EXHIBIT 10-1
BUSINESS LOAN AND SECURITY AGREEMENT
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THIS BUSINESS LOAN AND SECURITY AGREEMENT (this "Agreement") is made
this 26th day of August, 2009, by and among VSE CORPORATION, a corporation
organized under the laws of the State of Delaware ("VSE"), ENERGETICS
INCORPORATED, a corporation organized under the laws of the State of Maryland
("Energetics"), VSE SERVICES INTERNATIONAL, INC., a corporation organized
under the laws of the State of Delaware ("VSI"), INTEGRATED CONCEPTS AND
RESEARCH CORPORATION, a corporation organized under the laws of the District
of Columbia ("ICRC"), G&B SOLUTIONS, INC., a corporation organized under the
laws of the Commonwealth of Virginia ("G&B"), jointly and severally (each of
VSE, Energetics, VSI, ICRC and G&B, a "Borrower"; and collectively, the
"Borrowers"), CITIZENS BANK OF PENNSYLVANIA, a bank chartered in the
Commonwealth of Pennsylvania, its successors and assigns ("Citizens"),
SUNTRUST BANK, a banking corporation organized under the laws of the State of
Georgia, its successors and assigns ("SunTrust"), each other financial
institution which is a party to this Agreement, whether by execution of this
Agreement or otherwise (collectively, the "Lenders" and individually, a
"Lender") and CITIZENS BANK OF PENNSYLVANIA, a bank chartered in the
Commonwealth of Pennsylvania, its successors and assigns, in its capacity as
both collateral and administrative agent for the Lenders (the "Agent").
RECITALS
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A. The Borrowers have applied to the Lender for a revolving
credit facility in the maximum principal amount of Fifty Million Dollars
($50,000,000).
B. Lenders severally are willing to make the revolving
credit facility available jointly and severally to Borrowers upon the terms and
subject to the conditions set forth in this Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1 Certain Defined Terms.
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As used in this Agreement, the terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified therein, and the
following terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts receivable,
health care insurance receivables, contract rights, notes, drafts,
instruments, acceptances, chattel paper, leases and writings evidencing a
monetary obligation or a security interest in, or a lease of, goods, all
rights to receive the payment of a monetary obligation or other consideration
under present or future contracts (including, without limitation, all rights
(whether or not earned by performance) to receive payments under presently
existing or hereafter acquired or created letters of credit), or by virtue of
property that has been sold, leased, licensed, assigned or otherwise disposed
of, services rendered or to be rendered, loans and advances made or other
considerations given, by or set forth in or arising out of any present or
future chattel paper, note, draft, lease, acceptance, writing, bond,
insurance policy, instrument, document or general intangible, and all
extensions and renewals of any thereof, all rights under or arising out of
present or future contracts, agreements or general interest in goods which
gave rise to any or all of the foregoing, including all commercial tort
claims, other claims or causes of action now existing or hereafter arising in
connection with or under any agreement or document or by operation of law or
otherwise, all collateral security of any kind (including, without
limitation, real property mortgages and deeds of trust), Supporting
Obligations, letter of credit rights and letters of credit given by any
Person with respect to any of the foregoing, all books and records in
whatever media (paper, electronic or otherwise) recorded or stored, with
respect to any or all of the foregoing and all equipment and general
intangibles necessary or beneficial to retain, access and/or process the
information contained in those books and records, and all Proceeds (cash and
non-cash) of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
"ACH Settlement Risk Reserve" means any and all reserves which the
Agent from time to time establishes, in its sole discretion, with respect to
ACH Transactions.
"ACH Transactions" means any cash management or related services by the
Agent for the account of any of the Borrowers pursuant to agreement or
overdrafts.
"Additional Borrower" means each Person that has executed and delivered
an Additional Borrower Joinder Supplement that has been accepted and approved
by the Agent.
"Additional Borrower Joinder Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as Exhibit A,
with the blanks appropriately completed and executed and delivered by the
Additional Borrower and accepted by VSE on behalf of the Borrowers.
"Affiliate" means, with respect to any designated Person, any other
Person, (a) directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, (b) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in such designated Person, or (c) five percent
(5%) or more of whose stock or other equity interest is directly or
indirectly owned or held by such designated Person. For purposes of this
definition, the term "control" (including with correlative meanings, the
terms "controlling", "controlled by" and "under common control with") means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities or other equity interests or by contract or
otherwise.
"Agent" means the Person defined as the "Agent" in the preamble of this
Agreement and shall also include any successor Agent appointed pursuant to
Section 8.7.3 (Successor Agent).
"Agent's Fee" has the meaning described in Section 2.5.4 (Agent's Fee).
"Agent's Obligations" shall mean any and all Obligations payable solely
to and for the exclusive benefit of the Agent by any or all of the Borrowers
under the terms of this Agreement and/or any of the other Financing
Documents, including, without limitation, any and all Letter of Credit
Fees/or Field Examination Fees.
"Aggregate Commitments" means the Commitments of all Lenders.
"Agreement" means this Business Loan and Security Agreement, as
amended, restated, supplemented or otherwise modified in writing in
accordance with the provisions of Section 9.2 (Amendments; Waivers).
"Applicable Base Rate" means for any day, a fluctuating per annum rate
of interest equal to the greater of the (i) Prime Rate, (ii) Federal Funds
Open Rate plus one half of one percent (0.50%) or (iii) LIBOR Daily Floating
Rate plus two percent (2.0%)
"Applicable Interest Rate" means a (a) LIBOR-based Rate or (b) Base
Rate.
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated
balance sheet of the Borrowers and their respective Subsidiaries.
"Assignee" means any Person to which any Lender assigns all or any
portion of its interests under this Agreement, any Commitment, and any Loan,
in accordance with the provisions of Section 9.5 (Assignments by Lenders),
together with any and all successors and assigns of such Person; "Assignees"
means the collective reference to all Assignees.
"Bank Products" shall mean any (i) commercial credit card, purchase
card and merchant card services, or other commercial credit card services or
facilities, (ii) cash management services or facilities, (iii) foreign
investment or exchange products or services or (iv) products under any non-
speculative hedging agreement or arrangement, extended to any Borrower by
Lender or any Affiliate of Lender, from time to time.
"Bankruptcy Code" means Title 11 of the United States Code, as amended
from time to time, and any successor Laws.
"Base Rate" means the sum of (a) the Applicable Base Rate plus (b) the
Base Rate Margin.
"Base Rate Loan" means any Loan, the rate of interest applicable to
which is based upon the Applicable Base Rate.
"Base Rate Margin" means the amount determined to be in effect from
time to time in accordance with the matrix below. The initial Base Rate
Margin will be determined at the Closing Date using the Leverage Ratio
calculated by reference to the consolidated financial statements of VSE and
the Compliance Certificate most recently received by the Agent. Commencing
on the date following the Closing Date when the Agent receives the
consolidated financial statements of VSE and the Compliance Certificate in
accordance with this Agreement and on each such date thereafter, the Base
Rate Margin will be reset based on the Leverage Ratio calculated by reference
to such consolidated financial statements and Compliance Certificate.
Base Rate Margin Leverage Ratio
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0% Less than 1.00 to 1.0
.25% Equal to or greater than 1.00 to 1.0
but less than 2.00 to 1.0
.50% Equal to or greater than 2.00 to 1.0
In the event VSE fails to provide such consolidated financial
statements and Compliance Certificate to the Agent when due, the Base Rate
Margin shall be .50% until such time as such consolidated financial
statements and Compliance Certificate are submitted to and accepted by Agent
pursuant to this Agreement.
"Borrower" means each Person defined as a "Borrower" in the preamble of
this Agreement and each Additional Borrower; "Borrowers" means the collective
reference to all Persons defined as "Borrowers" in the preamble to this
Agreement and all Additional Borrowers.
"Borrowing Base" has the meaning described in Section 2.1.3 (Borrowing
Base).
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
"Business Day" means any day other than a Saturday, Sunday or other day
on which (a) in the case of Citizens (as Agent and Lender), commercial banks
in the State are authorized or required by law to close and, (b) in the case
of the Lenders, other than Citizens, are closed for the transaction of
business at their address listed in Section 9.1.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule
or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
"Capital Expenditure" means an expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital Assets,
including, without limitation, the entering into of a Capital Lease.
"Capital Lease" means with respect to any Person any lease of real or
personal property, for which the related Lease Obligations have been or
should be, in accordance with GAAP consistently applied, capitalized on the
balance sheet of that Person.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit with maturities of one (1) year or less from the date of acquisition
of, or money market accounts maintained with, the Agent, any Affiliate of the
Agent, or any other domestic commercial bank having capital and surplus in
excess of One Hundred Million Dollars ($100,000,000.00) or such other
domestic financial institutions or domestic brokerage houses to the extent
disclosed to, and approved by, the Agent and (c) commercial paper of a
domestic issuer rated at least either A-1 by Standard & Poor's Corporation
(or its successor) or P-1 by Moody's Investors Service, Inc. (or its
successor) with maturities of six (6) months or less from the date of
acquisition.
"Chattel Paper" means a record or records (including, without
limitation, electronic chattel paper) that evidence both a monetary
obligation and a security interest in specific goods, a security interest in
specific goods and software used in the goods, or a lease of specific goods;
all Supporting Obligations with respect thereto; any returned, rejected or
repossessed goods and software covered by any such record or records and all
proceeds (in any form including, without limitation, accounts, contract
rights, documents, chattel paper, instruments and general intangibles) of
such returned, rejected or repossessed goods; and all Proceeds of the
foregoing.
"Closing Date" means the Business Day, on which the Agent shall be
satisfied that the conditions precedent set forth in Section 5.1 (Conditions
to Initial Advance) have been fulfilled or otherwise waived by the Agent.
"Collateral" means all property of each and every Borrower subject from
time to time to the Liens of this Agreement, any of the Security Documents
and/or any of the other Financing Documents, together with any and all
Proceeds and products thereof.
"Collateral Account" has the meaning described in Section 2.1.9 (The
Collateral Account).
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
"Commitment" means with respect to each Lender, such Lender's Revolving
Credit Commitment and with respect to Citizens only, the Swing Line
Commitment, and "Commitments" means the collective reference to the Revolving
Credit Commitments of all of the Lenders and the Swing Line Commitment.
"Commitment Letter" means that certain Commitment Letter, dated June 1,
2009, by Citizens to VSE, as accepted by VSE on June 4, 2009.
"Committed Amount" means with respect to each Lender, such Lender's
Revolving Loan Committed Amount and with respect to Citizens only, the Swing
Line Commitment Amount and "Committed Amounts" means collectively the
Revolving Loan Committed Amount of each of the Lenders and the Swing Line
Committed Amount.
"Compliance Certificate" means a periodic Compliance Certificate
described in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with any Borrower within the
meaning of Section 414(b) or (c) of the Internal Revenue Code.
"Copyrights" means and includes, in each case whether now existing or
hereafter arising, all of each Borrower's rights, title and interest in and
to (a) all copyrights, rights and interests in copyrights, works protectable
by copyright, copyright registrations, copyright applications, and all
renewals of any of the foregoing, (b) all income, royalties, damages and
payments now or hereafter due and/or payable under any of the foregoing,
including, without limitation, damages or payments for past, current or
future infringements of any of the foregoing, (c) the right to sue for past,
present and future infringements of any of the foregoing, and (d) all rights
corresponding to any of the foregoing throughout the world.
"Credit Facility" means with respect to each Lender, such Lender's Pro
Rata Share of the Revolving Credit Facility or the Letter of Credit Sub-
Facility, as the case may be and with respect to Citizens only, the Swing
Line Sub-Facility and "Credit Facilities" means collectively the Revolving
Credit Facility, the Letter of Credit Sub-Facility, the Swing Line Sub-
Facility and any and all other credit facilities now or hereafter extended
under or secured by this Agreement.
"Deposit Account" means a demand, time, savings, passbook or similar
account maintained with a bank or financial institution in which funds are
held or invested for credit to or for the benefit of any Borrower.
"Deposit Account Control Agreement" means an agreement, in form and
substance reasonably satisfactory to Agent, among Agent, any applicable
Borrower and each bank or financial institution in which such Borrower
maintains a Deposit Account, which agreement provides that (a) such bank or
financial institution acknowledges the security interest of Agent in such
Deposit Account, (b) such bank or financial institution shall comply with
instructions originated by Agent directing disposition of the funds in such
Deposit Account without further consent by the applicable Borrower, and (c)
such bank or financial institution shall agree that it shall have no Lien on,
or right of setoff or recoupment against, such Deposit Account or the
contents thereof, other than in respect of usual and customary service fees
and of returned items for which Agent has been given value, in each such case
expressly consented to by Agent, and containing such other or different terms
and conditions as Agent may require.
"Default" means an event which, with the giving of notice or lapse of
time, or both, could or would constitute an Event of Default under the
provisions of this Agreement.
"Documents" means all documents of title or receipts, whether now
existing or hereafter acquired or created, and all Proceeds of the foregoing.
