
(to the extent the sale by the Borrower or the applicable Subsidiary of its
accounts receivable is deemed to give rise to a Lien in favor of the
purchaser thereof in such accounts receivable or the proceeds thereof); and
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37
(m) Liens to secure Indebtedness if, immediately after the grant
thereof, the aggregate amount of all Indebtedness secured by Liens that
would not be permitted but for this clause (m), when aggregated with the
amount of Indebtedness permitted by Section 6.04(h), does not exceed the
greater of (i) $100,000,000 or (ii) 15% of Consolidated Net Tangible Assets
as shown on the most recent consolidated balance sheet delivered pursuant
to Section 3.05 or 5.04(a) or (b), as the case may be.
SECTION 6.02. Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease back such property; provided,
however, that the Borrower and the Subsidiaries may enter into any such
transaction to the extent the Lien on any such property would be permitted by
Section 6.01(m).
SECTION 6.03. Mergers, Consolidations and Sales of Assets. In the case of
the Borrower, merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of, or permit the sale, transfer, lease or other disposition
of (in one transaction or in a series of transactions) all or substantially all
of its assets (including any Subsidiary), or agree to do any of the foregoing;
provided, however, that any person may merge into or consolidate with the
Borrower in a transaction in which the Borrower is the surviving corporation if
no Event of Default or Default shall have occurred and be continuing or would
occur immediately after giving effect thereto; provided, further, that nothing
in this Section 6.03 shall prohibit the sale of the capital stock or assets of
either or both Guarantors.
SECTION 6.04. Subsidiary Indebtedness. Permit any Subsidiary to create,
incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth in Schedule
6.04 and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof;
(b) Indebtedness issued to the Borrower or any other Subsidiary;
(c) Indebtedness incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that such Indebtedness is incurred prior
to or within 90 days after such acquisition or the completion of such
construction or improvement;
(d) Indebtedness of any person that becomes a Subsidiary after the
date hereof; provided that such Indebtedness exists at the time such person
becomes a Subsidiary and is not created in contemplation of or in
connection with such person becoming a Subsidiary;
(e) Indebtedness as an account party in respect of trade letters of
credit;
(f) Indebtedness arising in connection with any Permitted Receivables
Program (to the extent the sale by the applicable Subsidiary of its
accounts receivable is deemed to be Indebtedness of such Subsidiary);
(g) performance, advance payment, warranty and bid guarantees and
other similar guarantees of payment (other than in respect of Indebtedness
for borrowed money) made by a Subsidiary in the ordinary course of
business; and
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38
(h) other Indebtedness in an aggregate principal amount, when
aggregated with the amount of all Indebtedness secured by Liens permitted
by Section 6.01(m), not exceeding the greater of (i) $100,000,000 or (ii)
15% of Consolidated Net Tangible Assets as shown on the most recent
consolidated balance sheet delivered pursuant to Section 3.05 or 5.04(a) or
(b), as the case may be.
SECTION 6.05. Financial Covenants. (a) Debt to Capitalization. Permit Total
Debt to exceed (i) 60% of Total Capitalization at any time to and including
December 31, 2001, (ii) 55% of Total Capitalization at any time from and
including January 1, 2002 to, but excluding, June 28, 2004 and (iii) 50% of
Total Capitalization at any time from June 28, 2004 and thereafter.
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter (i) after the Closing Date until,
but excluding, June 28, 2004 to be less than 2.5 to 1.0 and (ii) commencing June
28, 2004 and thereafter to be less than 3.0 to 1.0.
ARTICLE VII
Events Of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement or the borrowings hereunder, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in
connection with or pursuant to this Agreement, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or any other amount (other than an amount referred to in (b)
above) due under this Agreement, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of three
Business Days following notice thereof;
(d) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05(a) or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement
contained in this Agreement (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent or any Lender to the
Borrower;
(f) the Borrower or any Subsidiary shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of $50,000,000, when and as the same shall
become due and payable, or (ii) fail to make any payment under any
guarantee, if the aggregate amount of the guaranteed obligations is in
excess of $50,000,000, except to the extent the Borrower or such Subsidiary
is contesting in good faith
<PAGE>
39
the requirement to make such payment, or (iii) fail to observe or perform
any other term, covenant, condition or agreement contained in any agreement
or instrument evidencing or governing any such Indebtedness if the effect
of any failure referred to in this clause (iii) is to cause such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any Significant Subsidiary, or of a
substantial part of the property or assets of the Borrower or a Significant
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Significant Subsidiary or for a substantial part of
the property or assets of the Borrower or a Significant Subsidiary or (iii)
the winding-up or liquidation of the Borrower or any Significant
Subsidiary; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(h) the Borrower or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Significant Subsidiary or for a substantial part of
the property or assets of the Borrower or any Significant Subsidiary, (iv)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $50,000,000 (to the extent not adequately covered by
insurance as to which the insurance company has acknowledged coverage in
writing) shall be rendered against the Borrower, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Borrower or any Subsidiary to enforce any such
judgment;
(j) an ERISA Event shall have occurred that, in the reasonable opinion
of the Required Lenders, when taken together with all other such ERISA
Events that have occurred could reasonably be expected to result in a
Material Adverse Effect;
(k) there shall have occurred a Change in Control; or
(l) the Guarantee contained in Article IX of this Agreement shall
cease, for any reason (other than in accordance with Section 10.17), to be
in full force and effect with respect to any Guarantor or the Borrower or
any Guarantor or any Affiliate of the Borrower or any Guarantor shall so
assert;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent
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40
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunde, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein to the
contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein to the
contrary notwithstanding.
ARTICLE VIII
The Administrative Agent
In order to expedite the transactions contemplated by this Agreement,
JPMorgan Chase Bank is hereby appointed to act as Administrative Agent on behalf
of the Lenders. Each of the Lenders and each assignee of any such Lender hereby
irrevocably authorizes the Administrative Agent to take such actions on behalf
of such Lender or assignee and to exercise such powers as are specifically
delegated to the Administrative Agent by the terms and provisions hereof,
together with such actions and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized by the Lenders, without
hereby limiting any implied authority, (a) to receive on behalf of the Lenders
all payments of principal of and interest on the Loans and all other amounts due
to the Lenders hereunder, and promptly to distribute to each Lender its proper
share of each payment so received; (b) to give notice on behalf of each of the
Lenders to the Borrower of any Event of Default specified in this Agreement of
which the Administrative Agent has actual knowledge acquired in connection with
its agency hereunder; and (c) to distribute to each Lender copies of all
notices, financial statements and other materials delivered by the Borrower
pursuant to this Agreement as received by the Administrative Agent.
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower of any of the terms, conditions, covenants or agreements contained in
this Agreement. The Administrative Agent shall not be responsible to the Lenders
for the due execution, genuineness, validity, enforceability or effectiveness of
this Agreement or any other instruments or agreements. The Administrative Agent
shall in all cases be fully protected in acting, or refraining from acting, in
accordance with written instructions signed by the Required Lenders (or, when
expressly required hereunder, all the Lenders) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. The Administrative Agent
shall, in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Administrative Agent nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrower on account of the failure of or
delay in performance or breach by any Lender of any of its obligations hereunder
or to any Lender on account of the failure of or delay in performance or breach
by any other Lender or the Borrower of any of their respective obligations
hereunder or in connection herewith. The Administrative Agent may execute any
and all duties hereunder by or through agents or employees and shall be entitled
to rely upon the advice of
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41
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent shall be under
no duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, with the consent of the Borrower (which consent
shall not be unreasonably withheld), to appoint a successor. If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on behalf
of the Lenders, appoint a successor Administrative Agent which shall be a bank
with an office in New York, New York, having a combined capital and surplus of
at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.05 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.
With respect to the Loans made by it hereunder, the Administrative Agent in
its individual capacity and not as Administrative Agent shall have the same
rights and powers as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the Administrative Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not the Administrative Agent.
Each Lender agrees (a) to reimburse the Administrative Agent, on demand, in
the amount of its pro rata share (based on its Commitment hereunder) of any
expenses incurred for the benefit of the Lenders by the Administrative Agent,
including counsel fees, that shall not have been reimbursed by the Borrower and
(b) to indemnify and hold harmless the Administrative Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against it in its capacity as the Administrative Agent or any of
them in any way relating to or arising out of this Agreement or any action taken
or omitted by it or any of them under this Agreement, to the extent the same
shall not have been reimbursed by the Borrower, provided that no Lender shall be
liable to the Administrative Agent or any such other indemnified person for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or wilful misconduct of the Administrative Agent or any of its
directors, officers, employees or agents.
Each Lender acknowledges 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 credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges 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 from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder. Each Lender further acknowledges that (i)
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42
the Syndication Agent and the Documentation Agents have no duties or obligations
as such under this Agreement and (ii) with respect to its Loans made or renewed
by it, the Syndication Agent and each Documentation Agent shall have the same
rights and powers under this Agreement as any Lender and may exercise the same
as though it were not an Agent, and the terms "Lender" and "Lenders" shall
include the Syndication Agent and each Documentation Agent in its individual
capacity.
ARTICLE IX
Guarantee
In order to induce the Lenders to extend credit hereunder and in
consideration therefor, each Guarantor hereby, jointly and severally,
unconditionally and irrevocably guarantees, as a primary obligor and not merely
as a surety, the Obligations. Each Guarantor further agrees that the Obligations
may be extended or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its Guarantee hereunder
notwithstanding any such extension or renewal of any Obligation.
Each Guarantor waives presentment to, demand of payment from and protest to
the Borrower of any of the Obligations, and also waives notice of acceptance of
its obligations and notice of protest for nonpayment. The obligations of each
Guarantor hereunder shall not be affected by the failure of any Lender or the
Administrative Agent to assert any claim or demand or to enforce any right or
remedy against the Borrower under the provisions of this Agreement or otherwise,
or, except as specifically provided therein, by any rescission, waiver,
amendment or modification of any of the terms or provisions of this Agreement or
any other agreement.
