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Exhibit 10.2
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
dated as of July 29, 2005
by and among
OPINION RESEARCH CORPORATION, MACRO INTERNATIONAL INC., ORC
PROTEL, LLC,
SOCIAL AND HEALTH SERVICES, LTD., ORC HOLDINGS, LTD. and
O.R.C. INTERNATIONAL LTD, as Borrowers,
and other Borrower parties hereto from time to time,
THE ROYAL BANK OF SCOTLAND PLC, as Lender,
and other Lender parties hereto from time to time,
and
THE ROYAL BANK OF SCOTLAND PLC,
as Agent
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TABLE OF CONTENTS
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CERTAIN
DEFINITIONS..................................................................................
1
ARTICLE I ISSUE AND SALE OF
NOTES....................................................................
10
Section 1.1 Authorization and
Issuance of the Notes............................................
10
Section 1.2 Sale and
Purchase..................................................................
10
Section 1.3 The
Closing........................................................................
10
ARTICLE II REPAYMENT OF THE
NOTES....................................................................
10
Section 2.1 Interest Rates and
Interest Payments...............................................
10
Section 2.2 Principal
Payments.................................................................
11
Section 2.3 Optional Early Payment
of the Notes................................................
11
Section 2.4 Notice of Optional
Prepayment......................................................
12
Section 2.5 Mandatory
Prepayment...............................................................
12
Section 2.6 Location for
Payment...............................................................
12
Section 2.7 Maximum Lawful
Rate................................................................
12
Section 2.8 Use of
Proceeds....................................................................
13
Section 2.9 Fees and
Expenses..................................................................
13
ARTICLE III PARENT COMPANY AS BORROWER'S
AGENT; JOINDER OF NEW
BORROWER SUBSIDIARIES; NO PRIORITY AMONG
NOTES.......................................................
14
Section 3.1 Appointment of the
Parent Company..................................................
14
Section 3.2 Joinder of New
Subsidiaries and
Affiliates......................................... 14
Section 3.3 No Preference or
Priority..........................................................
14
ARTICLE IV CONDITIONS TO THE LENDERS'
OBLIGATIONS....................................................
15
Section 4.1 Compliance with Law
and Agreements; Third Party Consents...........................
15
Section 4.2 Material Adverse
Changes...........................................................
15
Section 4.3
Litigation/Bankruptcy..............................................................
15
Section 4.4 Opinion of
Counsel.................................................................
15
Section 4.5 No
Default.........................................................................
15
Section 4.6
Documentation......................................................................
16
Section 4.7 Third Party
Agreements.............................................................
16
Section 4.8 Subordination
Agreement............................................................
16
Section 4.9 Financial
Documents................................................................
16
Section 4.10 Closing
Costs and
Expenses......................................................
16
ARTICLE V REPRESENTATIONS AND
WARRANTIES.............................................................
17
Section 5.1 Corporate Existence
and Qualification..............................................
17
Section 5.2 Corporate Authority;
Noncontravention..............................................
17
Section 5.3 Financial
Position.................................................................
17
Section 5.4 Payment of
Taxes...................................................................
18
Section 5.5 Accuracy of Submitted
Information; Omissions.......................................
18
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Section 5.6 Government
Contracts/Government
Subcontracts....................................... 18
Section 5.7 No Defaults or
Liabilities.........................................................
18
Section 5.8 No Violations of
Law...............................................................
19
Section 5.9 Litigation and
Proceedings.........................................................
19
Section 5.10 Assets and
Properties...........................................................
19
Section 5.11 Principal
Place of Business; Location of Books and
Records...................... 19
Section 5.12 Fiscal
Year.....................................................................
20
Section 5.13 Pension
Plans...................................................................
20
Section 5.14 O.S.H.A.,
ADA and Environmental
Compliance...................................... 20
Section 5.15
Intellectual
Property...........................................................
21
Section 5.16 Existing
or Pending Defaults; Material
Contracts................................ 22
Section 5.17 Leases and
Real
Property........................................................
22
Section 5.18 Labor
Relations.................................................................
22
Section 5.19 Assignment
of
Contracts.........................................................
22
Section 5.20
Intentionally
omitted...........................................................
23
Section 5.21 Ownership
of the
Borrowers......................................................
23
Section 5.22
Solvency........................................................................
23
Section 5.23 Foreign
Assets Control Regulations,
Etc......................................... 23
Section 5.24 Survival
of Representations and
Warranties...................................... 23
ARTICLE VI AFFIRMATIVE COVENANTS OF THE
BORROWERS....................................................
24
Section 6.1 Payment of Loan
Obligations........................................................
24
Section 6.2 Payment of
Taxes...................................................................
24
Section 6.3 Delivery of Financial
and Other Statements.........................................
24
Section 6.4 Maintenance of
Records; Review by the
Lenders...................................... 25
Section 6.5 Maintenance of
Insurance
Coverage..................................................
25
Section 6.6 Maintenance of
Property/Assets; Performance of
Contracts........................... 26
Section 6.7 Maintenance of
Corporate
Existence.................................................
26
Section 6.8 Intentionally
omitted..............................................................
26
Section 6.9
Management.........................................................................
26
Section 6.10 Disclosure
of Defaults,
Etc.....................................................
26
Section 6.11 Payment of
Costs................................................................
27
Section 6.12 Further
Assurances..............................................................
28
Section 6.13 Compliance
with
Law.............................................................
28
Section 6.14
Reincorporation/Reorganization..................................................
28
Section 6.15 Financial
Covenants of the
Borrowers............................................ 28
Section 6.16 Substitute
Notes................................................................
30
ARTICLE VII NEGATIVE COVENANTS OF THE
BORROWERS......................................................
30
Section 7.1 Change of Control;
Disposition of Assets; Merger...................................
30
Section 7.2 Legal Use of
Proceeds..............................................................
31
Section 7.3 Change of
Operations...............................................................
31
Section 7.4 Judgments;
Attachments.............................................................
31
Section 7.5 Further Assignments;
Performance and Modification of Contracts; etc................
31
Section 7.6 Affect Rights of the
Agent or Lenders..............................................
32
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Section 7.7 Indebtedness; Granting
of Security Interests.......................................
32
Section 7.8 Dividends; Loans;
Advances; Investments and Similar Events.........................
33
Section 7.9 Lease
Obligations..................................................................
34
Section 7.10 Senior
Loan
Facilities..........................................................
34
Section 7.11
Transactions with
Affiliates....................................................
34
Section 7.12 Sale and
Leaseback
Transactions.................................................
35
Section 7.13 Fiscal
Year/Accounting
Method...................................................
35
ARTICLE VIII DEFAULT AND
REMEDIES....................................................................
35
Section 8.1
Events of
Default...............................................................
35
Section 8.2
Consequences of Event of Default;
Remedies...................................... 37
ARTICLE IX THE AGENT;
AGENCY.........................................................................
38
Section 9.1
Appointment........................................................................
