EXHIBIT 4.12
SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
IT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND WITHOUT THE PRIOR WRITTEN CONSENT OF PAYOR.
FEDERAL DATA CORPORATION
9% INCREASING RATE SUBORDINATED NOTE
DUE ________ __, 2004
$______ ______ __, 1997
Federal Data Corporation, a Delaware corporation ("PAYOR"), for
value received, promises to pay to the order of Xxxxx X. Xxxxxxxxxx,
("PAYEE") the principal amount of Seventy-five Thousand Dollars ($_________),
together with accrued interest thereon, each calculated and payable only as
and to the extent set forth below, including without limitation Section 5
hereof, in this Note (together with any PIK Notes issued pursuant to Section
1.1 below, the "NOTES" or "SUBORDINATED NOTES"). The principal and interest
on this Note is payable in lawful money of the United States of America in
immediately available funds at such place in the United States as Payee may
from time to time designate in writing to Payor.
This Note is made pursuant to that certain Stock Purchase Agreement
(the "AGREEMENT"), dated June 18, 1997, by and among Federal Data Corporation
(the "BUYER"), Xxxxxxx Management Systems Corporation, a Maryland corporation
(the "TARGET"), and Xxxx X. and Xxxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxxx, Xx., Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxx, and Xxxxx X. Xxxxxxxxxx (the
"SELLERS") pursuant to which Xxxxx has purchased from Sellers all the issued and
outstanding shares of Target, and is one of the "Notes" referred to therein.
Xxxxx is a former shareholder of Seller and is receiving this Subordinated Note
pursuant to the Agreement. Payments under this Note are subject to the right of
Payor to reduce amounts payable under this Note as set forth in Section 5 below,
which right shall be binding upon any holder of the Subordinated Notes. All
capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Agreement.
1. PAYMENT OF PRINCIPAL AND INTEREST
1.1 CALCULATION AND PAYMENT OF INTEREST.
Interest on the principal balance of this Note outstanding from time
to time until paid in full shall accrue at the rate of (a) for the period from
the date hereof through ____ __, ____, nine percent (9%) per annum, (b) for the
period from ____ _, ____ through ____ __, ____, eleven percent (11%) per annum,
and (c) thereafter, thirteen percent (13%) per annum, in each case computed on
the basis of a 365 or 366-day year, as appropriate, for the actual number of
days elapsed, commencing on the date hereof. Such interest shall be payable
semi-annually in arrears, beginning on ________ __, ____ and thereafter on each
____ __ and ________ __ until the Maturity Date (as defined herein); PROVIDED,
HOWEVER, that any amount
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of cash interest which is not paid as a result of the application of the
provisions of Section 7.08 of the Credit Agreement or any similar provision
contained in any documents relating to the refinancing thereof (each, a "PAYMENT
RESTRICTION") shall be made by the issuance of a PIK Note and Payor shall be
deemed to have issued a PIK Note for any such interest regardless of whether
Payor shall have actually delivered any such PIK Note. Each Holder, by its
acceptance hereof, acknowledges (i) that Payor is contractually bound hereunder
to pay cash interest only to the extent not prohibited by a Payment Restriction,
(ii) that any cash interest not so paid shall be paid in the form of a PIK Note,
and (iii) the failure to pay cash interest as a result of a Payment Restriction
shall not constitute a default or Event of Default under this Note.
1.2 PAYMENT ON MATURITY DATE. The principal balance of, and any accrued
and unpaid interest on, this Note shall be payable on the later of (a) to the
extent the term of the Credit Agreement has been extended in connection with a
default or anticipated default thereunder, the date which is six months after
the indefeasible payment in full in cash of all amounts owing under the Credit
Agreement, and (b) ____ __, 2004 (as applicable, the "MATURITY DATE").
1.3 PRO RATA PAYMENT. All payments and prepayments of interest and
principal on the Subordinated Notes shall be made pro rata among the
Subordinated Notes held by the former Shareholders of Target in proportion to
the original principal amounts thereof.
1.4 [INTENTIONALLY OMITTED]
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1.5 OPTIONAL PREPAYMENT.
(a) Payor may, at its option at any time, without premium or
penalty, prepay all or any portion of this Note.
(b) Any prepayment of this Note shall be applied as follows:
FIRST, to payment of accrued interest; and SECOND, to payment of principal.
Upon any partial prepayment, at the request either of Payee or Payor, this Note
shall be surrendered to Payor in exchange for a substitute note, which shall set
forth the revised principal amount but otherwise identical to this Note. In the
event that this Note is prepaid in its entirety, this Note shall be surrendered
to Payor for cancellation as a condition to any such prepayment.
1.6 PAYMENT ONLY ON BUSINESS DAYS. Any payment hereunder which, but for
this Section 1.6, would be payable on a day which is not a Business Day, shall
instead be due and payable on the Business Day next following such date for
payment.