Each Guarantor further agrees that its Guarantee hereunder constitutes a
promise of payment when due and not merely of collection, and waives any right
to require that any resort be had by any Lender to any balance of any deposit
account or credit on the books of any Lender in favor of the Borrower or any
other person.
The obligations of either Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever, by reason of the invalidity, illegality or unenforceability of the
Obligations, any impossibility in the performance of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
either Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent or any Lender to assert any
claim or demand or to enforce any remedy under this Agreement or any other
agreement, by any waiver or modification in respect of any thereof, by any
default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner or
to any extent vary the risk of either Guarantor or otherwise operate as a
discharge of either Guarantor as a matter of law or equity.
Each Guarantor further agrees that its obligations hereunder shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be restored by the Administrative Agent or any Lender upon the
bankruptcy or reorganization of the Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which the Administrative Agent or any Lender may have at law or in equity
against either Guarantor by virtue hereof, upon the failure of the Borrower to
pay any Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and
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43
will, upon receipt of written demand by the Administrative Agent, forthwith pay,
or cause to be paid, in immediately available Dollars the amount of such unpaid
Obligation.
Anything herein to the contrary notwithstanding, the maximum liability of
each Guarantor hereunder shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
the insolvency of debtors (after giving effect to the right of contribution
established in the paragraph below).
Each Guarantor hereby agrees that to the extent that either Guarantor shall
have paid more than its proportionate share of any payment made hereunder, such
Guarantor shall be entitled to seek and receive contribution from and against
the other Guarantor hereunder which has not paid its proportionate share of such
payment. Each Guarantor's right of contribution shall be subject to the terms
and conditions of the following paragraph. The provisions of this paragraph
shall in no respect limit the obligations and liabilities of either Guarantor to
the Administrative Agent and the Lenders, and each Guarantor shall remain liable
to the Administrative Agent and the Lenders for the full amount guaranteed by
such Guarantor hereunder.
Upon payment by either Guarantor of any sums as provided above, all rights
of either Guarantor against the Borrower arising as a result thereof by way of
subrogation or otherwise shall in all respects be subordinated and junior in
right of payment to the prior indefeasible payment in full of all the
Obligations.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Unless otherwise specified herein, notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower or the Guarantors, at 141 Spring Street,
Lexington, Massachusetts 02421 Attention of Cheryl Norden (Telecopy No.
(781) 860-2505); with a copy to Stephen J. Iglowski at the same address;
(b) if to the Administrative Agent, to JPMorgan Chase Bank, One Chase
Manhattan Plaza, 8th Floor, New York, New York 10017, Attention of Doris
Mesa (Telecopy No. (212) 552-5650), with a copy to JPMorgan Chase Bank, at
270 Park Avenue, New York, New York 10017, Attention of Mr. Jack Riordan
(Telecopy No. (212) 270-5100);and
(c) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01.
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44
SECTION 10.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans, regardless of
any investigation made by the Lenders or on their behalf, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any Fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitments have not been terminated. The
provisions of Sections 2.13, 2.15, 2.19 and 10.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the invalidity
or unenforceability of any term or provision of this Agreement, or any
investigation made by or on behalf of the Administrative Agent or any Lender.
SECTION 10.03. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrower, the Administrative Agent or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or a Lender
Affiliate, (x) the Administrative Agent and (unless an Event of Default shall
have occurred and be continuing) the Borrower must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld)
and (y) unless the Borrower and the Administrative Agent shall otherwise agree
to a lower dollar amount, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000 (or the entire remaining amount of the
assigning Lender's Commitment), unless such Lender is making a substantially
simultaneous assignment to the same assignee pursuant to Section 10.04(b) of the
Five-Year Credit Agreement in which case the aggregate of the amount of the
Commitment of the assigning Lender subject to the assignment under this
Agreement and the amount of the commitment of the assigning Lender subject to
the assignment under the Five-Year Credit Agreement shall not be less than
$10,000,000, (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500 and (iii) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 10.04, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the execution thereof, (A) the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.13, 2.15, 2.19 and 10.05, as well as to
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45
any Fees accrued for its account and not yet paid). Any assignment by a Lender
of rights and/or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and/or obligations, as the case may be,
in accordance with paragraph (f) of this Section 10.04.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Revolving Loans and Competitive
Loans, in each case without giving effect to assignments thereof which have not
become effective, are as set forth in such Assignment and Acceptance, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements referred to in Section 3.05 or delivered
pursuant to Section 5.04 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The Borrower, the Administrative
Agent and the Lenders may treat each person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary, and such entries in the
Register shall be conclusive absent manifest error. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders and
the Borrower. No assignment shall be effective unless it has been recorded in
the Register as provided in this paragraph (e).
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46
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and/or obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.13, 2.15 and 2.19 (and shall have the duty to
mitigate under Section 2.20) to the same extent as if they were Lenders
(provided, that unless such participation was consented to by the Borrower, each
participating bank or other entity shall only be entitled to the benefit of the
cost protection provisions contained in Sections 2.13, 2.15 and 2.19 to the same
extent as its participating Lender) and (iv) the Borrower, the Administrative
Agent and the Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans or increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, "Company Private" or
"Proprietary", each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
such confidential information on terms no less restrictive than those applicable
to the Lenders pursuant to Section 10.16.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank without the consent of the
Borrower or the Administrative Agent to secure extensions of credit by such
Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, the Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
(i) The Borrower shall not assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent and each
Lender, and any attempted assignment without such consent shall be null and
void.
(j) Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC")
of such Granting Lender, identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Loan that such Granting Lender
would otherwise be obligated to make to the Borrower pursuant to Section 2.01 or
2.03(e), provided that (i) nothing herein shall constitute a commitment to make
any Loan by any SPC and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender
(and, if such Loan is a Competitive Loan, shall be deemed to utilize the
Commitments of all the Lenders) to the same extent, and as if, such Loan were
made by the Granting Lender. Each party hereto hereby agrees that no SPC shall
be liable for any indemnity or similar payment obligation under this Agreement
(all liability for which shall remain with
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47
the related Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any State thereof.
In addition, notwithstanding anything to the contrary contained in this Section
10.04 or in Section 10.16, any SPC may (i) with notice to, but without the prior
written consent of, the Borrower or the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to its Granting Lender or to any financial institutions providing
liquidity and/or credit facilities to or for the account of such SPC to fund the
Loans made by such SPC or to support the securities (if any) issued by such SPC
to fund such Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of a surety, guarantee or credit or liquidity enhancement to such
SPC.
SECTION 10.05. Expenses; Indemnity. (a) The Borrower agrees (i) to pay all
reasonable out-of-pocket expenses incurred by the Agents and the Arrangers in
connection with the syndication of the credit facilities provided for herein and
the preparation and administration of this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof (whether or not
the transactions hereby or thereby contemplated shall be consummated), including
the reasonable fees, charges and disbursements of Simpson Thacher & Bartlett,
counsel for the Agents and (ii) to pay all out-of-pocket expenses incurred by
any Agent, either Arranger or any Lender in connection with the enforcement or
protection of its rights in connection with this Agreement or in connection with
the Loans made hereunder, including the fees, charges and disbursements of
Simpson Thacher & Bartlett, counsel for the Agents, and, in connection with any
such enforcement or protection, the fees, charges and disbursements of any other
counsel (including the allocated charges of in-house counsel) for any Agent or
any Lender. The Borrower shall not be obligated to reimburse out-of-pocket legal
expenses pursuant to the preceding sentence for more than one law firm for the
Agents incurred in connection with the preparation of this Agreement or in
connection with any particular amendment, modification or waiver of the
provisions hereof.
(b) The Borrower agrees to indemnify each Agent, each Arranger and each
Lender, each Affiliate of any of the foregoing persons and each of their
respective directors, officers, employees, advisors and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated hereby, (ii) the use of the proceeds of the
Loans or (iii) any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses result from
the gross negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or unenforceability
of any term or provision of this Agreement, or any investigation made by or on
behalf of any Agent or any Lender. All amounts due under this Section 10.05
shall be payable on written demand therefor.
<PAGE>
48
SECTION 10.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or any affiliate,
branch or agency thereof to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent or any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any scheduled principal payment date or date for the payment of any interest
on any Loan or the payment of any Facility Fee, or waive or excuse any such
payment or any part thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Lender affected thereby, (ii) change
or extend the Commitment or decrease the Facility Fees or Utilization Fees of
any Lender without the prior written consent of such Lender, (iii) except in
accordance with Section 10.17, reduce or terminate the obligations of either
Guarantor, without the prior written consent of each Lender or (iv) amend or
modify the provisions of Section 2.16, the provisions of Section 10.04(i), the
provisions of this Section or the definition of the term "Required Lenders",
without the prior written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder without the prior written consent of the
Administrative Agent.
SECTION 10.09. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount,
<PAGE>
49
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 10.10. Entire Agreement. This Agreement and the Fee Letter
constitute the entire contract among the parties relative to the subject matter
hereof. Any other previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.11.
SECTION 10.12. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 10.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 10.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually signed counterpart of
this Agreement.
SECTION 10.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against the Borrower or its properties in the courts of any
jurisdiction.
<PAGE>
50
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
(d) The Administrative Agent, each Lender, the Borrower and each Guarantor
hereby irrevocably and unconditionally waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal action
or proceeding referred to in this Section any special, exemplary, punitive or
consequential damages.
