Exhibit 10.1
BUSINESS LOAN AND SECURITY AGREEMENT
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THIS BUSINESS LOAN AND
SECURITY AGREEMENT (this "Agreement") is made
this 14th day of August, 2007, by and among VSE CORPORATION, a
corporation
organized under the laws of the State of Delaware ("VSE"),
ENERGETICS
INCORPORATED, a corporation organized under the laws of the State
of Maryland
("Energetics"), VSE SERVICES INTERNATIONAL, INC., a corporation
organized
under the laws of the State of Delaware ("VSI"), and INTEGRATED
CONCEPTS AND
RESEARCH CORPORATION, a corporation organized under the laws of the
District
of Columbia ("ICRC"), jointly and severally (each of VSE,
Energetics, VSI, and
ICRC, a "Borrower"; and collectively, the "Borrowers"), CITIZENS
BANK OF
PENNSYLVANIA, a bank chartered in the State of Pennsylvania, its
successors
and assigns (the "Lender").
RECITALS
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A. The Borrowers have applied to the Lender for credit
facilities consisting of (i) a revolving credit facility in the
maximum
principal amount of Twenty Five Million Dollars ($25,000,000), and
(ii) a
letter of credit facility in the maximum principal amount of Five
Million
Dollars ($5,000,000), as part of that revolving credit
facility.
B. The Lenders is willing to make those credit facilities
available jointly and severally to the Borrowers upon the terms and
subject to
the conditions set forth in this Agreement.
AGREEMENTS
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NOW, THEREFORE, in
consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby
acknowledged, the
parties hereby agree as follows:
ARTICLE I
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DEFINITIONS
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Section
1.1 Certain Defined Terms.
As used in this Agreement, the
terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified
therein, and the
following terms shall have the following meanings:
"Account" individually and
"Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts
receivable,
health care insurance receivables, contract rights, notes,
drafts,
instruments, acceptances, chattel paper, leases and writings
evidencing a
monetary obligation or a security interest in, or a lease of,
goods, all
rights to receive the payment of a monetary obligation or other
consideration
under present or future contracts (including, without limitation,
all rights
(whether or not earned by performance) to receive payments under
presently
existing or hereafter acquired or created letters of credit), or by
virtue of
property that has been sold, leased, licensed, assigned or
otherwise disposed
of, services rendered or to be rendered, loans and advances made or
other
considerations given, by or set forth in or arising out of any
present or
future chattel paper, note, draft, lease, acceptance, writing,
bond, insurance
policy, instrument, document or general intangible, and all
extensions and
renewals of any thereof, all rights under or arising out of present
or future
contracts, agreements or general interest in goods which gave rise
to any or
all of the foregoing, including all commercial tort claims, other
claims or
causes of action now existing or hereafter arising in connection
with or under
any agreement or document or by operation of law or otherwise, all
collateral
security of any kind (including, without limitation, real property
mortgages
and deeds of trust), Supporting Obligations, letter of credit
rights and
letters of credit given by any Person with respect to any of the
foregoing,
all books and records in whatever media (paper, electronic or
otherwise)
recorded or stored, with respect to any or all of the foregoing and
all
equipment and general intangibles necessary or beneficial to
retain, access
and/or process the information contained in those books and
records, and all
Proceeds (cash and non-cash) of the foregoing.
"Account Debtor" means any
Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the
Receivables.
"ACH Settlement Risk Reserve"
means any and all reserves which the
Lender from time to time establishes, in its sole discretion, with
respect to
ACH Transactions.
"ACH Transactions" means any
cash management or related services by the
Lender for the account of any of the Borrowers pursuant to
agreement or
overdrafts.
"Additional Borrower" means
each Person that has executed and delivered
an Additional Borrower Joinder Supplement that has been accepted
and approved
by the Lender.
"Additional Borrower Joinder
Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as
EXHIBIT A,
with the blanks appropriately completed and executed and delivered
by the
Additional Borrower and accepted by VSE on behalf of the
Borrowers.
"Affiliate" means, with
respect to any designated Person, any other
Person, (a) directly or indirectly controlling, directly or
indirectly
controlled by, or under direct or indirect common control with the
Person
designated, (b) directly or indirectly owning or holding five
percent (5%) or
more of any equity interest in such designated Person, or (c) five
percent
(5%) or more of whose stock or other equity interest is directly or
indirectly
owned or held by such designated Person. For purposes of this
definition, the
term "control" (including with correlative meanings, the terms
"controlling",
"controlled by" and "under common control with") means the
possession,
directly or indirectly, of the power to direct or cause the
direction of the
management and policies of a Person, whether through ownership of
voting
securities or other equity interests or by contract or
otherwise.
"Agreement" means this
Business Loan and Security Agreement, as amended,
restated, supplemented or otherwise modified in writing in
accordance with the
provisions of Section 8.2 (Amendments; Waivers).
"Assets" means at any date all
assets that, in accordance with GAAP
consistently applied, should be classified as assets on a
consolidated balance
sheet of the Borrowers and their respective Subsidiaries.
"Bankruptcy Code" means Title
11 of the United States Code, as amended
from time to time, and any successor Laws.
"Borrower" means each Person
defined as a "Borrower" in the preamble of
this Agreement and each Additional Borrower; "Borrowers" means the
collective
reference to all Persons defined as "Borrowers" in the preamble to
this
Agreement and all Additional Borrowers.
"Borrowing Base" has the
meaning described in Section 2.1.3 (Borrowing
Base).
"Borrowing Base Deficiency"
has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has
the meaning described in Section 2.1.4
(Borrowing Base Report).
"Business Day" means any day
other than a Saturday, Sunday or other day
on which commercial banks in the State are authorized or required
to close.
"Capital Adequacy Regulation"
means any guideline, request or directive
of any central bank or other Governmental Authority, or any other
law, rule or
regulation, whether or not having the force of law, in each case,
regarding
capital adequacy of any bank or of any corporation controlling a
bank.
"Capital Expenditure" means an
expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital
Assets,
including, without limitation, the entering into of a Capital
Lease.
"Capital Lease" means with
respect to any Person any lease of real or
personal property, for which the related Lease Obligations have
been or should
be, in accordance with GAAP consistently applied, capitalized on
the balance
sheet of that Person.
"Cash Equivalents" means (a)
securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or
insured by the
United States Government or any agency thereof, (b) certificates of
deposit
with maturities of one (1) year or less from the date of
acquisition of, or
money market accounts maintained with, the Lender, any Affiliate of
the
Lender, or any other domestic commercial bank having capital and
surplus in
excess of One Hundred Million Dollars ($100,000,000.00) or such
other domestic
financial institutions or domestic brokerage houses to the extent
disclosed
to, and approved by, the Lender and (c) commercial paper of a
domestic issuer
rated at least either A-1 by Standard & Poor's Corporation (or
its successor)
or P-1 by Moody's Investors Service, Inc. (or its successor) with
maturities
of six (6) months or less from the date of acquisition.
"Chattel Paper" means a record
or records (including, without
limitation, electronic chattel paper) that evidence both a monetary
obligation
and a security interest in specific goods, a security interest in
specific
goods and software used in the goods, or a lease of specific goods;
all
Supporting Obligations with respect thereto; any returned, rejected
or
repossessed goods and software covered by any such record or
records and all
proceeds (in any form including, without limitation, accounts,
contract
rights, documents, chattel paper, instruments and general
intangibles) of such
returned, rejected or repossessed goods; and all Proceeds of the
foregoing.
"Closing Date" means the
Business Day, on which the Lender shall be
satisfied that the conditions precedent set forth in Section 5.1
(Conditions
to Initial Advance) have been fulfilled or otherwise waived by the
Lender.
"Collateral" means all
property of each and every Borrower subject from
time to time to the Liens of this Agreement, any of the Security
Documents
and/or any of the other Financing Documents, together with any and
all
Proceeds and products thereof.
"Collateral Account" has the
meaning described in Section 2.1.8 (The
Collateral Account).
"Collateral Disclosure List"
has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check,
draft, cash, money, instrument, item, and
other remittance in payment or on account of payment of the
Accounts or
otherwise with respect to any Collateral, including, without
limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale
or lease of
which gave rise to an Account, and other proceeds of Collateral;
and
"Collections" means the collective reference to all of the
foregoing.
"Committed Amount" means with
respect to the Lender, its Revolving Loan
Committed Amount and "Committed Amounts" means collectively the
Revolving Loan
Committed Amount of the Lender.
"Compliance Certificate" means
a periodic Compliance Certificate
described in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity"
means an entity, whether or not
incorporated, which is under common control with any Borrower
within the
meaning of Section 414(b) or (c) of the Internal Revenue Code.
"Copyrights" means and
includes, in each case whether now existing or
hereafter arising, all of each Borrower's rights, title and
interest in and to
(a) all copyrights, rights and interests in copyrights, works
protectable by
copyright, copyright registrations, copyright applications, and all
renewals
of any of the foregoing, (b) all income, royalties, damages and
payments now
or hereafter due and/or payable under any of the foregoing,
including, without
limitation, damages or payments for past, current or future
infringements of
any of the foregoing, (c) the right to sue for past, present and
future
infringements of any of the foregoing, and (d) all rights
corresponding to any
of the foregoing throughout the world.
"Credit Facility" means the
Revolving Credit Facility or the Letter of
Credit Facility, as the case may be and "Credit Facilities" means
collectively
the Revolving Credit Facility and the Letter of Credit Facility and
any and
all other credit facilities now or hereafter extended under or
secured by this
Agreement.
"Current Letter of Credit
Obligations" has the meaning set forth in
Section 2.2.5 of this Agreement.
"Default" means an event
which, with the giving of notice or lapse of
time, or both, could or would constitute an Event of Default under
the
provisions of this Agreement.
"Documents" means all
documents of title or receipts, whether now
existing or hereafter acquired or created, and all Proceeds of the
foregoing.