38
Section 9.2 General Nature of
Agent's Duties...................................................
38
Section 9.3 Exercise of
Powers.................................................................
39
Section 9.4 General Exculpatory
Provisions.....................................................
40
Section 9.5 Administration by the
Agent........................................................
40
Section 9.6 Lenders Not Relying on
the Agent or Other Lenders..................................
41
Section 9.7
Indemnification....................................................................
42
Section 9.8 Agent in its
Individual Capacity; Agent's
Commitment............................... 42
Section 9.9 Holders of
Notes...................................................................
42
Section 9.10 Successor
Agent.................................................................
43
Section 9.11 Additional
Agents...............................................................
43
Section 9.12
Calculations....................................................................
43
Section 9.13 All
Payments to the
Agent.......................................................
44
Section 9.14 Benefit of
Article..............................................................
45
ARTICLE X BOARD OBSERVATION
RIGHTS...................................................................
45
ARTICLE XI
MISCELLANEOUS.............................................................................
46
Section 11.1 Remedies
Cumulative.............................................................
46
Section 11.2
Waiver..........................................................................
46
Section 11.3
Notices.........................................................................
46
Section 11.4 Entire
Agreement................................................................
47
Section 11.5
Relationship of the
Parties.....................................................
48
Section 11.6 Waiver of
Jury
Trial............................................................
48
Section 11.7 Submission
to Jurisdiction; Service of Process;
Venue........................... 48
Section 11.8 Changes in
Capital
Requirements.................................................
49
Section 11.9
Captions........................................................................
49
Section 11.10 Modification and
Waiver.........................................................
49
Section 11.11
Transferability.................................................................
50
Section 11.12 Governing Law;
Binding Effect...................................................
50
Section 11.13 Gender;
Number..................................................................
50
Section 11.14 Joint and
Several
Liability.....................................................
50
Section 11.15
Materiality.....................................................................
50
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Section 11.16 Reliance on the
Agent...........................................................
51
Section 11.17
Taxes...........................................................................
51
Section 11.18 Indemnity;
Waiver of Consequential Damages,
Etc................................. 52
Section 11.19 The Patriot
Act.................................................................
52
Section 11.20
Subordination...................................................................
53
Section 11.21 53
Section 11.22
Counterparts....................................................................
53
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EXHIBITS
Exhibit 1 Form of
Non-Default Certificate
Exhibit 2 Form of
Quarterly Covenant Compliance/Non-Default Certificate
Exhibit 3 Form of
Note
Exhibit 4 Form of
Joinder Agreement
Exhibit 5 Form of
Assignment and Acceptance Agreement
SCHEDULES
Schedule A
Approved Non-Cash Charges
Schedule 1
Lender Percentages/Allocations
Schedule 5.3
Financial Position
Schedule 5.6
Material Government Contracts
Schedule 5.7
No Defaults or Liabilities
Schedule 5.9
Litigation and Proceedings
Schedule 5.11
Borrower's Business Locations
Schedule 5.15 (a) Intellectual
Property
Schedule 5.15(b) Intellectual
Property Royalty Payments
Schedule 5.16(a) Material
Contracts
Schedule 5.16(b) Contract
Litigation
Schedule 5.18
Labor Agreements
Schedule 5.21(a) Capitalization
of Borrowers other than the Parent Company
Schedule 5.21(b) Capitalization
of the Parent Company
Schedule 7.8
Loans, Salary Advances, Etc.
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SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
THIS SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT is executed as
of
the ____ day of July, 2005, and is by and
among (i) The Royal Bank of Scotland
PLC ("RBOS"), acting in the capacity of
Lender, and as Agent for the Lenders;
(ii) the other "Lender" parties to this
Agreement from time to time; (iii)
Opinion Research Corporation, a Delaware
corporation, whose address is 600
College Road East, Suite 4100, Princeton,
NJ 08540, Macro International Inc., a
Delaware corporation, whose address is
11785 Beltsville Drive, Calverton, MD
20705, ORC ProTel, LLC, a Delaware limited
liability company, whose address is
17213 Continental Drive, Lansing, IL 60438,
Social and Health Services, Ltd., a
Maryland corporation, whose address is
11426 Rockville Pike, Suite 100,
Rockville, MD 20852, ORC Holdings, Ltd., an
English Company, whose address is
Angel Corner House, 1 Islington High
Street, London, England N1 9AH, O.R.C.
International Ltd., an English Company,
whose address is Angel Corner House, 1
Islington High Street, London, England N1
9AH, and each other person or entity
hereafter executing a Joinder Agreement
pursuant to Section 3.2 of this
Agreement (collectively, the
"Borrowers").
WITNESSETH THAT:
WHEREAS, the Borrowers have proposed selling 14% Senior
Promissory
Notes in the aggregate principal amount of
$20,000,000 to the Lenders to finance
the Redemption Transaction (defined below),
subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and other good
and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, the parties hereto
agree, represent and warrant as
follows:
CERTAIN DEFINITIONS
For the purposes of this Agreement, the terms set forth below
shall
have the following definitions:
"ADA" shall have the meaning attributed to such term in Section
5.14(a) of this Agreement.
"Affiliate" shall mean, as applied to any Person, any other
Person
directly or indirectly controlling,
controlled by, or under common control with,
that Person.
"Agent" shall mean RBOS, acting in its capacity as agent for
the
Lenders, or any successor Agent appointed
pursuant to Section 9.10 of this
Agreement.
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"Agreement" shall mean this Senior Subordinated Note Purchase
Agreement, together with the schedules and
exhibits attached hereto, and any and
all amendments or modifications of this
Senior Subordinated Note Purchase
Agreement.
"Applicable Laws" shall mean any federal, state or local law,
ordinance, statute, rule or regulation to
which any Borrower or the property of
any Borrower is subject, whether domestic
or international.
"Assets" means, collectively, all of the assets, tangible and
intangible, which are owned or purported to
be owned by any Borrower.
"Borrower" and "Borrowers" shall have the meaning set forth in
the
preamble to this Agreement.
"Business Day" shall mean any day which is neither a Saturday
or
Sunday nor a legal holiday on which
commercial banks are authorized or required
to be closed in the State of New York.
"Carryover Year" shall have the meaning attributed to such term
in
Section 6.15(d) of this Agreement.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601 et
seq.).
"Citizens Bank" shall mean Citizens Bank of Pennsylvania, a
Pennsylvania state chartered bank, acting
individually, together with its
successors and assigns.
"Closing" shall have the meaning ascribed to such term in
Section
1.3 of this Agreement.
"Closing Date" shall have the meaning ascribed to such term in
Section 1.3 of this Agreement.
"Consolidated Net Income" shall mean, for any period of
determination, the sum of consolidated
gross revenues of the Borrowers and
Non-Borrower Subsidiaries for such period,
minus all consolidated operating and
non-operating expenses (including taxes) of
the Borrowers and Non-Borrower
Subsidiaries for such period, all as
determined in accordance with GAAP.