SECTION 10.16. Confidentiality. The Administrative Agent and each of the
Lenders agrees to keep confidential (and to use its best efforts to cause its
respective agents and representatives to keep confidential) the Information (as
defined below) and all copies thereof, extracts therefrom and analyses or other
materials based thereon, except that the Administrative Agent, any Lender or any
Lender Affiliate shall be permitted to disclose Information (a) to such of its
respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information, (b) to the extent requested by
any regulatory authority or examining authority, (c) to the extent otherwise
required by applicable laws and regulations or by any subpoena or similar legal
process, (d) in connection with any suit, action or proceeding relating to the
enforcement of its rights hereunder, (e) to the extent permitted by Section
10.04(g), or (f) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Agreement or (ii) becomes available
to the Administrative Agent or any Lender on a non-confidential basis from a
source other than the Borrower. For the purposes of this Section, "Information"
shall mean all financial statements, certificates, reports, agreements and
information (including all analyses, compilations and studies prepared by the
Administrative Agent or any Lender based on any of the foregoing) that are
received from the Borrower or any Subsidiary and related to the Borrower, any
Subsidiary or any employee, customer or supplier of the Borrower, other than any
of the foregoing that were available to the Administrative Agent or any Lender
on a non-confidential basis prior to its disclosure thereto by the Borrower, and
which are in the case of Information provided after the date hereof, clearly
identified at the time of delivery as confidential, "Company Private" or
"Proprietary". The provisions of this Section 10.16 shall remain operative and
in full force and effect regardless of the expiration and term of this
Agreement.
SECTION 10.17. Release of Guarantees. (a) Notwithstanding anything to the
contrary contained herein, , so long as no Default or Event of Default shall
have occurred and be continuing, the Guarantees created by Article IX of this
Agreement automatically shall be terminated and be of no further force or effect
and the Administrative Agent is hereby irrevocably authorized by each Lender
(without requirement of notice to or consent of any Lender) to take any action
reasonably requested by the Borrower (it being understood that the
Administrative Agent shall not refuse to take any reasonable action) to further
evidence or document such automatic release of the Guarantees created by Article
IX of this Agreement, but in each case only (i) to the extent necessary to
permit the sale of all or substantially all of the stock or of all or
substantially all of the assets of either Guarantor, (ii) to the extent
necessary to permit the consummation of any transaction that has been consented
to in accordance with Section 10.08 or (iii) under the circumstances described
in paragraph (b) below.
(b) So long as no Default or Event of Default shall have occurred and
be continuing, on the first date after the Closing Date on which the Borrower
has Index Debt of BBB or better from S&P
<PAGE>
51
and Baa2 or better from Moody's, in each case on "stable watch" or the
equivalent, the Guarantees created by Article IX of this Agreement automatically
shall be terminated and be of no further force or effect and the Administrative
Agent is hereby irrevocably authorized by each Lender (without requirement of
notice to or consent of any Lender) to take any action reasonably requested by
the Borrower (it being understood that the Administrative Agent shall not refuse
to take any reasonable action) to further evidence or document such automatic
release of the Guarantees created by Article IX of this Agreement.
SECTION 10.18. Waiver and Consent of the Existing Credit Agreement. Each
Lender which is a Lender (as defined under the Existing Credit Agreement) under
the Existing Credit Agreement hereby (i) waives the requirement of Section 2.12
of the Existing Credit Agreement that prepayments of Loans (as defined under the
Existing Credit Agreement) and reductions of Commitments (as defined under the
Existing Credit Agreement) may only be made upon at least 3 Business Days' prior
irrevocable written notice and (ii) consents to the Borrower prepaying the Loans
(as defined under the Existing Credit Agreement) and permanently reducing the
amount of the Commitments (as defined under the Existing Credit Agreement) under
the Existing Credit Agreement to an aggregate amount of no more than
$140,000,000 on the date hereof.
[Remainder of page left blank intentionally; Signature page to follow.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
RAYTHEON COMPANY,
as the Borrower
By:
---------------------------------------------
Name:
Title:
RAYTHEON TECHNICAL SERVICES COMPANY,
as a Guarantor
By:
---------------------------------------------
Name:
Title:
RAYTHEON AIRCRAFT COMPANY,
as a Guarantor
By:
---------------------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as a Lender and as Administrative Agent,
By:
---------------------------------------------
Name:
Title:
J.P. MORGAN SECURITIES, INC.,
as a Joint Lead Arranger and a Joint Bookrunner,
By:
---------------------------------------------
Name:
Title:
BANC OF AMERICA SECURITIES LLC,
as a Joint Lead Arranger and a Joint Bookrunner,
By:
---------------------------------------------
Name:
Title:
BANK OF AMERICA, N.A.,
as Syndication Agent and as a Lender
By:
---------------------------------------------
Name:
Title:
<PAGE>
CITICORP USA, INC.,
as Documentation Agent and as a Lender
By:
---------------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent and as a Lender
By:
---------------------------------------------
Name:
Title:
MIZUHO FINANCIAL GROUP,
as Documentation Agent and as a Lender
By:
---------------------------------------------
Name:
Title:
<PAGE>
Exhibit A to the
364-Day Credit Agreement
------------------------
[Form of]
RAYTHEON COMPANY
ADMINISTRATIVE QUESTIONNAIRE*
(*Lenders party to both the Five-Year Credit Agreement and the 364-Day Credit
Agreement need complete this form and submit the completed form as indicated
below in respect of the Five-Year Credit Agreement only, unless the
Administrative Questionnaire for the 364-Day Credit Agreement would be
completed differently.)
Please provide the following details:
A) FULL LEGAL BANK NAME:
------------------------------
B) FULL LEGAL DOMESTIC LENDING OFFICE NAME AND ADDRESS:
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
FAX NUMBER:
----------------------------------------------
TELEX NUMBER:
-------------------------------------------
C) FULL LEGAL EURODOLLAR LENDING OFFICE NAME AND ADDRESS:
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
FAX NUMBER:
---------------------------------------------
TELEX NUMBER:
-------------------------------------------
D) FULL LEGAL COMPETITIVE LOAN LENDING OFFICE NAME AND ADDRESS:
FAX NUMBER:
---------------------------------------------
TELEX NUMBER:
-------------------------------------------
E) WHERE EXECUTION COPIES SHOULD BE SENT FOR SIGNATURE(S)**:
ADDRESS:
------------------------------------------------
------------------------------------------------
------------------------------------------------
ATTN:
------------------------------------------------
------------------------------------------------; or
ELECTRONIC MAIL ADDRESS: -------------------------------
* The Lender hereby acknowledges that, in the Administrative Agent's discretion,
documents for execution may be sent by electronic mail or posted to a web site
designated by the Administrative Agent.
Please fax your completed questionnaire to Doris Mesa at
JPMorgan Chase Bank; fax (212) 552-5650.
<PAGE>
F) WHERE CONFORMED (FINAL) COPIES SHOULD BE SENT:
ADDRESS:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
ATTN:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
G) FOR BUSINESS AND/OR CREDIT MATTERS:
CONTACT NAME/DEPT:
----------------------------------------
TELEPHONE NUMBER:
----------------------------------------
FAX NUMBER:
----------------------------------------
ELECTRONIC MAIL ADDRESS:
--------------------------------
H) FOR ADMINISTRATIVE/OPERATIONS MATTERS:
CONTACT NAME/DEPT:
--------------------------------------
TELEPHONE NUMBER:
--------------------------------------
FAX NUMBER:
---------------------------------------------
ELECTRONIC MAIL ADDRESS:
---------------------------------
I) FOR COMPETITIVE BID REQUESTS:
CONTACT NAME/DEPT:
--------------------------------------
TELEPHONE NUMBER:
---------------------------------------
FAX NUMBER:
---------------------------------------------
ELECTRONIC MAIL ADDRESS:
--------------------------------
J) PAYMENT INSTRUCTIONS (PLEASE SPECIFY WHERE FUNDS, I.E. INTEREST, FEES, LOAN
REPAYMENTS SHOULD BE WIRED):
BANK NAME:
---------------------------------------
ABA, CHIPS #:
--------------------------------------------
ACCOUNT #:
----------------------------------------
CREDIT TO (if applicable):
-------------------------------
REFERENCE:
----------------------------------------
ATTENTION:
----------------------------------------
<PAGE>
Exhibit B to the
364-Day Credit Agreement
------------------------
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the 364-Day Competitive Advance and Revolving Credit
Facility, dated as of November 28, 2001 (as amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), among Raytheon Company, as the
Borrower, Raytheon Technical Services Company, a Delaware corporation, and
Raytheon Aircraft Company, a Kansas corporation, each as a Guarantor, the
several lenders from time to time parties thereto (the "Lenders"), J.P. Morgan
Securities Inc. and Banc of America Securities LLC, as joint lead arrangers and
joint bookrunners, Citicorp USA, Inc., Credit Suisse First Boston and Mizuho
Financial Group, each as a documentation agent, Bank of America, N.A, as the
syndication agent, and JPMorgan Chase Bank, as the administrative agent for the
Lenders. Terms defined in the Credit Agreement are used herein with the same
meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register pursuant
to Section 10.04(e) of the Credit Agreement), the interests set forth below (the
"Assigned Interests") in the Assignor's rights and obligations under the Credit
Agreement, including, without limitation, the amounts and percentages set forth
below of (i) the Commitments of the Assignor on the Effective Date and (ii) the
Loans owing to the Assignor which are outstanding on the Effective Date. Each of
the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 10.04(c) of the
Credit Agreement, a copy of which has been received by each such party. From and
after the Effective Date (i) the Assignee shall be a party to and be bound by
the provisions of the Credit Agreement and, to the extent of the Assigned
Interests, have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent of the Assigned Interests, relinquish its rights
and be released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is organized under the laws of a
jurisdiction outside the United States, the forms specified in Section 2.19(g)
of the Credit Agreement, duly completed and executed by such Assignee, (ii) if
the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Exhibit A to the Credit Agreement
and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
<PAGE>
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<TABLE>
<CAPTION>
Amount Assigned
Principal Amount Percentage Assigned of Applicable
Assigned and Identifying Facility/Commitment (set forth, to
information as individual at least 8 decimals, as a percentage
Facility/Commitment Competitive Loans) of the Total Commitments)
------------------- ------------------ -------------------------
<S> <C> <C>
Commitment $ %
------------- -------
Competitive Loans $ %
------------- -------
Accepted: */
-
The terms set forth above
are hereby agreed to:
JPMORGAN CHASE BANK,
as Administrative Agent
,as
- ------------------------
Assignor
By: By:
--------------------- -----------------------
Name: Name:
Title: Title:
,as Raytheon Company, as the
- ------------------------ Borrower
Assignor
By: By:
--------------------- -----------------------
Name: Name:
Title: Title:
</TABLE>
- ---------------------------
* To be completed to teh extent consents are required under Section 11.04(b)
of the Credit Agreement.
