Document:

Exhibit 10.1

 

WAIVER AND

AMENDMENT NUMBER TEN

TO AMENDED AND RESTATED CREDIT AGREEMENT

 

This WAIVER AND AMENDMENT
NUMBER TEN TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”),
dated as of June 30, 2008, is entered into among DECKERS OUTDOOR CORPORATION,
a Delaware corporation (“Borrower”), and
COMERICA BANK (“Bank”), with reference to the
following facts:

 

A.            Borrower and UGG Holdings, Inc.,
a California corporation (“UGG”), on the
one hand, as co-borrowers, and Bank, on the other hand, previously entered into
that certain Amended and Restated Credit Agreement, dated as of November 25,
2002, as amended from time to time (as so amended, the “Agreement”);

 

B.            UGG has duly merged with and
into Borrower and Borrower is the surviving entity;

 

C.            On or about May 5, 2008
Borrower, pursuant to an Equity Purchase Agreement, purchased all of the
ownership interests in Tsubo, LLC, a Delaware limited liability company (“TSUBO”)
and in connection with such acquisition, Borrower, TSUBO and Bank are entering
into that certain Joinder Agreement of even date herewith pursuant to which
said agreement TSUBO will become a Borrower under the Agreement; and

 

D.            Borrower and Bank desire to
amend and waive certain provisions of the Agreement in accordance with the
terms of this Amendment.

 

NOW, THEREFORE, in
consideration of the foregoing, the parties hereto hereby agree as follows:

 

1.             Defined
Terms. 
All initially capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Agreement.

 

2.             Waivers.

 

(a)           Bank
hereby waives any breach of Section 7.5 (Leases) or Section 7.12
(Capital Expenditures) which has occurred prior to the date hereof.

 

(b)           Bank
hereby waives the restriction on loans and advances to an Excluded Subsidiary
contained in Section 7.8(d)(iii) in connection with Borrower’s loan’s
and advances, during calendar year 2008, of up to Two Million Seven Hundred
Fifty Thousand Dollars ($2,750,000) to Borrower’s joint venture in China and
Bank further agrees that such loans and advances shall be excluded from the
calculation for the calendar year 2008, of the amount of the annual aggregate
restriction on such loans contained in Section 7.8(d)(iii).

 

3.             Amendment to Section 1.1.

 

(a)           The
definition of “Foreign Exchange Sublimit” is hereby amended to read as follows:

 

“‘Foreign
Exchange Sublimit’ means Twenty Million Dollars ($20,000,000).’

 

 

(b)           The
definition of “Revolving Loans Maturity Date” is hereby amended to read as
follows:

 

“‘Revolving
Loans Maturity Date’ means June 1, 2010.”

 

4.             Amendment
to Section 7.5.  Section 7.5 is hereby amended to read as
follows:

 

“7.5         Leases

 

“Create,
incur, assume or suffer to exist, or permit any Subsidiary (other than the
Excluded Subsidiaries) to create, incur, assume or suffer to exist, any obligation
as a lessee for the rental or hire of any real or personal property, other than
(i) leases that have been or should be capitalized in accordance with
GAAP, and (ii) leases (other than Capital Leases) that do not in the
aggregate require payments (including taxes, insurance, maintenance, and
similar expenses which any Borrower or any Subsidiary (other than the Excluded
Subsidiaries) is required to pay under the terms of any lease) in excess of
Fifteen Million Dollars ($15,000,000) on a consolidated basis for Borrowers and
the Subsidiaries (other than the Excluded Subsidiaries) in any fiscal year of
Borrowers.”

 

5.             Amendment
of Section 7.12.  Section 7.12 is hereby amended to read
as follows:

 

“7.12       Capital Expenditures

 

“Make,
or permit any Subsidiary (other than the Excluded Subsidiaries) to make, any
Capital Expenditures, or any commitments therefor, in excess of Twenty Eight
Million Dollars ($28,000,000) in the aggregate, on a consolidated basis, in any
fiscal year.”

