AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of
August 27, 1999
by and between
GRC INTERNATIONAL, INC.
(the "Borrower")
and
MERCANTILE-SAFE DEPOSIT
AND TRUST COMPANY
(the "Bank")
TABLE OF CONTENTS
Section Page
------- ----
Credit Facility
---------------
1.1 Revolving Credit Loan; Letters of Credit 2
1.2 Advances and Payments 2
1.3 Election of Fluctuating Rate 3
1.4 General Loan Provisions 4
1.5 Notice and Manner of Borrowing 7
1.6 Method of Payment 7
1.7 Use of Loan Proceeds 7
1.8 Fees 7
1.9 Collateral Security 8
Definitions
-----------
2.1 Definitions 8
2.2 Amendments, etc. Included 14
Representations and Warranties
3.1 Organization and Authority; Conflicting Laws and Agreements 15
3.2 Subsidiaries 15
3.3 Margin Stock 15
3.4 Financial Statements 15
3.5 Financial Condition 15
3.6 Litigation; Tax Returns; Governmental Approvals 15
3.7 Liens 16
3.8 Enforceability 16
3.9 No Defaults 16
3.10 ERISA 16
3.11 Commercial Loan 17
3.12 Hazardous Materials 17
3.13 Assignments under the Federal Assignment of Claims Act 17
Section Page
------- ----
Covenants
---------
4.1 Payment of Taxes and Other Claims 17
4.2 Maintenance of Properties 17
4.3 Corporate Existence 18
4.4 Maintenance of Insurance 18
4.5 Financial Information, Tax Returns and Reports 18
4.6 Indebtedness 20
4.7 Liens 21
4.8 Disposition of Stock and Indebtedness 21
4.9 Investments, Loans, Advances, Guarantees and Contingent Liabilities 22
4.10 Merger and Sale of Assets 22
4.11 Dealings with Affiliates 23
4.12 Limitations on Certain Contracts 23
4.13 ERISA 23
4.14 Issuance of Stock 24
4.15 Financial Ratio 24
4.16 Obligations of the Borrower Unconditional 24
4.17 Businesses 24
4.18 Compliance with Laws 24
4.19 Hazardous Materials 25
4.20 Material Agreements 25
4.21 Assignments under the Federal Assignment of Claims Act 25
4.22 Additional Subsidiaries 25
Events of Default and Remedies
------------------------------
5.1 Events of Default 26
5.2 Acceleration 28
5.3 Costs of Collection 28
5.4 Consent to Jurisdiction; Waiver of Jury Trial 28
5.5 Service of Process 29
5.6 Acceleration of Other Obligations to Bank 29
5.7 Remedies Cumulative 29
Section Page
------- ----
Conditions Precedent to Lending
-------------------------------
6.1 Conditions to the Making of the Initial
Advance under the Revolving Credit Loan 29
6.2 Conditions to the Making of Each Advance under
the Revolving Credit Loan 30
Collateral Security
-------------------
7.1 Security Documents 31
7.2 Deposit Balances 31
Miscellaneous
-------------
8.1 Exercise of Rights 31
8.2 Payment Due on Banking Day 32
8.3 Assessments 32
8.4 Survival 32
8.5 Notices 32
8.6 Counterparts 32
8.7 Successors and Assigns; Governing Law; Amendments 33
8.8 Section Headings; Construction 33
8.9 Transaction Expenses 33
8.10 Estoppel Certificates 33
8.11 Indemnification 34
8.12 Publicity 34
Exhibit A -- Form of Consolidated, Amended and Restated
---------
Revolving Credit Master Note
AMENDED AND RESTATED
--------------------
REVOLVING CREDIT AGREEMENT
--------------------------
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this
"Agreement") is dated as of the 27th day of August, 1999, by and between GRC
INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), and
MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking institution (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to (i) that certain Amended and Restated
Revolving Credit and Term Loan Agreement dated as of February 12, 1996 by and
among the Bank, the Borrower, SWL Inc. and General Research Corporation, as
amended by that certain First Confirmation and Amendment effective as of March
31, 1996, that certain Second Confirmation and Amendment effective as of June
30, 1996, that certain Third Confirmation and Amendment effective as of June 30,
1996, that certain Fourth Confirmation and Amendment effective as of December
31, 1996, that certain Fifth Confirmation and Amendment effective as of April
30, 1997 and that certain Sixth Confirmation and Amendment effective as of March
31, 1997 (collectively, the "1996 Loan Agreement"), (ii) that certain Amended
and Restated Revolving Credit Master Note dated July 18, 1996 in the face
principal amount of $22,000,000 executed by the Borrower in favor of the Bank
(the "1996 Revolving Credit Note") and (iii) that certain Term Loan Note dated
February 12, 1996 in the face principal amount of $2,200,000, that certain Term
Loan Note dated March 8, 1996 in the face principal amount of $400,000 and that
certain Secured Note (Commercial) dated June 7, 1996 in the face principal
amount of $2,600,000, all as subsequently amended (collectively, the "1996 Term
Notes"), the Bank has established a $22,000,000 revolving credit facility and an
$8,000,000 standby credit facility in favor of the Borrower, with the current
aggregate outstanding principal balance under the 1996 Revolving Credit Note and
the 1996 Term Notes being $___________; and
WHEREAS, the Borrower has requested and the Bank has agreed to
amend and restate the 1996 Loan Agreement for the purpose, among other things,
of consolidating the revolving credit and standby credit facilities referred to
above and the aggregate principal outstanding balances thereunder and of
increasing the maximum aggregate availability under such facilities from
$30,000,000 to $35,000,000 (such indebtedness, as so consolidated and increased,
the "Revolving Credit Loan") by having the Borrower execute and deliver to the
Bank a Consolidated, Amended and Restated Revolving Credit Master Note in the
form attached as Exhibit A hereto (the "Revolving Credit Note").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, the parties hereby agree as follows:
1. CREDIT FACILITY.
---------------
1.1. Revolving Credit Loan; Letters of Credit. (a) On the date that the
Borrower shall have satisfied all of the conditions precedent set forth in
Section 6.1 hereof but in no event later than August 31, 1999 (the "Closing
Date"), the Borrower shall execute and deliver to the Bank the Revolving Credit
Note. The Revolving Credit Loan shall bear interest at a fluctuating rate of
interest established from time to time in the manner set forth in Section 1.3
hereof. During such period(s) as the Revolving Credit Loan or a component
thereof is a Prime Rate Loan, accrued interest on such component shall be
payable monthly on the first day of each calendar month. During such period(s)
as the Revolving Credit Loan or a component thereof is a Eurodollar Loan,
accrued interest on such component shall be payable on the last day of the
applicable Interest Period; provided that in the case of an Interest Period of
six months, accrued interest shall also be payable on the day which is three
months after the first day of such Interest Period. The Bank is hereby
authorized to indicate by notation on its internal loan accounting system, with
appropriate reference to the customer number assigned by the Bank, all advances
of the Revolving Credit Loan made pursuant to this Agreement and all payments of
principal. Such notations shall be presumptive as to the aggregate unpaid
principal balance of the Revolving Credit Loan, but the failure of the Bank to
make any such notation shall not affect the obligations of the Borrower
hereunder or in connection with the Revolving Credit Loan. The entire, then
outstanding principal balance of the Revolving Credit Loan, together with the
accrued and unpaid interest thereon, shall be due and payable on August 27, 2001
(the "Maturity Date").
(b) Subject to the terms and conditions hereof, the Bank
agrees to issue letters of credit for the account of the Borrower on any Banking
Day prior to the Maturity Date, in such form as may be approved from time to
time by the Bank; provided that the Bank shall have no obligation to issue any
letter of credit if, after giving effect to such issuance, the aggregate amount
of all letters of credit so issued and outstanding, when added to the then
outstanding principal balance of the Revolving Credit Loan, would exceed the
Commitment. Each letter of credit shall be issued pursuant to the Bank's
standard letter of credit application, reimbursement agreement and/or such other
documentation as the Bank may require, and shall be in such amount(s) and
subject to such duration, draw and other conditions as are acceptable to the
Bank in its sole discretion.
1.2. Advances and Payments. The aggregate amount of all advances under
the Revolving Credit Loan at any one time outstanding shall not exceed the
Commitment. The Borrower shall from time to time make such payments of
principal, together with accrued interest on the principal so paid, to the Bank
as shall be necessary in order to maintain the outstanding balance of such
advances at or below the Commitment.
2
1.3. Election of Fluctuating Rate. (a) Commencing as of the Closing
Date, the Revolving Credit Loan may from time to time be a Prime Rate Loan or a
Eurodollar Loan, at the election of the Borrower upon notice to the Bank prior
to 12 noon on the Banking Day immediately preceding the date of advance of any
such Prime Rate Loan or Eurodollar Loan. During any period(s) that the Borrower
has not made an effective election under this Section 1.3, the Revolving Credit
Loan shall be a Prime Rate Loan.
(b) The Borrower may elect from time to time to convert any
Eurodollar Loan to a Prime Rate Loan, by giving notice of such election to the
Bank prior to 12 noon on the Banking Day immediately preceding the date of
conversion, provided that any such conversion may only be made on the last day
of an Interest Period with respect thereto. The Borrower may elect from time to
time to convert any Prime Rate Loan to a Eurodollar Loan by giving notice of
such election to the Bank prior to 12 noon on the Banking Day immediately
preceding the date of conversion. Any such notice of conversion to a Eurodollar
Loan shall specify the length of the initial Interest Period therefor.
Notwithstanding the foregoing, no Prime Rate Loan may be converted into a
Eurodollar Loan when any Default or Event of Default shall have occurred and be
continuing and the Bank shall have determined that such a conversion is not
appropriate.
(c) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Bank, in accordance with the applicable provisions
of the defined term "Interest Period" set forth in Section 2.1 hereof, of the
length of the next Interest Period to be applicable to such Eurodollar Loan,
provided that no Eurodollar Loan may be continued as such when any Default or
Event of Default shall have occurred and be continuing and the Bank shall have
determined that such continuation is not appropriate.