<PAGE>
Exhibit C to the
364-Day Credit Agreement
------------------------
[Form of]
BORROWING REQUEST
JPMorgan Chase Bank, as Administrative Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention of [___________]
[Date]
Ladies and Gentlemen:
The undersigned, Raytheon Company, a Delaware corporation (the "Borrower"),
refers to the 364-Day Competitive Advance and Revolving Credit Facility, dated
as of November 28, 2001 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), among the Borrower, Raytheon Technical
Services Company, a Delaware corporation, and Raytheon Aircraft Company, a
Kansas corporation, each as a Guarantor, the several lenders from time to time
parties thereto (the "Lenders"), J.P. Morgan Securities Inc. and Banc of America
Securities LLC, as joint lead arrangers and joint bookrunners, Citicorp USA,
Inc., Credit Suisse First Boston and Mizuho Financial Group, each as a
documentation agent, Bank of America, N.A, as the syndication agent, and
JPMorgan Chase Bank, as the administrative agent for the Lenders (in such
capacity, the "Administrative Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.04
of the Credit Agreement that it requests a Revolving Borrowing under the Credit
Agreement, and in that connection sets forth below the terms on which such
Borrowing is requested to be made:
(A) Date of Borrowing (which is a Business Day)
----------------------
(B) Principal Amount of Borrowing */
- ----------------------
(C) Interest rate basis **/
-- ----------------------
(D) Interest Period and the last day thereof ***/
--- ----------------------
(E) Funds are requested to be disbursed to the Borrower's account with JPMorgan
Chase Bank (Account No.____________)
- ----------
*/ Not less than $10,000,000 and in an integral multiple of $1,000,000, but in
- -
any event not exceeding the Total Commitment then available.
**/ Specify Eurodollar Borrowing or ABR Borrowing.
- --
***/ Which shall be subject to the definition of "Interest Period" and end not
- ---
later than the Maturity Date.
<PAGE>
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the applicable conditions to lending specified in Sections
4.01(b) and 4.01(c) of the Credit Agreement have been satisfied.
RAYTHEON COMPANY,
By:
--------------------------------
Name:
Title: [Responsible Officer]
<PAGE>
Exhibit D-1 to the
364-Day Credit Agreement
------------------------
[Form of]
COMPETITIVE BID REQUEST
JPMorgan Chase Bank, as Administrative Agent for
the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [____________]
Dear Sirs:
The undersigned, Raytheon Company, a Delaware corporation (the "Borrower"),
refers to the 364-Day Competitive Advance and Revolving Credit Facility, dated
as of November 28, 2001 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), among the Borrower, Raytheon Technical
Services Company, a Delaware corporation, and Raytheon Aircraft Company, a
Kansas corporation, each as a Guarantor, the several lenders from time to time
parties thereto (the "Lenders"), J.P. Morgan Securities Inc. and Banc of America
Securities LLC, as joint lead arrangers and joint bookrunners, Citicorp USA,
Inc., Credit Suisse First Boston and Mizuho Financial Group, each as a
documentation agent, Bank of America, N.A, as the syndication agent, and
JPMorgan Chase Bank, as the administrative agent for the Lenders (in such
capacity, the "Administrative Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The Borrower hereby gives you notice pursuant to Section
2.03(a) of the Credit Agreement that it requests a Competitive Borrowing under
the Credit Agreement, and in that connection sets forth below the terms on which
such Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
--------------------
(B) Principal Amount of
Competitive Borrowing 1/
- --------------------
(C) Interest rate basis 2/ --------------------
(D) Interest Period and the last
day thereof 3/
--------------------
- ----------
1 Not less than $10,000,000 (and in integral multiples of $1,000,000) and not
greater than the Total Commitment then available.
2 Eurodollar Loan or Fixed Rate Loan.
3 Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
<PAGE>
Upon acceptance of any or all of the Loans offered by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the conditions to lending specified in Sections 4.01(b) and
4.01(c) of the Credit Agreement have been satisfied.
Very truly yours,
RAYTHEON COMPANY,
By:
--------------------------------
Name:
Title: [Responsible Officer]
<PAGE>
Exhibit D-2 to the
364-Day Credit Agreement
------------------------
[Form of]
NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
Attention:
[Date]
Dear Sirs:
Reference is made to the 364-Day Competitive Advance and Revolving Credit
Facility, dated as of November 28, 2001 (as amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), among Raytheon Company, as the
Borrower, Raytheon Technical Services Company, a Delaware corporation, and
Raytheon Aircraft Company, a Kansas corporation, each as a Guarantor, the
several lenders from time to time parties thereto (the "Lenders"), J.P. Morgan
Securities Inc. and Banc of America Securities LLC, as joint lead arrangers and
joint bookrunners, Citicorp USA, Inc., Credit Suisse First Boston and Mizuho
Financial Group, each as a documentation agent, Bank of America, N.A, as the
syndication agent, and JPMorgan Chase Bank, as the administrative agent for the
Lenders (in such capacity, the "Administrative Agent"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Borrower made a Competitive Bid Request on
[__________], [____], pursuant to Section 2.03(a) of the Credit Agreement, and
in that connection you are invited to submit a Competitive Bid by
[Date]/[Time].1/ Your Competitive Bid must comply with Section 2.03(b) of the
Credit Agreement and the terms set forth below on which the Competitive Bid
Request is made:
(E) Date of Competitive Borrowing
--------------------
(F) Principal amount of Competitive Borrowing
--------------------
(G) Interest rate basis
--------------------
(H) Interest Period and the last day thereof
--------------------
Very truly yours,
JPMORGAN CHASE BANK, as Administrative Agent,
by
--------------------------------
Name:
Title:
Exhibit D-3 to the
364-Day Credit Agreement
------------------------
- ---------------------------
1 The Competitive Bid must be received by the Administrative Agent (i) in the
case of Eurodollar Loans, not later than 9:30 a.m., New York City time,
three Business Days before a proposed Competitive Borrowing, and (ii) in
the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time,
on the Business Day of a proposed Competitive Borrowing.
<PAGE>
[Form of]
COMPETITIVE BID
JPMorgan Chase Bank, as Administrative Agent for
the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [_____________]
Dear Sirs:
The undersigned, [Name of Lender], refers to the 364-Day Competitive
Advance and Revolving Credit Facility, dated as of November 28, 2001 (as
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
among Raytheon Company, as the Borrower, Raytheon Technical Services Company, a
Delaware corporation, and Raytheon Aircraft Company, a Kansas corporation, each
as a Guarantor, the several lenders from time to time parties thereto (the
"Lenders"), J.P. Morgan Securities Inc. and Banc of America Securities LLC, as
joint lead arrangers and joint bookrunners, Citicorp USA, Inc., Credit Suisse
First Boston and Mizuho Financial Group, each as a documentation agent, Bank of
America, N.A, as the syndication agent, and JPMorgan Chase Bank, as the
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes a Competitive Bid pursuant to Section 2.03(b) of the
Credit Agreement, in response to the Competitive Bid Request made by the
Borrower on [___________], [____], and in that connection sets forth below the
terms on which such Competitive Bid is made:
(I) Principal Amount 1/
--------------------
(J) Competitive Bid Rate 2/
-------------------
(K) Interest Period and last
day thereof
--------------------
- ----------
1 Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the Administrative Agent.
2 I.e., Eurodollar Rate + or - %, in the case of Eurodollar Loans, or %, in
the case of Fixed Rate Loans.
<PAGE>
The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.03(d)
of the Credit Agreement.
Very truly yours,
[Name of Lender],
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit D-4 to the
364-Day Credit Agreement
------------------------
[Form of]
COMPETITIVE BID ACCEPT/REJECT LETTER
JPMorgan Chase Bank, as Administrative Agent for
the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention: [___________]
Dear Sirs:
The undersigned, Raytheon Company (the "Borrower"), refers to the
364-Day Competitive Advance and Revolving Credit Facility, dated as of November
28, 2001 (as amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), among the Borrower, Raytheon Technical Services Company, a Delaware
corporation, and Raytheon Aircraft Company, a Kansas corporation, each as a
Guarantor, the several lenders from time to time parties thereto (the
"Lenders"), J.P. Morgan Securities Inc. and Banc of America Securities LLC, as
joint lead arrangers and joint bookrunners, Citicorp USA, Inc., Credit Suisse
First Boston and Mizuho Financial Group, each as a documentation agent, Bank of
America, N.A, as the syndication agent, and JPMorgan Chase Bank, as the
administrative agent for the Lenders (in such capacity, the "Administrative
Agent").
In accordance with Section 2.03(c) of the Credit Agreement, we have
received a summary of bids in connection with our Competitive Bid Request dated
and in accordance with Section 2.03(d) of the Credit
- -----------
Agreement, we hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
$ [%]/[+/-. %]
$
The $ should be deposited in JPMorgan Chase Bank account number
-----------
[_____________] on [date].