 

6.             Deletion
of clause (c) of Section 7.15.  Clause (c) of Section 7.15(c) is
hereby deleted and replaced with the following: 
“Intentionally omitted”.

 

7.             Representations
and Warranties.  In order to induce Bank to enter into this
Amendment, Borrower hereby represents and warrants to Bank that:

 

(a)           After
giving effect to this Amendment, no Event of Default or Unmatured Event of
Default is continuing;

 

(b)           All
of the representations and warranties set forth in the Agreement and the Loan
Documents are true, complete and accurate in all respects (except for
representations and warranties which are expressly stated to be true and
correct as of the Closing Date); and

 

(c)           This
Amendment has been duly executed and delivered by Borrower, and after giving
effect to this Amendment, the Agreement and the Loan Documents continue to
constitute the legal, valid and binding agreements and obligations of Borrower,
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, and similar laws and equitable principles
affecting the enforcement of creditors’ rights generally.

 

2

 

8.             Conditions
Precedent to Effectiveness of Amendment.  The effectiveness of this Amendment is
subject to and contingent upon the fulfillment of each and every one of the
following conditions:

 

(a)           Bank
shall have received this Amendment, duly executed by Borrower and Bank;

 

(b)           No
Event of Default, Unmatured Event of Default or Material Adverse Effect shall
have occurred and be continuing; and

 

(c)           All
of the representations and warranties set forth herein, in the Loan Documents
and in the Agreement shall be true, complete and accurate in all respects as of
the date hereof (except for representations and warranties which are expressly
stated to be true and correct as of the Closing Date).

 

9.             Counterparts;
Telefacsimile Execution.  This Amendment may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Amendment.  Delivery of an executed
counterpart of this Amendment by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Amendment.  Any party delivering an executed counterpart
of this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Amendment.

 

10.           Integration.  The Agreement as
amended by this Amendment constitutes the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
thereof, and supersedes any and all prior agreements and understandings, oral
or written, relating to the subject matter hereof and thereof.

 

11.           Reaffirmation
of the Agreement.  The Agreement as amended hereby and the other
Loan Documents remain in full force and effect.

 

[signatures follow]

 

3

 

IN WITNESS WHEREOF, the
parties hereto have duly executed and delivered this Amendment as of the date
first hereinabove written.

 

	
   

  	
  DECKERS
  OUTDOOR CORPORATION, a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
  Tom
  Hillebrandt

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
  Geoffrey
  Matthews

  
	
   

  	
  Title:

  	
  Vice
  President

  
						

 

4Exhibit 10.1

 

EXECUTION COPY

 

SECOND AMENDMENT TO FIRST LIEN CREDIT AGREEMENT

 

This Second
Amendment (this “Amendment”) to First Lien Credit
Agreement is entered into as of June 26, 2008 (the “Amendment
Effective Date”), by and among KRATOS DEFENSE AND SECURITY
SOLUTIONS, INC., a Delaware corporation (“Borrower”),
KEYBANK NATIONAL ASSOCIATION, as
Administrative Agent (“Administrative Agent”) and the
Lenders party hereto.

 

RECITALS

 

WHEREAS, reference is made to that
certain First Lien Credit Agreement, dated as of December 31, 2007 (as
amended from time to time, the “Credit Agreement”;
capitalized terms used herein without definition have the meanings ascribed to
such terms in the Credit Agreement), among Borrower, KeyBank National
Association, as administrative agent and issuing lender thereunder, and the
lenders party thereto;

 

WHEREAS, Borrower has requested that the Administrative Agent and the
Lenders agree to amend the Credit Agreement to allow for certain additional
add-backs to Consolidated EBITDA (as included in the Borrower’s computation of
the Maximum First Lien Leverage Ratio, Maximum Total Leverage Ratio, the
Minimum Fixed Charge Coverage Ratio and Minimum Consolidated EBITDA covenants
set forth in Sections 7.12(a), (b), (d) and (e));

