Exhibit 10.2
THIRD AMENDED AND RESTATED TERM NOTE
(Xxxxxxx X. Xxxxx)
$2,932,500 July 14, 1999
In consideration of the loan (hereinafter referred to as a "Loan"), OAO
Technology Solutions, Inc., a Delaware corporation (the "Lender"), has made to
Xxxxxxx X. Xxxxx, (the "Borrower"), and for value received, the Borrower hereby
promises to pay to the order of the Lender, at the Lender's office located at
0000 Xxxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxxx, XX 00000 or at such other
place in the continental United States as the Lender may designate in writing,
in lawful money of the United States, and in immediately available funds, the
principal sum of $2,932,500 together with all accrued interest thereon.
The Borrower hereby further promises to pay to the order of the Lender
interest on the outstanding principal amount from the date hereof, at a per
annum rate equal to 5.82% (the "Loan Rate"). The Borrower shall pay on demand
interest on any overdue payment of principal and interest (to the extent legally
enforceable) at the Loan Rate plus three percent (3%).
The unpaid principal balance of this Third Amended and Restated Term Note
(the "Note"), together with all accrued and unpaid interest, shall be paid in
full on July 14, 2008; provided, however, that the Lender may declare all
amounts outstanding under the Note immediately due and payable within ten
business days of any date on which Fair Market Value (as defined below) equals
or exceeds $3.91, as equitably adjusted for any subsequent stock distribution,
stock split, combination, reorganization, recapitalization, reclassification or
other similar event involving a change in the Lender's capital structure.
For this purpose, "Fair Market Value" will be determined as follows:
(x) if the Lender's common stock is publicly traded on a national
securities exchange or the Nasdaq National Market or Nasdaq SmallCap
Market, Fair Market Value will be equal to the mean between the highest
and lowest quoted selling prices of the Lender's common stock on the
preceding date on that securities exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market, or, if there were no trades on that date, on
the next preceding date upon which a sale was reported;
(y) if the Lender's common stock is publicly traded but not
principally traded on a national securities exchange or the Nasdaq
National Market or Nasdaq SmallCap Market, Fair Market Value will be equal
to the mean between the last reported "bid" and "asked" prices of the
Lender's common stock on the latest preceding date, as reported in the
"pink sheets" or by the National Daily Quotation Bureau or another
customary financial reporting service, as applicable and as the Board of
Directors of the Lender may determine; or
(z) if the Lender's common stock is not publicly traded or, if
publicly traded, is not subject to reported transactions or "bid" or
"asked" quotations as set forth above, Fair Market Value will be
determined in good faith by the Board of Directors of the Lender from time
to time; provided, however, that the Borrower may dispute the Board's
determination of Fair Market Value under this subsection (z) by delivering
to the Lender, within five business days of the Borrower's receipt of such
determination, a notice setting
forth in reasonable detail the Borrower's basis for such a dispute (the
"Dispute Notice"). If, within ten business days of the Lender's receipt of
the Dispute Notice, the Lender and the Borrower are unable to agree on
Fair Market Value, the Borrower will have the right to engage an
independent appraiser of recognized national standing that is acceptable
to the Lender to determine the Fair Market Value. The appraiser will be
required to render a written report on its determination, which
determination will be final and binding on the Borrower and the Lender. If
Fair Market Value as finally determined by the appraiser exceeds Fair
Market Value as determined by the Board pursuant to this subsection (z)
(the "Board Determination") by 10% or more, then the Lender shall pay for
all costs of the appraisal. If, on the other hand, Fair Market Value as
finally determined by the appraiser is less than the Board Determination
by 10% or more, then the Borrower shall pay for all costs of the
appraisal. In all other cases, the Lender and the Borrower shall share
equally the fees and expenses of the appraiser.
If, on the date of determining Fair Market Value, shares of the
Lender's common stock have been exchanged for or converted into other
securities, then Fair Market Value of such other securities shall be
determined on a basis substantially consistent with that set forth
immediately above, taking into account any necessary and equitable
adjustments as to the number of such securities.
All payments made on this Note (including, without limitation,
prepayments) shall be applied, at the option of the Lender, first to late
charges and collection costs, if any, then to accrued interest and then to
principal. Interest payable hereunder shall be calculated for actual days
elapsed on the basis of a 360-day year. All accrued and unpaid interest shall be
due and payable upon maturity of this Note. After maturity or in the event of
default, interest shall continue to accrue on this Note at the rate set forth
above and shall be payable on demand of the Lender.