"Eligible Receivable" and
"Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each account (net of
any returns,
discounts, claims, credits, charges, accrued rebates or other
allowances,
offsets, deductions, counterclaims, disputes or other defenses and
reduced by
the aggregate amount of all reserves, limits and deductions
provided for in
this definition and elsewhere in this Agreement) receivable in
United States
Dollars by a Borrower, provided each account conforms and continues
to conform
to the following criteria to the satisfaction of the Lender:
(a) the account arose in the ordinary
course
of a Borrower's business from a bona fide outright sale of
Inventory by such Borrower or from services performed by such
Borrower;
(b) the account is a valid, legally
enforceable obligation of the Account Debtor and requires no
further act on the part of any Person under any circumstances
to
make the account payable by the Account Debtor;
(c) the account is based upon an
enforceable
order or contract, written or oral, for Inventory shipped or
for
services performed, and the same were shipped or performed in
accordance with such order or contract;
(d) if the account arises from the sale
of
Inventory, the Inventory the sale of which gave rise to the
account has been shipped or delivered to the Account Debtor on
an
absolute sale basis and not on a bill and hold sale basis, a
consignment sale basis, a guaranteed sale basis, a sale or
return
basis, or on the basis of any other similar understanding;
(e) if the account arises from the
performance
of services, such services have been fully rendered and do not
relate to any warranty claim or obligation;
(f) the account is evidenced by an invoice
or
other documentation in form acceptable to the Lender, dated no
later than the date allowed under any contract governing such
account and containing only terms normally offered by the
respective Borrower;
(g) the amount shown on the books of a
Borrower and on any invoice, certificate, schedule or statement
delivered to the Lender is owing to such Borrower and no
partial
payment has been received unless reflected with that delivery;
(h) the account is not outstanding more
than
ninety (90) days from the date of the invoice therefore;
(i) the account is not owing by any
Account
Debtor for which the Lender has deemed fifty percent (50%) or
more
of such Account Debtor's other accounts (or any portion
thereof)
due to a Borrower, individually, or all of the Borrowers
collectively, to be non-Eligible Receivables;
(j) the Account Debtor has not
returned,
rejected or refused to retain, or otherwise notified a Borrower
of
any dispute concerning, or claimed nonconformity of, any of the
Inventory or services from the sale or furnishing of which the
account arose;
(k) the account is not subject to any
present
or contingent (and no facts exist which are the basis for any
future) offset, claim, deduction or counterclaim, dispute or
defense in law or equity on the part of such Account Debtor, or
any claim for credits, allowances, or adjustments by the
Account
Debtor because of returned, inferior, or damaged Inventory or
unsatisfactory services, or for any other reason including,
without limitation, those arising on account of a breach of any
express or implied representation or warranty;
(l) the Account Debtor is not a Subsidiary
or
Affiliate of any Borrower or an employee, officer, director or
shareholder of any Borrower or any Subsidiary or Affiliate of
any
Borrower, other than any joint venture of the Borrower or any
Subsidiary;
(m) the Account Debtor is not incorporated
or
primarily conducting business or otherwise located in any
jurisdiction outside of the United States of America, unless
the
Account Debtor's obligations with respect to such account are
secured by a letter of credit, guaranty or banker's acceptance
having terms and from such issuers and confirmation banks as
are
acceptable to the Lender in its sole and absolute discretion
(which letter of credit, guaranty or banker's acceptance is
subject to the perfected Lien of the Lender);
(n) as to which none of the following
events
has occurred with respect to the Account Debtor on such
Account:
death or judicial declaration of incompetency of an Account
Debtor
who is an individual; the filing by or against the Account
Debtor
of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency,
or
similar laws of the United States, any state or territory
thereof,
or any foreign jurisdiction, now or hereafter in effect; the
making of any general assignment by the Account Debtor for the
benefit of creditors; the appointment of a receiver or trustee
for
the Account Debtor or for any of the assets of the Account
Debtor,
including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal
Bankruptcy
Code; the institution by or against the Account Debtor of any
other type of insolvency proceeding (under the bankruptcy laws
of
the United States or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of
claims against, or winding up of affairs of, the Account
Debtor;
the sale, assignment, or transfer of all or any material part
of
the assets of the Account Debtor; the nonpayment generally by
the
Account Debtor of its debts as they become due; or the
cessation
of the business of the Account Debtor as a going concern;
(o) no Borrower is indebted in any manner
to
the Account Debtor (as creditor, lessor, supplier or otherwise,
other than trade debt incurred in the ordinary course of
business), with the exception of customary credits, adjustments
and/or discounts given to an Account Debtor by a Borrower in
the
ordinary course of its business;
(p) the account does not arise from
services
under or related to any warranty obligation of a Borrower or
out
of service charges, finance charges or other fees for the time
value of money;
(q) the account is not evidenced by
chattel
paper or an instrument of any kind and is not secured by any
letter of credit;
(r) the title of the respective Borrower
to
the account is absolute and is not subject to any prior
assignment, claim, Lien, or security interest, except Permitted
Liens;
(s) no bond or other undertaking by a
guarantor or surety has been or is required to be obtained,
supporting the account and any of the Account Debtor's
obligations
in respect of the account;
(t) each Borrower has the full and
unqualified
right and power to assign and grant a security interest in, and
Lien on, the account to the Lender as security and collateral
for
the payment of the Obligations;
(u) the account does not arise out of a
contract with, or order from, an Account Debtor that, by its
terms, forbids or makes void or unenforceable the assignment or
grant of a security interest by the Borrowers to the Lender, of
the account arising from such contract or order;
(v) the account is subject to a Lien in
favor
of the Lender, which Lien is perfected as to the account by the
filing of financing statements and which Lien upon such filing
constitutes a first priority security interest and Lien;
(w) the Inventory giving rise to the
account
was not, at the time of the sale thereof, subject to any Lien,
except those in favor of the Lender;
(x) no part of the account represents a
retainage;
(y)
the Lender in the good faith exercise of
its sole and absolute discretion has not deemed the account
ineligible because of uncertainty as to the creditworthiness of
the Account Debtor or because the Lender otherwise considers
the
collateral value of such account to the Lender to be impaired
or
its or their ability to realize such value to be insecure; and
(z) if the Account Debtor is located in
a
state requiring the filing of a Notice of Business Activities
Report or similar report in order to permit any Borrower to
seek
judicial enforcement in such state of payment of such Account,
that Borrower has qualified to do business in such state or has
filed a Notice of Business Activities Report or equivalent
report
for the then current year.
In the event of any dispute,
under the foregoing criteria, as to whether
an account is, or has ceased to be, an Eligible Receivable, the
decision of
the Lender in the good faith exercise of its sole and absolute
discretion
shall control.
"Enforcement Costs" means all
expenses, charges, costs and fees
whatsoever (including, without limitation, reasonable outside and
allocated
in-house counsel attorney's fees and expenses) of any nature
whatsoever paid
or incurred by or on behalf of the Lender in connection with (a)
any or all of
the Obligations, this Agreement and/or any of the other Financing
Documents,
(b) the creation, perfection, collection, maintenance,
preservation, defense,
protection, realization upon, disposition, sale or enforcement of
all or any
part of the Collateral, this Agreement or any of the other
Financing
Documents, including, without limitation, those costs and expenses
more
specifically enumerated in Section 3.6 (Costs) and/or Section 8.7
(Enforcement
Costs), and further including, without limitation, amounts paid to
lessors,
processors, bailees, warehousemen, sureties, judgment creditors and
others in
possession of or with a Lien against or claimed against the
Collateral, and
(c) the monitoring, administration, processing and/or servicing of
any or all
of the Obligations, the Financing Documents, and/or the
Collateral.
"Equipment" means all
equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies
of every
nature, presently existing or hereafter acquired or created and
wherever
located, whether or not the same shall be deemed to be affixed to
real
property, and all of such types of property leased by any Borrower
and all of
the Borrowers' rights and interests with respect thereto under such
leases
(including, without limitation, options to purchase), together with
all
accessions, additions, fittings, accessories, special tools, and
improvements
thereto and substitutions therefor and all parts and equipment
which may be
attached to or which are necessary or beneficial for the operation,
use and/or
disposition of such personal property, all licenses, warranties,
franchises
and General Intangibles related thereto or necessary or beneficial
for the
operation, use and/or disposition of the same, together with all
Accounts,
Chattel Paper, Instruments and other consideration received by any
Borrower on
account of the sale, lease or other disposition of all or any part
of the
foregoing, and together with all rights under or arising out of
present or
future Documents and contracts relating to the foregoing and all
Proceeds of
the foregoing.
"ERISA" means the Employee
Retirement Income Security Act of 1974, as
amended from time to time.
"Euro-Dollar Business Day"
means any day on which commercial banks are
open for domestic and international business (including dealing in
U.S. Dollar
Deposits) in London, England and the Commonwealth of
Pennsylvania.
"Event of Default" has the
meaning described in ARTICLE VII (Default and
Rights and Remedies).
"Facilities" means the
collective reference to the loan, letter of
credit, interest rate protection, foreign exchange risk, cash
management, and
other credit facilities now or hereafter provided to any one or
more of the
Borrowers by the Lender under this Agreement or otherwise by the
Lender.
"Federal Funds Rate" means for
any day of determination, the weighted
average of the rates on overnight federal funds transactions with
members of
the Federal Reserve System arranged by federal funds brokers, as
published for
such day (or, if such day is not a Business Day) by the Federal
Reserve Bank
for the next preceding Business Day) by the Federal Reserve Bank of
Richmond
or, if such rate is not so published for any day that is a Business
Day, the
average of quotations for such day on such transactions received by
the Lender
from three (3) federal funds brokers of recognized standing
selected by the
Lender.
"Fees" means the collective
reference to each fee payable to the Lender,
under the terms of this Agreement or under the terms of any of the
other
Financing Documents, including, without limitation, the Revolving
Credit Fees,
Letter of Credit Fees and the Field Examination Fees.
"Field Examination Fee" and
"Field Examination Fees" have the meanings
described in Section 2.4.7 (Field Examination Fees).
"Financing Documents" means at
any time collectively this Agreement, the
Notes, the Security Documents, the Letter of Credit Documents, and
any other
instrument, agreement or document previously, simultaneously or
hereafter
executed and delivered by any Borrower, and/or any other Person,
singly or
jointly with another Person or Persons, evidencing, securing,
guarantying or
in connection with this Agreement, any Note, any of the Security
Documents,
any of the Facilities, and/or any of the Obligations.
"Fixed or Capital Assets" of a
Person at any date means all assets which
would, in accordance with GAAP consistently applied, be classified
on the
balance sheet of such Person as property, plant or equipment at
such date.
"GAAP" means generally
accepted accounting principles in the United
States of America in effect from time to time.