"EBITDA" means as to Borrowers for any period of determination thereof,
the sum of (a) net profit (or loss) determined in accordance with GAAP
consistently applied, plus (b) net interest expense and income tax provisions
for such period, plus (c) depreciation and amortization of assets for such
period, plus (d) non-cash stock compensation, which does not represent a
reserve for future cash payments, plus (e) non-cash non-recurring charges, as
approved in writing by the Agent prior to the due date of the Compliance
Certificate as required under Sections 6.1.1(a) (Annual Statements and
Certificates) and 6.1.1(b) (Quarterly Statements and Certificates), minus any
non-cash gains to the extent included in net income. EBITDA shall be
determined on a rolling basis, based on the four (4) quarter period then
ending. EBITDA from any Permitted Acquisitions will be included on a pro
forma basis as such amounts may be deemed acceptable to the Agent in its sole
and absolute discretion.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each account (net of any
returns, discounts, claims, credits, charges, accrued rebates or other
allowances, offsets, deductions, counterclaims, disputes or other defenses
and reduced by the aggregate amount of all reserves, limits and deductions
provided for in this definition and elsewhere in this Agreement) receivable
in United States Dollars by a Borrower, provided each account conforms and
continues to conform to the following criteria to the satisfaction of the
Agent:
(a) the account arose in the ordinary course
of a Borrower's business from a bona fide outright sale of
Inventory by such Borrower or from services performed by such
Borrower;
(b) the account is a valid, legally
enforceable obligation of the Account Debtor and requires no
further act on the part of any Person under any circumstances to
make the account payable by the Account Debtor;
(c) the account is based upon an enforceable
order or contract, written or oral, for Inventory shipped or for
services performed, and the same were shipped or performed in
accordance with such order or contract;
(d) if the account arises from the sale of
Inventory, the Inventory the sale of which gave rise to the
account has been shipped or delivered to the Account Debtor on an
absolute sale basis and not on a bill and hold sale basis, a
consignment sale basis, a guaranteed sale basis, a sale or return
basis, or on the basis of any other similar understanding;
(e) if the account arises from the
performance of services, such services have been fully rendered
and do not relate to any warranty claim or obligation;
(f) the account is evidenced by an invoice or
other documentation in form acceptable to the Agent, dated no
later than the date allowed under any contract governing such
account and containing only terms normally offered by the
respective Borrower;
(g) the amount shown on the books of a
Borrower and on any invoice, certificate, schedule or statement
delivered to the Agent is owing to such Borrower and no partial
payment has been received unless reflected with that delivery;
(h) the account is not outstanding more than
ninety (90) days from the date of the invoice therefore;
(i) the account is not owing by any Account
Debtor for which the Agent has deemed fifty percent (50%) or more
of such Account Debtor's other accounts (or any portion thereof)
due to a Borrower, individually, or all of the Borrowers
collectively, to be non-Eligible Receivables;
(j) the Account Debtor has not returned,
rejected or refused to retain, or otherwise notified a Borrower
of any dispute concerning, or claimed nonconformity of, any of
the Inventory or services from the sale or furnishing of which
the account arose;
(k) the account is not subject to any present
or contingent (and no facts exist which are the basis for any
future) offset, claim, deduction or counterclaim, dispute or
defense in law or equity on the part of such Account Debtor, or
any claim for credits, allowances, or adjustments by the Account
Debtor because of returned, inferior, or damaged Inventory or
unsatisfactory services, or for any other reason including,
without limitation, those arising on account of a breach of any
express or implied representation or warranty;
(l) the Account Debtor is not a Subsidiary or
Affiliate of any Borrower or an employee, officer, director or
shareholder of any Borrower or any Subsidiary or Affiliate of any
Borrower, other than any joint venture of the Borrower or any
Subsidiary;
(m) the Account Debtor is not incorporated or
primarily conducting business or otherwise located in any
jurisdiction outside of the United States of America, unless the
Account Debtor's obligations with respect to such account are
secured by a letter of credit, guaranty or banker's acceptance
having terms and from such issuers and confirmation banks as are
acceptable to the Agent in its sole and absolute discretion
(which letter of credit, guaranty or banker's acceptance is
subject to the perfected Lien of the Agent for the benefit of the
Lenders ratably and the Agent);
(n) as to which none of the following events
has occurred with respect to the Account Debtor on such Account:
death or judicial declaration of incompetency of an Account
Debtor who is an individual; the filing by or against the Account
Debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory
thereof, or any foreign jurisdiction, now or hereafter in effect;
the making of any general assignment by the Account Debtor for
the benefit of creditors; the appointment of a receiver or
trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of
or taking possession by a "custodian," as defined in the Federal
Bankruptcy Code; the institution by or against the Account Debtor
of any other type of insolvency proceeding (under the bankruptcy
laws of the United States or otherwise) or of any formal or
informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the
Account Debtor; the sale, assignment, or transfer of all or any
material part of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due;
or the cessation of the business of the Account Debtor as a going
concern;
(o) no Borrower is indebted in any manner to
the Account Debtor (as creditor, lessor, supplier or otherwise,
other than trade debt incurred in the ordinary course of
business), with the exception of customary credits, adjustments
and/or discounts given to an Account Debtor by a Borrower in the
ordinary course of its business;
(p) the account does not arise from services
under or related to any warranty obligation of a Borrower or out
of service charges, finance charges or other fees for the time
value of money;
(q) the account is not evidenced by Chattel
Paper or an instrument of any kind and is not secured by any
letter of credit;
(r) the title of the respective Borrower to
the account is absolute and is not subject to any prior
assignment, claim, Lien, or security interest, except Permitted
Liens;
(s) no bond or other undertaking by a
guarantor or surety has been or is required to be obtained,
supporting the account and any of the Account Debtor's
obligations in respect of the account;
(t) each Borrower has the full and
unqualified right and power to assign and grant a security
interest in, and Lien on, the account to the Agent and the
Lenders as security and collateral for the payment of the
Obligations and the Agent's Obligations;
(u) the account does not arise out of a
contract with, or order from, an Account Debtor that, by its
terms, forbids or makes void or unenforceable the assignment or
grant of a security interest by the Borrowers to the Agent, for
the benefit of the Lenders ratably and the Agent, of the account
arising from such contract or order;
(v) the account is subject to a Lien in favor
of the Agent, for the benefit of the Lenders ratably and the
Agent, which Lien is perfected as to the account by the filing of
financing statements and which Lien upon such filing constitutes
a first priority security interest and Lien;
(w) the Inventory giving rise to the account
was not, at the time of the sale thereof, subject to any Lien,
except those in favor of the Agent, for the benefit of the
Lenders ratably and the Agent;
(x) no part of the account represents a
retainage;
(y) the Agent in the good faith exercise of
its sole and absolute discretion has not deemed the account
ineligible because of uncertainty as to the creditworthiness of
the Account Debtor or because the Agent otherwise considers the
collateral value of such account to the Agent and the Lenders to
be impaired or its or their ability to realize such value to be
insecure; and
(z) if the Account Debtor is located in a
state requiring the filing of a Notice of Business Activities
Report or similar report in order to permit any Borrower to seek
judicial enforcement in such state of payment of such Account,
that Borrower has qualified to do business in such state or has
filed a Notice of Business Activities Report or equivalent report
for the then current year.
In the event of any dispute, under the foregoing criteria, as to
whether an account is, or has ceased to be, an Eligible Receivable, the
decision of the Agent in the good faith exercise of its sole and absolute
discretion shall control.
"Enforcement Costs" means all expenses, charges, costs and fees
whatsoever (including, without limitation, reasonable outside and allocated
in-house counsel attorney's fees and expenses) of any nature whatsoever paid
or incurred by or on behalf of the Agent and/or any of the Lenders in
connection with (a) any or all of the Obligations, this Agreement and/or any
of the other Financing Documents, (b) the creation, perfection, collection,
maintenance, preservation, defense, protection, realization upon,
disposition, sale or enforcement of all or any part of the Collateral, this
Agreement or any of the other Financing Documents, including, without
limitation, those costs and expenses more specifically enumerated in Section
3.6 (Costs) and/or Section 9.10 (Enforcement Costs), and further including,
without limitation, amounts paid to lessors, processors, bailees,
warehousemen, sureties, judgment creditors and others in possession of or
with a Lien against or claimed against the Collateral, and (c) the
monitoring, administration, processing and/or servicing of any or all of the
Obligations, the Financing Documents, and/or the Collateral.
"Equipment" means all equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature, presently existing or hereafter acquired or created and wherever
located, whether or not the same shall be deemed to be affixed to real
property, and all of such types of property leased by any Borrower and all of
the Borrowers' rights and interests with respect thereto under such leases
(including, without limitation, options to purchase), together with all
accessions, additions, fittings, accessories, special tools, and improvements
thereto and substitutions therefor and all parts and equipment which may be
attached to or which are necessary or beneficial for the operation, use
and/or disposition of such personal property, all licenses, warranties,
franchises and General Intangibles related thereto or necessary or beneficial
for the operation, use and/or disposition of the same, together with all
Accounts, Chattel Paper, Instruments and other consideration received by any
Borrower on account of the sale, lease or other disposition of all or any
part of the foregoing, and together with all rights under or arising out of
present or future Documents and contracts relating to the foregoing and all
Proceeds of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Euro-Dollar Business Day" means any day on which commercial banks are
open for domestic and international business (including dealing in U.S.
Dollar Deposits) in London, England and the Commonwealth of Pennsylvania.
"Event of Default" has the meaning described in ARTICLE VII (Default
and Rights and Remedies).
"Facilities" means the collective reference to the loan, letter of
credit, interest rate protection, foreign exchange risk, cash management, and
other credit facilities now or hereafter provided to any one or more of the
Borrowers by the Agent or the Lenders under this Agreement or otherwise by
Citizens.
"Federal Funds Open Rate" means for any day of determination, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day) by the Federal
Reserve Bank for the next preceding Business Day) by the Federal Reserve Bank
of Richmond or, if such rate is not so published for any day that is a
Business Day, the average of quotations for such day on such transactions
received by the Agent from three (3) federal funds brokers of recognized
standing selected by the Agent.
"Fees" means the collective reference to each fee payable to the Agent,
for its own account or for the ratable benefit of the Lenders, under the
terms of this Agreement or under the terms of any of the other Financing
Documents, including, without limitation, the Revolving Credit Unused Line
Fee, the Origination Fee, Agent's Fee, Letter of Credit Fees and the Field
Examination Fees.
"Field Examination Fee" and "Field Examination Fees" have the meanings
described in Section 2.5.5 (Field Examination Fees).
"Financing Documents" means at any time collectively this Agreement,
the Notes, the Security Documents, the Letter of Credit Documents, and any
other instrument, agreement or document previously, simultaneously or
hereafter executed and delivered by any Borrower, and/or any other Person,
singly or jointly with another Person or Persons, evidencing, securing,
guarantying or in connection with this Agreement, any Note, any of the
Security Documents, any of the Facilities, and/or any of the Obligations.
"Fixed or Capital Assets" of a Person at any date means all assets
which would, in accordance with GAAP consistently applied, be classified on
the balance sheet of such Person as property, plant or equipment at such
date.
"Fixed Charge Coverage Ratio" means as to Borrowers for any period of
determination thereof the ratio of (a) the sum of (i) EBITDA, plus (ii)
operating lease payments (including rent), minus (iii) cash taxes, minus (iv)
cash dividends, minus (v) share repurchases to (b) Fixed Charges.
"Fixed Charges" means as to Borrowers for any period of determination
thereof, the sum of (i) scheduled or required principal payments on all
Indebtedness for Borrowed Money of Borrowers, plus (ii) all operating lease
payments (including rent), plus (iii) cash interest expense, plus (iv) any
earn-out payments of Borrowers paid in cash.
"Funding Office" means the office of the Agent specified in Section 9.1
or such other office as may be specified from time to time by the Agent as
its funding office by written notice to VSE and the Lenders.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"General Intangibles" means all general intangibles of every nature,
whether presently existing or hereafter acquired or created, and without
implying any limitation of the foregoing, further means all books and
records, commercial tort claims, other claims (including without limitation
all claims for income tax and other refunds), payment intangibles, Supporting
Obligations, choses in action, claims, causes of action in tort or equity,
contract rights, judgments, customer lists, software, Patents, Trademarks,
licensing agreements, rights in intellectual property, goodwill (including
goodwill of Borrower's business symbolized by and associated with any and all
Trademarks, trademark licenses, Copyrights and/or service marks), royalty
payments, licenses, letter-of-credit rights, letters of credit, contractual
rights, the right to receive refunds of unearned insurance premiums, rights
as lessee under any lease of real or personal property, literary rights,
Copyrights, service names, service marks, logos, trade secrets, amounts
received as an award in or settlement of a suit in damages, deposit accounts,
interests in joint ventures, general or limited partnerships, or limited
liability companies or partnerships, rights in applications for any of the
foregoing, books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to any or all of the foregoing,
all Supporting Obligations with respect to any of the foregoing, and all
Equipment and General Intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and all
Proceeds of the foregoing.
"Good Faith Deposit" has the meaning described in Section 2.5.3
(Origination Fee; Good Faith Deposit).
"Government Contracts" means any contract with the United States or any
department, agency or instrumentality of the United States where Borrower is
the prime contractor.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any department, agency or instrumentality
thereof.
"Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, and regulations
promulgated thereunder; (c) any substance the presence of which on any
property now or hereafter owned, acquired or operated by any of the Borrowers
is prohibited by any Law similar to those set forth in this definition; and
(d) any other substance which by Law requires special handling in its
collection, storage, treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by
Hazardous Materials of any property owned, operated or controlled by any of
the Borrowers or for which any of the Borrowers has responsibility,
including, without limitation, improvements, facilities, soil, ground water,
air or other elements on, or of, any property now or hereafter owned,
acquired or operated by any of the Borrowers, and any other contamination by
Hazardous Materials for which any of the Borrowers is, or is claimed to be,
responsible.
"Increased Revolving Facility Activation Notice" means a notice
substantially in the form of Exhibit E attached hereto and made a part
hereof.
"Increased Revolving Facility Closing Date" any Business Day designated
as such in an Increased Revolving Facility Activation Notice.
"Incremental Revolving Loans" has the meaning described in 2.1.6
(Increase to Revolving Credit Facility).
"Indebtedness" of a Person means at any date the total liabilities of
such Person at such time determined in accordance with GAAP consistently
applied.
"Indebtedness for Borrowed Money" of a Person means at any time the sum
at such time of (a) Indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or
similar obligations issued or created for the account of such Person, (c)
Lease Obligations of such Person with respect to Capital Leases, (d) all
liabilities secured by any Lien on any property owned by such Person, to the
extent attached to such Person's interest in such property, even though such
Person has not assumed or become personally liable for the payment thereof,
(e) obligations of third parties which are being guarantied or indemnified
against by such Person or which are secured by the property of such Person;
(f) any obligation of such Person under an employee stock ownership plan or
other similar employee benefit plan; (g) any obligation of such Person or a
Commonly Controlled Entity to a Multi-employer Plan; and (h) any obligations,
liabilities or indebtedness, contingent or otherwise, under or in connection
with, any Swap Transaction; but excluding trade and other accounts payable in
the ordinary course of business in accordance with customary trade terms and
which are not overdue (as determined in accordance with customary trade
practices) or which are being disputed in good faith by such Person and for
which adequate reserves are being provided on the books of such Person in
accordance with GAAP.
"Indemnified Parties" has the meaning set forth in Section 9.19
(Indemnification).
"Instrument" means a negotiable instrument or any other writing which
evidences a right to payment of a monetary obligation and is not itself a
security agreement or lease and is of a type that in the ordinary course of
business is transferred by delivery with any necessary endorsement or
assignment, and all Supporting Obligations with respect to any of the
foregoing and all Proceeds with respect to any of the foregoing.
"Interest Payment Date" means with respect to any Base Rate Loan the
last day of each calendar month commencing on July 31, 2009 and continuing
thereafter until the Obligations have been irrevocably paid in full.