"Contribution Agreement" shall mean the Contribution Agreement
dated
as of May 4, 2004 by and among the
Borrowers.
"EBITDA" shall mean, as of the date of any determination, the
Consolidated Net Income of the Parent
Company, including all Borrowers and
Non-Borrower Subsidiaries, plus interest
expense, plus taxes, plus depreciation
expense, plus amortization expense, plus
any non-cash, non-recurring charges
against income approved in writing by the
Agent (including, without limitation,
the items set forth on Schedule A attached
hereto) minus any
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non-cash gain (to the extent included in
determining net income), minus any
dividends paid in accordance with Section
7.8(a) of this Agreement to the extent
not deducted from net income, all as
determined on a rolling four (4) quarter
consolidated basis in accordance with GAAP.
Additionally, any transaction costs
for the closing of the Loan and related
amendments to the Senior Loan Facilities
may be added back to net income in
calculating EBITDA.
"ERISA" shall have the meaning attributed to such term in
Section
5.13(a) of this Agreement.
"Event of Default" shall have the meaning attributed to such term
in
Section 8.1 of this Agreement.
"Federal Funds Rate" for any day shall mean the rate per annum
(rounded upward to the nearest 1/8 of 1%)
determined by the Agent to be the rate
per annum announced by the Federal Reserve
Bank of New York (or any successor)
on such day as being the weighted average
of the rates on overnight Federal
Funds transactions arranged by Federal
Funds brokers on the previous trading
day, as computed and announced by such
Federal Reserve Bank (or any successor)
in substantially the same manner as such
Federal Reserve Bank computes and
announces the weighted average it refers to
as the "Federal Funds Effective
Rate" as of the date of this Agreement;
provided that if such Federal Reserve
Bank (or its successor) does not announce
such rate on any day, the "Federal
Funds Effective Rate" for such day shall be
the Federal Funds Rate for the last
day on which such rate was announced.
"First Horizon" shall mean First Horizon Bank, a division of
First
Tennessee Bank National Association.
"Fixed Charge Coverage Ratio" shall have the meaning attributed
to
such term in Section 6.15(a) of this
Agreement.
"Foreign Bank Accounts" shall have the meaning attributed to
such
term in Section 6.8 of this Agreement.
"GAAP" shall mean generally accepted accounting principles,
consistently applied, as in effect from
time to time. The parties hereto
acknowledge that GAAP may change from time
to time, and such changes may affect
the calculation of the covenants set forth
in Section 6.15 hereof, causing an
Event of Default hereunder. If an Event of
Default shall occur solely as a
result of such changes in GAAP, the parties
shall negotiate to achieve a
mutually acceptable amendment to the
calculation of the breached covenants set
forth in Section 6.15.
"Government" shall mean the United States government, any state
government, any local government, any
department, instrumentality or any agency
of the United States government, any state
government or any local government.
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"Government Contract" and "Government Contracts" shall mean,
individually or collectively as the context
may require, (i) written contracts
between any Borrower and the Government;
and (ii) written subcontracts between
any Borrower and a Prime Contractor who is
providing goods or services to the
Government pursuant to a written contract
with the Government (a "Government
Subcontract"), provided that the
subcontract relates only to goods or services
being provided to the Government pursuant
to the Government Subcontract.
"Government Subcontract" shall have the meaning attributed to
such
term in the definition of "Government
Contract".
"Hazardous Substance" shall mean, without limitation, any
flammable
explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls,
petroleum and petroleum products,
methane, hazardous materials, hazardous
wastes, hazardous or toxic substances,
pollutants or contaminants as defined in
CERCLA, HMTA, RCRA or any other
applicable environmental law, rule, order
or regulation.
"Hazardous Wastes" shall mean, without limitation, all waste
materials subject to regulation under
CERCLA, RCRA or analogous state law,
and/or any other applicable Federal and/or
state law now in force or hereafter
enacted relating to hazardous waste
treatment or disposal.
"HMTA" shall mean the Hazardous Materials Transportation Act,
as
amended (49 U.S.C. Sections 1801 et
seq.)
"Indebtedness" shall mean, without duplication (a) all
obligations
of the Borrowers in respect of money
borrowed; (b) all obligations of the
Borrowers (other than trade debt incurred
in the ordinary course of the
Borrowers' business), whether or not for
borrowed money, (i) represented by
notes payable, or drafts accepted, in each
case representing extensions of
credit, (ii) evidenced by bonds,
debentures, notes or similar instruments, (iii)
constituting purchase money indebtedness,
conditional sales contracts, title
retention debt instruments or other similar
instruments, upon which interest
charges are customarily paid or that are
issued or assumed as full or partial
payment for property or services rendered;
(c) capital lease obligations of the
Borrowers; (d) all obligations of the
Borrower to purchase, redeem, retire,
defease or otherwise make any payment in
respect of any mandatorily redeemable
stock issued by any Borrower, valued at the
greater of its voluntary or
involuntary liquidation preference plus
accrued and unpaid dividends; (e) each
Borrower's pro rata share of the
Indebtedness of any unconsolidated affiliate of
such Borrower (including Indebtedness of
any partnership or joint venture in
which such Borrower is a general partner or
joint venturer to the extent of such
Borrower's pro rata share of the ownership
of such partnership or joint
venture), (f) all obligations of any other
person or entity which any Borrower
has guaranteed, (g) reimbursement
obligations in connection with letters of
credit issued for the benefit of any
Borrower, and (h) the Obligations.
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"Interest Coverage Ratio" shall have the meaning attributed to
such
term in Section 6.15(b) of this
Agreement.
"Interest Expense" shall mean, as of the date of any
determination,
the Borrowers' aggregate interest expense
for borrowed money (including, without
limitation, premiums and interest expense
arising from or relating to interest
rate protection agreements and original
issue discounts), plus the amount of all
other interest due (whether paid or not
paid) on any indebtedness of each
Borrower for the applicable measurement
period, all as determined on a
consolidated basis in accordance with
GAAP.
"Interest Payment Date" shall mean the last Business Day of
each
September, December, March and June,
beginning on September 30, 2005.
"Joinder Agreement" shall have the meaning attributed to such
term
in Section [3.2] of this Agreement.
"Lender" and "Lenders" shall mean, respectively, each and all of
the
banking or financial institutions which, as
of any date of determination, are
(i) "Lender" parties to this Agreement,
and/or (ii) otherwise bound by the terms
and provisions of this Agreement and the
other Loan Documents applicable to any
and all Lenders generally, pursuant to an
Assignment and Acceptance in the form
of Exhibit 5 attached hereto, or any other
document, instrument or agreement, in
form and substance acceptable to the
Agent.
"Leverage Ratio" shall have the meaning attributed to such term
in
Section 6.15(c) of this Agreement.