"General Intangibles" means
all general intangibles of every nature,
whether presently existing or hereafter acquired or created, and
without
implying any limitation of the foregoing, further means all books
and records,
commercial tort claims, other claims (including without limitation
all claims
for income tax and other refunds), payment intangibles,
Supporting
Obligations, choses in action, claims, causes of action in tort or
equity,
contract rights, judgments, customer lists, software, Patents,
Trademarks,
licensing agreements, rights in intellectual property, goodwill
(including
goodwill of Borrower's business symbolized by and associated with
any and all
Trademarks, trademark licenses, Copyrights and/or service marks),
royalty
payments, licenses, letter-of-credit rights, letters of credit,
contractual
rights, the right to receive refunds of unearned insurance
premiums, rights as
lessee under any lease of real or personal property, literary
rights,
Copyrights, service names, service marks, logos, trade secrets,
amounts
received as an award in or settlement of a suit in damages, deposit
accounts,
interests in joint ventures, general or limited partnerships, or
limited
liability companies or partnerships, rights in applications for any
of the
foregoing, books and records in whatever media (paper, electronic
or
otherwise) recorded or stored, with respect to any or all of the
foregoing,
all Supporting Obligations with respect to any of the foregoing,
and all
Equipment and General Intangibles necessary or beneficial to
retain, access
and/or process the information contained in those books and
records, and all
Proceeds of the foregoing.
"Government Contracts" means
any contract with the United States or with
any state or political subdivision thereof or any department,
agency or
instrumentality of the United States, or any state or political
subdivision
thereof.
"Governmental Authority" means
any nation or government, any state or
other political subdivision thereof and any entity exercising
executive,
legislative, judicial, regulatory or administrative functions of or
pertaining
to government and any department, agency or instrumentality
thereof.
"Hazardous Materials" means
(a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from
time to time,
and regulations promulgated thereunder; (b) any "hazardous
substance" as
defined by the Comprehensive Environmental Response, Compensation
and
Liability Act of 1980, as amended from time to time, and
regulations
promulgated thereunder; (c) any substance the presence of which on
any
property now or hereafter owned, acquired or operated by any of the
Borrowers
is prohibited by any Law similar to those set forth in this
definition; and
(d) any other substance which by Law requires special handling in
its
collection, storage, treatment or disposal.
"Hazardous Materials
Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement)
by Hazardous
Materials of any property owned, operated or controlled by any of
the
Borrowers or for which any of the Borrowers has responsibility,
including,
without limitation, improvements, facilities, soil, ground water,
air or other
elements on, or of, any property now or hereafter owned, acquired
or operated
by any of the Borrowers, and any other contamination by Hazardous
Materials
for which any of the Borrowers is, or is claimed to be,
responsible.
"Indebtedness" of a Person
means at any date the total liabilities of
such Person at such time determined in accordance with GAAP
consistently
applied.
"Indebtedness for Borrowed
Money" of a Person means at any time the sum
at such time of (a) Indebtedness of such Person for borrowed money
or for the
deferred purchase price of property or services, (b) any
obligations of such
Person in respect of letters of credit, banker's or other
acceptances or
similar obligations issued or created for the account of such
Person, (c)
Lease Obligations of such Person with respect to Capital Leases,
(d) all
liabilities secured by any Lien on any property owned by such
Person, to the
extent attached to such Person's interest in such property, even
though such
Person has not assumed or become personally liable for the payment
thereof,
(e) obligations of third parties which are being guarantied or
indemnified
against by such Person or which are secured by the property of such
Person;
(f) any obligation of such Person under an employee stock ownership
plan or
other similar employee benefit plan; (g) any obligation of such
Person or a
Commonly Controlled Entity to a Multi-employer Plan; and (h) any
obligations,
liabilities or indebtedness, contingent or otherwise, under or in
connection
with, any Swap Transaction; but excluding trade and other accounts
payable in
the ordinary course of business in accordance with customary trade
terms and
which are not overdue (as determined in accordance with customary
trade
practices) or which are being disputed in good faith by such Person
and for
which adequate reserves are being provided on the books of such
Person in
accordance with GAAP.
"Indemnified Parties" has the
meaning set forth in Section 8.16
(Indemnification).
"Instrument" means a
negotiable instrument or any other writing which
evidences a right to payment of a monetary obligation and is not
itself a
security agreement or lease and is of a type that in the ordinary
course of
business is transferred by delivery with any necessary endorsement
or
assignment, and all Supporting Obligations with respect to any of
the
foregoing and all Proceeds with respect to any of the
foregoing.
"Interest Payment Date" means
(i) with respect to Revolving Loans which
accrue interest based on the Prime Rate the last day of each
calendar quarter
commencing on September 30, 2007 and continuing thereafter until
the
Obligations have been irrevocably paid in full (ii) with respect to
Revolving
Loans which accrue interest based on the LIBOR rate the earlier of
the last
day of each Interest Period or the last day of each calendar
quarter
commencing on September 30, 2007 and continuing thereafter until
the
Obligations have been irrevocably paid in full.
"Interest Period" means the
period during which interest at a LIBOR-
based Rate, determined as provided in this Agreement, shall be
applicable to
the Rate Request Amount in question, provided, however, that each
such period
shall be either one (1), two (2), three (3) or six (6) months which
shall be
measured from the date specified by the Borrowers in each Rate
Request for the
commencement of the computation of interest at a LIBOR-based Rate
to the
numerically corresponding day in the calendar month in which such
period
terminates (or, if there is numerical Euro-Dollar Business Day of a
calendar
month, then the last Euro-Dollar Business Day of the calendar month
in which
such period terminates, or if the numerically corresponding day is
not a Euro-
Dollar Business Day, then the next succeeding Euro-Dollar Business
Day enters
a new calendar month, in which case such period shall end on the
next
preceding Euro-Dollar Business Day) and in no event shall any such
period
extend beyond the Revolving Credit Termination Date.
"Internal Revenue Code" means
the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued
and proposed
to be issued thereunder.
"Inventory" means all goods of
Borrower and all right, title and
interest of Borrower in and to all of its now owned and hereafter
acquired
goods and other personal property furnished under any contract of
service or
intended for sale or lease, including, without limitation, all raw
materials,
work-in-process, finished goods and materials and supplies of any
kind, nature
or description which are used or consumed in Borrower's business or
are or
might be used in connection with the manufacture, packing,
shipping,
advertising, selling or finishing of such goods and other personal
property
and all licenses, warranties, franchises, General Intangibles,
personal
property and all documents of title or documents relating to the
same,
together with all Accounts, Chattel Paper, Instruments and other
consideration
received by Borrower on account of the sale, lease or other
disposition of all
or any part of the foregoing, and together with all rights under or
arising
out of present or future Documents and contracts relating to the
foregoing and
all Proceeds of the foregoing.
"Investment Property" means a
security, whether certificated or
uncertificated, security entitlement, securities account, commodity
contract
or commodity account and all Proceeds of, and Supporting
Obligations with
respect to, the foregoing.
"Item of Payment" means each
check, draft, cash, money, instrument,
item, and other remittance in payment or on account of payment of
the
Receivables or otherwise with respect to any Collateral, including,
without
limitation, cash proceeds of any returned, rejected or repossessed
goods, the
sale or lease of which gave rise to a Receivable, and other
proceeds of
Collateral; and "Items of Payment" means the collective reference
to all of
the foregoing.
"Laws" means all ordinances,
statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.
"Lease Obligations" of a
Person means for any period the rental
commitments of such Person for such period under leases for real
and/or
personal property (net of rent from subleases thereof, but
including taxes,
insurance, maintenance and similar expenses which such Person, as
the lessee,
is obligated to pay under the terms of said leases, except to the
extent that
such taxes, insurance, maintenance and similar expenses are payable
by
sublessees), including rental commitments under Capital Leases.
"Letter of Credit" and
"Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).
"Letter of Credit Agreement"
means the collective reference to each
letter of credit application and agreement substantially in the
form of the
Lender's then standard form of application for letter of credit or
such other
form as may be approved by the Lender, executed and delivered by
any one or
more of the Borrowers in connection with the issuance of a Letter
of Credit,
as the same may from time to time be amended, restated,
supplemented or
modified; and "Letter of Credit Agreements" means all of the
foregoing in
effect at any time and from time to time.
"Letter of Credit Documents"
means any and all drafts under or
purporting to be under a Letter of Credit, any Letter of Credit
Agreement, and
any other instrument, document or agreement executed and/or
delivered by any
one or more of the Borrowers or any other Person under, pursuant to
or in
connection with a Letter of Credit or any Letter of Credit
Agreement.
"Letter of Credit Facility"
means the facility established pursuant to
Section 2.2 (Letter of Credit Facility).
"Letter of Credit Fee" and
"Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).
"Letter of Credit Obligations"
means the collective reference to all
Obligations of any one or more of the Borrowers with respect to the
Letters of
Credit and the Letter of Credit Agreements.
"Letter-of-credit right" means
a right to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is
at the
time entitled to demand payment or performance.
"Leverage Ratio" means the
ratio of Total Liabilities on a specified
date to Tangible Net Worth on such date.
"Liabilities" means at any
date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on
a
consolidated balance sheet of the Borrowers and their respective
Subsidiaries.
"LIBOR Amount" means each
portion of the Principal Amount bearing
interest at a LIBOR-based Rate pursuant to a Rate Request.
"LIBOR-based Rate" means an
interest rate fixed for one, two, three or
six month periods at a rate equal to the corresponding LIBOR rate
(i.e. the
one, two, three or six month LIBOR rate) plus the LIBOR Rate Margin
in effect
on the date of the corresponding Rate Request.
"LIBOR rate" means the London
interbank offered rate of major banks for
deposits in United States Dollars for a designated period (e.g. on,
two, three
or six months) as set forth at Telerate Page 3750 at approximately
11:00 a.m.
London time on the third Euro-Dollar Business Day preceding the
date when the
LIBOR-based Rate will be become effective; provided, however, that
if such
information is not available on Telerate, the "LIBOR rate" shall be
determined
from information supplied to the Lender by a nationally recognized
reporting
service for similar information acceptable to the Lender.
"LIBOR Rate Margin" means the
amount determined to be in effect from
time to time using the chart set forth below. The initial
LIBOR Rate Margin
will be determined at the Closing Date using the Leverage Ratio
calculated by
reference to the consolidated balance sheet of VSE most recently
received by
the Lender. Commencing on the date following the Closing Date
when the Lender
receives the consolidated balance sheet of VSE in accordance with
this
Agreement and on each such date thereafter, the LIBOR Rate Margin
will be
reset based on the Leverage Ratio calculated by reference to such
consolidated
balance sheet.
LIBOR Rate
Margin
Leverage Ratio
-----------------
--------------
2.00%
Equal to or greater than 3.0 to 1.0
1.75%
Equal to or greater than 1.5 to 1.0 but
less than 3.0 to 1.0
1.25%
Less than 1.5 to 1.0
In the event VSE fails to
provide such balance sheet when due, the LIBOR
Rate Margin shall be 2.00% until such time as such balance sheets
are
submitted as required by this Agreement.