The outstanding principal amount of this Note may be prepaid in whole or
in part without any prepayment penalty or premium at any time or from time to
time by Borrower upon notice to the Lender; provided, that any prepayment shall
be applied first to any interest due to the date of such prepayment on this Note
and thereafter shall be applied to the installments of principal hereunder in
the inverse order of maturity.
Notwithstanding anything in this Note, the interest rate charged hereon
shall not exceed the maximum rate allowable by applicable law. If any stated
interest rate herein exceeds the maximum allowable rate, then the interest rate
shall be reduced to the maximum allowable rate, and any excess payment of
interest made by Borrower at any time shall be applied to the unpaid balance of
any outstanding principal of this Note.
An event of default hereunder shall consist of:
(i) a default in the payment by the Borrower to the Lender of principal or
interest under this Note as and when the same shall become due and payable; or
(ii) an event of default under the Second Amended and Restated Pledge
Agreement, dated as of October 18, 2001 (the "Pledge Agreement"), made by the
Borrower in favor of the Lender; or
(iii) institution of any proceeding by or against the Borrower under any
present or future bankruptcy or insolvency statute or similar law and, if
involuntary, if the same are not stayed or dismissed within sixty (60) days, or
the Borrower's assignment for the benefit of creditors or the
appointment of a receiver, trustee, conservator or other judicial representative
for the Borrower or the Borrower's property or the Borrower's being adjudicated
a bankrupt or insolvent; or
(iv) the expiration of the thirty (30) day period following the date the
Borrower ceases for any reason to remain in the employ of Xxxxxx.
Upon the occurrence of an event of default hereunder, this Note shall
automatically without any action or notice by Xxxxxx, be accelerated and become
immediately due and payable, and Lender shall have all of the rights and
remedies provided for herein or otherwise available at law or in equity, all of
which remedies shall be cumulative.
In the event the Borrower sells or otherwise transfers for value any of
the collateral pledged by the Borrower under the Pledge Agreement, then any
unpaid portion of the principal balance of this Note shall become immediately
due and payable, together with all accrued and unpaid interest on that principal
portion.
For purposes of applying the provisions of this Note, the Borrower shall
be considered to remain in the Lender's employ for so long as the Borrower
renders services to the Lender, any successor entity or one or more of the
Lender's fifty (50%) percent or more owned (directly or indirectly)
subsidiaries.
Payment of this Note shall be secured by a pledge of certain collateral
with the Lender pursuant to the Pledge Agreement. THE BORROWER, HOWEVER, SHALL
REMAIN PERSONALLY LIABLE FOR PAYMENT OF THIS NOTE AND ASSETS OF THE BORROWER, IN
ADDITION TO THE COLLATERAL UNDER THE PLEDGE AGREEMENT, MAY BE APPLIED TO THE
SATISFACTION OF THE BORROWER'S OBLIGATIONS HEREUNDER.
Neither the reference to nor the provisions of any agreement or document
referred to herein shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
herein provided.
Any action, suit or proceeding where the amount in controversy as to at
least one party, exclusive of interest and costs, exceeds $1,000,000 ("Summary
Proceeding"), arising out of or relating to this Agreement, or the breach,
termination or validity thereof, shall be litigated exclusively in the Superior
Court of the State of Delaware (the "Delaware Superior Court") as a summary
proceeding pursuant to Rules 124-131 of the Delaware Superior Court, or any
successor rules (the "Summary Proceeding Rules"). Each of the parties hereto
hereby irrevocably and unconditionally (i) submits to the jurisdiction of the
Delaware Superior Court for any Summary Proceeding, (ii) agrees not to commence
any Summary Proceeding except in the Delaware Superior Court, (iii) waives, and
agrees not to plead or to make, any objection to the venue of any Summary
Proceeding in the Delaware Superior Court, (iv) waives, and agrees not to plead
or to make, any claim that any Summary Proceeding brought in the Delaware
Superior Court has been brought in an improper or otherwise inconvenient forum,
(v) waives, and agrees not to plead or to make, any claim that the Delaware
Superior Court lacks personal jurisdiction over it, (vi) waives its right to
remove any Summary Proceeding to the federal courts except where such courts are
vested with sole and exclusive jurisdiction by statute and (vii) understands and
agrees that it shall not seek a jury trial or punitive damages in any Summary
Proceeding based upon or arising out of or otherwise related to this Agreement
waives any and all rights to any such jury trial or to seek punitive damages.
In the event any action, suit or proceeding where the amount in
controversy as to at least one party, exclusive of interest and costs, does not
exceed $1,000,000 (a "Proceeding"), arising out of or relating to this Agreement
or the breach, termination or validity thereof is brought, the parties to such
Proceeding agree to make application to the Delaware Superior Court to proceed
under the Summary Proceeding Rules. Until such time as such application is
rejected, such Proceeding shall be treated as a Summary Proceeding and all of
the foregoing provisions of this Section relating to Summary Proceedings shall
apply to such Proceeding.