"Liquidity Event" shall mean any one of the following: (a) the
sale
of more than fifty percent (50%) of the
Parent Company's assets (measured by
economic value on a consolidated basis),
(b) a merger or consolidation or the
sale of shares of the Parent Company's
capital equity or other transaction (or
series of related transactions) as a result
of which the holders of the
outstanding equity of the Parent Company
prior to the initiation of such
transaction (or series of related
transactions) do not own (beneficially or
otherwise) both a majority of the
outstanding equity and a majority of the
outstanding voting power of either the
Parent Company or the surviving entity
immediately after the transaction, or (c)
the Parent Company has become a wholly
owned subsidiary of another entity (the
"acquiror") or the Parent Company has
been combined (by merger or otherwise) into
the acquiror and the holders of the
outstanding equity of the Parent Company
prior to the initiation of such
transaction do not own (beneficially or
otherwise) both a majority of the
outstanding equity and a majority of the
outstanding voting power of the
acquiror immediately after the
transaction.
"Loan" shall mean the loans made by the Lenders to the Borrowers,
by
virtue of the purchase of the Notes, in the
original principal amount of Twenty
Million and No/100 Dollars
($20,000,000.00), or so much thereof as shall be
outstanding from time to time, and which
shall be evidenced by, bear interest
and be payable in accordance with the terms
and provisions set forth herein and
in the Notes.
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"Loan Document" and "Loan Documents" shall mean, respectively,
each
and all of this Agreement, the Notes, and
each other document, instrument,
agreement or certificate heretofore, now or
hereafter executed and delivered by
any Borrower in connection with the
Loan.
"Loan Fee" shall have the meaning attributed to such term in
Section
2.9 of this Agreement.
"Material Adverse Effect" shall mean any set of facts or
circumstances resulting in a material
adverse change to any Borrower's business,
property, profits, condition (financial or
otherwise), or the ability of any
Borrower to perform its obligations under
this Agreement or any other Loan
Document.
"Material Contract" shall mean any and all contracts or
agreements
to which a Borrower is a party and pursuant
to which such Borrower is or may be
(a) entitled to receive payments in excess
of One Million and No/100 Dollars
($1,000,000.00), in the aggregate, per
annum, or (b) obligated to make payments
or have any other obligation or liability
thereunder (direct or contingent) in
excess of Five Hundred Thousand and No/100
Dollars ($500,000.00), in the
aggregate, per annum.
"Maturity Date" shall have the meaning attributed to such term
in
Section 2.2 of this Agreement.
"Monitoring Fee" shall have the meaning assigned to such term
in
Section 2.9 of this Agreement.
"Non-Borrower Subsidiaries" shall mean, collectively, ORC
Korea,
Ltd., ORC Teleservice Corp., Opinion
Research Corporation, S.A. de C.V., ORC
International Holdings, Ltd. and ORC
Telecommunications Ltd.
"Non-Default Certificate" shall mean a certificate in
substantially
the form of Exhibit 1 hereto.
"Note" and "Notes" shall have the meaning attributed to such term
in
Section 1.1 of this Agreement.
"Obligation" and "Obligations" shall mean, respectively, any and
all
obligations or liabilities of any Borrower
to any Lender or the Agent in
connection with the Loan, whether now
existing or hereafter created or arising,
direct or indirect, matured or unmatured,
and whether absolute or contingent,
joint, several or joint and several, and no
matter how the same may be evidenced
or shall arise.
"Ordinary Course Payments" shall mean payments made directly by
a
Borrower to any non-Borrower subsidiary or
affiliate; provided that such
payments are made (i) in the ordinary
course of such Borrower's business, (ii)
for products actually delivered or
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services actually performed, and (iii)
pursuant to an "arm's length" transaction
(i.e., a transaction that would otherwise
be made with an unrelated and
unaffiliated third party).
"O.S.H.A." shall have the meaning attributed to such term in
Section
5.14(a) of this Agreement.
"Parent Company" shall mean Opinion Research Corporation, a
Delaware
corporation, and its successors and
assigns.
"Patriot Act" shall mean the U.S.A. Patriot Act (Title III of
Pub.
L. 107-56 (signed into law on October 26,
2001)), as amended.
"Pension Plan" or "Pension Plans" shall have the meaning
attributed
to such term in Section 5.13(a) of this
Agreement.
"Percentage" shall mean with respect to each Lender, the
percentage
set forth next to such Lender's name on
Schedule 1 to this Agreement in respect
of the Loan (as the context may require),
as the same may be modified or amended
from time to time.
"Permitted Liens" shall mean: (a) liens for taxes which are not
yet
due and payable or which are being
contested in good faith and by appropriate
proceedings, which (i) the Borrower has the
financial ability to pay, including
penalties and interest, and (ii) the
non-payment thereof will not result in the
execution of any such tax lien; (b)
deposits or pledges to secure obligations
under workers' compensation, social
security or similar laws, incurred in the
ordinary course of business; (c) liens
securing the Senior Loan Facilities or
any refinancing thereof permitted by
Section 7.7(a)(iii); (d) cash deposits
pledged to secure the performance of bids,
tenders, contracts (other than
contracts for the payment of money),
leases, statutory obligations, surety and
appeal bonds and other obligations of like
nature made in the ordinary course of
business; (e) mechanics', workmen's,
repairmen's, warehousemen's, vendors' or
carriers' liens or other similar liens;
provided that such liens arise in the
ordinary course of the Borrowers' business
and secure sums which are not past
due, or which are separately secured by
cash deposits or pledges in an amount
adequate to obtain the release of such
liens; (f) except as otherwise provided
in this Agreement, statutory or contractual
landlord's liens on the Borrower's
tangible personal property located in such
Borrower's demised premises; (g)
zoning or other similar and customary land
use restrictions, which do not
materially impair the use or value of any
Assets or property of any Borrower;
(h) judgment liens which are not prohibited
by Section 7.4 of this Agreement;
(i) other liens expressly permitted by the
terms and provisions of this
Agreement; (j) liens securing purchase
money indebtedness to the extent such
indebtedness is expressly permitted
pursuant to Section 7.7(a) of this
Agreement; and (k) liens in favor of the
Agent.
"Person" shall mean any natural person, corporation, limited
liability company, trust, joint venture,
association, company, partnership,
Government or other entity.
"Prime Contractor" shall mean any person or entity (other than
a
Borrower) which is a party to any
Government Subcontract.
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<PAGE>
"RCRA" shall mean the Resource Conservation and Recovery Act,
as
amended (42 U.S.C. Sections 6901 et
seq.).
"Redemption Transaction" means the redemption of all stock and
other
interests in the Parent Company held by LLR
Equity Partners, L.P. and LLR Equity
Partners Parallel, L.P. (except for 39,600
shares of the Parent Company's common
stock which was purchased on the open
market) pursuant to that certain Purchase
Agreement of even date herewith between the
Parent Company and the
aforementioned L.L.R. Equity Partners
entities.
"Related Parties" shall mean, with respect to any Person, such
Person's Affiliates and the directors,
officers, employees, agent and advisors
of such Person and of such Person's
Affiliates.