"Lien" means any mortgage,
deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien,
financing
statement, hypothecation, provision in any instrument or other
document for
confession of judgment, cognovit or other similar right or other
remedy,
claim, charge, control over or interest of any kind in real or
personal
property securing any indebtedness, duties, obligations, and
liabilities owed
to, or a claimed to be owed to, a Person, all whether perfected
or
unperfected, avoidable or unavoidable, based on the common law,
statute or
contract or otherwise, including, without limitation, any
conditional sale or
other title retention agreement, any lease in the nature thereof,
and the
filing of or agreement to give any financing statement under the
Uniform
Commercial Code of any jurisdiction, excluding the precautionary
filing of any
financing statement by any lessor in a true lease transaction, by
any bailor
in a true bailment transaction or by any consignor in a true
consignment
transaction under the Uniform Commercial Code of any jurisdiction
or the
agreement to give any financing statement by any lessee in a true
lease
transaction, by any bailee in a true bailment transaction or by any
consignee
in a true consignment transaction.
"Loan" means each of the
Revolving Loan and "Loans" means the collective
reference to the Revolving Loans.
"Loan Notice" has the meaning
described in Section 2.1.2 (Procedure for
Making Advances).
"Lockbox" has the meaning
described in Section 2.1.8 (The Collateral
Account).
"Maximum Rate" has the meaning
described in Section 2.4.5 (Maximum
Interest Rate).
"Multi-employer Plan" means a
Plan that is a Multi-employer plan as
defined in Section 4001(a)(3) of ERISA.
"Note" means the Revolving
Credit Note and "Notes" means collectively
the Revolving Credit Note and any other promissory note which may
from time to
time evidence all or any portion of the Obligations.
"Obligations" means all
present and future, whether now existing or
contemplated or hereafter arising, of any one or more of the
Borrowers to the
Lender under, arising pursuant to, in connection with and/or on
account of the
provisions of this Agreement, each Note, each Security Document,
and/or any of
the other Financing Documents, the Loans, and/or any of the
Facilities
including, without limitation, the principal of, and interest on,
each Note,
late charges, the Fees, Enforcement Costs, and prepayment fees (if
any),
letter of credit reimbursement obligations, letter of credit fees
or fees
charged with respect to any guaranty of any letter of credit; also
means all
other present and future indebtedness, duties, obligations, and
liabilities,
whether now existing or contemplated or hereafter arising, of any
one or more
of the Borrowers to the Lender or its Affiliates of any nature
whatsoever,
including, without limitation, any indebtedness, duties,
obligations, and
liabilities, under or in connection with, any Swap Transaction,
regardless of
whether such indebtedness, duties, obligations, and liabilities be
direct,
indirect, primary, secondary, joint, several, joint and several,
fixed or
contingent; and also means any and all renewals, extensions,
substitutions,
amendments, restatements and rearrangements of any such
indebtedness, duties,
obligations, and liabilities.
"Outstanding Letter of Credit
Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"Patents" means and includes,
in each case whether now existing or
hereafter arising, all of each Borrower's rights, title and
interest in and to
(a) any and all patents and patent applications, (b) any and all
inventions
and improvements described and claimed in such patents and
patent
applications, (c) reissues, divisions, continuations, renewals,
extensions and
continuations-in-part of any patents and patent applications, (d)
income,
royalties, damages, claims and payments now or hereafter due and/or
payable
under and with respect to any patents or patent applications,
including,
without limitation, damages and payments for past and future
infringements,
(e) rights to sue for past, present and future infringements of
patents, and
(f) all rights corresponding to any of the foregoing throughout the
world.
"PBGC" means the Pension
Benefit Guaranty Corporation.
"Permitted Acquisitions" means
a shall mean a transaction or series of
transactions whereby the Borrowers acquire all or substantially all
of the
assets of a business, or purchase an equity interest in a business
(the
"Target"), provided, that (i) such interest shall not be less than
eighty-five
percent (85%) of the total equity of such business, (ii) the
acquisition or
purchase price consideration paid by the Borrowers during any
twelve (12)
month consecutive period shall not be greater than Ten Million
Dollars
($10,000,000) in the aggregate; (iii) the acquired entity shall be
in a
similar line of business as that of the Borrowers; (iv) the
acquired entity
shall be a going concern, not involved in any material litigation
that is not
fully covered by reserves and/or insurance and shall have positive
net
earnings for the previous twelve (12) months; (v) both before and
after giving
effect to such transaction, no Event of Default shall be continuing
or shall
occur as a result of such transaction; (vi) the Borrowers will be
in
compliance with all financial covenants after giving pro forma
effect to such
transaction; (vii) after giving effect to such transaction there
must be at
least Five Million Dollars ($5,000,000) of availability under the
Revolving
Loan; (viii) the Lender shall have received satisfactory evidence
that
satisfactory arrangements shall have been made for the termination
of all
Liens encumbering any asset of any of the acquired entities; (ix)
no
Indebtedness shall be assumed by Borrowers in connection with
such
transaction; (x) the Lender shall have received and approved
complete copies
of the Purchase Agreement Documents; and (xi) within 15 days of
closing any
transaction contemplated hereby, the acquired entity shall be
joined to this
Agreement as an Additional Borrower by executing and delivering to
the Lender
an Additional Borrower Joinder Supplement
"Permitted Liens" means:
(a) Liens for Taxes which are not delinquent
or which the Lender has determined in the exercise of its sole and
absolute
discretion (i) are being diligently contested in good faith and by
appropriate
proceedings, and such contest operates to suspend collection of the
contested
Taxes and enforcement of a Lien, (ii) the respective Borrower has
the
financial ability to pay, with all penalties and interest, at all
times
without materially and adversely affecting such Borrower, and (iii)
are not,
and will not be with appropriate filing, the giving of notice
and/or the
passage of time, entitled to priority over any Lien of the Lender;
(b)
deposits or pledges to secure obligations under workers'
compensation, social
security or similar laws, or under unemployment insurance in the
ordinary
course of business; (c) Liens securing the Obligations; (d)
judgment Liens to
the extent the entry of such judgment does not constitute a Default
or an
Event of Default under the terms of this Agreement or result in the
sale or
levy of, or execution on, any of the Collateral; (e) Liens to
secure the
purchase price of Equipment or Inventory in an aggregate amount not
to exceed
Two Hundred Fifty Thousand Dollars ($250,000); and (f) such other
Liens, if
any, as are set forth on Schedule 4.1.18 attached hereto and made a
part
hereof.
"Permitted Uses" means short
term working capital of any Borrower's
business and to support the issuance of Letters of Credit, and any
Permitted
Acquisition.
"Person" means and includes an
individual, a corporation, a partnership,
a joint venture, a limited liability company or partnership, a
trust, an
unincorporated association, a Governmental Authority, or any
other
organization or entity.
"Plan" means any pension plan
that is covered by Title IV of ERISA and
in respect of which any Borrower or a Commonly Controlled Entity is
an
"employer" as defined in Section 3 of ERISA.
"Post-closing Balance Sheet"
has the meaning described in Section 4.1.28
(Post-closing Financial Statements).
"Post-closing Financial
Projections" has the meaning described in
Section 4.1.28 (Post-closing Financial Statements).
"Post-Default Rate" means the
Prime Rate in effect from time to time,
plus two percent (2.0%) per annum.
"Prepayment" means a Revolving
Loan Mandatory Prepayment or a Revolving
Loan Optional Prepayment, as the case may be, and "Prepayments"
mean
collectively all Revolving Loan Mandatory Prepayments and all
Revolving Loan
Optional Prepayments.
"Principal Amount" means the
aggregate outstanding principal balance of
the Notes.
"Prime-based Rate" means a
floating rate of interest equal to the Prime
Rate plus the Prime Rate Margin.
"Prime Rate" means the rate of
interest established from time to time by
the Lender and announced by the Lender as its prime rate. The
Prime Rate is
not necessarily the lowest or most favorable rate of interest
charged by the
Lender on extensions of credit to debtors.
"Prime Rate Margin" means the
amount determined to be effect form time
to time using the charge set forth below. The initial Prime
Rate Margin will
be determined at the Closing Date using the Leverage Ratio
calculated by
reference to the consolidated balance sheet of VSE most recently
received by
the Lender. Commencing on the date following the Closing Date
when the Lender
receives the consolidated balance sheet of VSE in accordance with
this
Agreement and on each such date thereafter, the Prime Rate Margin
will be
reset based on the Leverage Ratio calculated by reference to such
consolidated
balance sheet.
Prime Rate
Margin
Leverage Ratio
-----------------
--------------
.25%
Equal to or greater than 3.0 to 1.0
0%
Less than 3.0 to 1.0
In the event VSE fails to
provide such balance sheets when due, the
Prime Rate Margin shall be .25% until such time as such balance
sheets are
submitted as required by this Agreement.
"Proceeds" has the meaning
described in the Uniform Commercial Code as
in effect from time to time.
"Purchase Agreement Documents"
means collectively any agreement
hereafter executed in connection with any Permitted Acquisition and
any and
all other agreements, documents or instruments (together with any
and all
amendments, modifications, and supplements thereto, restatements
thereof, and
substitutes therefor) previously, now or hereafter executed and
delivered by
Borrower or any other Person in connection with any Permitted
Acquisition.
"Rate Request" means VSE's
written notice, as agent for the Borrowers to
be received by the Lender by 11:00 a.m. Eastern time on the third
Euro-Dollar
Business Day preceding the date specified in the Rate Request for
the
commencement of the Interest Period, of (a) its intention to have
(i) all or
any portion of the Principal Amount which is not then the subject
of an
Interest Period (other than an Interest Period which is terminating
on such
Euro-Dollar Business Day), and/or (ii) all or any portion of any
Loan which is
to be made on such date bear interest at a specified LIBOR-based
Rate and (b)
the Interest Period desired by the Borrowers in respect to the
amount
specified.
"Rate Request Amount" means
the amount, to be specified by the
Borrowers, through their agent VSE, in each Rate Request, which the
Borrowers
desire bear interest at the specified LIBOR-based Rate.
"Receivable" means one of each
Borrower's now owned and hereafter owned,
acquired or created Accounts, Chattel Paper, General Intangibles
and
Instruments; and "Receivables" means all of each Borrower's now or
hereafter
owned, acquired or created Accounts, Chattel Paper, General
Intangibles and
Instruments, and all cash and non-cash proceeds and products
thereof.