"Interest Period" means the period during which interest at a LIBOR-
based Rate, determined as provided in this Agreement, shall be applicable to
the Rate Request Amount in question, provided, however, that each such period
shall be either one (1), two (2) or three (3) months which shall be measured
from the date specified by the Borrowers in each Rate Request Notice for the
commencement of the computation of interest at a LIBOR-based Rate to the
numerically corresponding day in the calendar month in which such period
terminates (or, if there is numerical Euro-Dollar Business Day of a calendar
month, then the last Euro-Dollar Business Day of the calendar month in which
such period terminates, or if the numerically corresponding day is not a
Euro-Dollar Business Day, then the next succeeding Euro-Dollar Business Day
enters a new calendar month, in which case such period shall end on the next
preceding Euro-Dollar Business Day) and in no event shall any such period
extend beyond the Revolving Credit Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued and proposed
to be issued thereunder.
"Inventory" means all goods of Borrowers and all right, title and
interest of Borrowers in and to all of its now owned and hereafter acquired
goods and other personal property furnished under any contract of service or
intended for sale or lease, including, without limitation, all raw materials,
work-in-process, finished goods and materials and supplies of any kind,
nature or description which are used or consumed in Borrowers' business or
are or might be used in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods and other personal property
and all licenses, warranties, franchises, General Intangibles, personal
property and all documents of title or documents relating to the same,
together with all Accounts, Chattel Paper, Instruments and other
consideration received by Borrowers on account of the sale, lease or other
disposition of all or any part of the foregoing, and together with all rights
under or arising out of present or future Documents and contracts relating to
the foregoing and all Proceeds of the foregoing.
"Investment Property" means a security, whether certificated or
uncertificated, security entitlement, securities account, commodity contract
or commodity account and all Proceeds of, and Supporting Obligations with
respect to, the foregoing.
"Item of Payment" means each check, draft, cash, money, instrument,
item, and other remittance in payment or on account of payment of the
Receivables or otherwise with respect to any Collateral, including, without
limitation, cash proceeds of any returned, rejected or repossessed goods, the
sale or lease of which gave rise to a Receivable, and other proceeds of
Collateral; and "Items of Payment" means the collective reference to all of
the foregoing.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.
"Lease Obligations" of a Person means for any period the rental
commitments of such Person for such period under leases for real and/or
personal property (net of rent from subleases thereof, but including taxes,
insurance, maintenance and similar expenses which such Person, as the lessee,
is obligated to pay under the terms of said leases, except to the extent that
such taxes, insurance, maintenance and similar expenses are payable by
sublessees), including rental commitments under Capital Leases.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).
"Letter of Credit Agreement" means the collective reference to each
letter of credit application and agreement substantially in the form of the
Agent's then standard form of application for letter of credit or such other
form as may be approved by the Agent, executed and delivered by any one or
more of the Borrowers in connection with the issuance of a Letter of Credit,
as the same may from time to time be amended, restated, supplemented or
modified; and
"Letter of Credit Agreements" means all of the foregoing in effect at
any time and from time to time.
"Letter of Credit Documents" means any and all drafts under or
purporting to be under a Letter of Credit, any Letter of Credit Agreement,
and any other instrument, document or agreement executed and/or delivered by
any one or more of the Borrowers or any other Person under, pursuant to or in
connection with a Letter of Credit or any Letter of Credit Agreement.
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).
"Letter of Credit Issuance Fee" means that per annum percentage rate
determined by Agent from time to time in accordance with the matrix below.
The initial Letter of Credit Issuance Fee will be determined at the Closing
Date using the Leverage Ratio calculated by reference to the consolidated
financial statements of VSE and the Compliance Certificate most recently
received by the Agent. Commencing on the date following the Closing Date
when the Agent receives the consolidated financial statements of VSE and the
Compliance Certificate in accordance with this Agreement and on each such
date thereafter, the Letter of Credit Issuance Fee will be reset based on the
Leverage Ratio calculated by reference to such consolidated financial
statements and Compliance Certificate.
Letter of Credit Issuance Fee Leverage Ratio
----------------------------- --------------
2.00% Less than 1.00 to 1.0
2.25% Equal to or greater than 1.00
to 1.0 but less than 2.00 to 1.0
2.50% Equal to or greater than 2.00 to 1.0
In the event VSE fails to provide such consolidated financial
statements and Compliance Certificate to the Agent when due, the Letter of
Credit Issuance Fee shall be 2.50% until such time as such consolidated
financial statements and Compliance Certificate are submitted to and accepted
by the Agent pursuant to this Agreement.
"Letter of Credit Obligations" means the collective reference to all
Obligations of any one or more of the Borrowers with respect to the Letters
of Credit and the Letter of Credit Agreements.
"Letter-of-credit right" means a right to payment or performance under
a letter of credit, whether or not the beneficiary has demanded or is at the
time entitled to demand payment or performance.
"Letter of Credit Sub-Facility" means the sub-facility established
pursuant to Section 2.2 (Letter of Credit Sub-Facility).
"Leverage Ratio" means the ratio of Total Funded Debt on a specified
date to EBITDA for the four (4) quarter period then ending on such date.
"Liabilities" means at any date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on a
consolidated balance sheet of the Borrowers and their respective
Subsidiaries.
"LIBOR Amount" means each portion of the Principal Amount bearing
interest at a LIBOR-based Rate pursuant to a Rate Request Notice.
"LIBOR-based Rate" means an interest rate fixed for one, two or three
month periods at a rate equal to the corresponding LIBOR Rate (i.e. the one,
two or three month LIBOR Rate) plus the LIBOR Rate Margin in effect on the
date of the corresponding Rate Request Notice.
"LIBOR Daily Floating Rate" is the fluctuating rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the one (1) month London
interbank offered rate for deposits in United States Dollars at approximately
11:00 a.m. (London time) on the second preceding business day, as adjusted
from time to time in Agent's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs.
If for any reason such rate is not available, the term "LIBOR Daily Floating
Rate" shall mean the fluctuating rate of interest equal to the rate of
interest (rounded upwards, if necessary to the nearest 1/100 of 1%) appearing
on Reuters Screen LIBO Page as the one (1) month London interbank offered
rate for deposits in United States Dollars at approximately 11:00 a.m.
(London time) on the second preceding day, as adjusted from time to time in
Lender's sole discretion for then-applicable reserve requirements, deposit
insurance assessment rates and other regulatory costs; provided, however, if
more than one rate is specified on Reuters Screen LIBO page, the applicable
rate shall be the arithmetic mean of all such rates. Any change in the rate
will take effect on the date of such change in the LIBOR Daily Floating Rate
as indicated on Telerate Page 3750. Interest will accrue on any non-banking
day at the rate in effect on the immediately preceding banking day.
"LIBOR Loan" means any Revolving Loan, the rate of interest applicable
to which is based upon the LIBOR Rate.
"LIBOR Rate" means the London interbank offered rate of major banks for
deposits in United States Dollars for a designated period (e.g. one, two or
three) as set forth at Telerate Page 3750 at approximately 11:00 a.m. London
time on the third Euro-Dollar Business Day preceding the date when the LIBOR-
based Rate will be become effective; provided, however, that if such
information is not available on Telerate, the "LIBOR Rate" shall be
determined from information supplied to the Lender by a nationally recognized
reporting service for similar information acceptable to the Lender.
"LIBOR Rate Margin" means the amount determined to be in effect from
time to time in accordance with the matrix below. The initial LIBOR Rate
Margin will be determined at the Closing Date using the Leverage Ratio
calculated by reference to the consolidated financial statements of VSE and
the Compliance Certificate most recently received by the Agent. Commencing
on the date following the Closing Date when the Agent receives the
consolidated financial statements of VSE and the Compliance Certificate in
accordance with this Agreement and on each such date thereafter, the LIBOR
Rate Margin will be reset based on the Leverage Ratio calculated by reference
to such consolidated financial statements and Compliance Certificate.
LIBOR Rate Margin Leverage Ratio
----------------- --------------
2.00% Less than 1.00 to 1.0
2.25% Equal to or greater than 1.00
to 1.0 but less than 2.00 to 1.0
2.50% Equal to or greater than 2.00 to 1.0
In the event VSE fails to provide such consolidated financial
statements and Compliance Certificate to the Agent when due, the LIBOR Rate
Margin shall be 2.50% until such time as such consolidated financial
statements and Compliance Certificate are submitted to and accepted by the
Agent pursuant to this Agreement.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien, financing
statement, hypothecation, provision in any instrument or other document for
confession of judgment, cognovit or other similar right or other remedy,
claim, charge, control over or interest of any kind in real or personal
property securing any indebtedness, duties, obligations, and liabilities owed
to, or a claimed to be owed to, a Person, all whether perfected or
unperfected, avoidable or unavoidable, based on the common law, statute or
contract or otherwise, including, without limitation, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction, excluding the precautionary filing of
any financing statement by any lessor in a true lease transaction, by any
bailor in a true bailment transaction or by any consignor in a true
consignment transaction under the Uniform Commercial Code of any jurisdiction
or the agreement to give any financing statement by any lessee in a true
lease transaction, by any bailee in a true bailment transaction or by any
consignee in a true consignment transaction.
"Loan" means each of the Revolving Loan or the Swing Line Loan and
"Loans" means the collective reference to the Revolving Loans or the Swing
Line Loans.
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure for
Making Advances).
"Lockbox" has the meaning described in Section 2.1.9 (The Collateral
Account).
"Maximum Rate" has the meaning described in Section 2.5.7 (Maximum
Interest Rate).
"Multi-employer Plan" means a Plan that is a Multi-employer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Outstandings" of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to Section 8.5
(Indemnification)) to the Agent in respect to the Revolving Loan or otherwise
under this Agreement, minus (b) all amounts paid by the Agent to such Lender
which are received by the Agent and which, pursuant to this Agreement, are
paid over to such Lender for application in reduction of the outstanding
principal balance of the Revolving Loan.
"Non-Ratable Loan" means an advance under the Revolving Loan made by
Citizens in accordance with the provisions of Section 2.6.2(b) (Selection of
Settlement Dates).
"Note" means any Revolving Credit Note, the Swing Line Note or
Replacement Revolving Credit Note and "Notes" means collectively each
Revolving Credit Note, the Swing Line Note, Replacement Revolving Credit Note
and any other promissory note which may from time to time evidence all or any
portion of the Obligations.
"Obligations" means all present and future, whether now existing or
contemplated or hereafter arising, of any one or more of the Borrowers to the
Lenders and/or Agent under, arising pursuant to, in connection with and/or on
account of the provisions of this Agreement, each Note, each Security
Document, and/or any of the other Financing Documents, the Loans, and/or any
of the Facilities including, without limitation, the principal of, and
interest on, each Note, late charges, the Fees, Enforcement Costs, and
prepayment fees (if any), letter of credit reimbursement obligations, letter
of credit fees or fees charged with respect to any guaranty of any letter of
credit; also means all other present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or
hereafter arising, of any one or more of the Borrowers to the Agent and/or to
Lenders or its Affiliates of any nature whatsoever, including, without
limitation, any indebtedness, duties, obligations, and liabilities, under or
in connection with, any Swap Transaction or Bank Products, regardless of
whether such indebtedness, duties, obligations, and liabilities be direct,
indirect, primary, secondary, joint, several, joint and several, fixed or
contingent; and also means any and all renewals, extensions, substitutions,
amendments, restatements and rearrangements of any such indebtedness, duties,
obligations, and liabilities.
"OFAC" means the Office of Foreign Assets Control of the United States
Department of the Treasury.
"Officer's Certificate" means an Officer's Certificate described in
Section 6.1.29 (Permitted Acquisitions) in substantially the forms attached
to this Agreement as Exhibit F-1 and Exhibit F-2.
"Origination Fee" has the meaning described in Section 2.5.3
(Origination Fee; Good Faith Deposit).
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"Patents" means and includes, in each case whether now existing or
hereafter arising, all of each Borrower's rights, title and interest in and
to (a) any and all patents and patent applications, (b) any and all
inventions and improvements described and claimed in such patents and patent
applications, (c) reissues, divisions, continuations, renewals, extensions
and continuations-in-part of any patents and patent applications, (d) income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect to any patents or patent applications, including,
without limitation, damages and payments for past and future infringements,
(e) rights to sue for past, present and future infringements of patents, and
(f) all rights corresponding to any of the foregoing throughout the world.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquisitions" means a transaction or series of transactions
whereby a Borrower acquires all or substantially all of the assets of a
business, or purchases an equity interest in a business (the "Target"),
provided, that, (i) the acquisition or purchase price consideration paid by
the Borrowers shall not be greater than Ten Million Dollars ($10,000,000) for
each Permitted Acquisition and shall not exceed Twenty-Five Million Dollars
($25,000,000) in the aggregate for all Permitted Acquisitions; (ii) the
Target shall be in a similar line of business as that of the Borrowers; (iii)
the Target shall be a going concern, not involved in any material litigation
that is not fully covered by reserves and/or insurance and shall have
positive EBITDA for the immediately preceding twelve (12) months; (iv) both
before and after giving effect to such transaction, no Default or Event of
Default shall be continuing or shall occur as a result of such transaction;
(v) the Borrowers will be in compliance with all financial covenants after
giving pro forma effect to such transaction; (vi) after giving pro forma
effect to such transaction there must be at least Ten Million Dollars
($10,000,000) of availability under the Revolving Loan; (vii) the Agent shall
have received evidence satisfactory to the Agent that arrangements shall have
been made for the termination of all Liens encumbering any asset of the
Target; (viii) no Indebtedness shall be assumed by any Borrower in connection
with such transaction; (ix) the Agent shall have received and approved
complete copies of the Purchase Agreement Documents; and (x) within 15 days
of closing any transaction contemplated hereby, the Target shall be joined to
this Agreement as an Additional Borrower by executing and delivering to the
Agent an Additional Borrower Joinder Supplement and shall grant to Agent for
the benefit or the Agent and Lenders a Lien in all of its assets.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent
or which the Agent has determined in the exercise of its sole and absolute
discretion (i) are being diligently contested in good faith and by
appropriate proceedings, and such contest operates to suspend collection of
the contested Taxes and enforcement of a Lien, (ii) the respective Borrower
has the financial ability to pay, with all penalties and interest, at all
times without materially and adversely affecting such Borrower, and (iii) are
not, and will not be with appropriate filing, the giving of notice and/or the
passage of time, entitled to priority over any Lien of the Agent and/or the
Lenders; (b) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment
insurance in the ordinary course of business; (c) Liens securing the
Obligations; (d) judgment Liens to the extent the entry of such judgment does
not constitute a Default or an Event of Default under the terms of this
Agreement or result in the sale or levy of, or execution on, any of the
Collateral; (e) Liens to secure the purchase price of Equipment or Inventory
in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000); and (f) such other Liens, if any, as are set forth on Schedule
4.1.18 attached hereto and made a part hereof.