"Releases" shall have the meaning attributed to such term in
Section
5.14(c) of this Agreement.
"Required Lenders" shall mean all of the Lenders who at any
given
time, are not in default under or in breach
of any of the terms and conditions
of this Agreement applicable to such
Lender, and who hold Notes or participation
interests representing, in the aggregate,
at least sixty-six and two-thirds
percent (66 2/3%) of the outstanding
principal amount of the Notes.
"Senior Agent" means Citizens Bank and any successor to
Citizens
Bank, in its capacity as "Agent" pursuant
to the Senior Loan Agreement.
"Senior Lenders" means Citizens Bank and First Horizon, and
their
successors and assigns, in their capacities
as lenders pursuant to the Senior
Loan Agreement.
"Senior Loan Agreement" shall have the meaning attributed to
such
term in Section 4.7.
"Senior Loan Documents" means the "Loan Documents" as defined in
the
Senior Loan Agreement.
"Senior Loan Facilities" shall mean the loan facilities in the
maximum aggregate principal amount of
$50,000,000 provided to the Borrowers
pursuant to the Senior Loan Agreement.
"Subordination Agreement" shall mean that certain Subordination
and
Intercreditor Agreement of even date
herewith by and between Agent and Senior
Agent, and acknowledged by the
Borrowers.
"Total Debt" shall mean the actual amount of borrowed money
(including, without limitation, the Senior
Loan Facilities, the Loan and other
subordinated debt, capital leases and
synthetic leases that remain unpaid or
outstanding on the "as of" date of any
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<PAGE>
determination), plus the aggregate amount
of any and all financial guarantees
and the face amount of any and all
outstanding letters of credit (except that
outstanding loans under the Senior Loan
Facilities will be the thirty (30) day
average balance of the Senior Loan
Facilities for the thirty (30) day period
immediately preceding the "as of" date of
the calculation).
"UCC" shall mean the Uniform Commercial Code as the same may,
from
time to time, be enacted and in effect in
the State of New York; provided, that
to the extent that the UCC is used to
define any term herein and such term is
defined differently in different Articles
or Divisions of the UCC, the
definition of such term contained in
Article or Division 9 shall govern;
provided further, that in the event that,
by reason of mandatory provisions of
law, any or all of the attachment,
perfection or priority of, or remedies with
respect to, a lien on any Assets is
governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction
other than the State of New York, the
term "UCC" shall mean the Uniform
Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes
of the provisions thereof relating
to such attachment, perfection, priority or
remedies and for purposes of
definitions related to such provisions.
"UK Borrowers" shall mean ORC Holdings, Ltd., an English Company
and
O.R.C. International Ltd., an English
Company.
INTERPRETIVE PROVISIONS
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined
terms
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not
to any particular provision of this
Agreement; and "Subsection", "Section",
"Schedule" and "Exhibit" references are
to this Agreement unless otherwise
specified.
(c) Unless otherwise expressly provided herein, (i) references
to
agreements (including this Agreement) and
other contractual instruments shall be
deemed to include all subsequent amendments
and other modifications thereto, but
only to the extent such amendments and
other modifications are not prohibited by
the terms of this Agreement, and (ii)
references to any statute or regulation
are to be construed as including all
statutory and regulatory provisions
consolidating, amending, replacing,
supplementing or interpreting the statute or
regulation.
(d) The article, section and paragraph headings of this
Agreement
are for convenience of reference only, and
in no way define, limit or describe
the scope of this Agreement or the intent
of any provision hereof.
(e) This Agreement and the other Loan Documents are the result
of
negotiations among all parties hereto, and
have been reviewed by counsel to the
Agent, the Borrowers and the Lenders, and
are the products of all parties.
Accordingly, this Agreement
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<PAGE>
and the other Loan Documents shall not be
construed against the Agent or the
Lenders merely because of the Agent's or
Lenders' involvement in their
preparation.
ARTICLE I
ISSUE AND SALE OF NOTES
Section 1.1 Authorization and Issuance of the Notes.
Borrowers have duly authorized the issuance and sale to Lenders
of
$20,000,000 in aggregate principal amount
of Borrowers' Senior Subordinated
Notes Due July 29, 2011 (including any
Notes issued in substitution therefor,
each a "Note" and, collectively, the
"Notes"), which Notes are to be
substantially in the form attached hereto
as Exhibit 3.
Section 1.2 Sale and Purchase.
Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements
set forth herein, Borrowers shall
sell to Lenders, and Lenders shall purchase
from Borrowers, the Notes in the
allocations set forth on Schedule 1. The
aggregate purchase price for the Notes
shall be $20,000,000.
Section 1.3 The Closing.
Delivery of and payment for the Notes (the "Closing") shall be
made
at the offices of Agent at the address set
forth in Section 11.3, on the date
hereof concurrently with the execution and
delivery of this Agreement. The date
and time of the Closing as finally
determined pursuant to this Section 1.3 are
referred to herein as the "Closing Date."
Delivery of the Notes shall be made to
Lenders against payment of the purchase
price therefor, less the Loan Fee, the
initial Monitoring Fee, and any other
amounts payable pursuant to this Agreement
and the other Loan Documents in connection
with the Closing, by wire transfer of
immediately available funds in the manner
agreed to by Parent and Agent.
ARTICLE II
REPAYMENT OF THE NOTES
Section 2.1 Interest Rates and Interest Payments.
(a) The Notes will accrue interest on the outstanding principal
amount thereof at a rate equal to fourteen
percent (14.00%) per annum. Interest
shall be computed for the actual number of
days elapsed on the basis of a year
of three hundred sixty (360) days, composed
of twelve thirty (30) day months.
Interest shall be payable from time to time
in cash, as provided below.
(b) On each Interest Payment Date prior to the Maturity Date,
and
upon maturity of the Notes (whether on the
Maturity Date or earlier as a result
of acceleration), the
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<PAGE>
Borrowers shall pay and discharge in cash
all accrued and unpaid interest on the
outstanding principal amount of the Notes,
commencing on September 30, 2005.
(c) If, after the Closing Date, the adoption of, or any change
in,
any applicable law, rule or regulation, or
any change in the interpretation or
administration of any applicable law, rule
or regulation by any governmental
authority, central bank or comparable
agency charged with the interpretation or
administration thereof, or compliance by
any Lender with any request or
directive (whether or not having the force
of law) of any such authority,
central bank or comparable agency: (i)
shall impose, modify or deem applicable
any reserve (including any special deposit
or similar requirement against assets
of, deposits with or for the account of, or
credit extended by any Lender); or
(ii) shall impose on any Lender any other
condition affecting its Note; and the
result of anything described in clauses (i)
and (ii) above is to reduce the
amount of any sum received or receivable by
such Lender under this Agreement or
under its Note with respect thereto, then
upon demand by such Lender (which
demand shall be accompanied by a statement
setting forth the basis for such
demand and a calculation of the amount
thereof in reasonable detail, a copy of
which shall be furnished to Agent), the
Borrowers shall pay directly to such
Lender such additional amount as will
compensate such Lender for such increased
cost or such reduction, so long as such
amounts have accrued on or after the day
which is one hundred eighty (180) days
prior to the date on which such Lender
first made demand therefor; provided, that
if the event giving rise to such
costs or reductions has retroactive effect,
such one hundred eighty (180) day
period shall be extended to include the
period of retroactive effect.