"Reportable Event" means any
of the events set forth in Section 4043(c)
of ERISA or the regulations thereunder.
"Responsible Officer" means
for each Borrower, its chief executive
officer or president or, with respect to financial matters, its
chief
financial officer, or treasurer.
"Revolving Credit Commitment"
means the agreement of the Lender relating
to the making the Revolving Loan and advances thereunder subject to
and in
accordance with the provisions of this Agreement; and "Revolving
Credit
Commitments" means the collective reference to all the Revolving
Credit
Commitments of the Lender.
"Revolving Credit Commitment
Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit
Termination
Date.
"Revolving Credit Committed
Amount" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Expiration
Date" means August __, 2009.
"Revolving Credit Facility"
means the facility established by the Lender
pursuant to Section 2.1 (Revolving Credit Facility).
"Revolving Credit Note" has
the meaning described in Section 2.1.5
(Revolving Credit Notes).
"Revolving Credit Termination
Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the
Revolving
Credit Commitments are terminated pursuant to Section 7.2
(Remedies) or
otherwise.
"Revolving Credit Fee" and
"Revolving Credit Fees" have the meanings
described in Section 2.1.10 (Revolving Credit Fee).
"Revolving Credit Unused Line
Fee" and "Revolving Credit Unused Line
Fees" have the meanings described in Section 2.1.10 (Revolving
Credit Unused
Line Fee).
"Revolving Loan" has the
meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Loan Account" has
the meaning described in Section 2.1.9
(Revolving Loan Account).
"Revolving Loan Mandatory
Prepayment" and "Revolving Loan Mandatory
Prepayments" have the meanings described in Section 2.1.6
(Mandatory
Prepayments of Revolving Loan).
"Revolving Loan Optional
Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.7 (Optional
Prepayment
of Revolving Loan).
"Security Documents" means
collectively any assignment, pledge
agreement, security agreement, mortgage, deed of trust, deed to
secure debt,
financing statement and any similar instrument, document or
agreement under or
pursuant to which a Lien is now or hereafter granted to, or for the
benefit
of, the Lender on any real or personal property of any Person to
secure all or
any portion of the Obligations, all as the same may from time to
time be
amended, restated, supplemented or otherwise modified, including,
without
limitation, this Agreement.
"Solvent" means when used with
respect to any Person that at the time of
determination:
(a) the assets of such Person, at a
fair
valuation, are in excess of the total amount of its debts
(including, without limitation, contingent liabilities); and
(b) the present fair saleable value of
its
assets is greater than its probable liability on its existing
debts as such debts become absolute and matured; and
(c) it is then able and expects to be able
to
pay its debts (including, without limitation, contingent debts
and
other commitments) as they mature; and
(d) it has capital sufficient to carry on
its
business as conducted and as proposed to be conducted.
For purposes of determining
whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in
light of all
the facts and circumstances existing at such time, represents the
amount that
can reasonably be expected to become an actual or matured
liability.
"State" means the Commonwealth
of Virginia.
"Subsidiary" means any
corporation the majority of the voting shares of
which at the time are owned directly by any Borrower and/or by one
or more
Subsidiaries of any Borrower.
"Supporting Obligation" means
a letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports
the payment
or performance of an account, chattel paper, a document, a general
intangible,
an instrument or investment property.
"Swap Reserve" means any and
all reserves which the Lender from time to
time establishes, in its sole discretion, with respect to Swap
Transactions.
"Swap Transactions" means any
interest rate swap transaction, forward
rate transaction, treasury lock transaction, interest rate cap,
floor or
collar transaction, any similar transaction, any option to enter
into any of
the foregoing, or any combination of any of the foregoing.
"Tangible Net Worth" means, at
any date, all amounts which, in
accordance with GAAP, would be included under stockholders' equity
on the
consolidated balance sheet of VSE and Subsidiaries on such date;
provided
that, in any event, such amounts are to be net of amounts carried
on the books
of the Borrowers for (a) any write-up in the book value of any
assets
resulting from a revaluation thereof subsequent to the Closing
Date; (b)
treasury stock; (c) unamortized debt discount expense; (d) any cost
of
investments in excess of net assets acquired at any time of
acquisition; (e)
except as permitted by Section 6.2.6 (Investments, Loans and
Other
Transactions), loans or advances to any Affiliate of the Borrowers
or any
Subsidiary; (f) patents, patent applications, copyrights,
trademarks, trade
names, good will, research and development costs, organizational
expenses,
capitalized software developments costs and other like intangibles;
and (g)
any investments in securities which are not actively traded on a
national
securities exchange.
"Target" has the meaning
described in the definition of Permitted
Acquisitions.
"Taxes" means all taxes and
assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every
character
(including all penalties or interest thereon), which at any time
may be
assessed, levied, confirmed or imposed by any Governmental
Authority on any or
all of the Borrowers or any of its or their properties or assets or
any part
thereof or in respect of any of its or their franchises,
businesses, income or
profits.
"Trademarks" means and
includes in each case whether now existing or
hereafter arising, all of each Borrower's rights, title and
interest in and to
(a) any and all trademarks (including service marks), trade names
and trade
styles, and applications for registration thereof and the goodwill
of the
business symbolized by any of the foregoing, (b) any and all
licenses of
trademarks, service marks, trade names and/or trade styles, whether
as
licensor or licensee, (c) any renewals of any and all trademarks,
service
marks, trade names, trade styles and/or licenses of any of the
foregoing, (d)
income, royalties, damages and payments now or hereafter due and/or
payable
with respect thereto, including, without limitation, damages,
claims, and
payments for past, present and future infringements thereof, (e)
rights to sue
for past, present and future infringements of any of the foregoing,
including
the right to settle suits involving claims and demands for
royalties owing,
and (f) all rights corresponding to any of the foregoing throughout
the world.
"Unearned Contract Value"
means the difference between (a) the then
fully funded dollar value of the contract or subcontract, whether
or not
earned, and (b) the total amounts previously billed and properly
billable for
accepted end items or services.
"Uniform Commercial Code"
means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect
from time
to time in the State or in any other jurisdiction, as
applicable.
"Wholly Owned Subsidiary"
means any domestic United States corporation
all the shares of stock of all classes of which (other than
directors'
qualifying shares) at the time are owned directly or indirectly by
a Borrower
and/or by one or more Wholly Owned Subsidiaries of a Borrower.
Section
1.2 Accounting Terms and Other
Definitional Provisions.
Unless otherwise defined
herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant
hereto,
accounting terms not otherwise defined herein, and accounting terms
only
partly defined herein, to the extent not defined, shall have the
respective
meanings given to them under GAAP, as consistently applied to the
applicable
Person. All terms used herein which are defined by the
Uniform Commercial
Code shall have the same meanings as assigned to them by the
Uniform
Commercial Code unless and to the extent varied by this
Agreement. The words
"hereof", "herein" and "hereunder" and words of similar import when
used in
this Agreement shall refer to this Agreement as a whole and not to
any
particular provision of this Agreement, and article, section,
subsection,
schedule and exhibit references are references to articles,
sections or
subsections of, or schedules or exhibits to, as the case may be,
this
Agreement unless otherwise specified. As used herein, the
singular number
shall include the plural, the plural the singular and the use of
the
masculine, feminine or neuter gender shall include all genders, as
the context
may require. Reference to any one or more of the Financing
Documents shall
mean the same as the foregoing may from time to time be amended,
restated,
substituted, extended, renewed, supplemented or otherwise
modified. Reference
in this Agreement and the other Financing Documents to the
"Borrower", the
"Borrowers", "each Borrower" or otherwise with respect to any one
or more of
the Borrowers shall mean each and every Borrower and any one or
more of the
Borrowers, jointly and severally, unless a specific Borrower is
expressly
identified.
ARTICLE II
THE CREDIT FACILITIES
Section 2.1
The Revolving Credit Facility.
------------------------------
2.1.1 Revolving Credit Facility.
--------------------------
Subject to and upon the provisions of this Agreement, the
Lender establishes a revolving credit facility in favor of the
Borrowers. The
aggregate of all advances under the Revolving Credit Facility is
sometimes
referred to in this Agreement collectively as the "Revolving
Loan". The
Lender's "Revolving Credit Committed Amount" is $25,000,000.
During the
Revolving Credit Commitment Period, any or all of the Borrowers may
request
advances under the Revolving Credit Facility in accordance with the
provisions
of this Agreement; provided that after giving effect to any
Borrower's request
the aggregate outstanding principal balance of the Revolving Loan
and all
Letter of Credit Obligations would not exceed the lesser of (i) the
Revolving
Credit Committed Amount or (ii) the Borrowing Base.
Unless sooner paid, the unpaid Revolving Loan, together
with interest accrued and unpaid thereon and all other Obligations
shall be due
and payable in full on the Revolving Credit Expiration Date.
Interest on the
Revolving Loan shall be payable on each Interest Payment Date.
2.1.2 Procedure for Making Advances Under the
---------------------------------------
Revolving Loan; Lender Protection Loans.
----------------------------------------
The Borrowers may borrow under the Revolving Credit
Facility on any Business Day. Advances under the Revolving
Loan shall be
deposited to a demand deposit account of a Borrower with the Lender
or shall be
otherwise applied as directed by the Borrowers, which direction the
Lender may
require to be in writing. Not later than 1:00 p.m. (Eastern
Time) on the date
of the requested borrowing, the Borrowers shall give the Lender
oral or written
notice (a "Loan Notice") of the amount and (if requested by the
Lender) the
purpose of the requested borrowing and if requested by the Lender,
be
accompanied by a Borrowing Base Report. Any oral Loan Notice
shall be
confirmed in writing by the Borrowers within three (3) Business
Days after the
making of the requested advance under the Revolving Loan.
Each Loan Notice
shall be irrevocable.
In addition,
each of the Borrowers hereby irrevocably
authorizes the Lender at any time and from time to time, without
further
request from or notice to the Borrowers, to make advances under the
Revolving
Loan, and irrevocably authorizes the Lender to establish, without
duplication,
reserves against the Borrowing Base, which the Lender, in its sole
and
absolute discretion, deems necessary or appropriate to protect the
interests
of the Lender under this Agreement, including, without limitation,
advances
and reserves under the Revolving Loan made to cover debit balances
in the
Revolving Loan Account, principal of, and/or interest on, any Loan,
the
Obligations (including, without limitation, any Letter of Credit
Obligations),
and/or Enforcement Costs, prior to, on, or after the termination of
other
advances under this Agreement, regardless of whether the
outstanding principal
amount of the Revolving Loan that the Lender may advance or the
Lender may
reserve hereunder exceeds the Total Revolving Credit Committed
Amount or the
Borrowing Base.