Very truly yours,
RAYTHEON COMPANY,
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit E to the
364-Day Credit Agreement
------------------------
[Form of]
Opinion of Neal E. Minahan*
1. The Borrower and each Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the state of its organization.
The Borrower and each Guarantor is duly qualified and in good standing as a
foreign corporation and is authorized to do business in every jurisdiction where
such qualification or authorization is required, except where the failure to be
so qualified would not be reasonably likely to have a Material Adverse Effect.
The Borrower and each Guarantor has the corporate power and authority to
execute, deliver, perform its obligations and, in the case if the Borrower,
borrow under the Credit Agreement.
2. The execution and delivery of the Credit Agreement, the performance of
the Credit Agreement and the transactions contemplated thereby by the Borrower
and each Guarantor, the borrowings by the Borrower under the Credit Agreement
and the use of the proceeds thereof pursuant to the Credit Agreement (a) have
been duly authorized by all requisite corporate, and, if required, stockholder
action and (b) will not (i) violate (A) the certificate of incorporation or
by-laws of the Borrower or the relevant Guarantor, as applicable, or (B) any
order of any Governmental Authority binding upon the Borrower or the relevant
Guarantor, as applicable, or (ii) be in material conflict with, result in a
material breach of or constitute (alone or with notice or lapse of time or both)
a material default under, any material indenture, material agreement or other
material instrument to which the Borrower or the relevant Guarantor, as
applicable, or any of the Borrower's or the relevant Guarantor's properties or
assets, are bound or (iii) result in or require the creation or imposition of
any Lien on any property or assets of the Borrower or the relevant Guarantor, as
applicable,.
3. The Credit Agreement has been duly executed and delivered by the
Borrower and each Guarantor.
4. Except as set forth on Schedule 3.07 to the Credit Agreement, there is
no litigation, proceeding or governmental investigation pending or, to my
knowledge, threatened against the Borrower or any of its Subsidiaries (including
each Guarantor) or their respective businesses, assets or properties (a) that
relates to the Credit Agreement or any agreement or instrument contemplated
thereby or (b) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, would be likely to result in a
Material Adverse Effect.
5. No consent, registration with, approval, waiver, license or
authorization or other action by any Governmental Authority under the laws of
the State of New York, the Delaware General Corporation Law, [Insert appropriate
Kansas law] or the Federal laws of the United States is required for the due
execution, delivery and performance of the Credit Agreement by the Borrower or
either Guarantor.
6. Neither Guarantor is, the Borrower is not and none of its Subsidiaries
is an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
- ----------
* Opinions may be divided between one or more in-house counsel to the
Borrower and each Guarantor, as deemed appropriate by the Borrower.
<PAGE>
7. Neither Guarantor is, the Borrower is not and none of its Subsidiaries
is a "holding company" or a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935.
8. Assuming the proceeds of the Loans are used solely for the purposes set
forth in the preamble to the Credit Agreement, the execution, delivery and
performance of the Credit Agreement by the Borrower and each Guarantor and the
borrowings by the Borrower under the Credit Agreement will not violate (i)
applicable New York law, (ii) Delaware General Corporation law, (iii) [Insert
appropriate Kansas law] or (iv) the federal laws of the United States (other
than federal and state securities or blue sky laws, as to which we express no
opinion, but including Regulation T, U or X of the Board of Governors of the
Federal Reserve System of the United States).
<PAGE>
Exhibit F to the
364-Day Credit Agreement
------------------------
[Form of]
Opinion of Bingham Dana LLP for the Borrower
The Credit Agreement constitutes the legal, valid and binding
obligation of the Borrower and each Guarantor enforceable against it in
accordance with its terms, except as may be limited by (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors generally and
(ii) the application of general principles of equity (regardless of whether
enforcement is considered in proceedings at law or in equity).
<PAGE>
SCHEDULE 2.01
to the 364-Day Credit Agreement
-------------------------------
COMMITMENTS AND LENDER INFORMATION
----------------------------------
<TABLE>
<CAPTION>
Amount of Commitment
Commitment at Percentage at
Lender Effective Date Effective Date
- ------ -------------- --------------
<S> <C> <C>
JPMorgan Chase Bank $81,521,739.13 8.15%
270 Park Avenue, 38th Floor
New York, NY 10017
Attention: Jack Riordan
Tel: (212) 270-4768
Fax: (212) 270-5100
Bank of America, N.A. $81,521,739.13 8.15%
555 So. Flower St.,
CA9-706-11-07
Los Angeles, CA 90071
Attn: Charles Lilygren
Tel: (213) 228-2636
Fax: (213) 623-1959
Citicorp USA, Inc. $76,086,956.52 7.61%
399 Park Ave., 8th Floor
New York, NY 10043
Attn: Prakash Chonkar
Tel: (212) 816-5711
Fax: (212) 816-5323
Credit Suisse First Boston, $76,086,956.52 7.61%
11 Madison Avenue
New York, NY 10010-3629
Attention: David Kratovil/Janko Gogolja
Tel: (212) 325-9155
Fax: (212) 325-8615
The Industrial Bank of Japan, Limited, $76,086,956.52 7.61%
on behalf of Mizuho Financial Group
1251 Avenue of the Americas
New York, NY 10020-1104
Attn: Betty Aziz
Tel: (212) 282-3482
Fax: (212) 282-4488
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount of Commitment
Commitment at Percentage at
Lender Effective Date Effective Date
- ------ -------------- --------------
<S> <C> <C>
Societe Generale $76,086,956.52 7.61%
181 W. Madison Ste 3400
Chicago, IL 60602
Attn: John Root
Tel: (312) 578-5158
Fax: (312) 578-5099
The Bank of Nova Scotia $52,173,913.05 5.22%
2700 Peachtree St. NE
Atlanta, GA 30308
Attn: Terry Pitcher
Tel: (617) 624-7609
Fax: (617) 624-7607
Barclays Bank PLC $52,173,913.05 5.22%
222 Broadway, 8th Floor
New York, NY 10019
Attn: Russell Johnson
Tel: (212) 412-3728
Fax: (212) 412-7511
BNP Paribas $52,173,913.05 5.22%
787 Seventh Avenue
New York, NY 10019
Attention: Richard pace
Tel: (212) 841-3266
Fax: (212) 841-3049
Commerzbank AG, $52,173,913.05 5.22%
New York and Grand Cayman Branches
1251 Avenue of the Americas
New York, NY 10020
Attention: Peter Doyle
Tel: (212) 400-5854
Fax: (212) 703-4725
Fleet National Bank $52,173,913.05 5.22%
MA DE 100 11F
100 Federal Street
Boston, MA 02110
Attention: Jorge Schwartz
Tel: (617) 434-6629
Fax: (617) 434-1574
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount of Commitment
Commitment at Percentage at
Lender Effective Date Effective Date
- ------ -------------- --------------
<S> <C> <C>
Wachovia Bank, N.A. $43,478,260.87 4.35%
MC GA-423
191 Peachtree Street, N.E.
Atlanta, GA 30303
Attention: Christa Holland/ Kathryn Mays
Tel: (803) 765-3052
Fax: (803) 765-3363
Lehman Commercial Paper Inc. $43,478,260.87 4.35%
101 Hudson Street
Jersey City, NJ 07302
Attn: Michele Swanson
Tel: (212) 455-7500
Fax: (212) 455-7241
Bank of Tokyo-Mitsubishi Trust Company $32,608,695.65 3.26%
1251 Avenue of the Americas,12th Floor
New York, NY 10020
Attention: Thomas Fennessey
Tel: (212) 782-4221
Fax: (212) 782-6440
Bank One, NA (Main Office Chicago) $21,739,130.43 2.17%
One Bank One Plaza
Chicago, IL 60670
Attention: Randall Faust
Tel: (212) 373-1276
Fax: (212) 373-1403
Bayerische Landesbank Girozentrale, $21,739,130.43 2.17%
Cayman Islands Branch
560 Lexington Avenue, 17th Floor
New York, NY 10022
Attention: James H. Boyle
Tel: (212) 310-9817
Fax: (212) 310-9868
Credit Lyonnais New York Branch $21,739,130.43 2.17%
1301 Avenue of the Americas
New York, NY 10019
Attention: Scott Chappelka
Tel: (212) 261-7362
Fax: (212) 459-3179
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount of Commitment
Commitment at Percentage at
Lender Effective Date Effective Date
- ------ -------------- ---------------
<S> <C> <C>
Mellon Bank, N.A. $21,739,130.43 2.17%
1735 Market Street, 4th Floor
Philadelphia, PA 19103
Attn: J. Wade Bell
Tel: (215) 553-3875
Fax: (215) 553-4899
UBS AG, Stamford Branch $21,739,130.43 2.17%
677 Washington Boulevard- 8N
Stamford, CT 06901
Attn: Johny Villard
Tel: (203) 719-3845
Fax: (203) 719-3888
Westdeutsche Landesbank Girozentrale, $21,739,130.43 2.17%
New York Branch
1211 Avenue of the Americas
New York, NY 10036
Attention: Walter T. Duffy
Tel: (212) 852-6095
Fax: (212) 852-6148
The Bank of New York $10,869,565.22 1.09%
One Wall Street, 22nd Floor
New York, NY 10286
Attention: Ken Sneider
Tel: (212) 635-6863
Fax: (212) 635-1480
Banca Nazionale Del Lavoro, S.p.A., New York $10,869,565.22 1.09%
Branch
25 West 51st Street
New York, NY 10019
Attention: Frederic W. Hall
Tel: (212) 314-0605
Fax: (212) 581-2149
</TABLE>
<PAGE>
SCHEDULE 2.01
to the 364-Day Credit Agreement
-------------------------------
[TO BE ATTACHED]
<PAGE>
SCHEDULE 3.01
to the 364-Day Credit Agreement
-------------------------------
Significant Subsidiaries
------------------------
Raytheon Technical Services Company
Raytheon Aircraft Company
Raytheon International Trade Limited
Raytheon E-Systems, Inc.