2. EVENTS OF DEFAULT
The following shall constitute "EVENTS OF DEFAULT" under this Note:
(a) Subject to Section 4 below, failure by Payor to make any
payment or prepayment required under this Note when the same shall become due
and payable (whether at maturity, by acceleration or otherwise) and the
continuation of such failure for a period of thirty (30) days; or
(b) Payor breaches any covenant under Section 3.1 or Section 3.2 of
this Note, which breach or failure, if curable, shall continue uncured for a
period of thirty (30) days after the date on which written notice specifying
such breach, and stating that such notice is a "Notice of Default" hereunder,
shall have been given by Payee to Payor; or
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(c) Payor, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against
it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or
for all or any substantial portion of its property or assets;
(D) makes a general assignment for the benefit of the
creditors; or
(d) an involuntary case or proceeding is commenced against Payor
under any Bankruptcy Law and is not dismissed, bonded or discharged within
ninety (90) days thereafter, or a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against Payor in an involuntary case or
proceeding;
(B) appoints a Custodian of Payor for all or
substantially all of its properties; or
(C) orders the liquidation of Payor;
and in each case the order or decree remains unstayed and in effect for ninety
(90) days; or
(e) the occurrence of a "change of control" as defined in Section
8.01 of the Credit Agreement, as such section may be amended or restated by the
parties thereto.
If an Event of Default specified in Section 2(a), 2(b) or 2(e) shall have
occurred and be continuing and any Senior Debt shall then be outstanding,
subject to the provisions of Section
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4 hereof, Payee may, at its option, by notice in writing to Payor and to the
Agent under the Senior Debt Documents (the "ACCELERATION NOTICE"), declare the
entire principal amount of this Note and the interest accrued thereon to be due
and payable upon the earlier of (i) one hundred fifty (150) days after the
receipt of the Acceleration Notice by Payor and the Agent under the Senior Debt
Documents or (ii) an acceleration under the Senior Debt Documents, and upon any
such declaration the same shall become due and payable at such time. If an
Event of Default specified in Section 2(a), 2(b) or 2(e) shall have occurred and
be continuing and no Senior Debt shall then be outstanding, Payee may, at its
option, declare the entire principal amount of this Note and the interest
accrued thereon to be due and payable upon the date which is five Business Days
after the date of delivery by Payee to Payor of a written notice of
acceleration, and upon any such declaration the same shall become due and
payable at such time. If an Event of Default specified in Section 2(c) or 2(d)
hereof occurs, the principal balance of and accrued interest on this Note shall
become due and payable immediately without any declaration or other act on the
part of Payee.
If any Event of Default shall have occurred and be continuing,
subject to the provisions of Sections 2 and 4 hereof, Payee may proceed to
protect and enforce its rights either by suit in equity or by action at law, or
both, whether for specific performance of any provision of this Note or in aid
of the exercise of any power granted to Payee under this Note.
3. COVENANTS.
3.1 AFFIRMATIVE COVENANTS. Payor covenants and agrees that for so long
as any indebtedness evidenced by this Note shall remain outstanding, unless
waived by Majority Holders, Payor shall:
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(a) promptly give notice to Payee of (i) any default or Event of
Default hereunder or in connection with any Indebtedness having an aggregate
principal amount in excess of $2,500,000, other than the Senior Debt, (ii) any
notice of an "Event of Default" (as defined in the Senior Debt Documents)
permitting the holder or holders of the Senior Debt to accelerate such Senior
Debt given to Payor by any holder of Senior Debt or its agent or (iii) any
acceleration of the Senior Debt or any other Indebtedness of Payor having an
aggregate principal amount in excess of $2,500,000; and
(b) promptly deliver to Payee copies of any quarterly and annual
financial statements of Payor as well as a quarterly certificate of an officer
of Payor as to Payor's compliance with the terms hereof (or, if applicable,
detailing any noncompliance with the terms hereof and the course of action
proposed to be taken by Payor in connection with such noncompliance).