(d) Any notice of conversion to or continuation of any
Eurodollar Loan pursuant to Section 1.3(b) or 1.3(c) hereof may, subject to the
applicable provisions of the term determined "Interest Period" set forth in
Section 2.1 hereof, specify more than one Interest Period for different portions
of such Eurodollar Loan; provided that if the Borrower elects to split any
Eurodollar Loan into more than one Interest Period for different portions
thereof, then each such Interest Period portion of such Eurodollar Loan shall be
in an amount of at least $500,000 and may be amounts greater than $500,000 which
are whole multiples of $100,000 (for example, $600,000, $700,000, etc.). In
addition, the Borrower may in any such notice elect to split the Revolving
Credit Loan into a Prime Rate Loan component and a Eurodollar Loan component, so
long as the Eurodollar Loan component of the Revolving Credit Loan is in an
amount of at least $500,000 and may be amounts greater than $500,000 which are
whole multiples of $100,000 (for example, $600,000, $700,000, etc.). In no event
shall there be more than ten (10) different Eurodollar Loans outstanding at any
time.
3
(e) The fluctuating rate of interest applicable to all
Eurodollar Loans shall be the Eurodollar Rate plus the Applicable Margin. The
fluctuating rate of interest applicable to all Prime Rate Loans shall be the
Prime Rate plus the Applicable Margin.
(f) All elections by the Borrower under this Section 1.3 may
be made in such manner as the Bank from time to time deems reasonable and
appropriate under the circumstances.
1.4. General Loan Provisions. (a) Inability to Determine
Eurodollar Rate. In the event that prior to the first day of any Interest Period
the Bank shall have determined (which determination shall be conclusive and
binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Base Rate for such Interest Period, the Bank shall give notice
thereof to the Borrower as soon as practicable thereafter. If such notice is
given, (x) any Eurodollar Loan requested to be made on the first day of such
Interest Period shall be made as a Prime Rate Loan, (y) any Prime Rate Loan that
was to have been converted on the first day of such Interest Period to a
Eurodollar Loan shall be continued as a Prime Rate Loan, and (z) any Eurodollar
Loan that on the first day of such Interest Period was to have been continued
as, or converted to, a Eurodollar Loan shall be converted to or continued as a
Prime Rate Loan. Until such notice has been withdrawn by the Bank, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower have
the right to convert any Prime Rate Loan to a Eurodollar Loan.
(b) Illegality. Notwithstanding any other provision herein, if
any change in any law, rule or regulation or order of court applicable to the
Bank or the Borrower, or in the interpretation or application thereof, shall
make it unlawful for the Bank to make or maintain a Eurodollar Loan as
contemplated by this Agreement, (x) the commitment of the Bank hereunder to make
a Eurodollar Loan, continue a Eurodollar Loan as such and convert a Prime Rate
Loan to a Eurodollar Loan shall forthwith be cancelled and (y) any portion of
the Revolving Credit Loan then outstanding as a Eurodollar Loan shall be
converted automatically to a Prime Rate Loan on the last day of the then current
Interest Period with respect to such portion of the Revolving Credit Loan or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Bank such
amounts, if any, as may be required pursuant to Section 1.4(e) hereof.
(c) Requirements of Law. (x) In the event that any change in
any law, rule or regulation or order of court applicable to the Bank or the
Borrower, or in the interpretation or application thereof, or compliance by the
Bank with any request or directive (whether or not having the force of law) from
any central bank or other governmental authority made subsequent to the date
hereof:
(i) shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note, or any Eurodollar Loan made
by it, or change
4
the basis of taxation of payments to the Bank in respect thereof (except for
taxes covered by Section 1.4(d) hereof and changes in the rate of tax on the
overall net income of the Bank); or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of the
Bank which is not otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost to the Bank, by
an amount which the Bank deems to be material, of making, converting into,
continuing or maintaining a Eurodollar Loan or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay the Bank, upon demand, any additional amounts necessary to
compensate the Bank for such increased cost or reduced amount receivable. If the
Bank becomes entitled to claim any additional amounts pursuant to this Section
1.4(c), it shall promptly notify the Borrower of the event by reason of which it
has become so entitled. The Bank also agrees to use its best efforts to notify
the Borrower of any event that could reasonably be expected to result in a claim
for additional amounts pursuant to this Section 1.4(c); provided that the
failure to give any such notice shall not in any way have any adverse effect
upon the rights of the Bank hereunder. A certificate as to any additional
amounts payable pursuant to this Section 1.4(c) submitted by the Bank to the
Borrower shall be conclusive in the absence of manifest error.
(y) In the event that the Bank shall have determined that any
change in any law, rule or regulation or order of court applicable to the Bank
or the Borrower regarding capital adequacy or in the interpretation or
application thereof, or compliance by the Bank or any corporation controlling
the Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) from any governmental authority made subsequent to
the date hereof, does or shall have the effect of reducing the rate of return on
the Bank's or such corporation's capital as a consequence of its obligations
hereunder (whether in respect of a Prime Rate Loan, a Eurodollar Loan, a letter
of credit or otherwise) to a level below that which the Bank or such corporation
could have achieved, but for such change or compliance (taking into
consideration the Bank's or such corporation's policies with respect to capital
adequacy), by an amount deemed by the Bank to be material, then from time to
time, after submission by the Bank to the Borrower of a written request
therefor, the Borrower shall pay to the Bank the additional amount or amounts as
will compensate the Bank for such reduction.
5
(z) The covenants set forth in this Section 1.4(c) shall
survive the termination of this Agreement and the payment of the Revolving
Credit Note and all other amounts payable hereunder and under the Loan
Documents.
(d) Taxes. All payments made by the Borrower under this
Agreement and the Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
governmental authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Bank as a result of a present or
former connection between the jurisdiction of the government or taxing authority
imposing such tax and the Bank (excluding a connection arising solely from the
Bank having executed, delivered or performed its obligations or receive a
payment under, or enforced, any of the Loan Documents) or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Bank hereunder or under the Note, the amounts so payable
to the Bank shall be increased to the extent necessary to yield to the Bank
(after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Note. Whenever any Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Bank a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Bank the required receipts or other required documentary
evidence, the Borrower shall indemnify the Bank for any incremental taxes,
interest or penalties that may become payable by the Bank as a result of any
such failure. The agreements in this Section 1.4(d) shall survive the
termination of this Agreement and the payment of the Note and all other amounts
payable hereunder and under the Loan Documents.
(e) Indemnity. The Borrower agrees to indemnify the Bank and
to hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of (a) default by the Borrower in payment when due of the
principal amount of or interest on the Revolving Credit Loan, (b) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement, or (d) the making of a prepayment of any
Eurodollar Loan on a day which is not the last day of an Interest Period with
respect thereto, including (without limitation) in each case, any such loss or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained. This
covenant shall survive the termination of this Agreement and the payment of the
Note and all other amounts payable hereunder and under the Loan Documents.
6
(f) Prepayment. The Borrower shall have the right and
privilege to prepay any Prime Rate Loan, in whole or in part, at any time, and
no such prepayment shall be subject to any premium or penalty for prepayment. No
Eurodollar Loan shall be prepaid prior to the last day of its applicable
Interest Period.
1.5. Notice and Manner of Borrowing. The Bank shall, from time to time,
subject to the Commitment and so long as no Event of Default or Potential
Default has occurred or is continuing, make advances under the Revolving Credit
Loan upon receipt of requests therefor (which may be given in writing, by
telephone or in any other manner which the Bank deems reasonable and appropriate
under the circumstances) from the Borrower's chief executive officer, chief
financial officer, controller or such other authorized officer or officers as
the Borrower may from time to time specify to the Bank in writing. Each such
request shall include the date and amount of the advance subject thereto and the
information required by Section 1.3 hereof, and shall comply with such
additional requirements as may be set forth in the Revolving Credit Note.
1.6. Method of Payment. All payments hereunder and under the Revolving
Credit Note shall be made by not later than 2:00 P.M. (Baltimore time) on the
date when due, to the Bank at its address referred to in Section 8.5 hereof in
immediately available funds. Whenever any payment hereunder or under the
Revolving Credit Note becomes due on a day which is not a Banking Day
(hereinafter defined), such payment may be made on the next succeeding Banking
Day and such extension of time shall be included in the computation of the
interest due.
1.7. Use of Loan Proceeds. The Borrower may use the proceeds of the
Revolving Credit Loan for acquisitions, working capital and other corporate
purposes (including, without limitation, for the purpose of funding that portion
of the operations of the Borrower and its Subsidiaries that otherwise would have
been funded by payments on government contracts, during such time as the U.S.
federal government fails to make or delays making such payments, in whole or in
part, as a result of the Year 2000 Problem), subject, however, to the
restrictions set forth in this Agreement.
1.8. Fees. (a) The Borrower shall pay to the Bank on the Closing Date
an origination fee of $87,500, equal to 0.25% (25 basis points) of the
Commitment.