Thornwood Trust
<PAGE>
SCHEDULE 3.05
to the 364-Day Credit Agreement
-------------------------------
Financial Statements/Material Liabilities
-----------------------------------------
None.
<PAGE>
SCHEDULE 3.07
to the 364-Day Credit Agreement
-------------------------------
Litigation
----------
As disclosed in public filings and announcements made, in each case, on or
before November 16, 2001, via the EDGAR system of the Securities and Exchange
Commission.
<PAGE>
SCHEDULE 6.01
to the 364-Day Credit Agreement
-------------------------------
Existing Liens
--------------
None.
<PAGE>
SCHEDULE 6.04
to the 364-Day Credit Agreement
-------------------------------
Existing Subsidiary Indebtedness
--------------------------------
None.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>11
<FILENAME>dex1024.txt
<DESCRIPTION>FIVE-YEAR COMPETITIVE ADVANCE
<TEXT>
<PAGE>
EXHIBIT 10.24
EXECUTION COPY
================================================================================
$1,300,000,000
FIVE-YEAR COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY
among
RAYTHEON COMPANY
as the Borrower,
RAYTHEON TECHNICAL SERVICES COMPANY and
RAYTHEON AIRCRAFT COMPANY,
each as a Guarantor,
THE LENDERS NAMED HEREIN,
BANK OF AMERICA, N.A.,
as Syndication Agent,
CITICORP USA, INC., CREDIT SUISSE FIRST BOSTON and MIZUHO FINANCIAL
GROUP,
as Documentation Agents,
and
JPMORGAN CHASE BANK,
as Administrative Agent,
Dated as of November 28, 2001
================================================================================
J.P. MORGAN SECURITIES INC. and
BANC of AMERICA SECURITIES LLC
as Joint Lead Arrangers and Joint Bookrunners
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
----
<S> <C>
ARTICLE I Definitions....................................................................................1
SECTION 1.01. Defined Terms.................................................................1
SECTION 1.02. Terms Generally..............................................................14
ARTICLE II The Credits..................................................................................15
SECTION 2.01. Commitments..................................................................15
SECTION 2.02. Loans........................................................................15
SECTION 2.03. Competitive Bid Procedure....................................................16
SECTION 2.04. Borrowing Procedure..........................................................18
SECTION 2.05. Evidence of Debt; Repayment of Loans.........................................18
SECTION 2.06. Fees.........................................................................18
SECTION 2.07. Interest on Loans............................................................19
SECTION 2.08. Default Interest.............................................................20
SECTION 2.09. Alternate Rate of Interest...................................................20
SECTION 2.10. Termination and Reduction of Commitments.....................................20
SECTION 2.11. Conversion and Continuation of Revolving Credit Borrowings...................20
SECTION 2.12. Prepayment...................................................................22
SECTION 2.13. Reserve Requirements; Change in Circumstances................................22
SECTION 2.14. Change in Legality...........................................................23
SECTION 2.15. Indemnity....................................................................24
SECTION 2.16. Pro Rata Treatment...........................................................24
SECTION 2.17. Sharing of Setoffs...........................................................24
SECTION 2.18. Payments.....................................................................25
SECTION 2.19. Taxes........................................................................25
SECTION 2.20. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate......27
ARTICLE III LETTERS OF CREDIT...........................................................................28
SECTION 3.01. L/C Commitment...............................................................28
SECTION 3.02. Procedure for Issuance or Amendment of Letter of Credit......................28
SECTION 3.03. Fees and Other Charges.......................................................29
SECTION 3.04. L/C Participations...........................................................29
SECTION 3.05. Reimbursement Obligation of the Borrower.....................................30
SECTION 3.06. Obligations Absolute.........................................................30
SECTION 3.07. Letter of Credit Payments....................................................31
SECTION 3.08. Applications.................................................................31
ARTICLE IV Representations And Warranties...............................................................31
SECTION 4.01. Organization; Powers.........................................................31
SECTION 4.02. Authorization................................................................31
SECTION 4.03. Enforceability...............................................................32
SECTION 4.04. Governmental Approvals.......................................................32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.05. Financial Statements.........................................................32
SECTION 4.06. No Material Adverse Change...................................................32
SECTION 4.07. Litigation; Compliance with Laws.............................................32
SECTION 4.08. Federal Reserve Regulations..................................................32
SECTION 4.09. Investment Company Act; Public Utility Holding Company Act...................33
SECTION 4.10. Tax Returns..................................................................33
SECTION 4.11. No Material Misstatements....................................................33
SECTION 4.12. Employee Benefit Plans.......................................................33
SECTION 4.13. No Default...................................................................33
SECTION 4.14. Ownership of Property; Liens; Insurance......................................33
SECTION 4.15. Intellectual Property........................................................34
SECTION 4.16. Labor Matters................................................................34
SECTION 4.17. Environmental Matters........................................................34
SECTION 4.18. Solvency.....................................................................35
ARTICLE V Conditions Of Effectiveness and Lending.......................................................35
SECTION 5.01. All Borrowings...............................................................35
SECTION 5.02. Effectiveness................................................................36
ARTICLE VI Affirmative Covenants........................................................................37
SECTION 6.01. Existence; Businesses and Properties.........................................37
SECTION 6.02. Insurance....................................................................37
SECTION 6.03. Payment of Obligations; Taxes................................................38
SECTION 6.04. Financial Statements, Reports, etc...........................................38
SECTION 6.05. Litigation and Other Notices.................................................39
SECTION 6.06. Employee Benefits............................................................39
SECTION 6.07. Maintaining Records; Access to Properties and Inspections....................39
SECTION 6.08. Use of Proceeds..............................................................39
SECTION 6.09. Environmental Laws...........................................................39
SECTION 6.10. Termination of Existing Credit Agreement.....................................40
ARTICLE VII Negative Covenants..........................................................................40
SECTION 7.01. Liens........................................................................40
SECTION 7.02. Sale and Lease-Back Transactions.............................................41
SECTION 7.03. Mergers, Consolidations and Sales of Assets..................................41
SECTION 7.04. Subsidiary Indebtedness......................................................42
SECTION 7.05. Financial Covenants..........................................................42
ARTICLE VIII Events Of Default..........................................................................43
ARTICLE IX The Administrative Agent.....................................................................45
ARTICLE X Guarantee.....................................................................................47
ARTICLE XI Miscellaneous................................................................................48
SECTION 11.01. Notices......................................................................48
SECTION 11.02. Survival of Agreement........................................................49
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 11.03. Binding Effect...............................................................49
SECTION 11.04. Successors and Assigns.......................................................49
SECTION 11.05. Expenses; Indemnity..........................................................52
SECTION 11.06. Right of Setoff..............................................................53
SECTION 11.07. APPLICABLE LAW...............................................................53
SECTION 11.08. Waivers; Amendment...........................................................53
SECTION 11.09. Interest Rate Limitation.....................................................53
SECTION 11.10. Entire Agreement.............................................................54
SECTION 11.11. WAIVER OF JURY TRIAL.........................................................54
SECTION 11.12. Severability.................................................................54
SECTION 11.13. Counterparts.................................................................54
SECTION 11.14. Headings.....................................................................54
SECTION 11.15. Jurisdiction; Consent to Service of Process..................................54
SECTION 11.16. Confidentiality..............................................................55
SECTION 11.17. Release of Guarantees........................................................55
SECTION 11.18. Waiver and Consent of the Existing Credit Agreement..........................56
</TABLE>
EXHIBITS
- --------
Exhibit A Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D-1 Form of Competitive Bid Request
Exhibit D-2 Form of Notice of Competitive Bid Request
Exhibit D-3 Form of Competitive Bid
Exhibit D-4 Form of Competitive Bid Accept/Reject Letter
Exhibit E Form of Opinion of Neal E. Minahan
Exhibit F Form of Opinion of Bingham Dana LLP
Exhibit G Form of Issuing Lender Agreement
SCHEDULES
- ---------
Schedule 2.01 Lenders and Commitments
Schedule 4.01 Significant Subsidiaries
Schedule 4.05 Financial Statements/Material Liabilities
Schedule 4.07 Litigation
Schedule 7.01 Existing Liens
Schedule 7.04 Existing Subsidiary Indebtedness
iii
<PAGE>
FIVE-YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY, dated as of
November 28, 2001, among Raytheon Company, a Delaware corporation (the
"Borrower"), Raytheon Technical Services Company, a Delaware corporation, and
Raytheon Aircraft Company, a Kansas corporation, each as a Guarantor (in such
capacity, each a "Guarantor" and, collectively, the "Guarantors"), the Lenders
(as defined in Article I), J.P. Morgan SECURITIES, INC. and BANC OF AMERICA
SECURITIES LLC., as joint lead arrangers and joint bookrunners (in such
capacity, the "Arrangers"), Bank of America, N.A, as syndication agent (in such
capacity, the "Syndication Agent"), Citicorp USA, Inc., Credit Suisse First
Boston and Mizuho Financial Group, as documentation agents (in such capacity,
each a "Documentation Agent" and, collectively, the "Documentation Agents"), and
JPMORGAN CHASE BANK, a New York banking corporation, as administrative agent (in
such capacity, the "Administrative Agent", and, collectively with the
Syndication Agent and the Documentation Agents, the "Agents") for the Lenders.
The Borrower has requested the Lenders, and the Lenders have agreed, to
extend credit in the form of Revolving Loans at any time and from time to time
prior to the Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $1,300,000,000. The Borrower also has requested the
Lenders to provide a procedure pursuant to which the Borrower may invite the
Lenders to bid on an uncommitted basis on short-term borrowings by the Borrower.
The proceeds of the Loans are to be used by the Borrower for working capital and
general corporate purposes of the Borrower and its Subsidiaries.