 

WHEREAS, Borrower has further requested
that the Lenders approve the Unsecured Subordinated Convertible Notes issued by
SYS, which will be a Subsidiary of the Borrower upon the consummation of the
Acquisition of SYS by the Borrower, in the face amount of $3,125,000 (collectively
the “Subordinated Notes”) as Subordinated
Debt for purposes of Section 7.1(f) of the Credit Agreement; and

 

WHEREAS, subject to the terms and
conditions hereof, the Administrative
Agent and the Lenders have agreed to make such requested amendments to the
Credit Agreement and approve such Subordinated Notes;

 

NOW
THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby agree as follows:

 

Section 1.           Section References.  Unless otherwise expressly stated herein, all
Section references herein shall refer to Sections of the Credit Agreement.

 

Section 2.           Amendments
to Section 1.1 of the Credit Agreement.

 

(a)       Section 1.1 of the Credit
Agreement is hereby amended by adding the following clause (l) to the
definition of “Consolidated EBITDA”, immediately after existing clause (k) thereof:

 

 

“amounts
representing actual transaction costs incurred by the target in any Permitted
Acquisition consummated by the Borrower in which 100% of the purchase price in
connection therewith (as set forth in the definitive purchase agreement with
respect thereto and if not specified therein, then based on a valuation
acceptable to the Lenders) is paid in Equity Securities of the Company,
provided that such amounts (i) shall be limited to transaction costs paid
in cash and incurred directly in connection with such Permitted Acquisition and
prior to the consummation of such Permitted Acquisition and (ii) shall not
exceed, with respect to each such Permitted Acquisition, an aggregate amount
equal to 5.0% of the purchase price in connection therewith (as set forth in
the definitive purchase agreement with respect thereto and if not specified
therein, then based on a valuation acceptable to the Lenders);”

 

Section 3.           Approval
of the Subordinated Notes.  The
Lenders hereby approve the Subordinated Notes as Subordinated Debt for purposes
of compliance with Section 7.1(f) of the Credit Agreement; provided,
however, that such approval is expressly conditioned on receipt of a duly
executed Subordination Agreement in the form attached hereto as Exhibit A
from holders of Subordinated Notes representing no less than 95% of the
aggregate principal amount of all of Subordinated Notes within 10 days from the
closing of the Acquisition of SYS by the Borrower; provided  further,
that the Borrower shall use its best efforts to obtain a duly executed
Subordination Agreement in the form attached hereto as Exhibit A from all
remaining holders as soon as possible.

 

Section 4.           Conditions
Precedent.  The effectiveness of this
Amendment is subject to the satisfaction of each of the following conditions
precedent:

 

(a)       The Lenders shall have received all of the following,
in form and substance satisfactory to the Lenders:

 

(i)    Amendment.  This Amendment,
duly executed and delivered by each Credit Party, the Administrative Agent, the
Lenders and the Second Lien Administrative Agent;

 

(ii)   Expenses.  The expenses
and other amounts payable on the Amendment Effective Date referred to in Section 8
hereof, including, but not limited to, reimbursement or payment of all
out-of-pocket expenses (including the reasonable legal fees and expenses of
Latham & Watkins LLP, counsel to the Administrative Agent and the
Lenders) required to be reimbursed or paid by Borrower hereunder or under any
other Loan Document; and

 

(iii)  Additional Information. 
Such additional documents, instruments and information as Administrative
Agent may reasonably request to effect the transactions contemplated hereby.

 

(b)           Representations
and Warranties.  On the Amendment
Effective Date, the representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects on and
as of the Amendment Effective Date to the same extent as though made on and as
of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects on and as
of such earlier date.

 

2

 

(c)       Completion of Proceedings. 
All partnership, corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby shall be satisfactory in
form and substance to Administrative Agent and its counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.