3.2 NEGATIVE COVENANTS. Payor covenants and agrees that for so long as
any indebtedness evidenced by this Note remains outstanding, Payor will not,
without the written consent of Majority Holders:
(a) liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of related transactions, all or
substantially all of its assets; PROVIDED, HOWEVER, that the foregoing shall not
apply in any way to the grant of a lien or security interest in, or the
foreclosure, sale or other disposition of, collateral pledged to secure Senior
Debt pursuant to any judicial proceeding or by or at the direction of the
holders of any Senior Debt or any agent or other representative acting on their
behalf; or
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(b) consolidate with, or merge with or into, any Person unless (i)
Payor shall be the continuing Person, or the Person (if other than Payor) formed
by such consolidation or into which Payor is merged shall be a corporation
organized and existing under the laws of the United States or any state thereof
or of the District of Columbia and, in the event Payor is merged with or into
any other Person, such Person shall expressly assume, by an agreement executed
and delivered to Payee, the obligations of Payor under this Note, and (ii) the
Payor on this Note following the transaction shall be in compliance with Section
3.2(d) below. Upon any consolidation or merger of Payor in accordance with this
Section 3.2(b), the successor corporation formed by such consolidation or into
which Payor is merged shall succeed to, and be substituted for, and may exercise
every right and power of, Payor under this Note with the same effect as if such
successor corporation had been named as Payor herein; or
(c) declare or pay any dividends or distributions to its
stockholders, or redeem or otherwise purchase or acquire any of its Capital
Stock (other than the repurchase, redemption or similar transaction pursuant to
which Capital Stock owned by employees is reacquired or retired by the Payor),
directly or indirectly, whether in cash, property or in obligations of the
Payor; or
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(d) incur, assume or suffer to exist any Indebtedness other than
(i) Senior Debt which is incurred in connection with the operation of the
business of the Payor or its subsidiaries, but is not incurred for the purpose
of acquiring any Person or business (other than the acquisition contemplated in
the Agreement), (ii) other Indebtedness, including without limitation Senior
Debt which is incurred for the purpose of acquiring any Person or business
(other than the acquisition contemplated in the Agreement), so long as the ratio
of (x) Total Indebtedness of Payor and its Subsidiaries on a consolidated basis,
as of the date such additional Indebtedness is incurred (and after giving effect
to such incurrence), to (y) EBITDA of Payor, on a consolidated basis and giving
pro forma effect to acquisitions and dispositions effected during such period
(including without limitation the transaction in connection with which such
additional Indebtedness is incurred) as if such transactions had occurred on the
first day of such period, for the latest four complete fiscal quarters of Payor,
does not exceed 7.0:1, and (iii) the Indebtedness under the Subordinated Notes,
including additional issuances of the Subordinated Notes contemplated by the
Agreement.
4. SUBORDINATION
4.1 NOTE SUBORDINATED TO SENIOR DEBT. To the extent and in the manner
hereinafter set forth in this Section 4 and subject to the terms of Section 5
below, the indebtedness represented by this Note and the payment of the
principal of and the interest on this Note and any claim for rescission of the
purchase of this Note, and any claim which is the equivalent of or substitute
for principal of or interest on this Note, for damages arising from the purchase
of
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this Note or for reimbursement or contribution on account of such a claim,
and all other payments with respect to or on account of this Note
(collectively, the "SUBORDINATED DEBT") (a) rank pari passu in right of
payment with the subordinated notes issued by Federal Data Corporation, a
Delaware corporation, (i) pursuant to that certain Agreement and Plan of
Merger dated October 18, 1995, by and among FDC Holdings, Inc., and X. Xxxxxx
Xxxxxx, as shareholder representative and (ii) pursuant to that certain
Agreement and Plan of Merger dated April 9, 1997 by and among Xxxxx Xxx,
Xxxxx Xxxxxxx, Xxxxxx Xxxxx, NYMA, Inc. and NYMA Acquisition, Inc., and Xxxxx
Xxxxxxx as the initial shareholder representative, and (b) are hereby
expressly made subordinate and subject in right of payment to the prior
payment in full in cash of all other Senior Debt. This Section 4 constitutes
a continuing offer to all Persons who become holders of, or continue to hold,
Senior Debt, each of whom is an obligee hereunder and is entitled to enforce
such holder's rights hereunder, subject to the provisions hereof, without any
act or notice of acceptance hereof or reliance hereon. For purposes of this
Section 4, Senior Debt shall not be deemed to have been paid in full until
the termination of all commitments or other obligations by any holder thereof
and unless all such holders shall have received indefeasible payment in full
in cash of all obligations under or in respect of Senior Debt (including,
without limitation, Post Petition Interest).
4.2 NO PAYMENT ON NOTE IN CERTAIN CIRCUMSTANCES.
(a) During the continuance of any default in the payment of any
Senior Debt, whether at maturity, upon redemption or pursuant to acceleration or
otherwise (each, a "PAYMENT DEFAULT"), no direct or indirect payment of any kind
(other than the payment of interest on the Notes in PIK Notes) shall be made,
asked for, demanded, accepted, received or
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retained with respect to principal, interest or other amounts due under the
Notes nor shall any holder thereof exercise any remedies with respect thereto.
"PRIME RATE" shall mean the prime rate as published in the Money Rates Column of
the Eastern Edition of the WALL STREET JOURNAL (or the average of such rates if
more than one rate is indicated), in effect on the date of incurrence of such
Claim.