The Lenders are willing to extend such credit to the Borrower on the terms
and subject to the conditions set forth herein. Accordingly, the parties hereto
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at the Alternate Base Rate
in accordance with the provisions of Article II.
"Administrative Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Agents" shall have the meaning assigned to such term in the preamble.
"Agents' Fees" shall have the meaning assigned to such term in Section
2.06(b).
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount of
the Lenders' Revolving Credit Exposures.
<PAGE>
2
"Agreement" shall mean this Five-Year Competitive Advance and Revolving
Credit Facility, as amended, supplemented or otherwise modified from time to
time.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) or (c), or both, of the
preceding sentence, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" shall mean, with respect to any Eurodollar Loan
(other than any Eurodollar Competitive Loan), with respect to any ABR Loan or
with respect to the Facility Fees, as the case may be, with respect to the day
of, and any day after, the Closing Date, the applicable percentage set forth
below under the caption "Eurodollar Spread", "ABR Spread" or "Fee Percentage",
as the case may be, based upon the ratings by S&P and Moody's, respectively,
applicable on such date to the Index Debt:
Eurodollar Spread ABR Spread Fee Percentage
----------------- ---------- --------------
Category 1
- ----------
BBB+ or higher by S&P or
Baa1 or higher by Moody's 0.600% 0.000% 0.150%
Category 2
- ----------
BBB by S&P or
Baa2 by Moody's 0.700% 0.000% 0.175%
Category 3
- ----------
BBB- by S&P or
Baa3 by Moody's 0.900% 0.000% 0.225%
Category 4
- ----------
BB+ by S&P
or Ba1 by Moody's 1.225% 0.500% 0.275%
Category 5
- ----------
BB or lower by S&P
or Ba2 or lower by Moody's 1.625% 1.000% 0.375%
For purposes of this definition, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this paragraph), then such
rating agency shall be deemed to have established a rating in Category 5; (ii)
if the ratings established or deemed to have been established by Moody's and S&P
for the Index Debt shall fall within different Categories, the Applicable
Percentage shall be based on the higher of the two ratings unless the ratings
differ by more than one category, in which case the governing rating shall be
the rating next below the higher of the two; and (iii) if the ratings
established or deemed to have been established by Moody's and S&P for the Index
Debt shall be changed (other than as a result of a change in the rating
<PAGE>
3
system of Moody's or S&P), such change shall be effective as of the date on
which it is first announced by the applicable rating agency. Each change in the
Applicable Percentage shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the non-availability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Percentage shall be
determined by reference to the rating most recently in effect prior to such
change or cessation.
"Application" shall mean an application, in such form as the relevant
Issuing Lender may specify from time to time, requesting such Issuing Lender to
open or amend a Letter of Credit.
"Arrangers" shall have the meaning assigned to such term in the preamble.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate. The
term "Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other domestic banking authority to which the
Administrative Agent or any Lender (including any branch, Affiliate, or other
fronting office making or holding a Loan) is subject with respect to the Base CD
Rate, for new negotiable nonpersonal time deposits in Dollars of over $100,000
with maturities approximately equal to three months. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage. The term "Assessment Rate" shall mean for any date the
annual rate (rounded upwards, if necessary, to the next 1/100 of 1%) most
recently estimated by the Administrative Agent as the then current net annual
assessment rate that will be employed in determining amounts payable by the
Administrative Agent to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in Dollars at the Administrative Agent's domestic offices.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose Competitive Bids have been accepted pursuant to Section 2.03) on a single
date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance with
the terms of Section 2.04 and substantially in the form of Exhibit C.
"Business" shall have the meaning assigned to such term in Section 4.17.
"Business Day" shall mean any day other than a Saturday, Sunday or day on
which banks in New York City are authorized or required by law to close;
provided, however, that, when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in Dollar deposits in the London interbank market.
<PAGE>
4
"Capital Lease Obligations" shall mean as to any person, the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) any "person"
or "group" as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) shall become the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
Act), directly or indirectly, of more than 50% of the outstanding common stock
of the Borrower, or (b) a majority of the seats (other than vacant seats) on the
board of directors of the Borrower shall at any time have been occupied by
persons who were neither (i) nominated by the board of directors of the Borrower
nor (ii) appointed by directors so nominated.
"Closing Date" shall mean November 28, 2001.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder and participate in Letters of
Credit in an aggregate principal and/or face amount not to exceed the amount set
forth opposite such Lender's name on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same may
be (a) reduced from time to time pursuant to Section 2.10 or pursuant to Section
2.16, and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 11.04. The aggregate initial Commitments
shall be $1,300,000,000.
"Competitive Bid" shall mean an offer by a Lender to make a Competitive
Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification made by
the Borrower pursuant to Section 2.03(d) in the form of Exhibit D-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Competitive
Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to Section
2.03 in the form of Exhibit D-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a Competitive
Loan or concurrent Competitive Loans from the Lender or Lenders whose
Competitive Bids for such Borrowing have been accepted by the Borrower under the
bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Lender to the Borrower pursuant
to the bidding procedure described in Section 2.03. Each Competitive Loan shall
be a Eurodollar Competitive Loan or a Fixed Rate Loan.
<PAGE>
5
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated October 2001, as revised, amended,
modified or otherwise supplemented prior to the date hereof.
"Consolidated EBITDA" " shall mean, for any period, the sum of (a)
Consolidated Net Income for such period and (b) the aggregate amounts deducted
in determining Consolidated Net Income in respect of (i) Consolidated Net
Interest Expense for such period, (ii) income taxes, depreciation and
amortization of the Borrower and its consolidated Subsidiaries for such period
determined in accordance with GAAP and (iii) write-offs of goodwill as required,
or as would be required in the next succeeding fiscal year of the Borrower, by
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets.
"Consolidated Interest Coverage Ratio" shall mean for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Net Interest
Expense for such period.
"Consolidated Net Income": for any period, the consolidated net income (or
deficit) of the Borrower and its consolidated Subsidiaries for such period,
determined in accordance with GAAP; provided that (i) for the fiscal quarter of
the Borrower and its consolidated Subsidiaries ending April 1, 2001, such
Consolidated Net Income shall be increased by $325,000,000 representing one-time
charges recorded in connection with the discontinued operations of Raytheon
Engineers and Constructors, (ii) for the fiscal quarter of the Borrower and its
consolidated Subsidiaries ending July 1, 2001, such Consolidated Net Income
shall be increased by an aggregate amount not to exceed $272,000,000 for such
fiscal quarter, representing additional one-time charges to the extent recorded
in connection with the discontinued operations of Raytheon Engineers and
Constructors during such fiscal quarter and (iii) for the fiscal quarter of the
Borrower and its consolidated Subsidiaries ending September 30, 2001, such
Consolidated Net Income shall be increased by an aggregate amount not to exceed
$750,000,000 representing one-time charges recorded in connection with the
inventory write-down and valuation reserve related to various aircraft.
"Consolidated Net Interest Expense" shall mean, for any period, net
interest expense of the Borrower and its consolidated Subsidiaries for such
period, determined in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean, as at any date of
determination, the total amount of assets of the Borrower and the Subsidiaries
(less applicable depreciation, amortization and other valuation reserves) at
such date, after deducting therefrom (a) all current liabilities of the Borrower
and the Subsidiaries at such date and (b) all goodwill, trade names, trademarks,
patents, unamortized debt issuance fees and expenses and other like intangibles
at such date.
"Contractual Obligations" shall mean, as to any person, any provision of
any security issued by such person or of any agreement, instrument or other
undertaking to which such person is a party or by which it or any of its
property is bound.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and "Controlling" and "Controlled" shall have meanings correlative thereto.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Dollars" or "$" shall mean lawful money of the United States of America.
<PAGE>
6
"Environmental Laws" shall mean any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other applicable laws or
regulations (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Borrower or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g)
the receipt by the Borrower or any ERISA Affiliate of any notice that Withdrawal
Liability is being imposed or a determination that a Multiemployer Plan is, or
is expected to be, insolvent or in reorganization, within the meaning of Title
IV of ERISA; and (h) the occurrence of a non-exempt "prohibited transaction"
with respect to which the Borrower or any of its Subsidiaries is a "disqualified
person" (within the meaning of Section 4975) of the Code, or with respect to
which the Borrower or any such Subsidiary could otherwise be liable.
"Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Telerate screen (or otherwise on such
screen), the "Eurodollar Base Rate" shall be determined by reference to such
other comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
<PAGE>
7
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Competitive Borrowing" shall mean a Borrowing comprised of
Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
interest at a rate determined by reference to the Eurodollar Rate in accordance
with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar
Competitive Loan.
"Eurodollar Rate" shall mean with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
---------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Revolving Credit Borrowing" shall mean a Borrowing comprised of
Eurodollar Revolving Loans.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VIII.
"Excess Utilization Day" shall mean each day on which the Utilization
Percentage exceeds 33.3%.
"Existing Credit Agreement" shall mean the Five-Year Competitive Advance
and Revolving Credit Facility Credit Agreement, dated as of May 30, 1997 (as
amended, supplemented or otherwise modified through the date hereof), among HE
Holdings, Inc, as the borrower, Hughes Aircraft Company, as the guarantor, the
lenders from time to time parties thereto, Bank of America, N.A., as syndication
agent, and The Chase Manhattan Bank (now known as JPMorgan Chase Bank), as
administrative agent.
"Facility Fee" shall have the meaning assigned to such term in Section
2.06(a).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter, dated October 4, 2001, between the
Borrower, the Administrative Agent, the Syndication Agent and the Arrangers.
"Fees" shall mean the Facility Fees and the Agents' Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer or
Controller of such corporation.