 

(d)       No Default.  On the Amendment
Effective Date after giving effect to this Amendment, no event shall have
occurred and be continuing that would constitute a Default or an Event of
Default.

 

Section 5.           Representations
and Warranties; Reaffirmation of Grant. 
Each Credit Party hereby represents and warrants to the Administrative
Agent and the Lenders that, as of the Amendment Effective Date and after giving
effect to this Amendment, (a) all representations and warranties of the
Credit Parties set forth in the Credit Agreement and in any other Loan Document
are true and correct in all material respects on and as of the Amendment
Effective Date to the same extent as though made on and as of such date, except
to the extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date, (b) no
Default or Event of Default has occurred and is continuing, (c) the Credit
Agreement (as amended by this Amendment) and all other Loan Documents are and
remain legally valid, binding obligations of the Credit Parties, enforceable
against each such Credit Party in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability and (d) each of the
Security Documents to which such Credit Party is a party and all of the
Collateral described therein do and shall continue to secure the payment of all
Obligations as set forth in such respective Security Documents.  Each Credit Party that is a party to the
Pledge and Security Agreement or any of the other Security Documents hereby
reaffirms its grant of a security interest in the Collateral to the
Administrative Agent for the ratable benefit of the Secured Parties (as defined
in the Pledge and Security Agreement), as collateral security for the prompt
and complete payment and performance when due of the Obligations.

 

Section 6.           Survival
of Representations and Warranties. 
All representations and warranties made in this Amendment or any other
Loan Document shall survive the execution and delivery of this Amendment, and
no investigation by the Administrative Agent or the Lenders shall affect the
representations and warranties or the right of the Administrative Agent and the
Lenders to rely upon them.  If any
representation or warranty made in this Amendment is false in any material
respect as of the date made or deemed made, then such shall constitute an Event
of Default under the Credit Agreement.

 

3

 

Section 7.           Reference
to Agreement.  Each of the Loan
Documents, including the Credit Agreement, and any and all other agreements,
documents or instruments now or hereafter executed and/or delivered pursuant to
the terms hereof or pursuant to the terms of the Credit Agreement as amended
hereby, are hereby amended so that any reference in such Loan Documents to the
Credit Agreement, whether direct or indirect, shall mean a reference to the
Credit Agreement as amended hereby.  This
Amendment shall constitute a Loan Document under the Credit Agreement.

 

Section 8.           Costs
and Expenses of the Lenders.  Company
shall pay on demand all reasonable costs and expenses of the Administrative
Agent and the Lenders (including the reasonable fees, costs and expenses of
counsel to the Administrative Agent and/or the Lenders) incurred in connection
with the preparation, execution and delivery of this Amendment.

 

Section 9.           Governing
Law.  THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

Section 10.         Execution.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Amendment by telecopier (or electronic mail (in PDF
format)) shall be effective as delivery of a manually executed counterpart of
this Amendment.

 

Section 11.         Limited
Effect.  This Amendment relates only
to the specific matters expressly covered herein, shall not be considered to be
a waiver of any rights, claims or remedies any Lender may have under, or compliance
by the Borrower with any term or provision of, the Credit Agreement or any
other Loan Document or applicable law, and shall not be considered to create a
course of dealing or to otherwise obligate in any respect any Lender to execute
similar or other amendments or grant any waivers under the same or similar or
other circumstances in the future.

 

Section 12.         Ratification
by Guarantors.  Each of the
Guarantors acknowledges that its consent to this Amendment is not required, but
each of the undersigned nevertheless does hereby agree and consent to this
Amendment and to the documents and agreements referred to herein.  Each of the Guarantors agrees and
acknowledges that (i) notwithstanding the effectiveness of this Amendment,
such Guarantor’s guaranty shall remain in full force and effect without
modification thereto and (ii) nothing herein shall in any way limit any of
the terms or provisions of such Guarantor’s guaranty or any other Loan Document
executed by such Guarantor (as the same may be amended from time to time), all
of which are hereby ratified, confirmed and affirmed in all respects.  Each of the Guarantors hereby agrees and
acknowledges that no other agreement, instrument, consent or document shall be
required to give effect to this section. 
Each of the Guarantors hereby further acknowledges that Borrower, the 