(b) The Borrower shall also pay to the Bank a facility fee for
the period from the Closing Date to the Maturity Date, equal to the average
daily amount of the Commitment (i.e., $35,000,000/360, or $97,222.22) multiplied
by (i) 0.30% (30 basis points), for any such fiscal quarter in which the ratio
of the Debt of the Borrower and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP) to EBITDA is less than 1.75:1, (ii) 0.40% (40
basis points), for any such fiscal quarter in which the ratio of the Debt of the
Borrower and its Subsidiaries (determined on a consolidated basis in accordance
with GAAP) to EBITDA is greater than or equal to 1.75:1 but less than 2.25:1,
(iii) 0.50% (50 basis points), for any such fiscal quarter in which the ratio of
the Debt of the Borrower and its Subsidiaries (determined on a consolidated
basis in
7
accordance with GAAP) to EBITDA is greater than or equal to 2.25:1 but less than
2.75:1, and (iv) 0.75% (75 basis points), for any such fiscal quarter in which
the ratio of the Debt of the Borrower and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP) to EBITDA is greater than or equal
to 2.75:1. Such facility fee (x) shall be payable quarterly in arrears on the
last Banking Day of each September, December, March and June and the Maturity
Date, commencing on September 30, 1999, (y) shall be calculated on the basis of
a 90-day quarter except for (1) the period between the Closing Date and
September 30, 1999 and (2) the period between June 30, 2001 and the Maturity
Date, in which case such fee shall be calculated on the basis of a 360-day year
factor applied to actual days elapsed and (z) and shall be calculated such that
(1) the payment due on the last Banking Day of any September shall be based on
the ratio of the Debt of the Borrower and its Subsidiaries (determined on a
consolidated basis in accordance with GAAP) to EBITDA for the period of four
consecutive fiscal quarters ending on the preceding June 30, (2) the payment due
on the last Banking Day of any December shall be based on such ratio for the
period of four consecutive fiscal quarters ending on the preceding September 30,
(3) the payment due on the last Banking Day of any March shall be based on such
ratio for the period of four consecutive fiscal quarters ending on the preceding
December 31 and (4) the payment due on the last Banking Day of any June, as well
as the payment due on the Maturity Date, shall be based on such ratio for the
period of four consecutive fiscal quarters ending on the preceding March 31.
1.9. Collateral Security. The Borrower covenants and agrees that all
advances under the Revolving Credit Loan at any time outstanding and all present
and future indebtedness from time to time owing to the Bank from the Borrower or
any Subsidiary (hereinafter defined), whether pursuant to this Agreement, any
other credit facility, any guarantee or otherwise, shall at all times be secured
by and entitled to the benefit of all collateral security of every type and
description heretofore or hereafter afforded the Bank by the Borrower or any
Subsidiary, whether pursuant to this Agreement, any other credit facility, any
guarantee or otherwise.
2. DEFINITIONS.
-----------
2.1. Definitions. The following terms, when used herein, shall have the
following meanings:
"Additional Borrower" shall have the meaning set forth in Section
4.22(b) hereof.
"Affiliate" shall mean a Person (including a subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Borrower, (ii) which
beneficially owns or holds five percent (5%) or more of any class of the voting
shares (that is, shares entitled to vote for corporate directors) of the
Borrower, or (iii) five percent (5%) or more of the voting shares (or in the
case of a Person which is not a corporation, five percent (5%) or more of the
equity interest) of which is beneficially owned or held by the Borrower or
another Affiliate. The term "control" means the possession, directly or
indirectly, of the power to
8
direct or cause the direction of the management and policies of a Person whether
through the ownership of voting securities, by contract or otherwise.
"Applicable Margin" shall mean the rate per annum set forth below
opposite the quarterly ratio of the Debt of the Borrower and its Subsidiaries
(determined in accordance with GAAP) to EBITDA:
Debt/EBITDA Prime Rate Loans Eurodollar Loans
----------- ---------------- ----------------
0% 1.10%
< 1.75:1
0% 1.20%
< 2.25:1 but > 1.75:1
-
0% 1.30%
< 2.75:1 but > 2.25:1
-
0% 1.50%
> 2.75:1
-
The Applicable Margin shall be determined and adjusted on the date that
is the first Banking Day of the month immediately following the date by which
the Borrower is required to provide financial information in accordance with the
provisions of Section 4.5(a) or 4.5(b), as the case may be, and the related
certificate required pursuant to Section 4.5(c) (each, an "Interest
Determination Date"), such that (1) for the fiscal quarter ending September 30,
the applicable Interest Determination Date shall be the following December 1,
(2) for the fiscal quarter ending December 31, the applicable Interest
Determination Date shall be the following March 1, (3) for the fiscal quarter
ending March 31, the applicable Interest Determination Date shall be the
following June 1and (4) for the fiscal year ending June 30, the applicable
Interest Determination Date shall be the following October 1; provided, however,
that in the event that the financial statements required to be delivered
pursuant to Section 4.5(a) or Section 4.5(b) (as the case may be) and the
related certificate required pursuant to Section 4.5(c) are not delivered when
due, then, during the period from the date upon which such financial statements
are required to be delivered until one (1) Banking Day following the date upon
which they actually are delivered, the highest rate shall be determined to be in
effect for the purposes of determining Applicable Margin during such period.
Such Applicable Margin shall be effective with respect to all then outstanding
Eurodollar Loans and Prime Rate Loans from such Interest Determination Date
until the next such Interest Determination Date. Notwithstanding the foregoing,
the initial Applicable Margin shall be determined as if the ratio of the Debt of
the Borrower and its Subsidiaries (determined in accordance with GAAP) to EBITDA
is <1.75:1.
"Banking Day" shall have the meaning set forth in the form of Revolving
Credit Note attached as Exhibit A hereto.
"Closing Date" shall have the meaning set forth in Section 1.1(a)
hereof.
"Collateral" shall have the meaning collectively set forth in Section 1
of the Security Agreement.
9
"Commitment" shall mean $35,000,000.
"Consolidated Net Income" or "Consolidated Net Loss" for any fiscal
period shall mean the amount which, in conformity with GAAP, would be set forth
opposite the caption "net income" (or any like caption) or "net loss" (or any
like caption), as the case may be, on a consolidated statement of earnings of
the Borrower and its Subsidiaries for such fiscal period.
"Debt" of any Person, at any date, without duplication, shall mean the
sum of (a) all indebtedness of such Person for borrowed money, (b) the deferred
purchase price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices), including without limitation the amount which the Borrower
or any Subsidiary is contractually obligated to pay to the seller(s), or to
directors, officers or employees of the seller(s), in connection with any
Permitted Acquisition after the closing thereof, (c) any other indebtedness of
such person which is evidenced by a note, bond, debenture or similar instrument,
(d) all obligations of such Person under Financing Leases, (e) all obligations
of such Person in respect of letters of credit and acceptances and letters of
credit issues or created for the account of such Person (including without
limitation such letters of credit issued by the Bank), (f) all liabilities
secured by any lien or other encumbrance (whether statutory, consensual or
otherwise) on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof and (g) all Debt of
the types referred to in clauses (a) through (f) above which is guaranteed
directly or indirectly by such Person.
"Default Rate" shall mean a fluctuating rate of interest, adjusted
daily, equal to the Prime Rate plus 3%.
"EBITDA" for any fiscal period shall mean the Consolidated Net Income
or Consolidated Net Loss of the Borrower and its Subsidiaries, as the case may
be, for such fiscal period, after excluding therefrom amounts included therein
on account of extraordinary gain and restoring thereto (a) depreciation and
amortization (including write-offs or write-downs of amortizable and depreciable
items), (b) the amount of interest expense of such person or entity (determined
on a consolidated basis in accordance with GAAP) for such period on the
aggregate principal amount of its consolidated Indebtedness and (c) the amount
of tax expense of such person or entity (determined on a consolidated basis in
accordance with GAAP) for such period. The Borrower shall include in any
calculation of Consolidated Net Income or Consolidated Net Loss the net income
or net loss of any Person then a Subsidiary that was not a Subsidiary at all
times during the fiscal period covered by such calculation (each such
Subsidiary, a "Transition Subsidiary"); provided, however, that if the
Consolidated Net Income or Consolidated Net Loss for any such fiscal period is
larger by reason of such inclusion, then EBITDA for such period shall be reduced
by thirty percent (30%) of the increase in EBITDA resulting from the inclusion
of such Transition Subsidiary.
10
"Environmental Complaint" shall mean any complaint, order, citation or
notice with regard to air emissions, water discharges, noise emissions or any
other environmental, health or safety matter affecting the Borrower.
"ERISA," "Plan," and "PBGC" shall have the meanings set forth in
Section 3.10 hereof.
"Eurocurrency Reserve Requirements" shall mean for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board)
maintained by a member bank of such System.
"Eurodollar Base Rate" shall mean with respect to any Eurodollar Loan
for any one month or three month Interest Period, the "London Interbank Offered
Rate" (LIBOR) listed in the "Money Rates" table of The Wall Street Journal on
the Banking Day immediately preceding the first day of such Interest Period, as
specified in any request made in accordance with Sections 1.3 and 1.5 hereof
(and rounded, if necessary, upward to the nearest 1/100 of 1%).
"Eurodollar Loans" shall mean each portion of the Revolving Credit Loan
the rate of interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded, if necessary, upward
to the nearest whole multiple of 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall mean any of the events specified in Section
5.1 hereof. "Potential Default" shall mean the occurrence of any event or
existence of any condition which, with the giving of notice, would become an
Event of Default.
"Financial Statements" shall have the meaning set forth in Section 3.4
hereof.
"Financing Lease" shall mean any lease of property, real or personal,
the obligations of the lessee in respect of which are required (in accordance
with GAAP) to be capitalized on a balance sheet of the lessee.
11
"Hazardous Material" shall mean any oil, petroleum products or their
byproducts or any hazardous, toxic or dangerous waste, substance or material
defined as such in (or for purposes of) the Comprehensive Environmental
Response, Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law or any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree (collectively, "Toxic Waste Laws"), as
now or any time hereafter in effect, regulating, relating to or imposing
liability or standards of conduct concerning any hazardous, toxic or dangerous
waste, substance or material.
"Interest Period" shall mean, with respect to any Eurodollar Loan: (a)
initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such Eurodollar Loan and ending one, three or six
months thereafter, as selected by the Borrower in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, three or six
months thereafter, as selected by the Borrower in a notice of borrowing
delivered to the Bank by 10:00 a.m., Baltimore, Maryland time, not later than 12
noon on the Banking Day immediately prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Banking Day, such Interest
Period shall be extended to the next succeeding Banking Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on
the immediately preceding Banking Day;
(2) any Interest Period that would otherwise extend beyond the
Maturity Date shall end on such maturity date or such date of final
payment, as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Banking Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Banking Day
of a calendar month.
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Loan Documents" shall mean, collectively, this Agreement, the
Revolving Credit Note and the Security Documents.