"Permitted Uses" means short term working capital of any Borrower's
business, to support the issuance of Letters of Credit and any Permitted
Acquisitions.
"Person" means and includes an individual, a corporation, a
partnership, a joint venture, a limited liability company or partnership, a
trust, an unincorporated association, a Governmental Authority, or any other
organization or entity.
"Plan" means any pension plan that is covered by Title IV of ERISA and
in respect of which any Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3 of ERISA.
"Post-Default Rate" means the sum of (a) the Base Rate in effect from
time to time plus (b) two percent (2.0%) per annum.
"Prepayment" means a Revolving Loan Mandatory Prepayment, a Revolving
Loan Optional Prepayment, a Swing Line Loan Mandatory Prepayment, or a Swing
Line Loan Optional Prepayment, as the case may be, and "Prepayments" mean
collectively all Revolving Loan Mandatory Prepayments, all Revolving Loan
Optional Prepayments, all Swing Line Loan Mandatory Prepayments and all Swing
Line Loan Optional Prepayments.
"Principal Amount" means the aggregate outstanding principal balance of
the Notes.
"Prime Rate" means the rate of interest established from time to time
by the Agent and announced by the Agent as its prime rate. The Prime Rate is
not necessarily the lowest or most favorable rate of interest charged by the
Agent on extensions of credit to debtors.
"Proceeds" has the meaning described in the Uniform Commercial Code as
in effect from time to time.
"Pro-forma Balance Sheet" has the meaning described in Section 4.1
(Pro-forma Financial Statements).
"Pro-forma Financial Projections" has the meaning described in Section
4.1 (Pro-forma Financial Statements).
"Pro Rata Share" means at any time and as to any Lender, the percentage
derived by dividing the unpaid principal amount of the Loans and Letter of
Credit Obligations owing to that Lender by the aggregate unpaid principal
amount of all Loans and Letter of Credit Obligations then outstanding; or if
no Loans or Letter of Credit Obligations are outstanding, by dividing the
total amount of such Lender's Commitments by the total amount of the
Commitments of the Agent and all of the Lenders.
"Purchase Agreement Documents" means collectively any agreement
hereafter executed in connection with any Permitted Acquisition and any and
all other agreements, documents or instruments (together with any and all
amendments, modifications, and supplements thereto, restatements thereof, and
substitutes therefor) previously, now or hereafter executed and delivered by
any Borrower or any other Person in connection with any Permitted
Acquisition.
"Rate Request Notice" has the meaning described in Section 2.4.3(e)
(Selection of Interest Rates on Revolving Loans)
"Rate Request Amount" means the amount, to be specified by the
Borrowers, through their agent VSE, in each Rate Request Notice, which the
Borrowers desire bear interest at the specified Applicable Interest Rate.
"Receivable" means one of each Borrower's now owned and hereafter
owned, acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments; and "Receivables" means all of each Borrower's now or hereafter
owned, acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments, and all cash and non-cash proceeds and products thereof.
"Replacement Revolving Credit Note" has the meaning described in
Section 2.1.5 (Revolving Credit Note).
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA or the regulations thereunder.
"Responsible Officer" means for each Borrower, its chief executive
officer or president or, with respect to financial matters, its chief
financial officer, or treasurer.
"Requisite Lenders" means at any time of determination one or more of
the Lenders holding at least fifty-one percent (51%) of the Commitments,
provided, that, at any time of determination there are (a) two Lenders, then
one hundred percent (100%) of the Commitments and (b) at least three Lenders,
then at least two Lenders holding a minimum of fifty-one percent (51%) of the
Commitments.
"Revolving Credit Commitment" means the agreement of a Lender relating
to the making the Revolving Loan and advances thereunder subject to and in
accordance with the provisions of this Agreement; and "Revolving Credit
Commitments" means the collective reference to the Revolving Credit
Commitment of each of the Lenders.
"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" has the meaning described in
Section 2.1.1 (Revolving Credit Facility) as increased, from time to time,
pursuant to Section 2.1.6 (Increase to Revolving Credit Facility).
"Revolving Credit Expiration Date" means August 26, 2011.
"Revolving Credit Facility" means the facility established by the
Lenders pursuant to Section 2.1 (Revolving Credit Facility).
"Revolving Credit Note" and "Revolving Credit Notes" have the meanings
described in Section 2.1.5 (Revolving Credit Notes).
"Revolving Credit Optional Reduction" and "Revolving Credit Optional
Reductions" have the meanings described in Section 2.1.13 (Optional Reduction
of Total Revolving Credit Committed Amount).
"Revolving Credit Pro Rata Share" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Termination Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the Revolving
Credit Commitments are terminated pursuant to Section 7.2 (Remedies) or
otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line
Fees" have the meanings described in Section 2.1.11 (Revolving Credit Unused
Line Fee).
"Revolving Loan" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Loan Account" has the meaning described in Section 2.1.10
(Revolving Loan Account).
"Revolving Loan Mandatory Prepayment" and "Revolving Loan Mandatory
Prepayments" have the meanings described in Section 2.1.6 ((Mandatory
Prepayments of Revolving Loan).
"Revolving Loan Optional Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.8 (Optional
Prepayment of Revolving Loan).
"Sanctioned Country" means a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions/, or as otherwise
published from time to time.
"Sanctioned Person" means (i) a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn or as otherwise published
from time to time, or (ii) (A) an agency of the government of a Sanctioned
Country, (B) an organization controlled by a Sanctioned Country, or (C) a
person resident in a Sanctioned Country to the extent subject to a sanctions
program administered by OFAC.
"Security Documents" means collectively any assignment, pledge
agreement, security agreement, mortgage, deed of trust, deed to secure debt,
financing statement and any similar instrument, document or agreement under
or pursuant to which a Lien is now or hereafter granted to, or for the
benefit of, the Agent and/or the Lenders on any real or personal property of
any Person to secure all or any portion of the Obligations, all as the same
may from time to time be amended, restated, supplemented or otherwise
modified, including, without limitation, this Agreement.
"Settlement Date" means each Business Day after the Closing Date
selected by the Agent in its sole discretion subject to and in accordance
with the provisions of Section 2.6.2 (Settlement Procedures as to Revolving
Loan) as of which a Settlement Report is delivered by the Agent and on which
settlement is to be made among the Lenders in accordance with the provisions
of Section 2.5.8 (Payments).
"Settlement Report" means each report prepared by the Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement
Date, the aggregate outstanding principal balance of the Revolving Loan, each
Lender's Revolving Credit Pro Rata Share thereof, each Lender's Net
Outstandings and all Non-Ratable Loans made, and all payments of principal,
interest and Fees received by the Agent from the Borrowers during the period
beginning on such next preceding Settlement Date and ending on such
Settlement Date.
"Solvent" means when used with respect to any Person that at the time
of determination:
(a) the assets of such Person, at a fair
valuation, are in excess of the total amount of its debts
(including, without limitation, contingent liabilities); and
(b) the present fair saleable value of its
assets is greater than its probable liability on its existing
debts as such debts become absolute and matured; and
(c) it is then able and expects to be able to
pay its debts (including, without limitation, contingent debts
and other commitments) as they mature; and
(d) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"State" means the Commonwealth of Virginia.
"Stock Pledge Agreements" means those certain Pledge, Assignment and
Security Agreements, dated the Closing Date, from VSE to Agent for the
benefit of Lenders ratably and Agent, as the same may from time to time be
amended, restated, supplemented or otherwise modified.
"Subordinated Indebtedness" means all Indebtedness, incurred at any
time by any one or more of the Borrowers, which is in amounts, subject to
repayment terms, and subordinated to the Obligations, as set forth in one or
more written agreements, all in form and substance satisfactory to the Agent
in its sole and absolute discretion.
"Subsidiary" means any corporation the majority of the voting shares of
which at the time are owned directly by any Borrower and/or by one or more
Subsidiaries of any Borrower.
"Supporting Obligation" means a letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment
or performance of an account, chattel paper, a document, a general
intangible, an instrument or investment property.
"Swap Reserve" means any and all reserves which the Agent from time to
time establishes, in its sole discretion, with respect to Swap Transactions.
"Swap Transactions" means any interest rate swap transaction, forward
rate transaction, treasury lock transaction, interest rate cap, floor or
collar transaction, any similar transaction, any option to enter into any of
the foregoing, or any combination of any of the foregoing.
"Swing Line Commitment" means the agreement of Citizens relating to the
making the Swing Line Loan and advances thereunder subject to and in
accordance with the provisions of this Agreement.
"Swing Line Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Swing Line Termination Date.
"Swing Line Committed Amount" has the meaning described in Section 2.3
(Swing Line Sub-Facility).
"Swing Line Expiration Date" means August 26, 2011.
"Swing Line Sub-Facility" means the sub-facility established by
Citizens pursuant to Section 2.3. (Swing Line Sub-Facility).
"Swing Line Loan" and "Swing Line Loans" have the meaning described in
Section Section 2.3 (Swing Line Loans).
"Swing Line Loan Mandatory Prepayment" and "Swing Line Loan Mandatory
Prepayments" have the meanings described in Section 2.3.9 (Mandatory
Prepayments of Swing Line Loan).
"Swing Line Loan Optional Prepayment" and "Swing Line Loan Optional
Prepayments" have the meanings described in Section 2.3.10 (Optional
Prepayment of Swing Line Loan).
"Swing Line Note" has the meaning described in Section 2.3.7 (Swing
Line Note).
"Swing Line Termination Date" means the earlier of (a) the Swing Line
Expiration Date, or (b) the date on which the Swing Line Commitment is
terminated pursuant to Section 7.2 (Remedies) or otherwise.
"Target" has the meaning described in the definition of Permitted
Acquisitions.
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any
or all of the Borrowers or any of its or their properties or assets or any
part thereof or in respect of any of its or their franchises, businesses,
income or profits.
"Total Funded Debt" means as to Borrowers for any period of
determination thereof the sum of (i) all Indebtedness for Borrowed Money of
Borrowers, plus (ii) any accrued earn out payments of Borrowers (net of any
Cash Equivalents for purposes of calculating accrued earn out payments of
Borrowers).
"Total Revolving Credit Committed Amount" has the meaning described in
Section 2.1.1 (Revolving Credit Facility) as increased, from time to time,
pursuant to Section 2.1.6 (Increase to Revolving Credit Facility).
"Trademarks" means and includes in each case whether now existing or
hereafter arising, all of each Borrower's rights, title and interest in and
to (a) any and all trademarks (including service marks), trade names and
trade styles, and applications for registration thereof and the goodwill of
the business symbolized by any of the foregoing, (b) any and all licenses of
trademarks, service marks, trade names and/or trade styles, whether as
licensor or licensee, (c) any renewals of any and all trademarks, service
marks, trade names, trade styles and/or licenses of any of the foregoing, (d)
income, royalties, damages and payments now or hereafter due and/or payable
with respect thereto, including, without limitation, damages, claims, and
payments for past, present and future infringements thereof, (e) rights to
sue for past, present and future infringements of any of the foregoing,
including the right to settle suits involving claims and demands for
royalties owing, and (f) all rights corresponding to any of the foregoing
throughout the world.
"Unearned Contract Value" means the difference between (a) the then
fully funded dollar value of the contract or subcontract, whether or not
earned, and (b) the total amounts previously billed and properly billable for
accepted end items or services.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time
to time in the State or in any other jurisdiction, as applicable.
"Unused Fee Margin" means that per annum percentage rate determined by
Agent from time to time in accordance with the following matrix:
Unused Fee Margin Leverage Ratio
----------------- --------------
0.25% Less than 1.00 to 1.0
0.35% Equal to or greater than 1.00 to 1.0
but less than 2.00 to 1.0
0.50% Equal to or greater than 2.00 to 1.0
"Wholly Owned Subsidiary" means any domestic United States corporation
all the shares of stock of all classes of which (other than directors'
qualifying shares) at the time are owned directly or indirectly by a Borrower
and/or by one or more Wholly Owned Subsidiaries of a Borrower.
Section 1.2 Accounting Terms and Other Definitional Provisions.
---------------------------------------------------
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only
partly defined herein, to the extent not defined, shall have the respective
meanings given to them under GAAP, as consistently applied to the applicable
Person. All terms used herein which are defined by the Uniform Commercial
Code shall have the same meanings as assigned to them by the Uniform
Commercial Code unless and to the extent varied by this Agreement. The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are references to articles, sections or
subsections of, or schedules or exhibits to, as the case may be, this
Agreement unless otherwise specified. As used herein, the singular number
shall include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender shall include all genders, as the
context may require. Reference to any one or more of the Financing Documents
shall mean the same as the foregoing may from time to time be amended,
restated, substituted, extended, renewed, supplemented or otherwise modified.
Reference in this Agreement and the other Financing Documents to the
"Borrower", the "Borrowers", "each Borrower" or otherwise with respect to any
one or more of the Borrowers shall mean each and every Borrower and any one
or more of the Borrowers, jointly and severally, unless a specific Borrower
is expressly identified.
ARTICLE II
THE CREDIT FACILITIES
---------------------
Section 2.1 The Revolving Credit Facility.
------------------------------
2.1.1 Revolving Credit Facility.
--------------------------
Subject to and upon the provisions of this Agreement, the
Lenders collectively, but severally, establish a revolving credit facility
(the "Revolving Credit Facility") in favor of the Borrowers. The aggregate
of all advances under the Revolving Credit Facility, including any advances
under the Incremental Revolving Commitment, is sometimes referred to in this
Agreement collectively as the "Revolving Loan".
The amount set forth below opposite each Lender's name is
herein called such Lender's "Revolving Credit Committed Amount" and the total
of each Lender's Revolving Credit Committed Amount is herein called the
"Total Revolving Credit Committed Amount". Each Lender's Revolving Credit
Committed Amount and the Total Revolving Credit Committed Amount may be
increased by the amount, if any, of each Lender's Incremental Revolving
Commitment pursuant to Section 2.1.6 and all times thereafter all references
herein to each Lender's Revolving Credit Committed Amount and the Total
Revolving Credit Committed Amount shall include the amount of each Lender's
Incremental Revolving Commitment. The proportionate share set forth below
opposite each Lender's name is herein called such Lender's "Revolving Credit
Pro Rata Share":
Revolving Credit Revolving Credit
Lender Committed Amount Pro Rata Share
------ ---------------- --------------
Citizens $35,000,000 70%
SunTrust $15,000,000 30%
Total Revolving Credit
Committed Amount $50,000,000 100%
Neither the Agent nor any of the Lenders shall be
responsible for the Revolving Credit Commitment of any other Lender, nor will
the failure of any Lender to perform its obligations under its Revolving
Credit Commitment in any way relieve any other Lender from performing its
obligations under its Revolving Credit Commitment.