2.1.3 Borrowing Base.
---------------
As used in this Agreement, the term "Borrowing Base" means
at any time, an amount equal to the sum of (i) eighty percent (80%)
of the
amount of Eligible Receivables and (ii) ninety percent (90%) of
Eligible
Receivables derived from Government Contracts. Any Eligible
Receivables
acquired by any of the Borrowers in connection with any Permitted
Acquisition
shall not be included in the Borrowing Base without the prior
consent of the
Lender.
The Borrowing Base shall be computed based on the
Borrowing Base Report most recently delivered to and accepted by
the Lender in
its sole and absolute discretion. In the event the Borrowers
fail to furnish a
Borrowing Base Report required by Section 2.1.4 (Borrowing Base
Report), or in
the event the Lender believes that a Borrowing Base Report is no
longer
accurate, the Lender may, in its sole and absolute discretion
exercised from
time to time and without limiting other rights and remedies under
this
Agreement, suspend the making of or limit advances under the
Revolving Loan.
The Borrowing Base shall be subject to reduction by amounts
credited to the
Collateral Account since the date of the most recent Borrowing Base
Report and
by the amount of any Receivable which was included in the Borrowing
Base but
which the Lender determines fails to meet the respective criteria
applicable
from time to time for Eligible Receivables.
If at any time the total of the aggregate principal amount
of the Revolving Loan and Outstanding Letter of Credit Obligations
exceeds the
Borrowing Base, a borrowing base deficiency ("Borrowing Base
Deficiency")
shall exist. Each time a Borrowing Base Deficiency exists,
the Borrowers at
the sole and absolute discretion of the Lender exercised from time
to time
shall pay the Borrowing Base Deficiency ON DEMAND to the
Lender.
Without
implying any limitation on the Lender's discretion
with respect to the Borrowing Base, the criteria for Eligible
Receivables
contained in the definition of Eligible Receivables are in part
based upon the
business operations of the Borrowers existing on or about the
Closing Date and
upon information and records furnished to the Lender by the
Borrowers. If at
any time or from time to time hereafter, the business operations of
the
Borrowers change or such information and records furnished to the
Lender is
incorrect or misleading, the Lender in its discretion, may at any
time and
from time to time during the duration of this Agreement change such
criteria
or add new criteria. The Lender may communicate such changed
or additional
criteria to the Borrowers from time to time either orally or in
writing.
2.1.4 Borrowing Base Report.
----------------------
The Borrowers will furnish to the Lender no less
frequently than monthly before the 20th day of each month and at
such other
times as may be requested by the Lender a report of the Borrowing
Base (each a
"Borrowing Base Report"; collectively, the "Borrowing Base
Reports") in the form
required from time to time by the Lender, appropriately completed
and duly
signed. The Borrowing Base Report shall contain the net
amount due on the
Receivables, and the calculations of the Borrowing Base, all in
such detail, and
accompanied by such supporting and other information, as the Lender
may from
time to time request. Upon the Lender's request and upon the
creation of any
Receivables, or at such intervals as the Lender may require, the
Borrowers will
provide the Lender with (a) confirmatory assignment schedules; (b)
copies of
Account Debtor invoices; (c) evidence of shipment or delivery; and
(d) such
further schedules, documents and/or information regarding the
Receivables as the
Lender may reasonably require. The items to be provided under this
subsection
shall be in form satisfactory to the Lender, and certified as true
and correct
by a Responsible Officer, and delivered to the Lender from time to
time solely
for the Lender's convenience in maintaining records of the
Collateral. Any
Borrower's failure to deliver any of such items to the Lender shall
not
affect, terminate, modify, or otherwise limit the Liens of the
Lender in the
Collateral.
2.1.5 Revolving Credit Note.
----------------------
The
joint and several obligation of the Borrowers to pay
the Revolving Loan, with interest, shall be evidenced by a
promissory note (as
from time to time extended, amended, restated, supplemented or
otherwise
modified, the "Revolving Credit Note") substantially in the form of
EXHIBIT
"B" attached hereto and made a part hereof, with appropriate
insertions. The
Revolving Credit Note shall be dated as of the Closing Date, shall
be payable
to the order of the Lender at the times provided in the Revolving
Credit Note,
and shall be in the principal amount of the Revolving Credit
Committed Amount.
The Revolving Credit Note shall be dated as of the Closing Date,
shall be
payable to the order of the Lender and shall be in the principal
amount of the
Revolving Credit Committed Amount.
Each of the Borrowers acknowledges and agrees that, if the
outstanding principal balance of the Revolving Loan outstanding
from time to
time exceeds the Revolving Credit Committed Amount, the excess
shall bear
interest at the rates provided from time to time for advances under
the
Revolving Loan evidenced by the Revolving Credit Note and shall be
payable,
with accrued interest, ON DEMAND.
2.1.6 Mandatory Prepayments of Revolving Loan.
----------------------------------------
The Borrowers shall make the mandatory prepayments (each a
"Revolving Loan Mandatory Prepayment" and collectively, the
"Revolving Loan
Mandatory Prepayments") of the Revolving Loan at any time and from
time to
time in such amounts requested by the Lender pursuant to Section
2.1.3
(Borrowing Base) in order to cover any Borrowing Base
Deficiency.
2.1.7 Optional Prepayments of Revolving Loan.
---------------------------------------
The Borrowers shall have the option at any time and from
time to time to prepay (each a "Revolving Loan Optional Prepayment"
and
collectively the "Revolving Loan Optional Prepayments") the
Revolving Loan, in
whole or in part without premium or penalty.
2.1.8 The Collateral Account.
-----------------------
Upon request of the Lender after the occurrence of a
Default, the Borrowers will deposit, or cause to be deposited, all
Items of
Payment to a bank account designated by the Lender and from which
the Lender
alone has power of access and withdrawal (the "Collateral
Account"). Each
deposit shall be made not later than the next Business Day after
the date of
receipt of the Items of Payment. The Items of Payment shall
be deposited in
precisely the form received, except for the endorsements of the
Borrowers
where necessary to permit the collection of any such Items of
Payment, which
endorsement the Borrowers hereby agree to make. In the event
the Borrowers
fail to do so, the Borrowers hereby authorize the Lender to make
the
endorsement in the name of any or all of the Borrowers. Prior
to such a
deposit, the Borrowers will not commingle any Items of Payment with
any of the
Borrowers' other funds or property, but will hold them separate and
apart in
trust and for the account of the Lender.
In addition,
if so directed by the Lender, the Borrowers
shall direct the mailing of all Items of Payment from their Account
Debtors to
one or more post-office boxes designated by the Lender, or to such
other
additional or replacement post-office boxes pursuant to the request
of the
Lender from time to time (collectively, the "Lockbox"). The
Lender shall have
unrestricted and exclusive access to the Lockbox.
The Borrowers hereby authorize the Lender after the
occurrence of a Default to inspect all Items of Payment, endorse
all Items of
Payment in the name of any or all of the Borrowers, and deposit
such Items of
Payment in the Collateral Account. The Lender reserves the
right, exercised
in its sole and absolute discretion from time to time, to provide
to the
Collateral Account credit prior to final collection of an Item of
Payment and
to disallow credit for any Item of Payment which is unsatisfactory
to the
Lender. In the event Items of Payment are returned to the
Lender for any
reason whatsoever, the Lender may, in the exercise of its
discretion from time
to time, forward such Items of Payment a second time. Any
returned Items of
Payment shall be charged back to the Collateral Account, the
Revolving Loan
Account, or other account, as appropriate.
The Lender will after the occurrence of a Default apply
the whole or any part of the collected funds credited to the
Collateral Account
against the Revolving Loan (or with respect to Items of Payment
which are not
proceeds of Accounts or Inventory or after an Event of Default,
against any of
the Obligations) or credit such collected funds to a depository
account of any
or all of the Borrowers with the Lender, the order and method of
such
application to be in the sole discretion of the Lender.
2.1.9 Revolving Loan Account.
-----------------------
The Lender will establish and maintain a loan account on
its books (the "Revolving Loan Account") to which the Lender will
(a) debit (i)
the principal amount of each advance under the Revolving Loan made
by the
Lender hereunder as of the date made, (ii) the amount of any
interest accrued
on the Revolving Loan as and when due, and (iii) any other amounts
due and
payable by the Borrowers to the Lender from time to time under the
provisions
of this Agreement in connection with the Revolving Loan, including,
without
limitation, Enforcement Costs, Fees, late charges, and service,
collection and
audit fees, as and when due and payable, and (b) credit all
payments made by
the Borrowers to the Lender on account of the Revolving Loan as of
the date
made. The Lender may debit the Revolving Loan Account for the
amount of any
Item of Payment that is returned to the Lender unpaid. All
credit entries to
the Revolving Loan Account are conditional and shall be readjusted
as of the
date made if final and indefeasible payment is not received by the
Lender in
cash or solvent credits. The Borrowers hereby promise to pay
to the order of
the Lender, ON DEMAND, an amount equal to the excess, if any, of
all debit
entries over all credit entries recorded in the Revolving Loan
Account under
the provisions of this Agreement. Any and all periodic or
other statements or
reconciliations, and the information contained in those statements
or
reconciliations, of the Revolving Loan Account shall be presumed
conclusively
to be correct, and shall constitute an account stated between the
Lender and
the Borrowers unless the Lender receives specific written objection
thereto
from any Borrower within thirty (30) Business Days after such
statement or
reconciliation shall have been sent by the Lender. Any and
all periodic or
other statements or reconciliations, and the information contained
in those
statements or reconciliations, of the Revolving Loan Account shall
be final,
binding and conclusive upon the Borrowers in all respects, absent
manifest
error, unless the Lender receives specific written objection
thereto from the
Borrowers within thirty (30) Business Days after such statement
or
reconciliation shall have been sent by the Lender.
2.1.10 Revolving Credit Unused Line Fee.
---------------------------------
Borrowers shall pay to Lender a revolving credit facility
fee (collectively, the "Revolving Credit Unused Line Fees" and
individually, a
"Revolving Credit Unused Line Fee") in an amount equal to ten (10)
basis
points annum of the average daily unused and undisbursed portion of
the
Revolving Credit Committed Amount in effect from time to time
accruing during
each calendar quarter. The accrued and unpaid portion of the
Revolving Credit
Unused Line Fee shall be paid by Borrowers to Lender on the last
day of each
quarter, commencing on the first such date following the date
hereof, and on
the Revolving Credit Termination Date.