 

4

 

Administrative
Agent and any Lender may from time to time enter into any further amendments,
modifications, terminations and/or waivers of any provisions of the Loan
Documents without notice to or consent from such Guarantor and without
affecting the validity or enforceability of such Guarantor’s guaranty or giving
rise to any reduction, limitation, impairment, discharge or termination of such
Guarantor’s guaranty.

 

Section 13.         Certain
Waivers.  Each of the Credit Parties
hereby agrees that neither Administrative Agent nor any Lender shall be liable
under a claim of, and hereby waives any claim against Administrative Agent and
the Lenders based on, lender liability (including, but not limited to,
liability for breach of the implied covenant of good faith and fair dealing,
fraud, negligence, conversion, misrepresentation, duress, control and
interference, infliction of emotional distress and defamation and breach of
fiduciary duties) as a result of the amendments and waivers contained in this
Amendment and any discussions or actions taken or not taken by Administrative
Agent or the Lenders on or before the Amendment Effective Date or the discussions
conducted in connection therewith, or any course of action taken by
Administrative Agent or any Lender in response thereto or arising
therefrom.  This section shall survive
the execution and delivery of this Amendment and the other Loan Documents and
the termination of the Credit Agreement.

 

[signature pages follow]

 

5

 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.

 

	
   

  	
  KRATOS DEFENSE AND SECURITY 

  SOLUTIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS

  
	
   

  	
   

  	
   

  
	
   

  	
  MADISON RESEARCH 

  CORPORATION, an Alabama corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    D. Robin Mickle

  
	
   

  	
  Title:

  	
    President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KRATOS COMMERCIAL 

  SOLUTIONS, INC. (f/k/a
  SecurePlanet, 

  Inc.), a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Chris Caulson

  
	
   

  	
  Title:

  	
    Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WFI NMC CORP., a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Chris Caulson

  
	
   

  	
  Title:

  	
    Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KRATOS TEXAS, INC.
  (f/k/a WFI 

  Texas, Inc.), a Texas corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Chris Caulson

  
	
   

  	
  Title:

  	
    Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  KRATOS SOUTHEAST, INC.
  (f/k/a WFI 

  Georgia Inc.), a Georgia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Chris Caulson

  
	
   

  	
  Title:

  	
    Vice President, Finance

  
					

 

 

	
   

  	
  KRATOS MID-ATLANTIC,
  INC. (f/k/a 

  WFI Delaware Inc.), a Delaware 

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Chris Caulson

  
	
   

  	
  Title:

  	
    Vice President, Finance

  
					

 

 

	
   

  	
  KRATOS GOVERNMENT 

  SOLUTIONS, INC. (f/k/a WFI 

  Government Services, Inc.), a Delaware 

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    D. Robin Mickle

  
	
   

  	
  Title:

  	
    President

  
					

 

 

	
   

  	
  DEFENSE SYSTEMS, 

  INCORPORATED, a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    D. Robin Mickle

  
	
   

  	
  Title:

  	
    President

  
					

 

 

	
   

  	
  JMA ASSOCIATES, INC., a Delaware
  

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    D. Robin Mickle

  
	
   

  	
  Title:

  	
    President

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page  

  
					

 

 

	
   

  	
  HAVERSTICK CONSULTING, INC., an 

  Indiana corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Deanna Lund

  
	
   

  	
  Title:

  	
    Senior Vice President & CFO

  
					

 

 

	
   

  	
  HGS HOLDINGS, INC., an Indiana 

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Deanna Lund

  
	
   

  	
  Title:

  	
    Senior Vice President & CFO

  
					

 

 

	
   

  	
  HAVERSTICK GOVERNMENT 

  SOLUTIONS, INC., an Ohio corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Deanna Lund