12
"Maturity Date" shall have the meaning set forth in Section 1.1(a)
hereof.
"Obligations" shall mean, collectively, (i) the payment of all
principal of and interest on the Revolving Credit Note as and when the same
become due and payable (whether by lapse of time, acceleration or otherwise),
(ii) the payment of all interest, fees and charges payable by the Borrower under
the terms of the Loan Documents, (iii) the payment of all other indebtedness,
obligations and liabilities arising under, and the observance and performance of
all covenants and agreements contained in, the Loan Documents, (iv) the payment
of all principal of and interest on any other loans, credits or advances at any
time heretofore or hereafter made to the Borrower by the Bank, whether or not
related to or arising from the Revolving Credit Loan or the Loan Documents, and
(v) the payment in full of all expenses and charges, legal or otherwise,
including reasonable attorneys' fees, suffered or incurred by the Bank in
collecting or enforcing payment of the Revolving Credit Note or any or all of
the other foregoing indebtedness or in realizing upon, protecting or preserving
any collateral security for the Revolving Credit Note or such other
indebtedness.
"Permitted Acquisition" shall mean any acquisition by the Borrower,
directly or through any Subsidiary, of (i) all or substantially all of the
assets of any Person or (ii) a majority of the issued and outstanding voting
shares (that is, shares entitled to vote for corporate directors or members of a
similar governing body) of any Person, including any such acquisition which
takes the form of a merger, consolidation, corporate reorganization or similar
transaction as long as the Borrower, if a merging party, is the surviving entity
in any such transaction, provided that no Default or Event of Default has
occurred and is then continuing or would otherwise exist after giving effect to
any such Permitted Acquisition.
"Person" shall mean any individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
other entity of whatever nature.
"Premises" shall mean the significant sites of the Borrower's
operations, as set forth on Schedule I attached hereto.
"Prime Rate" shall mean the fluctuating interest rate set by the Bank
from time to time as an interest rate base for borrowings. The Prime Rate is one
of several interest rate bases used by the Bank, and the Bank lends at rates
above and below the Prime Rate. On the date hereof the Prime Rate is eight and
one-quarter percent (8 1/4%) per annum. All interest rates established or
imposed under the Loan Documents which are based upon the Prime Rate shall be
adjusted upwards and downwards on and as of the date of any change in the Prime
Rate and shall be calculated on the basis of a 360-day year factor applied to
actual days elapsed.
13
"Prime Rate Loans" shall mean each portion of the Revolving Credit Loan
the rate of interest applicable to which is based upon the Prime Rate.
"Revolving Credit Loan" shall have the meaning set forth in the second
recital paragraph hereof.
"Revolving Credit Note" shall have the meaning set forth in the second
recital paragraph hereof.
"Security Agreement" and "Security Documents" shall have the meanings
set forth in Section 7.1 hereof.
"Subsidiary" shall mean each Person (if any) actively engaged in
business, a majority of the issued and outstanding voting shares (that is,
shares entitled to vote for corporate directors or members of a similar
governing body) of which shall, at the time as of which any determination is
being made, be owned by the Borrower either directly or through Subsidiaries.
"Taxes" shall have the meaning set forth in Section 1.4(d) hereof.
"UCC" shall mean the Uniform Commercial Code, as in effect in any
applicable jurisdiction.
"Year 2000 Problem" shall mean the inability of computer applications
used by the U.S. federal government to recognize and perform properly
date-sensitive functions involving certain dates prior to, and any date after,
December 31, 1999.
"1996 Loan Agreement" shall have the meaning set forth in the first
recital paragraph hereof.
"1996 Revolving Credit Note" shall have the meaning set forth in the
first recital paragraph hereof.
"1996 Term Notes" shall have the meaning set forth in the first recital
paragraph hereof.
2.2. Amendments, etc. Included. All defined terms herein for
agreements, instruments and other documents shall be deemed to include any and
all amendments, modifications, extensions and renewals thereof, substitutions
therefor and supplements, exhibits and schedules thereto.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Bank that:
14
3.1. Organization and Authority; Conflicting Laws and Agreements. The
Borrower is a corporation duly organized and existing and is in good standing
under the laws of the jurisdiction of its incorporation, has full and adequate
corporate power to own its property and to carry on its business as now
conducted, is duly licensed or qualified to do business in all jurisdictions
where the nature of its business or the character of its properties requires
such licensing or qualification and has full right, power and authority to enter
into this Agreement and the Security Documents, to make the borrowings herein
provided for, to issue the Revolving Credit Note and to perform each and all of
the matters and things provided for in this Agreement and in the Security
Documents; and the Loan Documents do not, nor will the performance or observance
by the Borrower or any Subsidiary of any of the matters or things provided for
in any Loan Document, contravene, conflict with or in any way be restricted by
any law, rule or regulation or order of court applicable to the Borrower, any
Subsidiary or any of their respective businesses, operations or properties or
any provision of any organizational document of the Borrower or any lease,
mortgage, indenture, contract or agreement of or affecting the Borrower, any
Subsidiary or any of their respective properties.
3.2. Subsidiaries. As of the date hereof, the Borrower has no
Subsidiaries. The foregoing representation and warranty shall not be deemed to
prohibit the Borrower or any Subsidiary from effecting a Permitted Acquisition.
3.3. Margin Stock. Neither the Borrower nor any Subsidiary is engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of the Revolving Credit
Loan hereunder will be used to purchase or carry any margin stock or to extend
credit to others for that purpose.
3.4. Financial Statements. The consolidated financial statements of the
Borrower and the Subsidiaries audited by Deloitte & Touche LLP for the fiscal
year ended June 30, 1998 (the "Financial Statements"), which have heretofore
been furnished to the Bank, are complete and correct and fairly present the
consolidated financial condition of the Borrower and the Subsidiaries as of said
date and the results of their operations for the period covered thereby, all in
accordance with GAAP, except as otherwise noted therein. Neither the Borrower
nor any Subsidiary has any liabilities which are material to the Borrower and
such Subsidiary, direct or indirect, fixed or contingent, other than as
indicated in the Financial Statements.
3.5. Financial Condition. Since the date of the Financial Statements,
there have been no material adverse changes in the condition, financial or
otherwise, of the Borrower and the Subsidiaries nor any changes in the
operations of the Borrower and the Subsidiaries except those occurring in the
ordinary course of business.
3.6. Litigation; Tax Returns; Governmental Approvals. There is no
litigation or governmental proceeding pending, nor to the knowledge of the
Borrower threatened, against the Borrower or any Subsidiary which, if adversely
determined, would result in
15
any material adverse change in the consolidated financial condition, properties,
business or operations of the Borrower or the performance by the Borrower of its
obligations hereunder, under the Security Documents or under the Revolving
Credit Note, except as previously disclosed in writing to the Bank. All federal,
state and local income tax returns of the Borrower for the tax year ended June
30, 1998, and for all tax years ended prior to said date, have been filed with
the appropriate taxing authorities, and all taxes shown due thereon have been
timely paid. To the best of the Borrower's knowledge there are no objections to
or controversies in respect of any of the income tax returns of the Borrower and
the Subsidiaries for any fiscal year ended after said date pending or
threatened, except for those (if any) previously disclosed in writing to the
Bank, the Borrower warranting that such disclosures are true and accurate as of
the date hereof. No authorization, consent, approval, license, exemption, filing
or registration from or with any court or governmental department, agency or
instrumentality, is or will be necessary for the valid execution, delivery or
performance by the Borrower of any of the Loan Documents.
3.7. Liens. There are no liens, security interests or encumbrances on
any of the assets or properties of the Borrower or any Subsidiary, except as
permitted by Section 4.7 hereof.
3.8. Enforceability. The Loan Documents are the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general application relating to or affecting the enforcement of creditor's
rights and by general principles of equity.
3.9. No Defaults. The Borrower is and will remain in full compliance
with all of the terms and conditions hereof, and no Event of Default or
Potential Default has occurred and is continuing.
3.10. ERISA. The Borrower and the Subsidiaries are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974
("ERISA") as amended, to the extent applicable to them or to any plan, including
both single employer and multi-employer plans subject to Title IV of ERISA and
established or maintained for employees or former employees of the Borrower, any
Subsidiary or any member of the "controlled group" (as defined in ERISA) (such a
plan being hereinafter referred to as a "Plan"). Neither the Borrower nor any
Subsidiary has received any notice to the contrary from the Pension Benefit
Guaranty Corporation ("PBGC") or any other governmental entity or agency, and no
"reportable event" (as defined in ERISA) has occurred and is continuing. Except
as specifically otherwise disclosed in any information given to the Bank, the
present value of all vested benefits (determined on PBGC-guaranteed benefits and
using PBGC interest and mortality assumptions) under all single-employer Plans
maintained by the Borrower or a commonly-controlled Person does not, as of the
most recent valuation date, exceed the value of the assets of such Plans
allocable to such benefits.
16
3.11. Commercial Loan. The Revolving Credit Loan is a "commercial loan"
within the meaning of Section 12-101(c) of the Commercial Law Article of the
Annotated Code of Maryland, as amended.
3.12. Hazardous Materials. Except as previously disclosed in writing to
the Bank, to the best of its knowledge, the Borrower has never caused or
permitted any Hazardous Material to be disposed of on, under or at any of its
properties (including, without limitation, the Premises), and none of its
properties have ever been used (whether by the Borrower or, to its best
knowledge, by any other Person) as a dump site or storage (whether permanent or
temporary) site for any Hazardous Material. To the best of the Borrower's
knowledge the Premises contain no underground tanks or asbestos, nor any
transformers containing Polychlorinated Biphenyls.
3.13. Assignments under the Federal Assignment of Claims Act. Except as
previously disclosed in writing to the Bank, neither the Borrower nor any
Subsidiary has executed an assignment of a government contract (i) with respect
to which the United States or any of its departments, agencies or
instrumentalities is currently making payments, and (ii) which has been filed,
along with a notice of assignment, pursuant to the Federal Assignment of Claims
Act.