During the Revolving Credit Commitment Period, any or all
of the Borrowers may request advances under the Revolving Credit Facility in
accordance with the provisions of this Agreement; provided that after giving
effect to any Borrower's request:
(a) the outstanding principal balance of each
Lender's Pro Rata Share would not exceed the lesser of (i) such
Lender's Revolving Credit Pro Rata Share of the Revolving Credit
Committed Amount or (ii) such Lender's Pro Rata Share of the
Borrowing Base; and,
(b) the aggregate outstanding principal
balance of the Revolving Loan, the Swing Line Loan and all Letter
of Credit Obligations would not exceed the lesser of (i) the
Total Revolving Credit Committed Amount or (ii) the Borrowing
Base.
2.1.2 Procedure for Making Advances Under the
---------------------------------------
Revolving Loan; Lender Protection Loans.
- ----------------------------------------
The Borrowers may borrow under the Revolving Credit
Facility on any Business Day. Advances under the Revolving Loan shall be
deposited to a demand deposit account of a Borrower with the Agent or shall
be otherwise applied as directed by the Borrowers, which direction the Agent
may require to be in writing. Not later than 1:00 p.m. (Eastern Time) on the
date of the requested borrowing, the Borrowers shall give the Agent oral or
written notice (a "Loan Notice") of the amount and (if requested by the
Agent) the purpose of the requested borrowing and if requested by the Agent,
be accompanied by a Borrowing Base Report. Any oral Loan Notice shall be
confirmed in writing by the Borrowers within three (3) Business Days after
the making of the requested advance under the Revolving Loan. Each Loan
Notice shall be irrevocable. Upon receipt of any such Loan Notice, the Agent
shall promptly notify each Lender of the amount of each advance to be made by
such Lender on the requested borrowing date under such Lender's Revolving
Credit Commitment.
Not later than 2:00 p.m. (Eastern Time) on each requested
borrowing date for the making of advances under the Revolving Loan, each
Lender shall, if it has received timely notice from the Agent of the
Borrowers' request for such advances, make available to the Agent, in funds
immediately available to the Agent at the Agent's office set forth in Section
9.1 (Notices), such Lender's Pro Rata Share of the advances to be made on
such date.
In addition, each of the Borrowers hereby irrevocably
authorizes the Lenders at any time and from time to time, without further
request from or notice to the Borrowers, to make advances under the Revolving
Loan, and irrevocably authorizes the Agent to establish, without duplication,
reserves against the Borrowing Base, which the Agent, in its sole and
absolute discretion, deems necessary or appropriate to protect the interests
of the Agent and/or any or all of the Lenders under this Agreement,
including, without limitation, advances and reserves under the Revolving Loan
made to cover shortages, debit balances or overdrafts in the Revolving Loan
Account, principal of, and/or interest on, any Loan, the Obligations
(including, without limitation, any Letter of Credit Obligations), and/or
Enforcement Costs, prior to, on, or after the termination of other advances
under this Agreement, regardless of whether the outstanding principal amount
of the Revolving Loan that the Lenders may advance or the Agent may reserve
hereunder exceeds the Total Revolving Credit Committed Amount or the
Borrowing Base.
2.1.3 Borrowing Base.
---------------
As used in this Agreement, the term "Borrowing Base" means
at any time, an amount equal to the sum of (i) ninety percent (90%) of
Eligible Receivables that arise from obligations due under and from
Government Contracts and (ii) eighty percent (80%) of the amount of Eligible
Receivables that arise from obligations other than due under and from
Government Contracts.
The Borrowing Base shall be computed based on the
Borrowing Base Report most recently delivered to and accepted by the Agent in
its sole and absolute discretion. In the event the Borrowers fail to furnish a
Borrowing Base Report required by Section 2.1.4 (Borrowing Base Report), or
in the event the Agent believes that a Borrowing Base Report is no longer
accurate, the Agent may, in its sole and absolute discretion exercised from
time to time and without limiting other rights and remedies under this
Agreement, direct the Lenders to suspend the making of or limit advances
under the Revolving Loan and Citizens may, in its sole and absolute
discretion exercised from time to time, suspend the making or limit advances
under the Swing Line Loan. The Agent may reduce the Borrowing Base by
amounts credited to the Collateral Account since the date of the most recent
Borrowing Base Report and by the amount of any Receivable which was included
in the Borrowing Base but which the Agent determines fails to meet the
respective criteria applicable from time to time for Eligible Receivables.
If at any time the total of the aggregate principal amount
of the Revolving Loan, the Swing Line Loan and Outstanding Letter of Credit
Obligations exceeds the Borrowing Base, a borrowing base deficiency
("Borrowing Base Deficiency") shall exist. Each time a Borrowing Base
Deficiency exists, the Borrowers shall immediately upon notice from Agent pay
the Borrowing Base Deficiency to the Agent first to pay Citizens until the
Obligations under the Swing Line Loan have been paid in full and then for the
benefit of the Lenders from time to time.
Without implying any limitation on the Agent's discretion
with respect to the Borrowing Base, the criteria for Eligible Receivables
contained in the definition of Eligible Receivables are in part based upon
the business operations of the Borrowers existing on or about the Closing
Date and upon information and records furnished to the Agent by the
Borrowers. If at any time or from time to time hereafter, the business
operations of the Borrowers change or such information and records furnished
to the Agent is incorrect or misleading, the Agent in its discretion, may at
any time and from time to time during the duration of this Agreement change
such criteria or add new criteria. The Agent may communicate such changed or
additional criteria to the Borrowers from time to time either orally or in
writing.
2.1.4 Borrowing Base Report.
----------------------
The Borrowers will furnish to the Agent no less frequently
than monthly before the 30th day of each month and at such other times as may
be requested by the Agent or any of the Lenders a report of the Borrowing
Base (each a "Borrowing Base Report"; collectively, the "Borrowing Base
Reports") in the form required from time to time by the Agent, appropriately
completed and duly signed. The Borrowing Base Report shall contain the net
amount due on the Receivables, and the calculations of the Borrowing Base,
all in such detail, and accompanied by such supporting and other information,
as the Agent may from time to time request. Upon the Agent's request and
upon the creation of any Receivables, or at such intervals as the Agent may
require, the Borrowers will provide the Agent with (a) confirmatory
assignment schedules; (b) copies of Account Debtor invoices; (c) evidence of
shipment or delivery; and (d) such further schedules, documents and/or
information regarding the Receivables as the Agent may reasonably require.
The items to be provided under this subsection shall be in form satisfactory
to the Agent, and certified as true and correct by a Responsible Officer, and
delivered to the Agent from time to time solely for the Agent's convenience
in maintaining records of the Collateral. Any Borrower's failure to deliver
any of such items to the Agent shall not affect, terminate, modify, or
otherwise limit the Liens of the Agent and the Lenders in the Collateral.
2.1.5 Revolving Credit Notes.
-----------------------
The obligation of the Borrowers to pay each Lender's Pro
Rata Share of the Revolving Loan, with interest, shall be evidenced by a
series of promissory notes (as from time to time extended, amended, restated,
supplemented or otherwise modified, collectively the "Revolving Credit Notes"
and individually a "Revolving Credit Note") substantially in the form of
Exhibit B-1 attached hereto and made a part hereof, with appropriate
insertions. One or more of the Revolving Credit Notes may, pursuant to
Section 2.1.6 of this Agreement, be increased and replaced in their entirety
with one or more promissory notes (as from time to time extended, amended,
restated, supplemented or otherwise modified, collectively, the "Replacement
Revolving Credit Notes" and individually a "Replacement Revolving Credit
Note") substantially in the form of Exhibit B-2 attached hereto and made a
part hereof. Each Lender's Revolving Credit Note shall be dated as of the
Closing Date, shall be payable to the order of such Lender at the times
provided in the Revolving Credit Note, and shall be in the principal amount
of such Lender's Revolving Credit Pro Rata Share.
Each of the Borrowers acknowledges and agrees that, if the
outstanding principal balance of the Revolving Loan outstanding from time to
time exceeds the aggregate face amount of the Revolving Credit Notes, the
excess shall bear interest at the rates provided from time to time for
advances under the Revolving Loan evidenced by the Revolving Credit Notes and
shall be payable, with accrued interest, ON DEMAND.
2.1.6 Increase to Revolving Credit Facility.
--------------------------------------
Lenders may, in their sole discretion, agree to increase
the amount of each Lender's Revolving Credit Committed Amount (the
"Incremental Revolving Commitment") to make incremental revolving credit
loans available to Borrowers (the "Incremental Revolving Loans") by executing
and delivering to Agent a duly executed Increased Revolving Facility
Activation Notice specifying the (i) amount of such increase and (ii) the
Increased Revolving Facility Closing Date, provided, however, at the time of
said election, no Default or Event of Default has occurred and is continuing.
An Increased Revolving Facility Activation Notice that has been executed and
delivered to Agent may not be rescinded without the consent of the Requisite
Lenders. Notwithstanding the foregoing, without the consent of the Requisite
Lenders, (i) each request for Incremental Revolving Loans shall be in
increments of not less than Five Million Dollars ($5,000,000), (ii) the
aggregate amount of the Incremental Revolving Commitment shall not exceed
Twenty-Five Million Dollars ($25,000,000) and (iii) the aggregate amount of
the Total Revolving Credit Committed Amount, as may be increased by the
amount, if any, of each Lender's Incremental Revolving Commitment pursuant to
this Section 2.1.6 shall not exceed Seventy-Five Million Dollars
($75,000,000) at any time. Not later than the Increased Revolving Facility
Closing Date, Borrowers shall have delivered to Agent one or more duly
executed and completed Replacement Revolving Credit Notes which reflects the
amount of the Revolving Credit Committed Amount after giving effect to such
increase.
2.1.7 Mandatory Prepayments of Revolving Loan.
----------------------------------------
The Borrowers shall make the mandatory prepayments (each a
"Revolving Loan Mandatory Prepayment" and collectively, the "Revolving Loan
Mandatory Prepayments") of the Revolving Loan at any time and from time to
time in such amounts requested by the Agent pursuant to Section 2.1.3
(Borrowing Base) in order to cover any Borrowing Base Deficiency.
2.1.8 Optional Prepayments of Revolving Loan.
---------------------------------------
The Borrowers shall have the option at any time and from
time to time to prepay (each a "Revolving Loan Optional Prepayment" and
collectively the "Revolving Loan Optional Prepayments") the Revolving Loan,
in whole or in part without premium or penalty, other than with respect to
any indemnification and reimbursement obligations pursuant to Section 2.4.5.
2.1.9 The Collateral Account.
-----------------------
Upon request of the Agent after the occurrence of a
Default, the Borrowers will deposit, or cause to be deposited, all Items of
Payment to a bank account designated by the Agent and from which the Agent
alone has power of access and withdrawal (the "Collateral Account"). Each
deposit shall be made not later than the next Business Day after the date of
receipt of the Items of Payment. The Items of Payment shall be deposited in
precisely the form received, except for the endorsements of the Borrowers
where necessary to permit the collection of any such Items of Payment, which
endorsement the Borrowers hereby agree to make. In the event the Borrowers
fail to do so, the Borrowers hereby authorize the Agent to make the
endorsement in the name of any or all of the Borrowers. Prior to such a
deposit, the Borrowers will not commingle any Items of Payment with any of
the Borrowers' other funds or property, but will hold them separate and apart
in trust and for the account of the Agent for the benefit of the Lenders
ratably and the Agent.
In addition, if so directed by the Agent, the Borrowers
shall direct the mailing of all Items of Payment from their Account Debtors
to one or more post-office boxes designated by the Agent, or to such other
additional or replacement post-office boxes pursuant to the request of the
Agent from time to time (collectively, the "Lockbox"). The Agent shall have
unrestricted and exclusive access to the Lockbox.
The Borrowers hereby authorize the Agent after the
occurrence of a Default to inspect all Items of Payment, endorse all Items of
Payment in the name of any or all of the Borrowers, and deposit such Items of
Payment in the Collateral Account. The Agent reserves the right, exercised
in its sole and absolute discretion from time to time, to provide to the
Collateral Account credit prior to final collection of an Item of Payment and
to disallow credit for any Item of Payment which is unsatisfactory to the
Agent. In the event Items of Payment are returned to the Agent for any
reason whatsoever, the Agent may, in the exercise of its discretion from time
to time, forward such Items of Payment a second time. Any returned Items of
Payment shall be charged back to the Collateral Account, the Revolving Loan
Account, or other account, as appropriate.
The Agent will after the occurrence of a Default apply the
whole or any part of the collected funds credited to the Collateral Account
against the Revolving Loan (or with respect to Items of Payment which are not
proceeds of Accounts or Inventory or after an Event of Default, against any
of the Obligations) or credit such collected funds to a depository account of
any or all of the Borrowers with the Agent, the order and method of such
application to be in the sole discretion of the Agent.
2.1.10 Revolving Loan Account.
-----------------------
The Agent will establish and maintain a loan account on
its books (the "Revolving Loan Account") to which the Agent will (a) debit (i)
the principal amount of each advance under the Revolving Loan made by the
Lenders hereunder as of the date made, (ii) the amount of any interest
accrued on the Revolving Loan as and when due, and (iii) any other amounts
due and payable by the Borrowers to the Agent and/or the Lenders from time to
time under the provisions of this Agreement in connection with the Revolving
Loan, including, without limitation, Enforcement Costs, Fees, late charges,
and service, collection and audit fees, as and when due and payable, and (b)
credit all payments made by the Borrowers to the Agent on account of the
Revolving Loan as of the date made. The Agent may debit the Revolving Loan
Account for the amount of any Item of Payment that is returned to the Agent
unpaid. All credit entries to the Revolving Loan Account are conditional and
shall be readjusted as of the date made if final and indefeasible payment is
not received by the Agent in cash or solvent credits. The Borrowers hereby
promise to pay to the order of the Agent for the ratable benefit of the
Lenders, ON DEMAND, an amount equal to the excess, if any, of all debit
entries over all credit entries recorded in the Revolving Loan Account under
the provisions of this Agreement. Any and all periodic or other statements
or reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be presumed conclusively
to be correct, and shall constitute an account stated between the Agent, the
Lenders and the Borrowers unless the Agent receives specific written
objection thereto from any Borrower and/or any Lender within thirty (30)
Business Days after such statement or reconciliation shall have been sent by
the Agent. Any and all periodic or other statements or reconciliations, and
the information contained in those statements or reconciliations, of the
Revolving Loan Account shall be final, binding and conclusive upon the
Borrowers in all respects, absent manifest error, unless the Agent receives
specific written objection thereto from the Borrowers within thirty (30)
Business Days after such statement or reconciliation shall have been sent by
the Agent.