  
	
   

  	
  Title:

  	
    Senior Vice President & CFO

  
					

 

 

	
   

  	
  DTI ASSOCIATES, INC., a Virginia 

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Deanna Lund

  
	
   

  	
  Title:

  	
    Senior Vice President & CFO

  
					

 

 

	
   

  	
  ROCKET SUPPORT SERVICES,
  LLC,  

  an Indiana limited liability company

  
	
   

  	
   

  
	
   

  	
  By: HGS
  Holdings, Inc., its sole member 

  and sole manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Deanna Lund

  
	
   

  	
  Title:

  	
    Senior Vice President & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  KRATOS SOUTHWEST L.P.
  (f/k/a WFI 

  Southwest L.P.), a Texas limited 

  partnership

  
	
   

  	
   

  
	
   

  	
  By: Kratos
  Texas, Inc., a Texas corporation, 

  its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
    Chris Caulson

  
	
   

  	
  Title:

  	
    Vice President, Finance

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  KEYBANK
  NATIONAL 

  ASSOCIATION, as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  KEYBANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  FIELD POINT III, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  SPF CDO I, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

	
   

  	
  BROAD POINT I, B.V.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Second Amendment to First Lien
  Credit Agreement Signature Page

  
					

 

 

EXHIBIT A

 

FORM OF SUBORDINATION AGREEMENT

 

SUBORDINATION
AGREEMENT

 

This Subordination Agreement (this “Agreement”), dated as of
                    ,
2008, is made by the Holder referred to below in favor of the Secured Parties
referred to below, in connection with the Note referred to below.

 

WHEREAS, reference is made to (i) that certain Unsecured
Subordinated Convertible Note (the “Note”), dated
as of
                    ,
by SYS, a California corporation (“Company”) in
favor of
                    
(“Holder”), in the face amount of
$                    ,
(ii) that certain First Lien Credit Agreement (the “First Lien
Credit Agreement”), dated as of December 31, 2007, by and among
Kratos Defense and Security Solutions, Inc., a Delaware corporation (“Kratos”), the Lenders party thereto and KeyBank National
Association, as Administrative Agent (in such capacity, the “First Lien  Agent” and,
together with the Lenders, the “First Lien Secured Parties”)
and (iii) that certain Second Lien Credit Agreement (the “Second Lien Credit Agreement” and, together with the First
Lien Credit Agreement, the “Credit Agreements”),
dated as of December 31, 2007, by and among Kratos, the Lenders party
thereto and KeyBank National Association, as Administrative Agent (in such
capacity, the “Second Lien Agent” and, together
with the Lenders, the “Second Lien Secured Parties”).  Except as otherwise noted below, capitalized
terms used herein and not otherwise defined herein shall have the meaning
assigned to them in the First Lien Credit Agreement.

 

WHEREAS, pursuant to that certain Agreement and Plan of
Merger and Reorganization], dated as of February 20, 2008, Company is a
wholly owned subsidiary of Kratos.

 

WHEREAS, pursuant to Section 6.12 of each Credit
Agreement, Company is required, within 45 days from the date hereof, to become
a Guarantor under and as defined in each Credit Agreement.

 

WHEREAS, Holder is or may become financially interested in
Company or its affiliates and desires to aid Company and its affiliates,
including Kratos, in obtaining or having continued financial accommodations,
whether by way of loan, commitment to loan, extensions of credit or other
financial aid.