(b) Upon the occurrence of any default (other than a Payment
Default) under the Credit Agreement or any other Senior Debt Document which
would permit the Banks (or any other holder of Senior Debt) to accelerate the
maturity of the Senior Debt outstanding thereunder (whether after the giving of
notice, the lapse of time, or both or otherwise) (each, a "NON-PAYMENT
DEFAULT"), no payment or distribution (including any payment or distribution
that may be payable by reason of any other indebtedness of Payor being
subordinated to payment of the Subordinated Debt) shall be made by or on behalf
of Payor for or on account of or in respect of the Subordinated Debt until such
Non-Payment Default shall have been cured or waived or otherwise ceases to exist
pursuant to the terms of such Senior Debt, or the benefits of this sentence
shall have been waived by or on behalf of, and at the sole option of, the
holders of a majority of the principal amount of such Senior Debt.
Notwithstanding the foregoing, the suspension of payments described in the
preceding sentence shall terminate, and the Payor shall be obligated to make all
payments of principal and interest on this Note, including any payments not made
by virtue of such suspension, if any holder or holders of the relevant Senior
Debt has not, on or prior to the 180th day after the occurrence of the Non-
Payment Default under the Senior Debt, declared all unpaid principal and
interest on such Senior Debt to be immediately due and payable, unless such Non-
Payment Default shall have
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been cured or waived or otherwise ceases to exist pursuant to the terms of such
Senior Debt, or the benefits of the previous sentence shall have been waived by
or on behalf of, and at the sole option of, the holders of a majority of the
principal amount of such Senior Debt.
(c) Payee agrees that, so long as payments or distributions for or
on account of the Subordinated Debt are not permitted pursuant to this Section
4, Payee will not take, sue for, ask or demand from Payor payment of all or any
amounts under or in respect of this Note, or commence, or join with any creditor
other than the holders of Senior Debt and their agents in commencing, directly
or indirectly cause Payor to commence, or assist Payor in commencing, any
proceeding referred to in Section 4.3, and Payee shall not take or receive from
Payor, directly or indirectly or on its behalf, in cash or other property or by
set-off (except in respect to Payor's rights as set forth in Section 5 below) or
in any other manner, including, without limitation, from or by way of
collateral, payment of all or any amounts under or in respect of the
Subordinated Debt. In the event that notwithstanding the foregoing provisions
of this Section 4.2, any payment or distribution of any kind or character,
whether in cash, property or securities (including any payment or distribution
that may be payable by reason of any other indebtedness of Payor being
subordinated to payment of the Subordinated Debt), shall be received by Payee
for or on account of or in respect of the Subordinated Debt before all Senior
Debt is indefeasibly paid in full, such payment or distribution shall be
received and held in trust for, and shall be paid over (in the same form as so
received, to the extent practicable, and with any necessary endorsement) to the
holders of the Senior Debt remaining unpaid or their representative or
representatives, or to the trustee or trustees under any such indenture or
agreement under which any Senior Debt may have been issued, for
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application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of Senior Debt, until all
Senior Debt shall have been paid in full in cash, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
4.3 DISSOLUTION; LIQUIDATION; BANKRUPTCY; ACCELERATION. In the event of
(i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar proceeding in connection therewith,
relative to the Payor or any of its assets, or (ii) any liquidation, dissolution
or other winding up of the Payor, whether voluntary or involuntary or whether or
not involving insolvency or bankruptcy, or (iii) any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of the Payor, or
(iv) the acceleration of the Senior Debt by reason of the occurrence of a
default or an event of default thereunder (each such event, if any, herein
sometimes referred to as a "PROCEEDING"):
(a) The holders of all Senior Debt shall first be entitled to
receive payment in full in cash of all Senior Debt before any direct or indirect
payment may be made for or on account of payments under or in respect of the
Subordinated Debt, whether in cash, property or securities of any kind;
(b) Any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution that may
be payable by reason of any other indebtedness of Payor being subordinated to
payment of the Subordinated Debt), to which Xxxxx would be entitled except for
the provisions of this Section 4, shall be paid by the liquidating trustee or
agent or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the
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holders of Senior Debt or their representative or representatives, or to the
trustee or trustees under any indenture under which any instrument evidencing
any of such Senior Debt may have been issued for application (in the case of
cash) to, or as collateral (in the case of non-cash property or securities) for
the payment or prepayment of Senior Debt, to the extent necessary to make
payment in full of all Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
(c) The holders of Senior Debt are hereby irrevocably authorized
and empowered (in their own names or in the name of Payee or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in paragraph (b) above and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the amounts owing under the Subordinated Debt or
enforcing any security interest or other lien securing payment of the amounts
owing under the Subordinated Debt) as they may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the holders of
Senior Debt hereunder.