4. COVENANTS.
---------
So long as the Revolving Credit Note remains outstanding, the
Borrower hereby covenants and agrees with the Bank as follows:
4.1. Payment of Taxes and Other Claims. The Borrower will, and will
cause each Subsidiary to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, judgments, assessments
and governmental charges levied or imposed upon the Borrower or any Subsidiary
or upon the income, profits or property of the Borrower or any Subsidiary and
(b) all lawful claims for labor, materials and supplies which if unpaid might by
law become a lien upon the property of the Borrower or any Subsidiary; provided,
however, that the Borrower shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim, the amount,
applicability or validity of which is being contested diligently and in good
faith by appropriate proceedings and for which the Borrower or the Subsidiary
concerned shall have set aside on its books adequate reserves with respect
thereto; provided, further, that the foregoing proviso shall not relieve the
Borrower of its obligation to comply with Section 4.7 hereof; and provided,
further, that such proceedings do not materially impair the value or security of
the Collateral or any part thereof.
4.2. Maintenance of Properties. The Borrower will cause the Premises
and all other properties owned, leased or operated by the Borrower or any
Subsidiary and used or held for use in the conduct of their respective
businesses to be maintained and kept in
17
good condition, repair and working order and supplied with all necessary
equipment, and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the reasonable
judgment of the Borrower may be necessary or advisable so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.
4.3. Corporate Existence. The Borrower will do or cause to be done, and
will cause each Subsidiary to do or cause to be done, all things necessary to
preserve and keep in full force and effect their existence, organizational
status and good standing in the state of their organization and in every other
jurisdiction where the character of their properties or the nature of their
businesses requires them to qualify to do business, as well as the rights
(charter and statutory) and franchises of the Borrower and each Subsidiary. The
Borrower will not create any new subsidiaries, nor change its name, identity or
corporate structure, nor transact business under any trade name, nor change the
location of any material item of the Collateral or of its chief executive
offices or principal place of business without, in each case, first giving the
Bank thirty (30) days' prior written notice of its intent to do so.
4.4. Maintenance of Insurance. In addition to the specific requirements
set forth in Section 2(f) of the Security Agreement, the Borrower will maintain,
and will cause each Subsidiary to maintain, insurance coverage by good and
responsible insurance underwriters in such forms and amounts and against such
risks as are customary for companies engaged in similar businesses and owning
and operating similar properties. The Borrower shall from time to time file with
the Bank, promptly upon its request, a detailed list of the insurance then in
effect covering the Borrower's properties (including, without limitation, the
Collateral), stating the names of the insurance companies, the amounts and rates
of the insurance, the dates of the expiration thereof and the properties and
risks covered thereby.
4.5. Financial Information, Tax Returns and Reports. The Borrower will,
and will cause each Subsidiary to, employ GAAP and furnish to the Bank:
(a) as soon as available and in any event within forty-five
(45) days after the end of each interim fiscal quarter of each fiscal year of
the Borrower (or on the next Banking Day thereafter, if the forty-fifth day is
not a Banking Day), a consolidated and consolidating balance sheet of the
Borrower and the Subsidiaries as of the end of such interim fiscal period, and a
consolidated and consolidating statement of earnings of the Borrower and the
Subsidiaries for such fiscal period and for the period beginning on the first
day of such fiscal year and ending on the date of such balance sheet, setting
forth in comparative form the corresponding figures for the corresponding period
of the preceding fiscal year, all in reasonable detail and certified by the
chief financial officer of the Borrower;
(b) as soon as available and in any event within ninety (90)
days after the last day of each fiscal year (or on the next Banking Day
thereafter, if the ninetieth day is
18
not a Banking Day), consolidated financial statements which have been audited by
Deloitte & Touche LLP or another firm of independent public accountants of
recognized standing selected by the Borrower, covering the operations of the
Borrower and the Subsidiaries as of the end of such year and a consolidated
statement of earnings, shareholders' equity and cash flow for the Borrower and
the Subsidiaries for the year then ended, each on a comparative basis with
corresponding financial statements for the preceding fiscal year, which
financial statements shall be accompanied by a report of such independent public
accountants without exceptions or qualifications not acceptable to the Bank and
stating in substance that such financial statements have been prepared in
accordance with GAAP and that the audit of accounts in connection with such
financial statements has been made in accordance with GAAP and, accordingly,
included such tests of accounting records and other auditing procedures as such
accountants considered necessary or advisable under the circumstances; and the
Borrower shall also provide the Bank with such unaudited consolidating financial
statements as are used to prepare the foregoing financial statements;
(c) each set of financial statements delivered to the Bank
pursuant to paragraphs (a) and (b) above shall be accompanied by the written
certificate of the Borrower, signed by its chief financial officer, (i) to the
effect that such officer has reexamined the terms and provisions of this
Agreement and the Security Documents and that, to the best of his knowledge, the
Borrower has not been in default during the preceding fiscal period in the
fulfillment of any of the terms, covenants, provisions or conditions hereof or
thereof, and that no Event of Default or Potential Default has occurred and is
continuing as of the date of said statement; or if the signer is aware of any
such Event of Default or Potential Default, he shall disclose in reasonable
detail the nature thereof and such curative action as may be or has been taken
by the Borrower and (ii) setting forth the computations used by the Borrower in
determining (as of the end of such fiscal period) compliance with the covenant
contained in Section 4.15 hereof;
(d) [intentionally omitted];
---------------------
(e) [intentionally omitted];
---------------------
(f) promptly upon any filing thereof by the Borrower or any
Subsidiary with the Securities and Exchange Commission, any annual, periodic or
special report or registration statement (without exhibits) generally available
to the public;
(g) promptly upon any request therefor by the Bank, a copy of
any application for any patent, copyright, trademark, trade name or other
intellectual property right filed by the Borrower or any Subsidiary with the
United States Patent and Trademark Office, the United States Copyright Office,
or any similar office or agency of the United States or any State thereof;
(h) such additional information (including, without
limitation, federal, state and local income tax and property tax returns and
separate financial statements) for
19
the Borrower and/or any Subsidiary as the Bank may reasonably request concerning
the Borrower and such Subsidiary(ies) in order to enable the Bank to determine
whether the covenants, terms and provisions of this Agreement have been complied
with by the Borrower; and for that purpose the Borrower agrees that all
pertinent and relevant books, documents and vouchers relating to its business
and affairs and those of its Subsidiaries shall at all times during regular
business hours be open to the inspection of such accountant or other agent (who
may make copies of all or any part thereof) as shall from time to time be
designated by the Bank; and
(i) promptly upon any officer of the Borrower learning of the
same, notice of the occurrence of any Event of Default, notice of any material
change in the financial status of the Borrower or any Subsidiary, and notice of
the institution of any litigation against the Borrower or any Subsidiary which
could, if adversely determined, have a material, adverse effect on the financial
condition or operations of the Borrower or any Subsidiary.
The Bank agrees that it will hold and maintain confidential all
financial information, Backlog Reports and other proprietary information with
respect to the Borrower and its Subsidiaries and all information obtained during
inspections of the books and records of Borrower and its Subsidiaries which are
specifically designated by the Borrower as confidential and will not, without
the consent of the Borrower, disclose such information to any non-affiliated
third party. Notwithstanding the foregoing obligation of the Bank, the Borrower
hereby authorizes the Bank to disclose information obtained pursuant to this
Agreement (i) where required by governmental or regulatory authorities and (ii)
to its outside and in-house legal counsel, auditors, examiners and accountants.
In addition, the foregoing obligation of the Bank shall not apply in connection
with any exercise of the Bank's rights and remedies under the Loan Documents
arising during any period(s) when an Event of Default has occurred and is
continuing.
4.6. Indebtedness. The Borrower covenants that it will not, and will
not permit any Subsidiary to, create, incur, assume or suffer to exist any
indebtedness for borrowed money (including as such all indebtedness representing
the deferred purchase price of property), except:
(a) the indebtedness evidenced by the Revolving Credit Note;
(b) indebtedness or leases of the Borrower or any Subsidiary
outstanding on the date hereof and disclosed or reflected in the Financial
Statements or in the footnotes thereto;
(c) indebtedness of the Borrower or any wholly owned
Subsidiary to any other wholly owned Subsidiary;
(d) purchase money indebtedness of the Borrower and all
Subsidiaries;
20
(e) any existing or future indebtedness owed solely to the
Bank or any Payee under the Revolving Credit Note;
(f) leases entered into by the Borrower or any wholly owned
Subsidiary in the ordinary course of business;
(g) any unsecured indebtedness in addition to any of the
foregoing, which is subordinated to the Revolving Credit Note and which in the
aggregate does not exceed $1,500,000 at any time; and
(h) with respect to any Permitted Acquisition, the amount
which the Borrower or any Subsidiary is contractually obligated to pay to the
seller(s), or to directors, officers or employees of the seller(s), after the
closing thereof.
4.7. Liens. The Borrower covenants that it will not, and will not
permit any Subsidiary to, create, assume or suffer to exist any lien, security
interest or encumbrance upon any of their property or assets, whether now owned
or hereafter acquired, except:
(a) liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings;
(b) other liens, security interests, charges or encumbrances
incidental to the conduct of their businesses or the ownership of their
properties and assets which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and which do not, in the
aggregate, materially detract from the value of their properties or assets or
materially impair the use thereof in the operation of their businesses;
(c) liens and security interests existing on the date hereof
and disclosed or reflected in the Financial Statements or in the footnotes
thereto;
(d) liens and security interests in favor of the Bank; and
(e) liens and security interests on property or assets
securing indebtedness incurred to purchase such property or assets (but not
extending to any other property or assets), to the extent permitted under
Section 4.6(d) hereof.
4.8. Disposition of Stock and Indebtedness. The Borrower covenants that
it will not, and will not allow any Subsidiary to, sell, transfer or otherwise
dispose of, or part with control of, any shares of stock or indebtedness of any
Subsidiary, except to the Borrower or any other wholly owned Subsidiary or to
the Bank as collateral security for the Revolving Credit Note.