2.1.11 Revolving Credit Unused Line Fee.
---------------------------------
Borrowers shall pay to Agent for the ratable benefit of
Lenders a revolving credit facility fee (collectively, the "Revolving Credit
Unused Line Fees" and individually, a "Revolving Credit Unused Line Fee") in
an amount equal to the Unused Fee Margin multiplied by the average daily
unused and undisbursed portion of the Revolving Credit Committed Amount in
effect from time to time accruing during each calendar quarter. For purposes
of clarification, the outstanding amount of any Swing Line Loan shall not be
considered usage of the Revolving Credit Committed Amount, while the face
amount of outstanding Letters of Credit shall be considered usage of the
Revolving Credit Committed Amount. The accrued and unpaid portion of the
Revolving Credit Unused Line Fee shall be paid quarterly in arrears by
Borrowers to Agent on the last day of each quarter, commencing on the first
such date following the date hereof, and on the Revolving Credit Termination
Date.
2.1.12 Required Availability under the Revolving Credit
------------------------------------------------
Facility.
- ---------
On the Closing Date, the aggregate outstanding principal
amount of the Revolving Loan, including any Swing Line Loans, and Outstanding
Letter of Credit Obligations shall not exceed an amount equal to (a) the
lesser of the Borrowing Base or the Total Revolving Credit Committed Amount,
minus (b) Ten Million Dollars ($10,000,000). Borrowers shall make a
Revolving Loan Mandatory Prepayment pursuant to the provisions of Section
2.1.7 (Mandatory Prepayments of Revolving Loan) to the extent necessary to
achieve compliance with this Section.
2.1.13 Optional Reduction of Total Revolving Credit
--------------------------------------------
Committed Amount.
- -----------------
The Borrowers shall have the right to reduce permanently
(each a "Revolving Credit Optional Reduction" and collectively the "Revolving
Credit Optional Reductions") the Total Revolving Credit Committed Amount in
effect from time to time in the amount of any integral multiple of Five
Million Dollars ($5,000,000), upon at least fifteen (15) Business Days prior
written notice to the Agent specifying the date and amount of such Revolving
Credit Optional Reduction; provided, that no Revolving Credit Optional
Reduction shall be permitted if, (i) after giving effect thereto and to any
Revolving Loan Optional Prepayment made on the effective date thereof, the
then outstanding principal amount of the Revolving Loan and Outstanding
Letter of Credit Obligations exceeds the Total Revolving Credit Committed
Amount as so reduced or (ii) after giving effect to such Revolving Credit
Optional Reduction there is not at least Ten Million Dollars ($10,000,000) of
availability under the Revolving Loan. Such notice shall be irrevocable as
to the amount and date of such Revolving Credit Optional Reduction.
Section 2.2 The Letter of Credit Sub-Facility.
----------------------------------
2.2.1 Letters of Credit.
------------------
Subject to and upon the provisions of this Agreement, and
as a part of the Revolving Credit Commitments, each of the Borrowers, upon
the prior approval of the Agent, may obtain standby letters of credit (as the
same may from time to time be amended, supplemented or otherwise modified,
each a "Letter of Credit" and collectively the "Letters of Credit") from the
Agent from time to time from the Closing Date until the Business Day
preceding the Revolving Credit Termination Date. The Borrowers will not be
entitled to obtain a Letter of Credit unless (a) the Borrowers are then able
to obtain a Revolving Loan from the Lenders in an amount not less than the
proposed face amount of the Letter of Credit requested by the Borrowers, and
(b) the sum of the then Outstanding Letter of Credit Obligations (including
the amount of the requested Letter of Credit), unless otherwise agreed to by
the Lenders, does not exceed Fifteen Million Dollars ($15,000,000).
2.2.2 Letter of Credit Fees.
----------------------
With respect to each Letter of Credit, the Borrowers shall
pay to the Agent, for its own account, an amount equal to the Letter of
Credit Issuance Fee multiplied by the face amount of each Letter of Credit
all without regard for provisions contained in the Letters of Credit which
may give rise to a reduction in the stated amount thereof unless such
reduction has actually occurred (collectively, the "Letter of Credit Fees").
The Letter of Credit Fees shall be paid upon the opening of each Letter of
Credit and on the last day of each fiscal quarter thereafter, if any, at the
per annum rate. In addition, the Borrowers shall pay to the Agent all other
reasonable and customary amendment, negotiation, processing, transfer or
other fees to the extent and as and when required by the provisions of any
Letter of Credit Agreement. All Letter of Credit Fees and all such other
additional fees are included in and are a part of the "Fees" payable by the
Borrowers under the provisions of this Agreement and are for the sole and
exclusive benefit of the Agent and are a part of the Agent's Obligations.
2.2.3 Terms of Letters of Credit; Post-Expiration Date
-----------------------------------------------
Letters of Credit.
------------------
Each Letter of Credit shall (a) be opened pursuant to a
Letter of Credit Agreement and (b) expire on a date not later than the
Business Day preceding the Revolving Credit Expiration Date; provided,
however, if any Letter of Credit does have an expiration date later than the
Business Day preceding the Revolving Credit Termination Date (each a "Post-
Expiration Date Letter of Credit" and collectively, the "Post-Expiration Date
Letters of Credit"), effective as of the Business Day preceding the Revolving
Credit Termination Date and without prior notice to or the consent of the
Borrowers, the Lenders shall make advances under the Revolving Loan for the
account of the Borrowers in the aggregate face amount of all such Letters of
Credit. The Agent may in its sole and absolute discretion issue or refuse to
issue any Letter of Credit which is automatically renewable or "evergreen".
The amount of each Lender's advance shall be equal to its Revolving Credit
Pro Rata Share of the aggregate face amount of all such Letters of Credit.
The Agent shall deposit the proceeds of such advances into one or more non-
interest bearing accounts with and in the name of the Agent and over which
the Agent alone shall have exclusive power of access and withdrawal
(collectively, the "Letter of Credit Cash Collateral Account"). The Letter
of Credit Cash Collateral Account is to be held by the Agent, for the ratable
benefit of the Lenders, as additional collateral and security for any Letter
of Credit Obligations relating to the Post-Expiration Date Letters of Credit.
The Borrowers hereby assign, pledge, grant and set over to the Agent, for the
ratable benefit of the Lenders, a first priority security interest in, and
Lien on, all of the funds on deposit in the Letter of Credit Cash Collateral
Account, together with any and all Proceeds and products thereof as
additional collateral and security for the Letter of Credit Obligations
relating to the Post-Expiration Date Letters of Credit. The Borrowers
acknowledge and agree that the Agent shall be entitled to fund any draw or
draft on any Post-Expiration Date Letter of Credit from the monies on deposit
in the Letter of Credit Cash Collateral Account without notice to or consent
of the Borrowers or any of the Lenders. The Borrowers further acknowledge
and agree that the Agent's election to fund any draw or draft on any Post-
Expiration Date Letter of Credit from the Letter of Credit Cash Collateral
shall in no way limit, impair, lessen, reduce, release or otherwise adversely
affect the Borrowers' obligation to pay any Letter of Credit Obligations
under or relating to the Post-Expiration Date Letters of Credit. At such
time as all Post-Expiration Date Letters of Credit have expired and all
Letter of Credit Obligations relating to the Post-Expiration Date Letters of
Credit have been paid in full, the Agent agrees to apply the amount of any
remaining funds on deposit in the Letter of Credit Cash Collateral Account to
the then unpaid balance of the Obligations under the Revolving Credit
Facility in such order and manner as the Agent shall determine in its sole
and absolute discretion in accordance with the provisions of this Agreement.
Each Letter of Credit shall be issued for purposes
acceptable to Agent. The aggregate face amount of all Letters of Credit at
any one time outstanding and issued by the Agent pursuant to the provisions
of this Agreement, including, without limitation, any and all Post-Expiration
Date Letters of Credit, plus the amount of any unpaid Letter of Credit Fees
and unpaid Letter of Credit Fees accrued or scheduled to accrue thereon, and
less the aggregate amount of all drafts issued under or purporting to have
been issued under such Letters of Credit that have been paid by the Agent and
for which the Agent has been reimbursed by the Borrowers in full in
accordance with Section 2.2.5 (Payments of Letters of Credit) and the Letter
of Credit Agreements, and for which the Agent has no further obligation or
commitment to restore all or any portion of the amounts drawn and reimbursed,
is herein called the "Outstanding Letter of Credit Obligations".
2.2.4 Procedures for Letters of Credit.
---------------------------------
The Borrowers shall give the Agent written notice at least
five (5) Business Days prior to the date on which the Borrower desires the
Agent to issue a Letter of Credit. Such notice shall be accompanied by a
duly executed Letter of Credit Agreement specifying, among other things: (a)
the name and address of the intended beneficiary of the Letter of Credit, (b)
the requested face amount of the Letter of Credit, (c) whether the Letter of
Credit is to be revocable or irrevocable, (d) the Business Day on which the
Letter of Credit is to be opened and the date on which the Letter of Credit
is to expire, (e) the terms of payment of any draft or drafts which may be
drawn under the Letter of Credit, and (f) any other terms or provisions the
Borrowers desire to be contained in the Letter of Credit. Such notice shall
also be accompanied by such other information, certificates, confirmations,
and other items as the Agent may require to assure that the Letter of Credit
is to be issued in accordance with the provisions of this Agreement and a
Letter of Credit Agreement. In the event of any conflict between the
provisions of this Agreement and the provisions of a Letter of Credit
Agreement, the provisions of this Agreement shall prevail and control unless
otherwise expressly provided in the Letter of Credit Agreement. Upon (x)
receipt of such notice, (y) payment of all Letter of Credit Fees and all
other Fees payable in connection with the issuance of such Letter of Credit,
and (z) receipt of a duly executed Letter of Credit Agreement, the Agent
shall process such notice and Letter of Credit Agreement in accordance with
its customary procedures and open such Letter of Credit on the Business Day
specified in such notice. The Agent shall not be obligated to issue any
Letter of Credit where the expiration date automatically renews or is
"evergreen".
2.2.5 Payments of Letters of Credit.
------------------------------
The Borrowers hereby promise to pay to the Agent, ON
DEMAND and in United States Dollars, the following which are herein collectively
referred to as the "Current Letter of Credit Obligations":
(a) the amount which the Agent has paid or
will be required to pay under each draft or draw on a Letter of
Credit, whether such demand be in advance of the Agent's payment
or for reimbursement for such payment;
(b) any and all reasonable charges and
expenses which the Agent may pay or incur relative to the Letter
of Credit and/or such draws or drafts; and
(c) interest on the amounts described in (a)
and (b) not paid by the Borrowers as and when due and payable
under the provisions of (a) and (b) above from the day the same
are due and payable until paid in full at the Post-Default Rate.
In addition, the Borrowers hereby promise to pay any and
all other Letter of Credit Obligations as and when due and payable in
accordance with the provisions of this Agreement and the Letter of Credit
Agreements. The obligation of the Borrowers to pay Current Letter of Credit
Obligations and all other Letter of Credit Obligations shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrowers or any other account
party may have or have had against the beneficiary of such Letter of Credit,
the Agent, any of the Lenders, or any other Person, including, without
limitation, any defense based on the failure of any draft or draw to conform
to the terms of such Letter of Credit, any draft or other document proving to
be forged, fraudulent or invalid, or the legality, validity, regularity or
enforceability of such Letter of Credit, any draft or other documents
presented with any draft, any Letter of Credit Agreement, this Agreement, or
any of the other Financing Documents, all whether or not the Agent or any of
the Lenders had actual or constructive knowledge of the same, and
irrespective of any Collateral, security or guarantee therefor or right of
offset with respect thereto and irrespective of any other circumstances
whatsoever which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrowers for any Letter of Credit
Obligations, in bankruptcy or otherwise; provided, however, that the
Borrowers shall not be obligated to reimburse the Agent for any wrongful
payment under such Letter of Credit made as a result of the Agent's willful
misconduct. The obligation of the Borrowers to pay the Letter of Credit
Obligations shall not be conditioned or contingent upon the pursuit by the
Agent or any other Person at any time of any right or remedy against any
Person which may be or become liable in respect of all or any part of such
obligation or against any Collateral, security or guarantee therefor or right
of offset with respect thereto.
The Letter of Credit Obligations shall continue to be
effective, or be reinstated, as the case may be, if at any time payment of
all or any portion of the Letter of Credit Obligations is rescinded or must
otherwise be restored or returned by the Agent or any of the Lenders upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Person, or upon or as a result of the appointment of a receiver, intervenor,
or conservator of, or trustee or similar officer for, any Person, or any
substantial part of such Person's property, all as though such payments had
not been made.
2.2.6 Change in Law; Increased Cost.
------------------------------
If any change in any law or regulation or in the
interpretation thereof by any court or other Governmental Authority charged
with the administration thereof shall either (a) impose, modify or deem
applicable any reserve, special deposit or similar requirement against
Letters of Credit issued by the Agent, or (b) impose on the Agent or any of
the Lenders any other condition regarding this Agreement or any Letter of
Credit, and the result of any event referred to in clauses (a) or (b) above
shall be to increase the cost to the Agent of issuing, maintaining or
extending the Letter of Credit or the cost to any of the Lenders of funding
any obligation under or in connection with the Letter of Credit (which
increase in cost shall be the result of the Agent's reasonable allocation of
the aggregate of such cost increases resulting from such events), then, upon
demand by the Agent, the Borrowers shall immediately pay to the Agent from
time to time as specified by the Agent, additional amounts which shall be
sufficient to compensate the Agent and the Lenders for such increased cost,
together with interest on each such amount from the date demanded until
payment in full thereof at a rate per annum equal to the then highest current
rate of interest on the Revolving Loan. A certificate as to such increased
cost incurred by the Agent and/or any of the Lenders, submitted by the Agent
to the Borrowers, shall be conclusive, absent manifest error.