(d) Xxxxx shall duly and promptly take such action as the holders
of Senior Debt may reasonably request to execute and deliver to the holders of
Senior Debt such powers of attorney, assignments, or other instruments as the
holders of Senior Debt may request in order to enable the holders of Senior Debt
to enforce any and all claims with respect to, and any security interests and
other liens securing payment of, the amounts owing under the Subordinated Debt.
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(e) In the event that notwithstanding the foregoing provisions of
this Section 4.3, any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution that may
be payable by reason of any other indebtedness of Payor being subordinated to
payment of the Subordinated Debt), shall be received by Payee for or on account
of or in respect of the Subordinated Debt before all Senior Debt is indefeasibly
paid in full, such payment or distribution shall be received and held in trust
for, and shall be paid over (in the same form as so received, to the extent
practicable, and with any necessary endorsement) to the holders of the Senior
Debt remaining unpaid or their representative or representatives, or to the
trustee or trustees under any such indenture or agreement under which any Senior
Debt may have been issued, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the payment or
prepayment of Senior Debt, until all Senior Debt shall have been paid in full in
cash, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
4.4 SUBROGATION. Upon the final payment in full in cash of all Senior
Debt, Payee shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of Payor
applicable to the Senior Debt until the principal of and interest on and all
other amounts payable under the Subordinated Debt shall be paid in full, and for
the purposes of such subrogation, no payments or distributions to the holders of
the Senior Debt of any cash, property or securities to which Payee would be
entitled except for the provisions of this Section 4 and no payment over
pursuant to the provisions of this Section 4 to the holders of Senior Debt by
Payee shall, as between Payor, its creditors other than holders of Senior Debt,
and Payee, be deemed to be a payment by Payor to or on
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account of the Senior Debt. It is understood that the provisions of this
Section 4 are and are intended solely for the purpose of defining the relative
rights of Xxxxx, on the one hand, and the holders of the Senior Debt, on the
other hand.
4.5 OBLIGATIONS OF PAYOR UNCONDITIONAL. Nothing contained in this
Section 4 or elsewhere in this Note is intended to or shall impair, as among
Payor, its creditors other than the holders of Senior Debt, and Payee, the
obligation of Payor, which is absolute and unconditional, to pay to Payee the
principal of and interest on and all other amounts due under this Note in
accordance with its terms, or is intended to or shall affect the relative rights
of Payee and creditors of Payor other than the holders of the Senior Debt, nor
shall anything herein prevent Payee from exercising all remedies otherwise
permitted by applicable law upon default under this Note, subject to the
provisions of this Section 4 and to the rights of holders of Senior Debt to
receive distributions and payments otherwise payable to Payee.
4.6 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon
any payment or distribution of assets of Payor referred to in this Section 4,
Payee shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation
or reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to Payee, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt and other indebtedness of Payor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to Section 4 of this Note. Such reliance shall not affect the rights
of the holders of the Senior Debt.
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4.7 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF PAYOR OR
HOLDERS OF SENIOR DEBT. No right of any present or future holders of any Senior
Debt to enforce subordination as provided herein will at any time in any way be
prejudiced or impaired by any act or failure to act on the part of Payor or by
any act or failure to act by any such holder, or by any act, failure to act or
noncompliance by Payor, the holders of Senior Debt or their respective agents
with the terms of this Note, regardless of any knowledge thereof which any such
holder or Payor may have or otherwise be charged with. No amendment, waiver or
other modification of this Note shall in any way adversely affect the rights of
the holders of any Senior Debt under this Section 4 unless such holders of
Senior Debt consent in writing to such amendment, waiver or modification. The
provisions of this Section 4 are intended for the benefit of and shall be
enforceable directly by the holders of the Senior Debt.
4.8 FURTHER ASSURANCES. Payee and Payor each will, at Xxxxx's expense
and at any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the holders of Senior Debt may request, in order to protect
any right or interest granted or purported to be granted hereby or to enable the
holders of Senior Debt to exercise and enforce their rights and remedies
hereunder.
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4.9 AGREEMENTS IN RESPECT OF SUBORDINATED DEBT.
(a) Xxxxx agrees that it will not make any payment for or on
account of or in respect of this Note, or take any other action, in
contravention of the provisions of this Section 4.
(b) Payee shall promptly notify the holders of Senior Debt, at
Banque Indosuez, New York Branch, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, or such other address of which Xxxxx has been notified in writing,
of the occurrence of any default under this Note of which Payee shall obtain
knowledge.