 

NOW, THEREFORE, in order to induce the Lenders under each
Credit Agreement to extend or to continue to extend financial accommodations to
the Kratos from time to time, Holder hereby agrees as follows:

 

1.             Anything in the Note to the contrary notwithstanding,
the indebtedness evidenced by the Note (the “Subordinated
Indebtedness”) shall be subordinate and junior in right of payment,
to the extent and in the manner hereinafter set forth, to all Obligations (as
defined in the First Lien Credit Agreement or the Second Lien Credit Agreement,
as applicable) of Company under each Credit Agreement or any other Loan
Document (as defined in the applicable Credit Agreement), including Company’s
Guaranty Obligations (as defined in each Credit Agreement) under the
Multi-Party Guarantee (as defined in each Credit Agreement)(such Obligations
and other indebtedness and obligations in connection with any renewal,
refunding, restructuring or refinancing thereof, including interest thereon
accruing after the commencement of any bankruptcy or insolvency proceedings,
whether or not such interest is an allowed claim in such proceeding, being
hereinafter collectively referred to as the “Senior
Indebtedness”):

 

 

(a)           If
any Event of Default (as defined in the applicable Credit Agreement) under
either Credit Agreement has occurred and for so long as such Event of Default
is continuing, (x) the holders of Senior Indebtedness shall be paid in
full in cash in respect of all amounts constituting Senior Indebtedness before
Holder is entitled to receive (whether directly or indirectly), or make any
demands for, any payment on account of the Subordinated Indebtedness; (y) until
the holders of Senior Indebtedness are paid in full in cash in respect of all
amounts constituting Senior Indebtedness, any payment or distribution to which
Holder would otherwise be entitled shall be made to the holders of Senior
Indebtedness; and (z) Holder shall not exercise any remedies with respect
to the collection of the Subordinated Indebtedness against Company or any
property or assets of Company.

 

(b)           If
any payment or distribution of any character, whether in cash, securities or
other property, in respect of the Subordinated Indebtedness shall (despite
these subordination provisions) be received by Holder in violation of clause
(a) before all Senior Indebtedness shall have been paid in full in
cash, such payment or distribution shall be held in trust for the benefit of,
and shall be paid over or delivered to, the holders of Senior Indebtedness (or
their representatives), ratably according to the respective aggregate amounts
remaining unpaid thereon, to the extent necessary to pay all Senior
Indebtedness in full in cash.

 

2.             To the fullest extent permitted by law, no present or
future holder of Senior Indebtedness shall be prejudiced in its right to
enforce the subordination of this Agreement by any act or failure to act on the
part of Company or by any act or failure to act on the part of such holder or
any trustee or agent for such holder. 
Company and Holder hereby agree that the subordination of the
Subordinated Indebtedness pursuant to this agreement is for the benefit of the
First Lien Secured Parties and the Second Lien Secured Parties, the First Lien
Secured Parties and the Second Lien Secured Parties are obligees under this
Agreement to the same extent as if their names were written herein as such and,
subject to the Intercreditor Agreement, the First Lien Agent or the Second Lien
Agent may, on behalf of the applicable Secured Parties, proceed to enforce the
subordination provisions herein.

 

3.             This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Senior Indebtedness is rescinded or must otherwise be restored or
returned by any holder of Senior Indebtedness upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any of the Credit Parties (as
defined in each Credit Agreement), or upon or as a result of the appointment of
a receiver, intervenor or conservator of, or trustee or similar officer for,
any of the Credit Parties (as defined in each Credit Agreement) or any
substantial part of the assets of any of them, or otherwise, all as though such
payments had not been made.

 

4.             Nothing contained in the subordination provisions set
forth above is intended to or will impair, as between Company and Holder, the
obligations of Company, which are absolute and unconditional, to pay to Holder
the principal of and interest on the Subordinated Indebtedness as and when due
and payable in accordance with its terms, or is intended to or will affect the
relative rights of Holder and other creditors of the Company other than the
holders of Senior Indebtedness.

 

THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

 

[signatures on following page]

 

 

IN WITNESS WHEREOF, Holder has caused this
agreement to be executed as of the        day of
              ,
2008.

 

	
   

  	
   

  	
  HOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title
  (if applicable)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Holder’s
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  City,
  State, Zip

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED
  AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SYS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5050
  Murray Canyon Rd., Ste 200

  	
   

  	
   

  
	
  San
  Diego, California 92123

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