2.2.7 General Letter of Credit Provisions.
------------------------------------
The Borrowers hereby instruct the Agent to pay any draft
complying with the terms of any Letter of Credit irrespective of any
instructions of the Borrowers to the contrary. The Borrowers assume all
risks of the acts and omissions of the beneficiary and other users of any
Letter of Credit. The Agent, the Lenders and their respective branches,
Affiliates and/or correspondents shall not be responsible for and the
Borrowers hereby indemnify and hold the Agent, the Lenders and their
respective branches, Affiliates and/or correspondents harmless from and
against all liability, loss and expense (including reasonable attorney's fees
and costs) incurred by the Agent, the Lenders and/or their respective
branches, Affiliates and/or correspondents relative to and/or as a
consequence of (a) any failure by the Borrowers to perform the agreements
hereunder and under any Letter of Credit Agreement, (b) any Letter of Credit
Agreement, this Agreement, any Letter of Credit and any draft, draw and/or
acceptance under or purported to be under any Letter of Credit, (c) any
action taken or omitted by the Agent, any of the Lenders and/or any of their
respective branches, Affiliates and/or correspondents at the request of the
Borrowers, (d) any failure or inability to perform in accordance with the
terms of any Letter of Credit by reason of any control or restriction
rightfully or wrongfully exercised by any de facto or de jure Governmental
Authority, group or individual asserting or exercising governmental or
paramount powers, and/or (e) any consequences arising from causes beyond the
control of the Agent, any of the Lenders and/or any of their respective
branches, Affiliates and/or correspondents.
Except for willful misconduct, the Agent, the Lenders and
their respective branches, Affiliates and/or correspondents, shall not be
liable or responsible in any respect for any (a) error, omission,
interruption or delay in transmission, dispatch or delivery of any one or
more messages or advices in connection with any Letter of Credit, whether
transmitted by cable, telegraph, mail or otherwise and despite any cipher or
code which may be employed, and/or (b) action, inaction or omission which may
be taken or suffered by it or them in good faith or through inadvertence in
identifying or failing to identify any beneficiary or otherwise in connection
with any Letter of Credit.
Any Letter of Credit may be amended, modified or revoked
only upon the receipt by the Agent from the Borrowers and the beneficiary
(including any transferee and/or assignee of the original beneficiary), of a
written consent and request therefor.
If any Laws, order of court and/or ruling or regulation of
any Governmental Authority of the United States (or any state thereof) and/or
any country other than the United States permits a beneficiary under a Letter
of Credit to require the Agent, the Lenders and/or any of their respective
branches, Affiliates and/or correspondents to pay drafts under or purporting
to be under a Letter of Credit after the expiration date of the Letter of
Credit, the Borrowers shall reimburse the Agent and the Lenders, as
appropriate, for any such payment pursuant to provisions of Section 2.2.6
(Change in Law; Increased Cost).
Except as may otherwise be specifically provided in a
Letter of Credit or Letter of Credit Agreement, the laws of the State and the
Uniform Customs and Practice for Documentary Credits, 1993 Revision,
International Chamber of Commerce Publication No. 500 shall govern the
Letters of Credit. The Laws, rules, provisions and regulations of the
Uniform Customs and Practice for Documentary Credits are hereby incorporated
by reference. In the event of a conflict between the Uniform Customs and
Practice for Documentary Credits and the laws of the State, the Uniform
Customs and Practice for Documentary Credits shall prevail.
2.2.8 Participations in the Letters of Credit.
----------------------------------------
Each Lender hereby irrevocably authorizes the Agent to
issue Letters of Credit in accordance with the provisions of this Agreement.
As of the date each Letter of Credit is opened or issued by the Agent
pursuant to the provisions of this Agreement, each Lender shall have an
undivided participating interest in (a) the rights and obligations of the
Agent under such Letter of Credit, and (b) the Outstanding Letter of Credit
Obligations of the Borrowers with respect to such Letter of Credit, in an
amount equal to each Lender's Revolving Credit Pro Rata Share of such
Outstanding Letter of Credit Obligations.
2.2.9 Payments by the Lenders to the Agent.
-------------------------------------
If the Borrowers fail to pay to the Agent any Current
Letter of Credit Obligations as and when due and payable, the Agent shall
promptly notify each of the Lenders and shall demand payment from each of the
Lenders such Lender's Revolving Credit Pro Rata Share of such unpaid Current
Letter of Credit Obligations. In addition, if any amount paid to the Agent
on account of Current Letter of Credit Obligations is rescinded or required
to be restored or turned over by the Agent upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrowers or upon or as a
result of the appointment of a receiver, intervenor, trustee, conservator or
similar officer for the Borrowers, or is otherwise not indefeasibly covered
by an advance under the Revolving Loan, the Agent shall promptly notify each
of the Lenders and shall demand payment from each of the Lenders of its
Revolving Credit Pro Rata Share of its portion of the Current Letter of
Credit Obligations to be remitted to the Borrowers.
Each of the Lenders irrevocably and unconditionally agrees
to honor any such demands for payment under this Section and promises to pay
to the Agent's account on the same Business Day as demanded the amount of its
Revolving Credit Pro Rata Share of the Current Letter of Credit Obligations
in immediately available funds, without any setoff, counterclaim or deduction
of any kind. Any payment by a Lender hereunder shall in no way release,
discharge or lessen the obligation of the Borrowers to pay Current Letter of
Credit Obligations to the Agent in accordance with the provisions of this
Agreement.
The obligation of each of the Lenders to remit the amounts
of its Revolving Credit Pro Rata Share of Current Letter of Credit
Obligations for the account of the Agent pursuant to this Section shall be
unconditional and irrevocable under any and all circumstances and may not be
terminated, suspended or delayed for any reason whatsoever, provided that all
payments of such amounts by each of the Lenders shall be without prejudice to
the rights of each of the Lenders with respect to the Agent's alleged willful
misconduct. Any claim any Lender may have against the Agent as a result of
the Agent's alleged willful misconduct may be brought by such Lender in a
separate action against the Agent but may not be used as a defense to payment
under the provisions of this Section.
No failure of any Lender to remit the amount of its
Revolving Credit Pro Rata Share of Current Letter of Credit Obligations to
the Agent pursuant to this Section shall affect the obligations of the Agent
under any Letter of Credit, and if any Lender does not remit to the Agent the
amount of its Revolving Credit Pro Rata Share of Current Letter of Credit
Obligations on the same day as demanded, then without limiting such Lender's
obligation to transmit funds on the same Business Day as demanded, such
Lender shall be obligated to pay, on demand of the Agent and without setoff,
counterclaim or deduction of any kind whatsoever interest on the unpaid
amount at the Federal Funds Rate for each day from the date such amount shall
be due and payable to the Agent until the date such amount shall have been
paid in full to the Agent by such Lender.
Section 2.3 Swing Line Sub-Facility.
------------------------
2.3.1 Swing Line Loans.
-----------------
Subject to the terms and conditions hereof, Citizens
agrees to make swing line loans (individually, a "Swing Line Loan" and
collectively, the "Swing Line Loans") to the Borrowers, jointly and severally,
in an aggregate principal amount not to exceed at any one time outstanding Ten
Million Dollars ($10,000,000) (the "Swing Line Committed Amount"); provided,
however, Borrowers shall not request, and Citizens shall not make, a Swing
Line Loan if, after giving effect to the making of such Swing Line Loan, the
aggregate outstanding principal balance of the Revolving Loan, the Swing Line
Loans and all Letter of Credit Obligations would exceed the lesser of the (a)
Total Revolving Credit Committed Amount or (b) Borrowing Base. During the
Revolving Credit Commitment Period, each Borrower may use the Swing Line
Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof.
2.3.2 Refunding Swing Line Loans.
---------------------------
Citizens may from time to time at its discretion, on
behalf of the Borrowers, issue a notice stating the current balance outstanding
under the Swing Line Commitment. Each Lender shall make advances under the
Revolving Loan available to the Agent in immediately available funds, not
later than 2:00 p.m. (Eastern Time), one (1) Business Day after the date of
any notice from Citizens that a Revolving Loan is requested on behalf of the
Borrowers (the "Refunding Date"). At any time there are amounts outstanding
under the Swing Line Loan, Citizens will make such refunding requests to each
Lender no less frequent than two (2) times per week. The proceeds of such
Revolving Loan shall be immediately applied by Citizens to reduce the
outstanding principal balance to an amount not to exceed One Million Dollars
($1,000,000) under the Swing Line Commitment (the "Refunded Swing Line
Loans"). Effective on the Business Day such advances under the Revolving
Loan are made, the portion of the Swing Line Loans so paid shall no longer be
outstanding as Swing Line Loans, shall no longer be due under the Swing Line
Note and shall be due under the respective Revolving Credit Notes issued to
the Lenders in accordance with their respective Pro Rata Shares of the
Revolving Credit Committed Amount. Each Borrower authorizes Citizens to
charge such Borrower's accounts with the Agent (up to the amount available in
each such account) in order to immediately pay the amount of such Refunded
Swing Line Loans to the extent amounts received from the Lenders are not
sufficient to repay in full such Refunded Swing Line Loans.
2.3.3 No Swing Line Loans if Default.
-------------------------------
Notwithstanding anything herein to the contrary, Citizens
shall not be obligated to make any Swing Line Loans if a Default or an Event
of Default shall have occurred and be continuing.
2.3.4 Participations in Swing Line Loans.
-----------------------------------
If prior to the time a Revolving Loan would have otherwise
been made, a Default or Event of Default shall have occurred, each Lender
shall immediately purchase an undivided participating interest in an amount
equal to (a) its Pro Rata Share of the Revolving Credit Committed Amount as
set forth in Section 2.1.1 (Revolving Credit Facility) times (b) the
aggregate principal amount of Swing Line Loans then outstanding which were to
have been repaid with such Refunded Swing Line Loans (the "Swing Line
Participation Amount"). On the Refunding Date, each Lender shall transfer to
Citizens, in immediately available funds, such Lender's Swing Line
Participation Amount and upon receipt thereof Citizens shall deliver to each
Lender a Swing Line Loan Participation Certificate dated the date of
Citizens' receipt of such funds and in the Swing Line Participation Amount.
2.3.5 Adjustments to Swing Line Participation Amounts.
------------------------------------------------
Whenever, at any time after Citizens has received from any
Lender such Lender's Swing Line Participation Amount, Citizens receives any
payment on account of the Swing Line Loans, Citizens will distribute to such
Lender its pro rata share of such payment (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Lender's participating interest was outstanding and funded); provided,
however, that in the event that such payment received by Citizens is required
to be returned, such Lender will return to Citizens any portion thereof
previously distributed to it by Citizens.
2.3.6 Lenders' Obligations Unconditional.
-----------------------------------
Each Lender's obligation to make the Refunded Swing Line
Loans referred to in this Section 2.3 (Swing Line Sub-Facility) and to
purchase participating interests in Swing Line Loans pursuant to this Section
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (a) any set-off, counterclaim,
recoupment, defense or other right which any Lender or either Borrower may
have against Citizens, either Borrower or any other Person for any reason
whatsoever; (b) the occurrence or continuance of a Default or an Event of
Default; (c) any adverse change in the condition (financial or otherwise) of
either Borrower; (d) any breach of this Agreement or any other Financing
Document by the Borrowers, the Agent or any of the Lenders, or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
2.3.7 Swing Line Note.
----------------
Advances made by Citizens under the Swing Line Commitment
shall be evidenced by a separate Swing Line Note payable to the order of
Citizens in the principal amount of the Swing Line Commitment substantially
in the form of Exhibit B-3 attached hereto and made a part hereof, with the
blanks therein appropriately completed, dated as of the date of the initial
advance under this Agreement and payable on the Revolving Credit Expiration
Date (the "Swing Line Note"). The Borrowers' joint and several obligations
under the Swing Line Note and other indebtedness, obligations and liabilities
with respect to the Swing Line Loan are part of the Obligations and are
secured by the Obligations.
2.3.8 Interest on Swing Line Loans.
-----------------------------
(a) Each Swing Line Loan shall bear interest
until the Revolving Credit Expiration Date at the Base Rate. Interest on each
Swing Line Loan shall be payable in consecutive monthly payments commencing
on the last Business Day of the first calendar month following an advance
under the Swing Line Sub-Facility and continuing on the last Business Day of
each month thereafter through and including Revolving Credit Termination
Date.
(b) Notwithstanding the foregoing, following
the occurrence and during the continuance of a Default or an Event of Default,
at the option of the Agent, all Swing Line Loans and all other Obligations shall
bear interest at the Post-Default Rate.
2.3.9 Mandatory Prepayments of Swing Line Loan.
-----------------------------------------
The Borrowers shall make the mandatory prepayments (each a
"Swing Line Loan Mandatory Prepayment" and collectively, the "Swing Line Loan
Mandatory Prepayments") of the Swing Line Loan at any time and from time to
time in such amounts requested by Citizens or the Agent pursuant to Section
2.1.3 (Borrowing Base) of this Agreement in order to cover any Borrowing Base
Deficiency.
2.3.10 Optional Prepayments of Swing Line Loan.
----------------------------------------
The Borrowers may, at their option, at any time and from
time to time, prepay (each a "Swing Line Loan Optional Prepayment" and
collectively the "Swing Line Loan Optional Prepayments") the Swing Line Loan
without premium or penalty.
Section 2.4 Interest Rates on Revolving Loans and Swing Line Loans.
-------------------------------------------------------
2.4.1 General Provisions.
-------------------
All payments hereunder (including any payment or
prepayment of principal, interest, fees and other charges) or with respect to
the Notes or the Loans shall be made in lawful money of the United States of
America, in immediately available funds without set-off, deduction or
counterclaim of any kind, to the Agent, for the ratable benefit of the Lenders,
at its office at 8521 Leesburg Pike, Suite 405, Vienna Virginia 22182, or at
such other place as the Agent may in writing designate, and shall be applied, at
the option of each Lender with respect to the Obligations due to such Lender,
first to accrued Obligations other than principal and interest, second to
accrued interest outstanding under the Swing Line Loan, third to principal
due on the Swing Line Loan, fourth to accrued interest on Loans bearing
interest at the Base Rate, fifth to accrued interest on Loans bearing
interest at the LIBOR-based Rate, sixth to principal due on Loans bearing
interest at the Base Rate, and seventh to principal due on Loans bearing
interest at a LIBOR-based Rate on the last day of the Interest Period
applicable thereto.
2.4.2 Applicable Interest Rates.
--------------------------
(a) The Revolving Loan, or any portion
thereof shall bear interest until the Revolving Credit Termination Date at
either the Base Rate or the LIBOR-based Rate, as selected and specified by VSE
in a Rate Request Notice furnished to the Agent in accordance with the
provisions of Section 2.4.3(e), or as otherwise determined in accordance with
the provisions of this Section 2.4.
(b) The Swing Line Loan, or any portion
thereof shall bear interest until the Revolving Credit Termination Date at the
Base Rate or as otherwise determined in accordance with the provisions of this
Section 2.4.