4.10 OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and interests of the
holders of Senior Debt hereunder, and all agreements and obligations of Payee
and Payor under this Section 4, shall remain in full force and effect
irrespective of:
(i) any lack of validity or enforceability of the
Payor Guaranty or any successor guaranty of the Credit Agreement or
any other Senior Debt Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Senior Debt, or
any other amendment or waiver of or any consent to any departure from
the Credit Agreement or the Payor Guaranty or any successor guaranty
or any other Senior Debt Document, including, without limitation, any
increase in the Senior Debt resulting from the extension of additional
credit to Payor or any of its Subsidiaries or otherwise;
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(iii) any taking, exchange, release or non-
perfection of any other collateral, or any taking, release, amendment
or waiver of or consent to departure from any guaranty, for all or any
of the Senior Debt;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the Senior Debt, or any manner of
sale or other disposition of any collateral for all or any of the
Senior Debt or any other assets of Payor or any of its Subsidiaries;
(v) any change, restructuring or termination of
the corporate structure or existence of Payor or any of its
Subsidiaries; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Payor or a
subordinated creditor.
The provisions of this Section 4 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be returned by the holders of Senior Debt
upon the insolvency, bankruptcy or reorganization of Payor or otherwise, all as
though such payment had not been made.
4.11 WAIVER. Payee and Payor each hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Senior Debt
and this Section 4 and any requirement that the holders of Senior Debt protect,
secure, perfect or insure any security interest or lien on any property subject
thereto or exhaust any right or take any action against Payor or any other
person or entity or any collateral.
4.12 NO WAIVER; REMEDIES. No failure on the part of the holders of Senior
Debt to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor
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shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
4.13 CONTINUING AGREEMENT; ASSIGNMENTS UNDER SENIOR DEBT AGREEMENTS. The
provisions of this Section 4 constitute a continuing agreement and shall (i)
remain in full force and effect until the indefeasible payment in full in cash
of the Senior Debt, (ii) be binding upon Payee, Payor and their respective
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, the holders of Senior Debt and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), the holders of
Senior Debt may assign or otherwise transfer all or any portion of their rights
and obligations under the Credit Agreement or any other Senior Debt Document, as
applicable, to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to the
holders of Senior Debt herein or otherwise.
5. RIGHT TO REDUCE AMOUNTS PAYABLE UNDER THIS NOTE. Payee hereby agrees, by
acceptance of this Note, that Payor may reduce the principal amount of this Note
following the Closing pursuant to Section 9(g) of the Agreement, subject to such
other terms and conditions as are set forth in the Agreement. Any such
adjustment is intended as, and shall be treated by the parties as, an adjustment
to the Purchase Price. If the principal amount of the Note is reduced pursuant
to Subsection 9(g) of the Agreement, such reduction shall be deemed to be made
effective as of the Closing Date and all interest that may have accrued on the
principal amount so cancelled shall also be deemed to be retroactively
cancelled, effective as of the later of (i) the date hereof and (ii) the date
such Claim arose. Upon any reduction of the principal
20
amount of the Note, Payee, shall, upon request of the Payor, surrender this Note
and Payor shall issue a replacement Note to Payee, upon such surrender, to
reflect such decrease in principal amount but otherwise identical to this Note.
6. INCREASE IN AMOUNTS PAYABLE UNDER THIS NOTE. In the event that June 30
EBIT (as defined in, and determined in accordance with the provisions of, the
Agreement) is equal to or exceeds Two Million Five Hundred Fifty Thousand
Dollars ($2,550,000), the principal amount of this Note shall automatically, and
without any action by Payor or Payee shall increase by an amount equal to
Twenty-five Thousand Dollars ($25,000.00). Such increase shall be deemed
effective as of the original date of this Note, and interest shall accrue
thereon from such date. Upon demand from Payee, a replacement Note to reflect
such increase in principal amount but otherwise identical to this Note shall be
issued to Payee, upon surrender of this Note to Payor.
7. CERTAIN DEFINITIONS
"AGENT" means Banque Indosuez, New York Branch, as agent for the
lenders under the Credit Agreement, and its successors and assigns.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar
federal, state or foreign law for the relief of debtors or any arrangement,
reorganization, assignment for the benefit of creditors or any other marshalling
of the assets and liabilities of Payor.
"BUSINESS DAY" means each day other than Saturdays, Sundays and days
when commercial banks are authorized or required by law to be closed for
business in New York, New York.
21
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations, warrants, options or other equivalents
(however designated) of capital stock of such Person (if a corporation) and any
and all equivalent ownership interests in such Person (if other than a
corporation), in each case whether now outstanding or hereafter issued.