21
4.9. Investments, Loans, Advances, Guarantees and Contingent
Liabilities. The Borrower covenants that it will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any loan or advance to, or
guarantee, endorse or otherwise be or become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person (including
any joint venture), except that the Borrower or any Subsidiary may:
(a) permit to remain outstanding all presently existing loans,
advances and investments in or to any Subsidiary and disclosed or reflected in
the Financial Statements or in the footnotes thereto;
(b) make loans, advances and investments in or to any wholly
owned Subsidiary;
(c) acquire and own stock, obligations or securities received
in settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary;
(d) own, purchase or acquire prime commercial paper rated P-1
by Xxxxx'x Investor Services, Inc. and A-1 by Standard and Poors Corporation,
bankers acceptances of, and certificates of deposit in, the Bank or any other
United States commercial bank with capital resources in excess of $500,000,000,
obligations of the United States Government or any agency thereof, and
obligations guaranteed by the United States Government, all of the foregoing in
each case to become due within one (1) year from the date of purchase;
(e) permit to exist guarantees of obligations of any wholly
owned Subsidiary, which obligations are not prohibited by Section 4.6;
(f) make deposits and extensions of credit and endorse
negotiable instruments for deposit or collection, all in the ordinary course of
business; and
(g) effect Permitted Acquisitions.
4.10. Merger and Sale of Assets. The Borrower covenants that it will
not, and will not permit any Subsidiary to, merge or consolidate with any other
Person, or sell, lease, transfer or otherwise dispose of all or any substantial
part of their assets, except that:
(a) any Subsidiary may merge with the Borrower (provided that
such Borrower shall be the continuing or surviving corporation) or with any one
or more other Subsidiaries;
22
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to the Borrower or any Subsidiary; and
(c) the Borrower or any Subsidiary may effect any merger which
constitutes a Permitted Acquisition.
4.11. Dealings with Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction with an Affiliate except on
terms no less favorable to the Borrower or such Subsidiary than if such
transaction were an arm's length transaction with a non-affiliated Person.
4.12. Limitations on Certain Contracts. The Borrower will not, and will
not permit any Subsidiary to, enter into or be a party to:
(a) any contract providing for the making of loans, advances
or capital contributions by the Borrower or any Subsidiary to any Person or for
the purchase of any property from any Person (except for employee loans or
advances in the ordinary course of business), in each case in order to enable
such Person to maintain working capital, net worth or any other balance sheet
condition or to pay debts, dividends or expenses;
(b) any contract for the purchase by the Borrower or any
Subsidiary of materials, supplies or other property or services if such contract
(or any related document) requires that payment for such materials, supplies or
other property or services shall be made regardless of whether or not delivery
of such materials, supplies or other property or services is ever made or
tendered;
(c) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or
requires that the lessee purchase or otherwise acquire securities or obligations
of the lessor;
(d) any contract for the sale or use of materials, supplies or
other property or the rendering of services which requires that payment to the
Borrower or any Subsidiary for such materials, supplies or other property, or
the use thereof, or for such services shall be subordinated to any indebtedness
of the purchaser or user of such materials, supplies or other property or the
Person entitled to the benefit of such services owed or to be owed to any other
Person; or
(e) any other contract which, in economic effect, is
substantially equivalent to a guarantee by the Borrower or any Subsidiary,
except as permitted by Section 4.9 hereof.
4.13. ERISA. The Borrower will, and will cause each Subsidiary to,
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character
23
which, if unpaid or unperformed, might result in the imposition of a lien or
charge against any of their properties or assets, and will promptly notify the
Bank of the occurrence of any reportable event (as defined in ERISA) which might
result in the termination by PBGC of any Plan or of termination of any such Plan
or appointment of a trustee therefor. The Borrower will notify the Bank of its
or any Subsidiary's intention to terminate or withdraw from any Plan and will
not, and will not permit any Subsidiary to, terminate any such Plan or withdraw
therefrom unless the Borrower or such Subsidiary shall be in compliance with all
of the terms and conditions of this Agreement after giving effect to any
liability to PBGC or to the Plan resulting from such termination or withdrawal.
For purposes of this Section 4.13, the Bank hereby acknowledges notification
from the Borrower to the effect that the employee stock ownership plan of its
announced acquisition candidate, Management Consulting & Research Inc., is
intended to be terminated in connection with such acquisition.
4.14. Issuance of Stock. The Borrower shall not permit any Subsidiary
(either directly, or indirectly by the issuance of rights or options for, or
securities convertible into, such shares) to issue, sell or dispose of any
shares of any class of its stock, except to the Borrower or any other wholly
owned Subsidiary.
4.15. Financial Ratio. Commencing with the fiscal year ending June 30,
2000, the Borrower shall not, and shall not permit any Subsidiaries to, directly
or indirectly, permit for any fiscal quarter the ratio of the Debt of the
Borrower and its Subsidiaries (determined on a consolidated basis in accordance
with GAAP) to EBITDA, calculated for the period of four consecutive fiscal
quarters ending on the last day of such fiscal quarter, to be greater than
3.00:1.
4.16. Obligations of the Borrower Unconditional. The payment and
performance by the Borrower of its obligations hereunder and under the Revolving
Credit Note and the Security Documents shall be absolute and unconditional,
irrespective of any defense or right of set-off, recoupment or counterclaim it
might otherwise have against the Bank or any other Person; and the Borrower
shall pay absolute net during the term thereof all payments to be made on
account of the Revolving Credit Loan as prescribed in the Revolving Credit Note
and all other payments required hereunder and thereunder, free of all deductions
and without any abatement, diminution or set-off whatsoever.
4.17. Businesses. The Borrower will not, and will not permit any
Subsidiary to, make or suffer to be made any material change in the manner in
which their businesses are conducted. The Borrower shall not be deemed to have
breached or defaulted under the foregoing covenant simply because the U.S.
federal government shall have failed to make or delayed making to the Borrower
or any Subsidiary, in whole or in part, any payment under a government contract
as a result of the Year 2000 Problem.
4.18. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all applicable federal, state and local laws, rules,
ordinances and regulations where noncompliance could have a material adverse
effect on their respective
24
financial conditions, properties, businesses or operations; provided, however,
that the Borrower or any Subsidiary, as the case may be, may in good faith and
by appropriate proceedings contest the applicability or validity of any such
law, so long as such Borrower or such Subsidiary is prosecuting such contest
diligently and has set aside on its books adequate reserves with respect
thereto.
4.19. Hazardous Materials. The Borrower will indemnify and defend the
Bank and hold the Bank harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses and claims of any and every kind
whatsoever paid, incurred or suffered by, or asserted against the Bank for, with
respect to, or as a direct or indirect result of, the presence on or under, or
the escape, seepage, leakage, spillage, discharge, emission, discharging or
release from the Premises or any of the Borrower's other properties of, any
Hazardous Material (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any Toxic
Waste Laws), regardless of whether or not caused by, or within the control of,
the Borrower. If the Borrower receives any notice of (a) the happening of any
event involving the use, spill, discharge or clean-up of any Hazardous Material
or (b) an Environmental Complaint from any Person, including, but not limited
to, the United States Environmental Protection Agency, then the Borrower shall
promptly give both oral and written notice of the same to the Bank. Upon
obtaining knowledge of an Environmental Complaint from any source and by any
means, the Bank shall have the right, but not the obligation, upon five (5)
Banking Days' prior written notice to the Borrower to take such reasonable
actions as it deems necessary or advisable to clean up, remove, resolve or
minimize the impact of, or otherwise deal with, any such Hazardous Material or
Environmental Complaint. Any and all sums expended by the Bank for such
purposes, together with interest thereon at the Default Rate, shall be
immediately reimbursed by the Borrower and shall constitute an Obligation which
is secured by the Collateral.
4.20. Material Agreements. Upon the request of the Bank from time to
time, the Borrower shall deliver a list of all material leases, mortgages,
indentures, contracts or agreements of or affecting the Borrower, any Subsidiary
or any of their respective properties and true and correct copies of such
document(s) as the Bank may specify.
4.21. Assignments under the Federal Assignment of Claims Act. Neither
the Borrower nor any Subsidiary shall execute any assignment of any government
contract, to which the Borrower or any such Subsidiary is a party (either as a
contractor or subcontractor), in favor of any person other than the Bank without
the prior written consent of the Bank. In addition, the Borrower will promptly
notify the Bank upon its discovery of any attempt by any person other than the
Bank to file such an assignment under the Federal Assignment of Claims Act.
4.22. Additional Subsidiaries. (a) With respect to any Subsidiary
created or acquired after the Closing Date by the Borrower, the Borrower shall
(i) cause such Subsidiary promptly to become a party to the Security Agreement
pursuant to
25
documentation to be in form and substance reasonably satisfactory to the Bank,
(ii) execute and deliver such amendments to this Agreement requested by the Bank
to reflect the existence of such new Subsidiary, (iii) execute and deliver a
Pledge and Security Agreement in form and substance satisfactory to the Bank to
effect the pledge to the Bank of the equity interests of such new Subsidiary
thereunder and (iv) if so requested by the Bank, deliver to the Bank legal
opinions relating to the matters described in clauses (i) through (iii)
immediately preceding and such other matters as the Bank may reasonably require,
which opinions shall be in form and substance reasonably satisfactory to the
Bank.
(b) With respect to any Subsidiary created or acquired after
the Closing Date by the Borrower, the Borrower shall (i) designate such
Subsidiary as a "Borrower" hereunder (an "Additional Borrower"), cause such
Additional Borrower promptly to become a party to this Agreement pursuant to
documentation to be in form and substance reasonably satisfactory to the Bank,
(iii) execute and deliver such amendments to this Agreement and the other Loan
Documents (including without limitation the Revolving Credit Note) requested by
the Bank to reflect the existence of such Additional Borrower, (iv) execute and
deliver such other approvals, certificates or documents requested by the Bank in
its reasonable discretion and (v) if so requested by the Bank, deliver to the
Bank legal opinions relating to the matters described in clauses (i) through
(iv) immediately preceding and such other matters as the Bank may reasonably
require, which opinions shall be in form and substance reasonably satisfactory
to the Bank.
5. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
5.1. Events of Default. The occurrence or existence of any one or more
of the following events or conditions shall constitute an Event of Default:
(a) (i) default in the payment when due of any installment of
the principal of or interest on any Note, whether at the stated maturity thereof
or at any other time provided in such Note or in this Agreement, or (ii) default
for a period of five (5) days after notice in the payment when due of any other
amount payable by the Borrower under any Loan Document;
(b) default in the observance or performance of any covenant
set forth in Sections 4.6 through 4.13, 4.15 or 4.17 hereof;
(c) default in the observance or performance by the Borrower
of any other provision of this Agreement or any of the Security Documents which
is not remedied within thirty (30) days after notice thereof to the Borrower by
Bank; provided, however, that if such default cannot be corrected within thirty
(30) days, it shall not be an Event of Default so long as, in the opinion of the
Bank, the Borrower is diligently taking appropriate corrective action to cure
the same and such default will not, in the sole judgment of the Bank, impair the
security for the Revolving Credit Loan;
26
(d) a default shall occur under any evidence of indebtedness
issued, assumed or guaranteed by the Borrower or any Subsidiary (other than any
such indebtedness owing by any Subsidiary to the Borrower or to another
Subsidiary) or under any indenture, agreement or other instrument under which
the same may be issued, and such default shall continue for the period of time
(if any) necessary to permit the acceleration of the maturity of any such
indebtedness in the aggregate amount of $250,000 or more;
(e) any representation or warranty made by the Borrower in
this Agreement or any of the Security Documents, or in any of the exhibits
hereto or thereto, or in any opinion, report, statement (including, without
limitation, financial statements) or certificate furnished by it pursuant to
this Agreement or any of the Security Documents, proves to have been false,
misleading or incomplete in any material respect as of the date of the issuance
or making thereof;
(f) the Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States Bankruptcy
Code, as amended, (ii) not pay, or admit in writing its inability to pay, its
debts generally as they become due or suspend payment of its obligations, (iii)
become insolvent or make an assignment for the benefit of creditors, (iv) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, conservator, liquidator or similar official for it or any
substantial part of its property, (v) institute any proceeding seeking an order
for relief or other protection under the United States Bankruptcy Code, as
amended, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, marshalling of assets, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) fail to contest in
good faith any appointment or proceeding described in Section 5.1(g) hereof, or
(vii) take any corporate action in furtherance of any of the foregoing purposes;
(g) a custodian, receiver, trustee, conservator, liquidator or
similar official shall be appointed for the Borrower or any Subsidiary or any
substantial part of any of their respective properties, or a proceeding for such
purposes or the purposes described in Section 5.1(f) hereof shall be instituted
against the Borrower or any Subsidiary and such appointment continues
undischarged or any such proceeding continues undismissed or unstayed for a
period of thirty (30) days;
(h) any final judgments, writs or warrants of attachment or of
any similar processes aggregating in excess of $250,000 shall be entered or
filed against the Borrower, any Subsidiary or against any of their properties or
assets and remain unpaid, unvacated, unbonded or unstayed on appeal for a period
of five (5) days after entry or filing;
27
(i) any "reportable event" (as defined in ERISA) which
constitutes grounds for the termination of any Plan of the Borrower or any
member of the "controlled group" (as defined by ERISA) or for the appointment by
the appropriate United States District Court of a trustee to administer or
liquidate any such Plan, shall have occurred and be continuing thirty (30) days
after written notice of such effect shall have been given to the Borrower by the
PBGC or the Bank; or any such Plan shall be terminated; or the Borrower or any
member of the controlled group shall have withdrawn from such Plan or a trustee
shall be appointed by the appropriate United States District Court to administer
any such Plan; or the PBGC shall institute proceedings to administer or
terminate any such Plan; and in the case of vested liabilities allocable to, or
the withdrawal liability of the Borrower or any members of the controlled group
with respect to, such Plans shall exceed (either singly or in the aggregate in
the case of any such liability arising under more than one such Plan and in the
case of more than one liability arising under one or more such Plans) 5% of
consolidated assets of the Borrower and its Subsidiaries (as determined in
accordance with GAAP);
(j) the Borrower or any Subsidiary shall lose any license,
franchise or permit which materially affects their business operations as
presently conducted, if the same is not restored within thirty (30) days after
such loss.
5.2. Acceleration. (a) When any Event of Default (other than any Event
of Default described in Sections 5.1(f) and (g) hereof) has occurred and is
continuing, the Bank may declare the principal of and the accrued interest on
the Revolving Credit Note to be forthwith due and payable and thereupon the
Revolving Credit Note, including both principal and interest, shall be and
become immediately due and payable, together with all other amounts payable
under the Loan Documents, without further demand, presentment, protest or notice
of any kind.
(b) When any Event of Default described in Section 5.1(f) or
(g) hereof has occurred and is continuing, then the Revolving Credit Note shall
immediately become due and payable, together with all other amounts payable
under the Loan Documents, without presentment, demand, protest or notice of any
kind.
5.3. Costs of Collection. The Borrower agrees to pay to the Bank all
expenses and costs incurred or paid by the Bank, including reasonable attorneys'
fees and court costs, in connection with any default by the Borrower hereunder
or in connection with the enforcement of any of the terms hereof or of the
Revolving Credit Note or any Security Document or in connection with protecting
or realizing upon any collateral for the Obligations, including any of the
foregoing incurred in connection with any bankruptcy, reorganization or similar
proceedings instituted by or against the Borrower or any Subsidiary.
5.4. Consent to Jurisdiction; Waiver of Jury Trial. (a) The Borrower
hereby agrees that any action or proceeding with respect to this Agreement or
the Revolving Credit Note or any action or proceeding brought to enforce any
breach hereof or thereof
28
against the Borrower or any of its property may be brought in any federal or
state court situated in the State of Maryland and/or in any other court having
jurisdiction over the subject matter, in one or more actions or proceedings, all
at the sole election of the Bank, and by execution and delivery of this
Agreement, the Borrower irrevocably consents to jurisdiction in each such court.
(b) The Borrower irrevocably waives any right it may have to a
trial by jury in any action or proceeding described in the foregoing Section
5.4(a), and hereby acknowledge that this waiver is a material provision of this
Agreement and shall be specifically enforceable.
5.5. Service of Process. If, for any reason, the Borrower is unable to
receive service of process in the manner provided by the Maryland Rules of
Procedure, then the Borrower hereby irrevocably appoints the State Department of
Assessments and Taxation as its agent for the purpose of gaining jurisdiction
over the Borrower in the State of Maryland in connection with any of the
Obligations; provided, however, that the Bank shall promptly notify the Borrower
in writing of any such service of process.
5.6. Acceleration of Other Obligations to Bank. When any Event of
Default has occurred and is continuing, the Bank may declare any and/or all
other indebtedness of the Borrower or any Subsidiary owing to the Bank, whether
now existing or created in the future, to be immediately due and payable,
without presentment, demand, protest or further notice of any kind.
5.7. Remedies Cumulative. All rights, remedies and powers of the Bank
hereunder are irrevocable and cumulative, and not alternative or exclusive, and
shall be in addition to all other rights, remedies and powers given hereby or by
any of the other Loan Documents or any laws now existing or hereafter enacted.
6. CONDITIONS PRECEDENT TO LENDING.
-------------------------------
6.1. Conditions to the Making of the Initial Advance under the
Revolving Credit Loan. The obligation of the Bank to make the initial advance
under the Revolving Credit Loan hereunder is subject to the following conditions
precedent:
(a) Revolving Credit Note. The Bank shall have received the
Revolving Credit Note, duly executed by the Borrower on the Closing Date.
(b) Opinion of Borrower's In-House Legal Counsel. The Bank
shall have received a written opinion of in-house legal counsel for the
Borrower, dated the Closing Date, in form and substance reasonably satisfactory
to the Bank.
(c) Evidence of Authorization. The Bank shall have received
copies of all corporate action taken by the Borrower to authorize the Loan
Documents and the borrowings hereunder and under the Revolving Credit Note,
certified as of the Closing
29
Date and including a certification as to the incumbency and
signature(s) of the person(s) authorized to execute and deliver or furnish such
documents and all related materials and information.
(d) Estoppel Certificate. The Borrower shall deliver to the
Bank a certificate, dated as of the Closing Date, to the effect that (i) no
Event of Default or Potential Default has occurred and is continuing and (ii)
all representations and warranties contained herein and in the Security
Documents are true, accurate and complete in all material respects.
(e) Security Documents. (i) The Bank shall have received the
Security Agreement duly executed by the Borrower.
(ii) The Borrower shall have delivered to the Bank for
filing against the Borrower all necessary and advisable UCC financing
statements, amendments and other appropriate filings (including recording tax
allocation certificates), fully executed and in due and proper form for filing
in all appropriate recording offices situated in such jurisdictions as may be
appropriate, in order to perfect the Bank's first priority lien on and security
interest in all collateral security under any of the Security Documents; and the
Borrower shall have provided for payment of all applicable filing or recording
fees and taxes with respect thereto.
(f) Organizational Documents. The Borrower shall deliver to
the Bank certified copies of the organizational documents of the Borrower and
certificates of good standing for the Borrower from the States of Delaware,
Virginia, California and Ohio.
(g) Consents and Approvals. The Bank shall have received
copies of such consents and approvals as the Borrower may be required to obtain
from any Person in order to enter into this Agreement or any of the Security
Documents and to consummate the transactions contemplated hereby or thereby.
(h) Transaction Expenses. The Borrower shall have paid any
statements for transaction expenses which are payable under Section 8.9 hereof.
(i) Disclosure Letter. The Bank shall have received specific
written disclosure from the Borrower prior to the Closing Date as to any matters
for which disclosure is required under Section 3.6 or 3.12 hereof.