2.1.11 Optional Reduction of Total Revolving Credit
--------------------------------------------
Committed Amount.
-----------------
The Borrowers shall have the right to reduce permanently
(each a "Revolving Credit Optional Reduction" and collectively the
"Revolving
Credit Optional Reductions") the Total Revolving Credit Committed
Amount in
effect from time to time in the amount of any integral multiple of
One Million
Dollars ($1,000,000), upon at least fifteen (15) Business Days
prior written
notice to the Lender specifying the date and amount of such
Revolving Credit
Optional Reduction; provided, that no Revolving Credit Optional
Reduction
shall be permitted if, (i) after giving effect thereto and to any
Revolving
Loan Optional Prepayment made on the effective date thereof, the
then
outstanding principal amount of the Revolving Loan and Outstanding
Letter of
Credit Obligations exceeds the Total Revolving Credit Committed
Amount as so
reduced or (ii) after giving effect to such Revolving Credit
Optional
Reduction there is not at least Five Million Dollars ($5,000,000)
of
availability under the Revolving Loan. Such notice shall be
irrevocable as to
the amount and date of such Revolving Credit Optional
Reduction.
Section 2.2
The Letter of Credit Facility.
------------------------------
2.2.1 Letters of Credit.
------------------
Subject to and upon the provisions of this Agreement, and
as a part of the Revolving Credit Commitments, each of the
Borrowers, upon the
prior approval of the Lender, may obtain standby letters of credit
(as the
same may from time to time be amended, supplemented or otherwise
modified,
each a "Letter of Credit" and collectively the "Letters of Credit")
from the
Lender from time to time from the Closing Date until the Business
Day
preceding the Revolving Credit Termination Date. The
Borrowers will not be
entitled to obtain a Letter of Credit unless (a) the Borrowers are
then able
to obtain a Revolving Loan from the Lender in an amount not less
than the
proposed face amount of the Letter of Credit requested by the
Borrowers, and
(b) the sum of the then Outstanding Letter of Credit Obligations
(including
the amount of the requested Letter of Credit), unless otherwise
agreed to by
the Lender, does not exceed Five Million Dollars ($5,000,000).
2.2.2 Letter of Credit Fees.
----------------------
With
respect to each Letter of Credit, the Borrowers shall
pay to the Lender, for its own account, an issuance fee of one
hundred twenty-
five (125) basis points per annum of the stated amount of each
Letter of
Credit all without regard for provisions contained in the Letters
of Credit
which may give rise to a reduction in the stated amount thereof
unless such
reduction has actually occurred (each a "Letter of Credit Fronting
Fee" and
collectively, the "Letter of Credit Fees"). The Letter of
Credit Fees shall
be paid upon the opening of each Letter of Credit and upon each
anniversary
thereof, if any. In addition, the Borrowers shall pay to the
Lender all other
reasonable and customary amendment, negotiation, processing,
transfer or other
fees to the extent and as and when required by the provisions of
any Letter of
Credit Agreement. All Letter of Credit Fees and all such
other additional
fees are included in and are a part of the "Fees" payable by the
Borrowers
under the provisions of this Agreement and are for the sole and
exclusive
benefit of the Lender.
2.2.3 Terms of Letters of Credit; Post-Expiration
Date
------------------------------------------------
Letters of Credit.
------------------
Each Letter of Credit shall (a) be opened pursuant to a
Letter of Credit Agreement and (b) expire on a date not later than
the
Business Day preceding the Revolving Credit Expiration Date;
provided,
however, if any Letter of Credit does have an expiration date later
than the
Business Day preceding the Revolving Credit Termination Date (each
a "Post-
Expiration Date Letter of Credit" and collectively, the
"Post-Expiration Date
Letters of Credit"), effective as of the Business Day preceding the
Revolving
Credit Termination Date and without prior notice to or the consent
of the
Borrowers, the Lender may make advances under the Revolving Loan
for the
account of the Borrowers in the aggregate face amount of all such
Letters of
Credit. The Lender may in its sole and absolute discretion
issue or refuse to
issue any Letter of Credit which is automatically renewable or
"evergreen".
The Lender shall deposit the proceeds of such advances into one or
more non-
interest bearing accounts with and in the name of the Lender and
over which
the Lender alone shall have exclusive power of access and
withdrawal
(collectively, the "Letter of Credit Cash Collateral
Account"). The Letter of
Credit Cash Collateral Account is to be held by the Lender, as
additional
collateral and security for any Letter of Credit Obligations
relating to the
Post-Expiration Date Letters of Credit. The Borrowers hereby
assign, pledge,
grant and set over to the Lender, a first priority security
interest in, and
Lien on, all of the funds on deposit in the Letter of Credit Cash
Collateral
Account, together with any and all Proceeds and products thereof as
additional
collateral and security for the Letter of Credit Obligations
relating to the
Post-Expiration Date Letters of Credit. The Borrowers
acknowledge and agree
that the Lender shall be entitled to fund any draw or draft on any
Post-
Expiration Date Letter of Credit from the monies on deposit in the
Letter of
Credit Cash Collateral Account without notice to or consent of the
Borrowers.
The Borrowers further acknowledge and agree that the Lender's
election to fund
any draw or draft on any Post-Expiration Date Letter of Credit from
the Letter
of Credit Cash Collateral shall in no way limit, impair, lessen,
reduce,
release or otherwise adversely affect the Borrowers' obligation to
pay any
Letter of Credit Obligations under or relating to the
Post-Expiration Date
Letters of Credit. At such time as all Post-Expiration Date
Letters of Credit
have expired and all Letter of Credit Obligations relating to the
Post-
Expiration Date Letters of Credit have been paid in full, the
Lender agrees to
apply the amount of any remaining funds on deposit in the Letter of
Credit
Cash Collateral Account to the then unpaid balance of the
Obligations under
the Revolving Credit Facility in such order and manner as the
Lender shall
determine in its sole and absolute discretion in accordance with
the
provisions of this Agreement.
Each Letter of Credit shall be issued for purposes
acceptable to Lender. The aggregate face amount of all
Letters of Credit at
any one time outstanding and issued by the Lender pursuant to the
provisions
of this Agreement, including, without limitation, any and all
Post-Expiration
Date Letters of Credit, plus the amount of any unpaid Letter of
Credit Fees
and unpaid Letter of Credit Fees accrued or scheduled to accrue
thereon, and
less the aggregate amount of all drafts issued under or purporting
to have
been issued under such Letters of Credit that have been paid by the
Lender and
for which the Lender has been reimbursed by the Borrowers in full
in
accordance with Section 2.2.5 (Payments of Letters of Credit) and
the Letter
of Credit Agreements, and for which the Lender has no further
obligation or
commitment to restore all or any portion of the amounts drawn and
reimbursed,
is herein called the "Outstanding Letter of Credit
Obligations".
2.2.4 Procedures for Letters of Credit.
---------------------------------
The Borrowers shall give the Lender written notice at
least five (5) Business Days prior to the date on which the
Borrower desires the
Lender to issue a Letter of Credit. Such notice shall be
accompanied by a
duly executed Letter of Credit Agreement specifying, among other
things: (a)
the name and address of the intended beneficiary of the Letter of
Credit, (b)
the requested face amount of the Letter of Credit, (c) whether the
Letter of
Credit is to be revocable or irrevocable, (d) the Business Day on
which the
Letter of Credit is to be opened and the date on which the Letter
of Credit is
to expire, (e) the terms of payment of any draft or drafts which
may be drawn
under the Letter of Credit, and (f) any other terms or provisions
the
Borrowers desire to be contained in the Letter of Credit.
Such notice shall
also be accompanied by such other information, certificates,
confirmations,
and other items as the Lender may require to assure that the Letter
of Credit
is to be issued in accordance with the provisions of this Agreement
and a
Letter of Credit Agreement. In the event of any conflict
between the
provisions of this Agreement and the provisions of a Letter of
Credit
Agreement, the provisions of this Agreement shall prevail and
control unless
otherwise expressly provided in the Letter of Credit
Agreement. Upon (x)
receipt of such notice, (y) payment of all Letter of Credit Fees
and all other
Fees payable in connection with the issuance of such Letter of
Credit, and (z)
receipt of a duly executed Letter of Credit Agreement, the Lender
shall
process such notice and Letter of Credit Agreement in accordance
with its
customary procedures and open such Letter of Credit on the Business
Day
specified in such notice. The Lender shall not be obligated
to issue any
Letter of Credit where the expiration date automatically renews or
is
"evergreen".
2.2.5 Payments of Letters of Credit.
------------------------------
The Borrowers hereby promise to pay to the Lender, ON
DEMAND and in United States Dollars, the following which are herein
collectively
referred to as the "Current Letter of Credit Obligations":
(a) the amount which the Lender has paid
or
will be required to pay under each draft or draw on a Letter of
Credit, whether such demand be in advance of the Lender's
payment
or for reimbursement for such payment;
(b) any and all reasonable charges and
expenses which the Lender may pay or incur relative to the
Letter
of Credit and/or such draws or drafts; and
(c) interest on the amounts described in
(a)
and (b) not paid by the Borrowers as and when due and payable
under the provisions of (a) and (b) above from the day the same
are due and payable until paid in full at a rate per
In addition, the Borrowers hereby promise to pay any and
all other Letter of Credit Obligations as and when due and payable
in accordance
with the provisions of this Agreement and the Letter of Credit
Agreements.
The obligation of the Borrowers to pay Current Letter of Credit
Obligations
and all other Letter of Credit Obligations shall be absolute and
unconditional
under any and all circumstances and irrespective of any setoff,
counterclaim
or defense to payment which the Borrowers or any other account
party may have
or have had against the beneficiary of such Letter of Credit, the
Lender, or
any other Person, including, without limitation, any defense based
on the
failure of any draft or draw to conform to the terms of such Letter
of Credit,
any draft or other document proving to be forged, fraudulent or
invalid, or
the legality, validity, regularity or enforceability of such Letter
of Credit,
any draft or other documents presented with any draft, any Letter
of Credit
Agreement, this Agreement, or any of the other Financing Documents,
all
whether or not the Lender had actual or constructive knowledge of
the same,
and irrespective of any Collateral, security or guarantee therefor
or right of
offset with respect thereto and irrespective of any other
circumstances
whatsoever which constitutes, or might be construed to constitute,
an
equitable or legal discharge of the Borrowers for any Letter of
Credit
Obligations, in bankruptcy or otherwise; provided, however, that
the Borrowers
shall not be obligated to reimburse the Lender for any wrongful
payment under
such Letter of Credit made as a result of the Lender's willful
misconduct.