"CONSOLIDATED NET INCOME" means, with respect to any Person, such
Person's consolidated net income determined in accordance with GAAP
"CREDIT AGREEMENT" means the Credit Agreement dated December 1, 1995
among the Payor, Banque Indosuez, New York Branch, as agent and collateral agent
thereunder, and the other parties thereto, together with the related documents
thereto (including without limitation any guarantee agreements and security
documents), in each case as such agreement or document may be amended, modified
or supplemented from time to time, including without limitation any agreement or
document extending the maturity of, refinancing, replacing or otherwise
restructuring all or any part of the Indebtedness under such agreement or
document or any replacement or successor agreement or document and whether by
the same or any other agent, lender or group of lenders.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"EBITDA" means, with respect to any Person for any period, the
consolidated Net Income, plus, consolidated tax expense, plus consolidated tax
expense, plus consolidated interest expense, plus consolidated depreciation and
amortization expenses, plus all other non-cash charges deducted in computing
Consolidated Net Income, in each case for such Person for such period,
calculated in accordance with GAAP.
22
"EVENT OF DEFAULT" means any of the occurrences specified under
Sections 2(a) through 2(e) of this Note.
"INDEBTEDNESS" of any Person means all obligations of such Person for
borrowed money or evidenced by bonds, notes, debentures or similar instruments,
excluding notes and capital leases issued in connection with offsetting lease
assets and excluding all other capitalized lease obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PIK NOTES" means the PIK Notes issued pursuant to Section 1.1 hereof
in lieu of cash interest and containing terms substantially identical to this
Note.
"REFINANCING DEBT" means any indebtedness incurred to repay,
refinance or otherwise replace indebtedness or obligations (including, without
limitation, commitments) under the Credit Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means all obligations of Payor (including without
limitation contingent obligations with respect to undrawn letters of credit
issued under the Credit Agreement, any obligations owed with respect to
indemnification obligations, interest rate protection incurred to satisfy the
requirements of the Credit Agreement and commitment fees and agency fees payable
thereunder or pursuant thereto) (i) under the Credit Agreement or (ii) for
Indebtedness to the extent such Indebtedness is incurred to acquire, or in
connection with the acquisition of, a Person or business or assets, or (iii)
with respect to Refinancing Debt
23
(including in each such case fees, expenses, claims, charges, indemnity
obligations and interest at the contract rate (including any rate applicable
upon default) accrued or accruing after the commencement of a Proceeding whether
or not such interest is an allowed claim enforceable against the debtor in a
bankruptcy case under Title 11 of the United States Code or whether or not such
interest accrues after the filing of such petition for purposes of such Title
("POST PETITION INTEREST")). Senior Debt outstanding under or in respect of
Senior Debt Documents shall continue to constitute Senior Debt notwithstanding
that such Senior Debt may be disallowed, avoided or subordinated pursuant to any
Bankruptcy Law or other applicable insolvency law or equitable principles.
"SENIOR DEBT DOCUMENTS" means the Credit Agreement and any other
agreement, indenture, mortgage, guaranty, pledge, security agreement or
instrument evidencing or securing Senior Debt or pursuant to which Senior Debt
is incurred.
"SUBORDINATED NOTE" means each of this Note and each other
subordinated promissory note made by Payor pursuant to the Agreement, including
without limitation, in each case, any PIK Notes issued pursuant to the terms
thereof.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity, whether such corporation or entity now exists or shall hereafter
be created, of which a majority of the Capital Stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
24
"UNAFFILIATED ENTITY" is an entity which is not an Affiliate of Payor
or The Carlyle Group, L.P.
7. MISCELLANEOUS
7.1 SECTION HEADINGS. The section headings contained in this Note are
for reference purposes only and shall not affect the meaning or interpretation
of this Note.
7.2 AMENDMENT AND WAIVER. Subject to Section 7.10 hereof, no provision
of this Note may be amended or waived unless Payor shall have obtained the
written agreement of Payee and (unless there are no amounts and no commitments
outstanding under the Credit Agreement) the Agent under the Credit Agreement.
No failure or delay in exercising any right, power or privilege hereunder shall
imply or otherwise operate as a waiver of any rights of Payee, nor shall any
single or partial exercise thereof preclude any other or future exercise thereof
or the exercise of any other right, power or privilege.
7.3 SUCCESSORS, ASSIGNS AND TRANSFERORS. This Note may not be assigned
or transferred by Payee without the express written consent of Payor and may not
be assigned or transferred to (x) any competitor, customer or supplier of Payor
or any of its Subsidiaries or (y) to any other Person if such assignment or
transfer would cause any interest payments due under this Note to become non-
deductible as an expense for any tax purposes. Payor may not assign its
obligations under this Note without the prior written consent of Payee except in
connection with a transaction permitted under Section 3.2(b) hereof. Subject to
the foregoing, the obligations of Payor and Payee under this Note shall be
binding upon, and inure to the benefit of, and be enforceable by, Payor and
Payee, and their respective successors and permitted assigns, whether or not so
expressed.
25
7.4 GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to any
conflicts of laws principles thereof that would otherwise require the
application of the law of any other jurisdiction.