<PAGE>
8
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed Rate
Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at a
fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other liability of any other person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligations of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
liability or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness or liability, (b) to purchase
property, securities or services for the purpose of assuring the owner of such
Indebtedness or liability of the payment of such Indebtedness or liability or
(c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or liability.
"Guarantor" shall have the meaning assigned to such term in the preamble.
"Hedge Agreements" shall mean all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Indebtedness" of any person shall mean, as at any date of determination,
all indebtedness (including capitalized lease obligations) of such person and
its consolidated subsidiaries at such date that would be required to be included
as a liability on a consolidated balance sheet (excluding the footnotes thereto)
of such person prepared in accordance with GAAP applied on a basis consistent
with the application used in the financial statements referred to in Section
4.05.
"Index Debt" shall mean the senior, unsecured, non-credit enhanced,
long-term indebtedness for borrowed money of the Borrower.
"Interest Payment Date" shall mean, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Eurodollar Borrowing with an Interest Period of more than
three months' duration, each day that would have been an Interest Payment Date
had successive Interest Periods of three months' duration been applicable to
such Borrowing, and, in addition, except with respect to any ABR Loan, the date
of any prepayment of such Loan or conversion of such Loan to a Loan of a
different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower may elect, (b) as to any ABR Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the earlier of (i) the next succeeding March 31, June 30,
<PAGE>
9
September 30 or December 31 and (ii) the Maturity Date and (c) as to any Fixed
Rate Borrowing, the period commencing on the date of such Borrowing and ending
on the date specified in the Competitive Bids in which the offer to make the
Fixed Rate Loans comprising such Borrowing was extended, which shall not be
earlier than seven days after the date of such Borrowing or later than 360 days
after the date of such Borrowing; provided, however, that, if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
Notwithstanding anything to the contrary in this definition of "Interest
Period", any Interest Period that would otherwise extend beyond the Maturity
Date shall end on the Maturity Date.
"Issuing Lender" shall mean JPMorgan Chase Bank, any of its Affiliates or
any other Lender (designated as an Issuing Lender in an Issuing Lender Agreement
executed by such Lender, the Borrower and the Administrative Agent), in each
case in its capacity as issuer of any Letter of Credit.
"Issuing Lender Agreement" shall mean an agreement, substantially in the
form of Exhibit G, executed by a Lender, the Borrower, and the Administrative
---------
Agent pursuant to which such Lender agrees to become an Issuing Lender
hereunder.
"L/C Commitment" shall mean the lesser of (i) $300,000,000 and (ii) the
Total Commitment.
"L/C Fee Applicable Percentage" shall mean, with respect to any Performance
Letter of Credit or with respect to any other Letter of Credit, as the case may
be, with respect to the day of, and any day after, the Closing Date, the
applicable percentage set forth below under the caption "Performance Letter of
Credit L/C Fee" or "Other Letter of Credit L/C Fee", as the case may be, based
upon the ratings by S&P and Moody's, respectively, applicable on such date to
the Index Debt:
Performance Letter of Other Letter of Credit L/C
Credit L/C Fee Fee
Category 1 --------------------- --------------------------
- ----------
BBB+ or higher by S&P or
Baa1 or higher by Moody's 0.45000% 0.60000%
Category 2
- ----------
BBB by S&P or
Baa2 by Moody's 0.52500% 0.70000%
Category 3
- ----------
BBB- by S&P or
Baa3 by Moody's 0.67500% 0.90000%
Cartegory 4
- -----------
BB+ by S&P
or Ba1 by Moody's 0.91875% 1.22500%
Category 5
- ----------
BB or lower by S&P
or Ba2 or lower by Moody's 1.21875% 1.62500%
<PAGE>
10
For purposes of this definition, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this paragraph), then such
rating agency shall be deemed to have established a rating in Category 5; (ii)
if the ratings established or deemed to have been established by Moody's and S&P
for the Index Debt shall fall within different Categories, the L/C Fee
Applicable Percentage shall be based on the higher of the two ratings unless the
ratings differ by more than one category, in which case the governing rating
shall be the rating next below the higher of the two; and (iii) if the ratings
established or deemed to have been established by Moody's and S&P for the Index
Debt shall be changed (other than as a result of a change in the rating system
of Moody's or S&P), such change shall be effective as of the date on which it is
first announced by the applicable rating agency. Each change in the L/C Fee
Applicable Percentage shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the non-availability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the L/C Fee Applicable Percentage shall be
determined by reference to the rating most recently in effect prior to such
change or cessation.
"L/C Fee Payment Date" shall mean the last day of each March, June,
September and December and the Maturity Date.
"L/C Obligations" shall mean, at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 3.05.
"L/C Participants" shall mean the collective reference to all the Lenders
other than the relevant Issuing Lender.
"Lender Affiliate" shall mean (a) any Affiliate of any Lender, (b) any
person that is administered or managed by any Lender or any Affiliate of any
Lender and that is engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of
its business and (c) with respect to any Lender which is a fund that invests in
commercial loans and similar extensions of credit, any other fund that invests
in commercial loans and similar extensions of credit and is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such Lender
or investment advisor.
"Lenders" shall mean (a) the financial institutions listed on Schedule 2.01
(other than any such financial institution that has ceased to be a party hereto
pursuant to an Assignment and Acceptance) and (b) any financial institution that
has become a party hereto pursuant to an Assignment and Acceptance.
"Letters of Credit" shall have the meaning assigned to such term in Section
3.01(a).
"Lien" shall mean, with respect to any asset of any person, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities that
constitute assets of such person, any purchase option, call or similar right of
a third party with respect to such securities.
"Loans" shall mean the Revolving Loans and the Competitive Loans.
<PAGE>
11
"Mandatorily Redeemable Equity Securities" shall mean the 17,250,000 equity
security units, including any remarketed securities, issued by the Borrower in
May 2001. Each equity security unit consists of a contract to purchase shares of
the Borrower's common stock on May 15, 2004, and a mandatorily redeemable equity
security, with a stated liquidation amount of $50.00 due on May 15, 2004. The
mandatorily redeemable equity security represents an undivided interest in the
assets of RC Trust I, a Delaware business trust, formed for the purpose of
issuing these securities and whose assets consist solely of subordinated notes
issued by the Borrower.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the margin
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) to be added to or subtracted from the Eurodollar Rate
in order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning assigned to such term in Regulation
U.
"Material Adverse Effect" shall mean a materially adverse effect on the
business, assets, operations or condition, financial or otherwise, of the
Borrower and the Subsidiaries taken as a whole.
"Materials of Environmental Concern" shall mean all explosive or
radioactive substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, urea-formaldehyde
insulation, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
"Maturity Date" shall mean the fifth anniversary of the Closing Date.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Obligations" shall mean (a) the due and punctual payment of (i) the
principal of and interest (including interest accruing during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations, including
Fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) of
the Borrower to the Lenders under this Agreement or any Letter of Credit and (b)
the due and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Performance Letter of Credit" shall mean any Letter of Credit issued to
support contractual obligations for supply, service or construction contracts,
including, but not limited to, bid, performance, advance payment, warranty,
retention, availability and defects liability obligations.
"Permitted Receivables Program" shall mean any receivables securitization
program pursuant to which the Borrower or any of the Subsidiaries sells accounts
receivable and related receivables to any non-Affiliate in a "true sale"
transaction; provided, however, that any related indebtedness incurred to
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finance the purchase of such accounts receivable is not includible on the
balance sheet of the Borrower or any Subsidiary in accordance with GAAP and
applicable regulations of the Securities and Exchange Commission.
"person" shall mean any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being effective.
"Property" shall have the meaning assigned to such term in Section 4.17.
"Ratio Certificate" shall mean a certificate, signed on behalf of the
Borrower by a Financial Officer of the Borrower, delivered to the Administrative
Agent on the Closing Date and as may be required by Section 6.04(c), and setting
forth the calculations, in reasonable detail, required to determine compliance
with all covenants set forth in Sections 7.05 (a) and (b) on the Closing Date or
on the last day of any fiscal quarter, as the case may be.
"Register" shall have the meaning given such term in Section 11.04(d).
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Reimbursement Obligation" shall mean the obligation of the Borrower to
reimburse the relevant Issuing Lender pursuant to Section 3.05 for amounts drawn
under Letters of Credit.
"Required Lenders" shall mean, at any time, the holders of more than 50% of
the Commitments then in effect or, if the Commitments have been terminated, the
Aggregate Revolving Credit Exposure then outstanding.
"Responsible Officer" of any corporation shall mean any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
"Revolving Credit Exposure" shall mean, as to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Revolving
Loans held by such Lender then outstanding and (b) such Lender's pro rata share
(determined in accordance with such Lender's Commitment as compared to the
aggregate Commitments or, if such Commitment has expired or been terminated, in
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accordance with the Lender's Commitments in effect immediately prior to such
termination as compared to the Total Commitment at such time) of the L/C
Obligations then outstanding.
"Revolving Loans" shall mean the revolving loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Revolving Loan shall be a Eurodollar
Revolving Loan or an ABR Loan.
"S&P" shall mean Standard & Poor's Ratings Service.
"Significant Subsidiary" shall mean any Subsidiary that would be a
"Significant Subsidiary" at such time, as such term is defined in Regulation S-X
promulgated by the Securities and Exchange Commission as in effect on the
Closing Date. Notwithstanding Regulation S-X, each Guarantor will at all times
be deemed to be a Significant Subsidiary.
"Solvent" when used with respect to any person, shall mean that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such person will, as of such date, exceed the amount of all
"liabilities of such person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such person will, as of such date, be greater
than the amount that will be required to pay the liability of such person on its
debts as such debts become absolute and matured, (c) such person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Stockholders' Equity" shall mean, as at any date of determination, the
stockholders' equity of the Borrower and its consolidated Subsidiaries as of
such date, as determined in accordance with GAAP.
"subsidiary" shall mean, with respect to