The obligation of the Borrowers to pay the Letter of Credit
Obligations shall
not be conditioned or contingent upon the pursuit by the Lender or
any other
Person at any time of any right or remedy against any Person which
may be or
become liable in respect of all or any part of such obligation or
against any
Collateral, security or guarantee therefor or right of offset with
respect
thereto.
The Letter of Credit Obligations shall continue to be
effective, or be reinstated, as the case may be, if at any time
payment of all
or any portion of the Letter of Credit Obligations is rescinded or
must
otherwise be restored or returned by the Lender upon the
insolvency,
bankruptcy, dissolution, liquidation or reorganization of any
Person, or upon
or as a result of the appointment of a receiver, intervenor, or
conservator
of, or trustee or similar officer for, any Person, or any
substantial part of
such Person's property, all as though such payments had not been
made.
2.2.6 Change in Law; Increased Cost.
------------------------------
If any change in any law or regulation or in the
interpretation thereof by any court or other Governmental Authority
charged
with the administration thereof shall either (a) impose, modify or
deem
applicable any reserve, special deposit or similar requirement
against Letters
of Credit issued by the Lender, or (b) impose on the Lender any
other
condition regarding this Agreement or any Letter of Credit, and the
result of
any event referred to in clauses (a) or (b) above shall be to
increase the
cost to the Lender of issuing, maintaining or extending the Letter
of Credit
or the cost to the Lender of funding any obligation under or in
connection
with the Letter of Credit (which increase in cost shall be the
result of the
Lender's reasonable allocation of the aggregate of such cost
increases
resulting from such events), then, upon demand by the Lender, the
Borrowers
shall immediately pay to the Lender from time to time as specified
by the
Lender, additional amounts which shall be sufficient to compensate
the Lender
for such increased cost, together with interest on each such amount
from the
date demanded until payment in full thereof at a rate per annum
equal to the
then highest current rate of interest on the Revolving Loan.
A certificate as
to such increased cost incurred by the Lender, submitted by the
Lender to the
Borrowers, shall be conclusive, absent manifest error.
2.2.7 General Letter of Credit Provisions.
------------------------------------
The Borrowers hereby instruct the Lender to pay any draft
complying with the terms of any Letter of Credit irrespective of
any
instructions of the Borrowers to the contrary. The Borrowers
assume all risks
of the acts and omissions of the beneficiary and other users of any
Letter of
Credit. The Lender and its branches, Affiliates and/or
correspondents shall
not be responsible for and the Borrowers hereby indemnify and hold
the Lender
and its branches, Affiliates and/or correspondents harmless from
and against
all liability, loss and expense (including reasonable attorney's
fees and
costs) incurred by the Lender and/or its branches, Affiliates
and/or
correspondents relative to and/or as a consequence of (a) any
failure by the
Borrowers to perform the agreements hereunder and under any Letter
of Credit
Agreement, (b) any Letter of Credit Agreement, this Agreement, any
Letter of
Credit and any draft, draw and/or acceptance under or purported to
be under
any Letter of Credit, (c) any action taken or omitted by the Lender
and/or any
of its branches, Affiliates and/or correspondents at the request of
the
Borrowers, (d) any failure or inability to perform in accordance
with the
terms of any Letter of Credit by reason of any control or
restriction
rightfully or wrongfully exercised by any de facto or de jure
Governmental
Authority, group or individual asserting or exercising governmental
or
paramount powers, and/or (e) any consequences arising from causes
beyond the
control of the Lender and/or any of its branches, Affiliates
and/or
correspondents.
Except for willful misconduct, the Lender and its
branches, Affiliates and/or correspondents, shall not be liable or
responsible
in any respect for any (a) error, omission, interruption or delay
in
transmission, dispatch or delivery of any one or more messages or
advices in
connection with any Letter of Credit, whether transmitted by cable,
telegraph,
mail or otherwise and despite any cipher or code which may be
employed, and/or
(b) action, inaction or omission which may be taken or suffered by
it or them in
good faith or through inadvertence in identifying or failing to
identify any
beneficiary or otherwise in connection with any Letter of
Credit.
Any Letter of Credit may be amended, modified or revoked
only upon the receipt by the Lender from the Borrowers and the
beneficiary
(including any transferee and/or assignee of the original
beneficiary), of a
written consent and request therefor.
If any Laws, order of court and/or ruling or regulation of
any Governmental Authority of the United States (or any state
thereof) and/or
any country other than the United States permits a beneficiary
under a Letter
of Credit to require the Lender and/or any of their respective
branches,
Affiliates and/or correspondents to pay drafts under or purporting
to be under
a Letter of Credit after the expiration date of the Letter of
Credit, the
Borrowers shall reimburse the Lender, as appropriate, for any such
payment
pursuant to provisions of Section 2.2.6 (Change in Law; Increased
Cost).
Except as may otherwise be specifically provided in a
Letter of Credit or Letter of Credit Agreement, the laws of the
State and the
Uniform Customs and Practice for Documentary Credits, 1993
Revision,
International Chamber of Commerce Publication No. 500 shall govern
the Letters
of Credit. The Laws, rules, provisions and regulations of the
Uniform Customs
and Practice for Documentary Credits are hereby incorporated by
reference. In
the event of a conflict between the Uniform Customs and Practice
for Documentary
Credits and the laws of the State, the Uniform Customs and Practice
for
Documentary Credits shall prevail.
Section 2.3
Interest.
---------
2.3.1 General Provisions.
-------------------
All payments hereunder
(including any payment or prepayment of
principal, interest, fees and other charges) or with respect to the
Notes or
the Loans shall be made in lawful money of the United States of
America, in
immediately available funds without set-off, deduction or
counterclaim of any
kind, to the Lender, at its office at 8521 Leesburg Pike, Suite 405
Vienna,
Virginia 22182, or at such other place as the Lender may in writing
designate,
and shall be applied, first to accrued Obligations other than
principal and
interest, next to accrued interest, then to principal due on Loans
bearing
interest at the Prime-based Rate, and last to interest due on Loans
bearing
interest at a LIBOR-based Rate the last day of the Interest Period
applicable
thereto, unless the Interest Period is six months, in which case
interest
shall be due quarterly on the last day of each calendar
quarter. Borrowers
authorize the Lender to debit demand deposit account number
_____________ or
any other account with Lender (routing number ____________)
designated in
writing by VSE, beginning September 30, 2007 for any payments due
to the
Lender. VSE further certifies that VSE holds legitimate
ownership of this
account and preauthorizes this periodic debit as part of its right
under said
ownership. At the option of the Lender, the Loans shall bear
interest at the
Default Rate, payable on demand, during any period of Default
hereunder.
2.3.2 Inability to Determine Rate.
----------------------------
In the event that the Lender shall have determined (which
determination shall be conclusive and binding upon the Borrowers)
that by
reason of circumstances affecting the interbank Eurodollar market
adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for
any given
Interest Period, the Lender shall forthwith give notice (which may
be
telephonic and promptly confirmed in writing or by facsimile
transmission) of
such determination to Borrowers at least two Euro-dollar Business
Days prior
to, as the case may be, the conversion date of any portion of the
Principal
Amount bearing interest at the Prime-based Rate to a LIBOR-based
Rate. If
such notice is given: (a) any portion of the Principal Amount
bearing interest
at the Prime-based Rate that was to have been converted to a
LIBOR-based Rate,
subject to the provisions hereof, shall be continued at the
Prime-based Rate
and (b) any portion of the Principal Amount bearing interest at a
LIBOR-based
Rate shall be converted, on the last day of the then current
Interest Period
with respect thereto, to the Prime-based Rate. Until such
notice has been
withdrawn by the Lender, the Borrowers shall not have the right to
have a
LIBOR-based Rate apply to any portion of the Principal Amount.
2.3.3 Indemnity.
----------
The Borrowers agree to indemnify and reimburse the Lender
and to hold the Lender harmless from any loss, cost (including
administrative
costs) or expense which any one or more of the Lender may sustain
or incur as
a consequence of (a) a default by the Borrowers in payment when due
of the
principal amount of or interest on any LIBOR Amount, (b) the
failure of the
Borrowers to make, or convert the Applicable Interest Rate of, a
Loan after
the Borrowers have given a Rate Request, (c) the failure of the
Borrowers to
make any prepayment of a Loan after the Borrowers have given notice
of such
intention to make such a prepayment, and/or (d) the making by the
Borrowers of
a prepayment of a Loan on a day which is not the last day of the
Interest
Period for such LIBOR Amount, calculated as provided in the
following
paragraph. This agreement and covenant of the Borrowers shall
survive
termination or expiration of this Agreement and payment of the
other
Obligations.
Contemporaneously with any prepayment of principal of a
LIBOR Amount, a prepayment fee shall be due and payable to the
Lender in an
amount equal to the product of
(A) the amount so prepaid
multiplied by
-------------
(B) the difference (but not less than zero) of
--------------
(i) the constant maturity 360-day
interest yield (as of the
first day of the then effective
Interest Period and
expressed as a decimal) for a United
States Treasury bill,
note, or bond (a "Treasury
obligation") selected by the
Lender, in an aggregate amount
comparable to the amount
prepaid, and having, as of the first
day of the then
effective Interest Period, a
remaining term approximately
equal to the original Interest
Period,
minus
-----
(ii) the 360-day interest yield (as
of the Business Day
immediately preceding the prepayment
date and expressed as a
decimal) on such Treasury obligation
and having, as of the
Business Day immediately preceding
the prepayment date, a
remaining term until maturity
approximately equal to the
unexpired portion of the Interest
Period,
multiplied by
-------------
(C) the quotient of
------------
(y) the number of calendar days in
the unexpired portion of
the Interest Period,
divided by
----------
(x) 360.
The applicable yields on the Treasury obligations
described above shall be determined based upon the Federal Reserve
statistical
release H.15 published for the applicable determination dates set
forth above.
Any Treasury obligation selected when the related Interest Period
is one year or
less shall be United States Treasury Bills. The Lender shall
not be obligated
or required to have actually reinvested the prepaid amount of the
LIBOR Amount
in any such Treasury obligation as a condition precedent to the
Borrowers'
being obligated to pay a prepayment fee as outlined above.
The Lender shall
not be obligated to accept any prepayment of principal unless it
is
accompanied by the prepayment fee, if any, due in connection
therewith as
calculated pursuant to the provisions of this paragraph. No
prepayment fee
payable in