7.5 LOST, STOLEN, DESTROYED OR MUTILATED NOTE. Upon receipt of evidence
reasonably satisfactory to Payor of the loss, theft, destruction or mutilation
of this Note and of indemnity arrangements reasonably satisfactory to Payor from
or on behalf of the holder of this Note, and upon surrender or cancellation of
this Note if mutilated, Payor shall make and deliver a new note of like tenor in
lieu of such lost, stolen, destroyed or mutilated Note, at Xxxxx's expense.
7.6 WAIVER OF PRESENTMENT, ETC. Except as otherwise provided herein,
presentment, demand, protest, notice of dishonor and all other notices are
hereby expressly waived by Payor.
7.7 USURY. Nothing contained in this Note shall be deemed to establish
or require the payment of a rate of interest in excess of the maximum rate
legally enforceable. If the rate of interest called for under this Note at any
time exceeds the maximum rate legally enforceable, the rate of interest required
to be paid hereunder shall be automatically reduced to the maximum rate legally
enforceable. If such interest rate is so reduced and thereafter the maximum
rate legally enforceable is increased, the rate of interest required to be paid
hereunder shall be automatically increased to the lesser of the maximum rate
legally enforceable and the rate otherwise provided for in this Note.
26
7.8 NOTICES. Any notice, request, instruction or other document to be
given hereunder by either party to the other shall be in writing and shall be
deemed given when received and shall be (i) delivered personally or (ii) mailed
by certified mail, postage prepaid, return receipt requested or (iii) delivered
by Federal Express or a similar overnight courier or (iv) sent via facsimile
transmission to the fax number given below, as follows:
IF TO PAYOR, ADDRESSED TO:
Federal Data Corporation
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Fax Number: (000) 000-0000
WITH A COPY TO:
The Carlyle Group
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Suite 220 South
Washington, DC 20004
Attention: Xxxxx Xxxxx
Fax Number: (000) 000-0000
AND
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Suite 1300
Washington, DC 20004-2505
Attention: Xxxx X. Xxxxx
Fax Number: (000) 000-0000
27
IF TO PAYEE, ADDRESSED TO:
Xxxxx Xxxxxxxxxx
c/o Erkiletian Construction Co.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxx, Xxxxxxx, Xxxxx & Xxxxxxxxxx
0000 X Xxxxxx, X.X.
Washington, D.C. 20037
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Fax Number: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other party.
In the event that any notice under this Note is required to be made
on or as of a day which is not a Business Day, then such notice shall not be
required to be made until the first day thereafter which is a Business Day.
7.9 REPRESENTATIONS AND WARRANTIES OF PAYOR. Payor hereby represents and
warrants to Payee that: (a) Payor is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware; (b) Payor has duly
authorized, executed and delivered this Note; and (c) this Note constitutes a
legally valid and binding obligation of Payor,
28
enforceable against Payor in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights or remedies of creditors
and the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought.
7.10 ACTION BY MAJORITY HOLDERS. Subject to the provisions of this
Section 7.10, Majority Holders and Payor may enter into agreements for the
purpose of adding or modifying provisions of the Subordinated Notes or changing
in any manner the rights of the Payee or Payor hereunder or waiving any
covenant, default or Event of Default hereunder; PROVIDED, HOWEVER, that no
supplemental agreement shall, without the consent of the Payee: (a) extend the
stated maturity of this Note or reduce the principal amount hereof, or reduce
the rate or change the time of payment of interest due on this Note; or (b)
reduce the percentage specified in the definition of Majority Holders; or (c)
amend this Section 7.10; or (d) effect any change in the terms of this Note
which is not also applicable to each other Subordinated Note; and PROVIDED,
FURTHER, that no change may be made to this Note which would either modify the
subordination provisions hereof or would otherwise adversely affect the rights
of the holders of Senior Debt without the written consent, prior to the
indefeasible repayment thereof in full in cash, of the Required Banks (as
defined in the Credit Agreement) and thereafter the holders of a majority in
principal amount of Senior Debt.
29
IN WITNESS WHEREOF, Xxxxx has executed and delivered this Note as of
the date hereinabove first written.
FEDERAL DATA CORPORATION
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
30
ACKNOWLEDGMENT
Xxxxx X. Xxxxxxxxxx, Payee under the attached 9 % Subordinated
Promissory Note, dated as of June 30, 1997 (the "NOTE") hereby acknowledges the
provisions of Section 4, Section 5 and Section 7.10 of the Note and agrees to be
bound by the provisions thereof.
By:
-----------------------------
Name:
STATE OF _______________________
ss
COUNTY OF ______________________
On the ___ day of June, 1997, before me personally came
____________________________ to be known and known to me to be the individual
describe in and who executed the foregoing Acknowledgement and acknowledged to
me that he executed the same.
Signed and sworn before me SEAL
on ________________, 1997
_________________________ My commission expires:__________
Notary Public