Section 2.2 Principal Payments.
The Borrowers covenant and agree to repay to Agent, for the
ratable
benefit of the Lenders, the unpaid
principal balance of the Notes in full, in a
single principal payment, together with all
accrued and unpaid interest, fees
and other amounts due hereunder, on July
29, 2011 (the "Maturity Date").
Section 2.3 Optional Early Payment of the Notes.
Subject to the terms and conditions of the Subordination
Agreement,
and subject to the terms of this Section
2.3, the Borrowers may prepay to Agent,
for the ratable benefit of the Lenders, the
outstanding principal amount of the
Notes in whole or in part in multiples of
$100,000, or such lesser amount as is
then outstanding; provided, that if such
prepayment is made prior to the
Maturity Date, such prepayment shall
include an early payment fee, equal to the
principal amount being paid multiplied by
the following percentage:
<TABLE>
<CAPTION>
If Prepaid During the 12 Month
Period
Ending on July 29 of the Following Years
Percentage
----------------------------------------
----------
<S>
<C>
2006
6%
2007
4%
</TABLE>
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<PAGE>
<TABLE>
<S>
<C>
2008
2%
2009 and thereafter
0%
</TABLE>
All such prepayments of the Notes shall be
applied by Agent to the outstanding
principal of the Notes only after
application of such prepayment to any accrued
interest and other amounts due and payable
in respect of the Loan.
Section 2.4 Notice of Optional Prepayment.
If the Borrowers shall elect to prepay any Notes pursuant to
Section
2.3 hereof, the Parent Company shall give
notice of such prepayment to Agent not
less than ten (10) days or more than ninety
(90) days prior to the date fixed
for prepayment, specifying (i) the date on
which such prepayment is to be made,
and (ii) the principal amount of such Notes
to be prepaid on such date, (iii)
the premium due pursuant to Section 2.3,
and (iv) accrued interest applicable to
the prepayment. Such notice shall be
accompanied by a certificate of the chief
executive officer or chief financial
officer of the Parent Company that such
prepayment is being made in compliance with
Section 2.3. Notice of prepayment
having been so given, the aggregate
principal amount of the Notes specified in
such notice, together with accrued interest
thereon, if any, shall become due
and payable on the prepayment date set
forth in such notice.
Section 2.5 Mandatory Prepayment.
The Notes shall be prepaid in full, together with all accrued
and
unpaid interest, fees and other amounts due
hereunder, in the event of a
Liquidity Event. Prepayment as a result of
a Liquidity Event shall be subject to
the early payment fee described in Section
2.3, and such early payment fee shall
be paid simultaneous with any such
mandatory prepayment pursuant to this Section
2.5.
Section 2.6 Location for Payment.
The Borrowers will pay all sums becoming due on each Note for
principal, premium, if any, and interest to
Agent by the method and at the
address specified for such purpose in such
Note, or by such other method or at
such other address as Agent shall have from
time to time specified to the Parent
Company in writing for such purpose,
without the presentation or surrender of
such Note or the making of any notation
thereon, except that upon written
request of the Parent Company made
concurrently with or reasonably promptly
after payment or prepayment in full of any
Note, the holder of such Note shall
surrender such Note for cancellation,
reasonably promptly after such request, to
the Parent Company at its principal
executive office.
Section 2.7 Maximum Lawful Rate.
This Agreement, the Notes and the other Loan Documents are
hereby
limited by this Section 2.7. In no event,
whether by reason of acceleration of
the maturity of the amounts due hereunder
or otherwise, shall interest and fees
contracted for, charged, received,
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<PAGE>
paid or agreed to be paid to Lenders exceed
the maximum amount permissible under
such applicable law. If, from any
circumstance whatsoever, interest and fees
would otherwise be payable to Agent or
Lenders in excess of the maximum amount
permissible under applicable law, the
interest and fees shall be reduced to the
maximum amount permitted under applicable
law. If from any circumstance, Agent
or Lenders shall have received anything of
value deemed interest by applicable
law in excess of the maximum lawful amount,
an amount equal to any excess of
interest shall be applied to the reduction
of the principal amount of the Notes,
in such manner as may be determined by
Lenders, and not to the payment of fees
or interest, or if such excessive interest
exceeds the unpaid balance of the
principal amount of the Notes, such excess
shall be refunded to Borrowers.
Section 2.8 Use of Proceeds.
The Loan shall be used by the Borrowers only to finance the
Redemption Transaction. Each Borrower
agrees that it will not use or permit the
Loan proceeds to be used for any other
purpose without the prior written consent
of the Agent.
Section 2.9 Fees and Expenses.
In addition to principal, interest, early payment fees and
other
sums payable pursuant to the Notes, the
Borrowers shall pay the following fees:
(a) Loan Fee. Simultaneously with the execution of this
Agreement,
the Borrowers shall pay to the Agent, for
the benefit of all Lenders pro-rata
based on each Lender's percentage of the
Loan, a loan fee (the "Loan Fee") in
the aggregate amount of $500,000.
(b) Monitoring Fee. The Borrowers shall pay to the Agent, for
its
own account, an annual monitoring fee (the
"Monitoring Fee"), in the amount of
Twenty Five Thousand and No/100 Dollars
($25,000.00) per annum. The first annual
Monitoring Fee shall be due and payable in
full on the first anniversary of the
date of this Agreement, and subsequent
payments of the annual Monitoring Fee
shall be due and payable in full on each
anniversary of the date of this
Agreement thereafter. No Monitoring Fee is
payable with respect to the first
year of the term of the Loan, and no annual
Monitoring Fee shall be payable in
the event that prior to the applicable
payment date the Obligations have been
paid in full.
(c) Out-of-Pocket Fees and Expenses. The Borrowers shall be
liable
for and shall timely pay all reasonable
out-of-pocket costs and expenses
(including reasonable attorneys' fees and
expenses of counsel for the Agent, and
of other special and local counsel and
other experts, if any, engaged by the
Agent) from time to time incurred by the
Agent and the Lenders in connection
with the administration of, preservation of
rights in and enforcement of this
Agreement, the other Loan Documents and the
transactions contemplated by this
Agreement. Without limiting the generality
of the foregoing, the Borrowers shall
be liable for all of the Agent's and the
Lenders' reasonable out-of-pocket costs
and expenses
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<PAGE>
associated with any and all amendments,
waivers and/or consents relating to the
Loan or otherwise relating to this
Agreement.