If a Summary Proceeding is not available to resolve any dispute hereunder,
the controversy or claim shall be settled by arbitration conducted on a
confidential basis, under the U.S. Arbitration Act, if applicable, and the then
current Commercial Arbitration Rules of the American Arbitration Association
(the "Association") strictly in accordance with the terms of this Agreement and
the substantive law of the State of Delaware. The arbitration shall be conducted
at the Association's regional office located closest to the Lender's principal
place of business by a single arbitrator. Judgment upon the arbitrator's award
may be entered and enforced in any court of competent jurisdiction. Neither
party shall institute a proceeding hereunder unless at least 60 days prior
thereto such party shall have given written notice to the other party of its
intent to do so.
Neither party shall be precluded hereby from securing equitable remedies
in courts of any jurisdiction, including, but not limited to, temporary
restraining orders and preliminary injunctions to protect its rights and
interests but shall not be sought as a means to avoid or stay arbitration or
Summary Proceedings.
Each of the parties hereto hereby irrevocably designates and appoints
Corporation Service Company (the "Service Agent") with offices on the date
hereof at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as its agent to receive
service of process in any Proceeding or Summary Proceeding. Each of the parties
hereto further covenants and agrees that, so long as this Agreement or the
Pledge Agreement shall be in effect, each such party shall maintain a duly
appointed agent for the service of summonses and other legal processes in the
State of Delaware and will notify the other parties hereto of the name and
address of such agent if it is no longer the Service Agent.
The Borrower hereby waives presentment, demand, protest and notice of
dishonor and protest, and also waives all other exemptions; and agrees that
extension or extensions of the time of payment of this Note or any installment
or part thereof may be made before, at or after maturity by agreement by the
Lender. Upon default hereunder the Lender shall have the right to offset the
amount owed by the Borrower against any amounts owed by the Lender in any
capacity to the Borrower, whether or not due, and the Lender shall be deemed to
have exercised such right of offset and to have made a charge against any such
account or amounts immediately upon the occurrence of an event of default
hereunder even though such charge is made or entered on the books of the Lender
subsequent thereto. The Borrower shall pay to the Lender, upon demand, all costs
and expenses, including, without limitation, attorneys' fees and legal expenses,
that may be incurred by the Lender in connection with the enforcement of this
Note.
Notices required to be given hereunder shall be deemed validly given (i)
three business days after sent, postage prepaid, by certified mail, return
receipt requested, (ii) one business day after sent, charges paid by the sender,
by Federal Express Next Day Delivery or other guaranteed delivery service, (iii)
when sent by facsimile transmission, or (iv) when delivered by hand:
If to the Lender: OAO Technology Solutions, Inc.
0000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Chief Financial Officer
If to the Borrower: Xxxxxxx X. Xxxxx
or to such other address, or in care of such other person, as the holder or the
Borrower shall hereafter specify to the other from time to time by due notice.
That certain Transition Agreement and General and Special Release, entered
into by and between the Lender and the Borrower on May 29, 2002 but effective as
of April 19, 2002, contains certain terms and conditions that relate to the
Borrower's obligations under this Note, including, without limitation, the
Borrower's obligation under Section 9(b) of such agreement to use net proceeds
of a certain stock exercise and subsequent share disposition to repay amounts
outstanding under this Note, even if such repayments would constitute
prepayments under this Note.
Any failure by the Lender to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right at
any time. No amendment to or modification of this Note shall be binding upon the
Lender unless in writing and signed by it. Any provision hereof found to be
illegal, invalid or unenforceable for any reason whatsoever shall not affect the
validity, legality or enforceability of the remainder hereof. This Note shall
apply to and bind the successors of the Borrower and shall inure to the benefit
of the Lender, its successors and assigns.
This Note shall be governed by and interpreted in accordance with the laws
of the State of Delaware.
This Note amends and restates in its entirety the Second Amended and
Restated Term Note made by Xxxxxxxx in favor of Xxxxxx and executed on October
18, 2001, but dated as of July 14, 1999.
IN WITNESS WHEREOF, the Borrower has duly executed this Third Amended and
Restated Term Note on this 29th day of May, 2002, but effective as of the date
first written above.
-----------------------------
XXXXXXX X. XXXXX
Accepted, Acknowledged and Agreed:
OAO TECHNOLOGY SOLUTIONS, INC.
By:________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