(j) Other Documents. The Bank shall have received such other
documents, certificates and opinions, and evidence of such other matters, as it
may reasonably require.
6.2. Conditions to the Making of Each Advance under the Revolving
Credit Loan. The obligation of the Bank to make each advance under the Revolving
Credit Loan) is subject to the conditions precedent that on the date of the
making of such
30
advance, (i) the Borrower shall have performed and observed, and shall then be
in compliance with, all of the terms, covenants and conditions of the Loan
Documents, (ii) there shall not have occurred or be existing any Event of
Default, and (iii) the representations and warranties contained herein and in
the Security Documents, as such representations and warranties may from time to
time hereafter be modified or otherwise noticed to the Bank in writing (with
such modifications or other written notifications approved by the Bank), shall
be true, accurate and complete, with the same effect as though such
representations and warranties had been made at the time of such advance; and
each and every request for an advance under the Revolving Credit Loan shall
constitute a confirmation and warranty by the Borrower that this Section 6.2 has
been satisfied in full.
7. COLLATERAL SECURITY.
-------------------
7.1. Security Documents. As collateral security for the Obligations the
Borrower has executed and delivered to the Bank an Amended and Restated Security
Agreement (the "Security Agreement" and, together with the Security Agreement
and any and all additional documents, agreements, instruments and certificates
which may from time to time secure all or any portion of the Revolving Credit
Loan, including without limitation any Pledge and Security Agreement delivered
after the date hereof pursuant to Section 4.22 hereof, the "Security
Documents"), covering and creating a security interest in any and all of its
inventory, goods, accounts, accounts receivable, general intangibles, chattel
paper, instruments and equipment, whether now owned or existing or hereafter
acquired or arising.
7.2. Deposit Balances. As additional security for the payment,
performance and discharge of the Obligations, the Borrower hereby pledges to the
Bank, grants the Bank a security interest in, and gives to the Bank a first
priority lien upon and a right of set-off against, all deposit balances now or
hereafter arising in any of its accounts with the Bank and all property and
securities of every kind and nature which have been or at any time shall be
delivered to the Bank or otherwise come into the Bank's possession, custody or
control for any purpose whatsoever, whether or not for the express purpose of
being used by the Bank as collateral security or for safekeeping or for any
other or different purpose, or which shall be in transit to the Bank or set
apart for or on behalf of the Bank, in any way, by the Borrower or for its
account, or in which the Borrower may have any interest, whether the Bank shall
accept the same for the purpose for which delivered or not, and any and all cash
and non-cash proceeds of said property and securities and every part thereof,
with the right of the Bank, in its discretion, to resort first to any part of
said security without exhausting its rights against any other collateral or
source of payment.
8. MISCELLANEOUS.
-------------
8.1. Exercise of Rights. Any delay on the part of the Bank in
exercising any power, privilege or right under this Agreement shall not operate
as a waiver thereof, and no single or partial exercise of any power, privilege
or right hereunder shall preclude
31
other or further exercise thereof, or the exercise of any other power, privilege
or right. The waiver by the Bank of any default by the Borrower shall not
constitute a waiver of any subsequent defaults, but shall be restricted to the
default so waived. The failure of the Bank to enforce any of the terms and
provisions hereof, or its failure to declare a default hereunder, shall apply
only in the particular instance, and shall not operate as a continuing waiver.
If any part of this Agreement should be contrary to any law which the Bank might
seek to apply or enforce, or should be otherwise defective, the other provisions
of this Agreement shall not be affected thereby, but shall continue in full
force and effect.
8.2. Payment Due on Banking Day. If any payment or prepayment of
principal or interest on the Revolving Credit Note shall fall due on a day which
is not a Banking Day, interest at the applicable rate shall continue to accrue
on such principal from the stated due date thereof to and including the next
succeeding Banking Day, on which day the same shall be payable.
8.3. Assessments. The Borrower agrees that it will pay all documentary,
stamp, recording and similar taxes which are payable in respect of any of the
Loan Documents, including interest and penalties, in the event any such taxes
are assessed, irrespective of when such assessment is made.
8.4. Survival. All representations and warranties of the Borrower made
herein or in certificates given pursuant hereto shall survive the execution and
delivery of the Loan Documents, and shall continue in full force and effect with
respect to the date as of which they were made as long as the Revolving Credit
Note shall remain outstanding.
8.5. Notices. All notices and other communications provided for herein
or in any of the Security Documents shall be in writing, except as otherwise
specifically provided for hereinabove, and shall be deemed to have been given or
made when served personally or on the first Banking Day following deposit in the
United States mail and addressed, if to the Borrower, to GRC International,
Inc., 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000, Attention: Chief Financial
Officer (with a copy to Xxxxxx X. XxXxxx, Esq., Senior Vice President, Director
of Corporate Development and General Counsel, at the same address), or if to the
Bank, to Xxx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xx. Xxxxxx X.
Xxxxxxx, Senior Vice President (with a copy to Xxxxxxx, Baetjer and Xxxxxx, LLP,
0000 Xxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000, Attn: Xxxxxx X.
Xxxxxxxxx, Esq.), or at such other address as shall be designated by either
party hereto in a written notice to the other party pursuant to this Section
8.5.
8.6. Counterparts. This Agreement may be executed in any number of
counterparts, and by different parties on different counterparts, all of which
taken together shall constitute one and the same instrument. Any of the parties
hereto may execute this Agreement by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Agreement shall become
32
effective when each of the parties hereto has executed this Agreement or a
separate counterpart hereof, and delivered the same to the Bank.
8.7. Successors and Assigns; Governing Law; Amendments. This Agreement
shall be binding upon the Borrower and its successors and assigns, and shall
inure to the benefit of the Bank and its successors and assigns, the term "Bank"
as used herein to include any subsequent holder of any Note. The Bank reserves
the right to sell, assign, encumber, transfer or otherwise dispose of all or any
part of its right, title and interest in and to any of the Revolving Credit
Note, the Collateral, the Security Documents and this Agreement, including any
undivided participation therein, all without the consent of or notice to the
Borrower; provided, however, that the Borrower shall continue to recognize the
Bank as the holder of such right, title and interest until it shall have
received written notice from the Bank of disposition. This Agreement and the
rights and duties of the parties hereto shall be construed and determined in
accordance with the internal laws of the State of Maryland, without regard to
principles of conflicts of laws. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and any
prior understandings, commitments and agreements, whether written or oral, with
respect thereto are superseded hereby. No Loan Document may be amended or
modified except by a written instrument signed by the Borrower and the Bank. The
Borrower may not assign its rights or obligations hereunder without the prior
written consent of the Bank.
8.8. Section Headings; Construction. Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement. When used in this Agreement, the singular of any
word shall include the plural, the plural shall include the singular and the use
of any gender shall include all genders.
8.9. Transaction Expenses. The Borrower shall pay all out-of-pocket
costs and expenses incurred by the Bank in connection with the negotiation,
preparation, execution and delivery of this Agreement, all related documents and
any subsequent amendments hereof or thereof, or in connection with the
consummation of any of the transactions contemplated hereby or thereby,
including the reasonable fees and expenses of Xxxxxxx, Baetjer and Xxxxxx, LLP,
special counsel for the Bank.
8.10. Estoppel Certificates. The Borrower will, upon not less than
fifteen (15) Banking Days' request by the Bank, execute, acknowledge and deliver
to the Bank a statement in writing, certifying (a) that this Agreement is
unmodified and in full force and effect and that the payments required by the
Loan Documents to be paid by the Borrower have been paid, and (b) the then
unpaid balance of the Revolving Credit Loan; and stating whether or not, to the
knowledge of the signer of such certificate, any Event of Default or Potential
Default has occurred and is continuing and, if so, specifying each such default
of which the signer may have knowledge.
33
8.11. Indemnification. The Borrower shall protect, indemnify and save
harmless the Bank and its officers, employees and agents from and against, any
and all liabilities, suits, actions, claims, demands, losses, expenses and costs
of every kind and nature incurred by, or asserted or imposed against, the Bank
and its officers, agents or employees, or any of them, by reason of any
accident, injury (including death) or damage to any person or property, however
caused (other than if by the willful misconduct of such person), resulting from,
connected with or growing out of any act of commission or omission of the
Borrower or any officer, employee, agent, assignee, contractor or subcontractor
of the Borrower or any use, non-use, possession, occupation, condition,
operation, service, design, construction, acquisition, maintenance or management
of, or on, or in connection with, the Premises, the Collateral, or any part
thereof, or by reason of any suit or proceeding brought by or against the Bank
in any way relating to or arising out of the transactions contemplated by the
Loan Documents, the enforcement of any of the terms thereof or the exercise of
any of the remedies provided for therein, regardless of whether such
liabilities, suits, actions, claims, demands, damages, losses, expenses and
costs are against or are suffered or sustained by the Bank or any of its
officers, agents or employees, or are against legal entities to whom the Bank or
any of its officers, agents or employees may become liable therefor. The
Borrower, if so requested by the Bank, shall undertake to defend, at its sole
cost and expense, any and all suits, actions and proceedings brought against the
Bank or any of its officers, agents or employees in connection with any of the
matters mentioned in this Section 8.11.
8.12. Publicity. Except as may be required to comply with applicable
law, any public notices, advertisements or similar announcements relating to
this Agreement or the Revolving Credit Loan shall be subject to the prior
approval of each of the parties hereto.
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IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
duly executed under seal, intending it to be a sealed instrument, as of the day
and year first above written.
[SEAL]
ATTEST or WITNESS: GRC INTERNATIONAL, INC.
---------------------------------- By: (SEAL)
Xxxxxxx X. Xxxxxx ------------------------------
Name: Xxxxxx X. XxXxxx
Assistant Gen. Cnsl. & Ass't Sec. Title: SVP, Dir. Corp. Dev't, GC & Sec.
ATTEST or WITNESS: MERCANTILE-SAFE DEPOSIT
AND TRUST COMPANY
---------------------------------- By: (SEAL)
-----------------------------
Name:
------------------------------
Title:
------------------------------
36