ARTICLE III
PARENT COMPANY AS BORROWER'S AGENT; JOINDER OF NEW
BORROWER SUBSIDIARIES; NO PRIORITY AMONG NOTES
Section 3.1 Appointment of the Parent Company.
Each Borrower acknowledges that (i) the Lenders have agreed to
extend credit to each of the Borrowers on
an integrated basis for the purposes
herein set forth; (ii) it is receiving
direct and/or indirect benefits from each
such extension of credit; and (iii) the
obligations of the "Borrower" or
"Borrowers" under this Agreement are the
joint and several obligations of each
Borrower. To facilitate the administration
of the Loan, each Borrower hereby
irrevocably appoints the Parent Company as
its true and lawful agent and
attorney-in-fact with full power and
authority to execute, deliver and
acknowledge on such Borrower's behalf, each
Non-Default Certificate and all
other Loan Documents or other materials
provided or to be provided to the Agent
or any Lenders pursuant to this Agreement
or in connection with the Loan. This
power-of-attorney is coupled with an
interest and cannot be revoked, modified or
amended without the prior written consent
of the Agent. Upon request of the
Agent, each Borrower shall execute,
acknowledge and deliver to the Agent a form
Power of Attorney confirming and restating
the power-of-attorney granted herein.
Section 3.2 Joinder of New Subsidiaries and Affiliates.
Any present or future subsidiary (other than the Non-Borrower
Subsidiaries) of any Borrower in which such
Borrower now or hereafter owns,
directly or indirectly, an ownership
interest of greater than fifty percent
(50%) shall, unless waived in writing by
the Agent, execute and deliver to the
Agent (a) a Joinder Agreement in the form
attached as Exhibit 4 hereto (a
"Joinder Agreement"), pursuant to which
such subsidiary or affiliate shall (i)
join in and become a party to this
Agreement and the other Loan Documents; (ii)
agree to comply with and be bound by the
terms and conditions of this Agreement
and all of the other Loan Documents; and
(iii) become a "Borrower" and
thereafter be jointly and severally liable
for the performance of all the past,
present and future obligations and
liabilities of the Borrowers hereunder and
under the Loan Documents; and (b) such
other documents, instruments and
agreements as may be reasonably required by
the Agent in connection therewith
(including, without limitation, an opinion
of counsel), in form and substance
acceptable to the Agent and its counsel in
all respects.
Section 3.3 No Preference or Priority.
It is expressly understood and agreed that each of the Notes
shall
be without preference or priority over any
of the other Notes; it being the
intention of the parties that the Notes
shall be co-equal and coordinate on a
pro rata basis in right of payment of
principal, interest, late charges and
other sums due thereunder.
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<PAGE>
ARTICLE IV
CONDITIONS TO THE LENDERS' OBLIGATIONS
The purchase of the Notes (and funding of the Loan) by the
Lenders
under this Agreement shall be subject to
the following conditions, any or all of
which may be waived by the Agent:
Section 4.1 Compliance with Law and Agreements; Third Party
Consents.
The Lenders shall be reasonably satisfied that (i) the Loan shall
be
in full compliance with all legal
requirements, (ii) all regulatory and third
party consents and approvals required to be
obtained have been obtained, and
(iii) the Borrowers shall have performed
all agreements theretofore to be
performed by the Borrowers.
Section 4.2 Material Adverse Changes.
There shall have been no material adverse change in (i) the
business, assets, properties, prospects or
condition (financial or otherwise) of
any Borrower, between the date of the most
recent financial statement(s)
delivered to the Lenders and the Closing
Date or (ii) the government contracting
status of any Borrower with respect to the
United States government or any
department or agency thereof.
Section 4.3 Litigation/Bankruptcy.
There shall be no pending or threatened litigation by any
entity
(private or governmental) with respect to
the Loan or any documentation executed
in connection therewith (except for such
litigation disclosed to and not
objected to by the Agent and the Lenders
prior to Closing), nor shall there be
any litigation, bankruptcy or other
proceedings which the Agent and the Lenders'
believe, in their good faith judgment,
could reasonably be expected to have a
Material Adverse Effect on the business,
property, assets, liabilities,
condition (financial or otherwise), results
of operations or prospects of the
Borrowers on a going forward basis.
Section 4.4 Opinion of Counsel.
The Agent shall have received opinions of Borrowers' counsel
with
respect to each of the Borrowers, in form
and substance satisfactory to the
Agent and its counsel in all respects.
Section 4.5 No Default.
There shall exist no Event of Default, and no act, event or
condition shall have occurred which with
notice or the lapse of time, or both,
would constitute an Event of Default.
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<PAGE>
Section 4.6 Documentation.
The Agent shall have received the following: (i) all of the
Loan
Documents, executed by a duly elected
officer of each Borrower, and (ii) such
financial statements, projections,
certificates of good standing, corporate
resolutions, opinions, certifications,
schedules to be attached to this
Agreement and such other documents,
instruments and agreements as may be
reasonably required by the Lenders or the
Agent, each in such form and content
and from such parties, as the Agent shall
require (including, without
limitation, all documentation and other
information required by bank regulatory
authorities under applicable "know your
customer" and anti-money laundering
rules and regulations, including the
Patriot Act). All documentation relating to
the Loan and all related transactions must
be satisfactory in all respects to
the Agent, the Lenders and their respective
counsel.
Section 4.7 Third Party Agreements.
The Borrowers shall have delivered to Agent fully-executed copies
of
(i) documentation of the Redemption
Transaction, and (ii) that certain Business
Loan and Security Agreement dated as of May
4, 2004 by and among Citizens Bank
(as a lender and as Senior Agent), First
Horizon (as a lender) and the
Borrowers, as amended by that certain First
Modification dated as of March 15,
2005 and that certain Second Modification
of even date herewith (collectively,
together with any amendments or
modifications thereto not prohibited by the
Subordination Agreement, the "Senior Loan
Agreement"), together with copies of
all material "Loan Documents" (as defined
in the Senior Loan Agreement), all of
which shall be in form and substance
satisfactory to Agent in its sole
discretion.
Section 4.8 Subordination Agreement.
Agent and Senior Agent shall have executed and delivered the
Subordination Agreement, and the Borrowers
shall have acknowledged the
Subordination Agreement in writing.
Section 4.9 Financial Documents.
The Agent shall have received the following: pro forma
projections
(for three (3) years) showing (a) covenant
compliance satisfactory to the Agent
and Lenders in all respects; and (b) excess
borrowing availability under the
Senior Revolving Facilities as of the
Closing Date, in an amount satisfactory to
the Agent and Lenders in all respects. All
of the foregoing must be satisfactory
in all respects to the Agent and the
Lenders.
Section 4.10 Closing Costs and Expenses.
The Borrowers shall have paid all fees payable to the Agent
and/or
the Lenders, plus all closing costs and
expenses incurred by the Agent in
connection with the transactions
contemplated hereby including, without
limitation, the applicable fees and
expenses described in Section 2.9.
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<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Agent and Lenders to enter into this Agreement,
each
Borrower jointly and severally represents,
warrants, covenants and agrees as
follows:
Section 5.1 Corporate Existence and Qualification.
Each Borrower is a corporation duly organized, validly existing
and
in good standing under the laws of its
jurisdiction of incorporation or
formation referenced in the preamble of
this Agreement, with all corporate power
and authority and all necessary licenses
and permits to own, operate and lease
its properties and carry on its business as
now being conducted, and as it may
in the future be conducted. Each Borrower
has only one jurisdiction of
incorporation/formation. Each Borrower is
duly qualified and authorized to do
business and is in good standing in each
jurisdiction in which the nature of its
activities or the character of its
properties makes qualification necessary,
except to the extent that the failure to so
qualify could not reasonably be
expected to have a Material Adverse Effect.
The corporate name of each Borrower
set forth in this Agreement and the other
Loan Documents is accurate in all
respects, and such corporate name is
identical to the corporate name of record
with such Borrower's jurisdiction of
incorporation or formation.
Section 5.2 Corporate Authority; Noncontravention.
The execution, delivery and performance of the obligations of
each
Borrower set forth in this Agreement, the
Notes and the other Loan Documents (i)
have been duly authorized by all necessary
corporate and/or stockholder action;
(ii) do not require the consent of any
governmental body, agency or authority;
(iii) will not violate or result in (and
with notice or the lapse of time will
not violate or result in) the breach of any
provision of any Borrower's
Articles/Certificate of Incorporation,
By-laws or other corporate formation
documents, as applicable, any Material
Contract, or any order or regulation of
any governmental authority or arbitration
board or tribunal; and (iv) except as
expressly permitted by the terms and
provisions of this Agreement, will not
result in the creation of a lien, charge or
encumbrance of any nature upon any
of the properties or assets of any
Borrower. When the Loan Documents are
executed and delivered, they will
constitute legal, valid and binding
obligations of each Borrower, enforceable
against each Borrower in accordance
with their respective terms, subject to
applicable bankruptcy, insolvency and
other similar laws affecting the rights of
creditors generally.
Section 5.3 Financial Position.
The financial statements listed on Schedule 5.3 hereto, copies
of
which have been delivered to the Lenders,
present fairly the financial condition
of the Borrowers as of the date thereof and
the results of the Borrowers'
operations for the periods indicated
therein, were prepared in accordance with
GAAP, are true and accurate in all
respects, and are not misleading in any
respect. All material liabilities, fixed or
contingent, are fully shown or
provided for on the referenced financial
statements or the notes thereto as of
the dates thereof
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<PAGE>
to the extent they are required to be shown
or disclosed in accordance with
GAAP. There has been no material adverse
change in (i) the business, property or
condition (financial or otherwise) of the
Borrowers, taken as whole, since the
date of its most recent financial
statements listed on Schedule 5.3 or (ii) the
government contracting status of any
Borrower with respect to the United States
government or any department or agency
thereof.
Section 5.4 Payment of Taxes.
Each
Borrower has filed all tax returns and reports required to be
filed by it with the United States
Government, all state and local governments
and/or all foreign federal, state and local
governments, and has paid in full or
made adequate provision on its books for
the payment of all taxes, interest,
penalties, assessments or deficiencies
shown to be due or claimed to be due on
or in respect of such tax returns and
reports, except to the extent that the
validity or amount thereof is being
contested in good faith by appropriate
proceedings and the non-payment thereof
pending such contest will not result in
the execution of any tax lien or otherwise
jeopardize the Agent's or the
Lenders' interests hereunder.
Section 5.5 Accuracy of Submitted Information; Omissions.
As of the date furnished, all documents, certificates,
information,
materials and financial statements
furnished or to be furnished to any Lender or
the Agent pursuant to this Agreement or
otherwise in connection with the Loan
(i) are true and correct in all material
respects; (ii) do not contain any
untrue statement of a material fact; and
(iii) do not omit any material fact
necessary to make the statements contained
therein or herein not misleading. No
Borrower is aware of any fact which has not
been disclosed to the Agent in
writing which materially adversely affects,
or so far as any Borrower can now
reasonably foresee, could materially
adversely affect, the properties, business,
profit or condition (financial or
otherwise) of the Borrowers, taken as a whole,
or the ability of any Borrower to perform
its obligations set forth in this
Agreement or any other Loan Document.
Section 5.6 Government Contracts/Government Subcontracts.
No notice of suspension, debarment, cure notice, show cause
notice
or notice of termination for default has
been issued by the Government to any
Borrower, and no Borrower is a party to any
pending, or to any Borrower's
knowledge threatened, suspension,
debarment, termination for default or show
cause requirement by the Government or
other adverse Government action or
proceeding in connection with any
Government Contract or Government Subcontract.
All Government Contracts which have a
remaining term of twelve (12) months or
longer and a remaining value of Five
Million and No/100 Dollars ($5,000,000.00)
or more are listed on Schedule 5.6
hereto.
Section 5.7 No Defaults or Liabilities.
No Borrower is in default of any obligation, covenant or
condition
contained in any Material Contract which
would entitle the other party thereto
to exercise remedies
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<PAGE>
thereunder (excluding those defaults
pursuant to which the other party thereto
has made a monetary claim for less than
Five Hundred Thousand and No/100 Dollars
($500,000.00)). Additionally, except for
the matters disclosed on Schedule 5.9
hereto, there is no litigation, legal or
administrative proceeding or
investigation pending against any Borrower,
and no litigation, legal or
administrative proceeding or investigation
has been threatened against any
Borrower, which has not been disclosed to
the Agent and the Lenders in writing
and which involves amounts in excess of
Five Hundred Thousand and No/100 Dollars
($500,000.00) or which could prejudice, in
any material respect, the Agent's or
any Lender's rights or remedies under any
Loan Document.
Section 5.8 No Violations of Law.
No Borrower is in violation of any Applicable Laws, except for
such
violations which could not reasonably be
expected to have a Material Adverse
Effect; no Borrower has failed to obtain
any license, permit, franchise or other
governmental authorization necessary to the
ownership of its properties or to
the conduct of its business, and each
Borrower has conducted its business and
operations in compliance with all
Applicable Laws, except in each case, for such
failures or non-compliances which could not
reasonably be expected to have a
Material Adverse Effect.
Section 5.9 Litigation and Proceedings.
Except for the matters set forth on Schedule 5.9 attached hereto,
no
action, suit or proceeding against or
affecting any Borrower is presently
pending, or to the knowledge of any
Borrower, threatened, in any court, before
any governmental agency or department, or
before any arbitration board or
tribunal, which involves the possibility of
any judgment or liability in excess
of Five Hundred Thousand and No/100 Dollars
($500,000.00) and is not fully
covered by insurance, subject to any
applicable deductible. No Borrower is in
default with respect to any order, writ,
injunction or decree of any court,
governmental authority or arbitration
boar