(c) Notwithstanding the foregoing, following
the occurrence and during the continuance of an Event of Default, at the option
of the Requisite Lenders, the Revolving Loan, the Swing Line Loan and all
other Obligations shall bear interest at the Post-Default Rate.
2.4.3 Selection of Interest Rates on the Revolving
--------------------------------------------
Loan.
-----
(a) The Borrowers may select the initial
Applicable Interest Rate or Applicable Interest Rates to be charged on advances
under the Revolving Loan.
(b) From time to time after the date of this
Agreement as provided in this Section, by a proper and timely Rate Request
Notice furnished to the Agent in accordance with the provisions of Section
2.4.3(e), the Borrowers may select an initial Applicable Interest Rate for
any advance under the Revolving Loan or may convert the Applicable Interest
Rate for any existing advance under the Revolving Loan to any other
Applicable Interest Rate.
(c) The Borrowers' selection of an
Applicable Interest Rate, the Borrowers' election to convert an Applicable
Interest Rate to another Applicable Interest Rate, and any other adjustments in
an interest rate are subject to the following limitations:
(i) no change from the LIBOR Rate to
the Base Rate shall become effective on a day other than a
Business Day and no change from the Base Rate to the LIBOR
Rate shall become effective on a day other than a day which
is a Eurodollar Business Day;
(ii) any Applicable Interest Rate
change for any advance under the Revolving Loan to be effective
on a date on which any principal payment on account of such
advance is scheduled to be paid shall be made only after such
payment shall have been made; and
(iii) as of the effective date of a
selection, there shall not exist an Event of Default.
(d) If a request for an advance under the
Revolving Loan is not accompanied by a Rate Request Notice or does not otherwise
include a selection of an Applicable Interest Rate, or if, after having made
a selection of an Applicable Interest Rate, the Borrowers fail or are not
otherwise entitled under the provisions of this Agreement to continue such
Applicable Interest Rate, the Borrowers shall be deemed to have selected the
Base Rate as the Applicable Interest Rate until such time as the Borrowers
have selected a different Applicable Interest Rate in accordance with, and
subject to, the provisions of this Section.
(e) The Lenders will not be obligated to
make advances under the Revolving Loan or the Swing Line Loan or to convert the
Applicable Interest Rate on advances under the Revolving Loan to another
Applicable Interest Rate, unless the Agent shall have received an irrevocable
written or telephonic notice (a "Rate Request Notice") from the Borrowers
specifying the following information:
(i) the amount to be borrowed or
converted;
(ii) a selection of the Applicable
Interest Rate; and
(iii) the requested date on which such
election is to be effective.
Any telephonic notice must be confirmed in writing within
three (3) Business Days. Each Rate Request Notice must be received by the
Agent not later than 11:00 a.m. (Eastern Time) on the Business Day of any
requested borrowing or conversion in the case of a selection of the Base Rate
and not later than 1:00 p.m. (Eastern Time) on the third Euro-Dollar Business
Day before the date specified therein for commencement of the Interest Period
of any requested borrowing or conversion in the case of a selection of the
LIBOR-based Rate.
2.4.4 Inability to Determine Rate.
----------------------------
In the event that the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that by
reason of circumstances affecting the interbank Eurodollar market adequate
and reasonable means do not exist for ascertaining the LIBOR Rate for any
given Interest Period, the Agent shall forthwith give notice (which may be
telephonic and promptly confirmed in writing or by facsimile transmission) of
such determination to each Lender and to the Borrowers at least two Euro-
dollar Business Days prior to, as the case may be, the conversion date of any
portion of the Principal Amount bearing interest at the Base Rate to a LIBOR-
based Rate. If such notice is given: (a) any portion of the Principal Amount
bearing interest at the Base Rate that was to have been converted to a LIBOR-
based Rate, subject to the provisions hereof, shall be continued at the Base
Rate and (b) any portion of the Principal Amount bearing interest at a LIBOR-
based Rate shall be converted, on the last day of the then current Interest
Period with respect thereto, to the Base Rate. Until such notice has been
withdrawn by the Agent, the Borrowers shall not have the right to have a
LIBOR-based Rate apply to any portion of the Principal Amount.
2.4.5 Indemnity.
----------
The Borrowers agree to indemnify and reimburse the Agent
and the Lenders and to hold the Agent and the Lenders harmless from any loss,
cost (including administrative costs) or expense which any one or more of the
Agent or the Lenders may sustain or incur as a consequence of (a) a default
by the Borrowers in payment when due of the principal amount of or interest
on any LIBOR Amount, (b) the failure of the Borrowers to make, or convert the
Applicable Interest Rate of, a Loan after the Borrowers have given a Rate
Request Notice, (c) the failure of the Borrowers to make any prepayment of a
Loan after the Borrowers have given notice of such intention to make such a
prepayment, and/or (d) the making by the Borrowers of a prepayment of a Loan
on a day which is not the last day of the Interest Period for such LIBOR
Amount, calculated as provided in the following paragraph. This agreement
and covenant of the Borrowers shall survive termination or expiration of this
Agreement and payment of the other Obligations.
Contemporaneously with any prepayment of principal of a
LIBOR Amount, a prepayment fee shall be due and payable to the Lenders in an
amount equal to the product of
(A) the amount so prepaid
multiplied by
-------------
(B) the difference (but not less than zero) of
--------------
(i) the constant maturity 360-day interest yield (as of the
first day of the then effective Interest Period and
expressed as a decimal) for a United States Treasury bill,
note, or bond (a "Treasury obligation") selected by the
Agent, in an aggregate amount comparable to the amount
prepaid, and having, as of the first day of the then
effective Interest Period, a remaining term approximately
equal to the original Interest Period,
minus
-----
(ii) the 360-day interest yield (as of the Business Day
immediately preceding the prepayment date and expressed as
a decimal) on such Treasury obligation and having, as of
the Business Day immediately preceding the prepayment date,
a remaining term until maturity approximately equal to the
unexpired portion of the Interest Period,
multiplied by
-------------
(C) the quotient of
------------
(y) the number of calendar days in the unexpired portion of
the Interest Period,
divided by
----------
(x) 360.
The applicable yields on the Treasury obligations
described above shall be determined based upon the Federal Reserve statistical
release H.15 published for the applicable determination dates set forth above.
Any Treasury obligation selected when the related Interest Period is one year or
less shall be United States Treasury Bills. The Agent and the Lenders shall
not be obligated or required to have actually reinvested the prepaid amount
of the LIBOR Amount in any such Treasury obligation as a condition precedent
to the Borrowers' being obligated to pay a prepayment fee as outlined above.
The Agent and the Lenders shall not be obligated to accept any prepayment of
principal unless it is accompanied by the prepayment fee, if any, due in
connection therewith as calculated pursuant to the provisions of this
paragraph. No prepayment fee payable in connection herewith shall in any
event or under any circumstances be deemed or construed as a penalty.
2.4.6 Payment of Interest.
--------------------
(a) Unpaid and accrued interest on any
portion of a LIBOR Loan shall be paid (a) on the last Business Day of each
Interest Period for such LIBOR-based Rate and (b) at the Revolving Credit
Termination Date; provided, however, that any and all unpaid and accrued
interest on any LIBOR Amount prepaid prior to expiration of the then current
Interest Period for such LIBOR Amount shall be paid immediately upon prepayment.
Notwithstanding the foregoing, any and all unpaid and accrued interest on any
LIBOR Loan converted to a Base Rate shall be paid immediately upon such
conversion.
(b) Unpaid and accrued interest on any
portion of a Base Rate Loan shall be paid (a) on the Interest Payment Date and
(b) at the Revolving Credit Termination Date. Notwithstanding the foregoing,
any and all unpaid and accrued interest on any Base Rate Loan converted to a
LIBOR Loan shall be paid immediately upon such conversion.
Section 2.5 General Financing Provisions.
-----------------------------
2.5.1 Borrowers' Representatives.
---------------------------
The Borrowers hereby represent and warrant to the Agent
and the Lenders that each of them will derive benefits, directly and indirectly,
from each Letter of Credit and from each Loan, both in their separate
capacity and as a member of the integrated group to which each of the
Borrowers belong and because the successful operation of the integrated group
is dependent upon the continued successful performance of the functions of
the integrated group as a whole, because (a) this financing is enabling any
Permitted Acquisition, (b) the terms of the consolidated financing provided
under this Agreement are more favorable than would otherwise would be
obtainable by the Borrowers individually, and (c) the Borrowers' additional
administrative and other costs and reduced flexibility associated with
individual financing arrangements which would otherwise be required if
obtainable would substantially reduce the value to the Borrowers of the
financing. The Borrowers in the discretion of their respective managements
are to agree among themselves as to the allocation of the benefits of Letters
of Credit and the proceeds of Loans; provided, however, that the Borrowers
shall be deemed to have represented and warranted to the Agent and the
Lenders at the time of allocation that each benefit and use of proceeds is a
Permitted Use.
For administrative convenience, each Borrower hereby
irrevocably appoints VSE as each Borrower's attorney-in-fact, with power of
substitution (with the prior written consent of the Agent in the exercise of
its sole and absolute discretion), in the name of VSE or in the name of the
Borrower or otherwise to take any and all actions with respect to the this
Agreement, the other Financing Documents, the Obligations and/or the
Collateral (including, without limitation, the Proceeds thereof) as VSE may
so elect from time to time, including, without limitation, actions to (i)
request advances under the Loans, apply for and direct the benefits of
Letters of Credits, and direct the Agent to disburse or credit the proceeds
of any Loan directly to an account of VSE, any one or more of the Borrowers
or otherwise, which direction shall evidence the making of such Loan and
shall constitute the acknowledgment by each of the Borrowers of the receipt
of the proceeds of such Loan or the benefit of such Letter of Credit, (ii)
enter into, execute, deliver, amend, modify, restate, substitute, extend
and/or renew this Agreement, any Additional Borrower Joinder Supplement, any
other Financing Documents, security agreements, mortgages, deposit account
agreements, instruments, certificates, waivers, letter of credit
applications, releases, documents and agreements from time to time, and (iii)
endorse any check or other item of payment in the name of the Borrower or in
the name of VSE. The foregoing appointment is coupled with an interest,
cannot be revoked without the prior written consent of the Agent, and may be
exercised from time to time through VSE's duly authorized officer, officers
or other Person or Persons designated by VSE to act from time to time on
behalf of VSE.
Each of the Borrowers hereby irrevocably authorizes each
of the Lenders to make Loans to any one or more of the Borrowers, and hereby
irrevocably authorizes the Agent to issue or cause to be issued Letters of
Credit for the account of any or all of the Borrowers, pursuant to the
provisions of this Agreement upon the written, oral or telephone request of
any one or more of the Persons who is from time to time a Responsible Officer
of a Borrower under the provisions of the most recent certificate of
corporate resolutions and/or incumbency of the Borrowers on file with the
Agent and also upon the written, oral or telephone request of any one of the
Persons who is from time to time a Responsible Officer of VSE under the
provisions of the most recent certificate of corporate resolutions and/or
incumbency for VSE on file with the Agent.
Neither the Agent nor any of the Lenders assumes any
responsibility or liability for any errors, mistakes, and/or discrepancies in
the oral, telephonic, written or other transmissions of any instructions,
orders, requests and confirmations between the Agent and the Borrowers or the
Agent and any of the Lenders in connection with the Credit Facilities, any
Loan, any Letter of Credit or any other transaction in connection with the
provisions of this Agreement. Without implying any limitation on the joint
and several nature of the Obligations, the Lenders agree that,
notwithstanding any other provision of this Agreement, the Borrowers may
create reasonable inter-company indebtedness between or among the Borrowers
with respect to the allocation of the benefits and proceeds of the advances
and Credit Facilities under this Agreement. The Borrowers agree among
themselves, and the Agent and the Lenders consent to that agreement, that
each Borrower shall have rights of contribution from all of the other
Borrowers to the extent such Borrower incurs Obligations in excess of the
proceeds of the Loans received by, or allocated to purposes for the direct
benefit of, such Borrower. All such indebtedness and rights shall be, and
are hereby agreed by the Borrowers to be, subordinate in priority and payment
to the indefeasible repayment in full in cash of the Obligations, and, unless
the Agent agrees in writing otherwise, shall not be exercised or repaid in
whole or in part until all of the Obligations have been indefeasibly paid in
full in cash. The Borrowers agree that all of such inter-company
indebtedness and rights of contribution are part of the Collateral and secure
the Obligations. Each Borrower hereby waives all rights of counterclaim,
recoupment and offset between or among themselves arising on account of that
indebtedness and otherwise. Each Borrower shall not evidence the inter-
company indebtedness or rights of contribution by note or other instrument,
and shall not secure such indebtedness or rights of contribution with any
Lien or security. Notwithstanding anything contained in this Agreement to
the contrary, the amount covered by each Borrower under the Obligations
(including, without limitation, Section 2.5.11 (Guaranty)) shall be limited
to an aggregate amount (after giving effect to any collections from, rights
to receive contribution from or payments made by or on behalf of any other
Borrower in respect of the Obligations) which, together with other amounts
owing by such Borrowers to the Agent and the Lenders under the Obligations,
is equal to the largest amount that would not be subject to avoidance under
the Bankruptcy Code or any applicable provisions of any applicable,
comparable state or other Laws.
2.5.2 Use of Proceeds of the Loans.
-----------------------------
The proceeds of each advance under the Loans shall be used
by the Borrowers for Permitted Uses, and for no other purposes except as may
otherwise be agreed by the Requisite Lenders in writing.
2.5.3 Origination Fee; Good Faith Deposit.
------------------------------------
The Borrowers shall pay to the Agent on or before the
Closing Date for the ratable benefit of the Lenders based on each such
Lender's Pro Rata Share an origination fee in the amount of Seventy-Five
Thousand Dollars ($75,000) (the "Origination Fee"), which Origination Fee has
been fully earned and is non-refundable, of which Borrowers have previously
paid to the Agent for the ratable benefit of the Lenders a good faith deposit
in the amount of Thirty-Seven Thousand Five Hundred Dollars ($37,500) (the
"Good Faith Deposit").
2.5.4 Agent's Fee.
------------
Borrower shall pay to Agent on the Closing Date and at
each anniversary of the Closing Date the fee as described in the Commitment
Letter (the "Agent's Fee"). The Agent's Fee has been fully earned and is non-
refundable.
2.5.5 Field Examination Fees.
-----------------------
The Borrower shall pay to the Agent a field examination
fee (collectively, the "Field Examination Fees" and individually a "Field
Examination Fee"), which Field Examination Fees shall be payable at the time
of each field examination of each Borrowers' books and records in an amount
prior to an Event of Default, not to exceed the Agent's actual costs of
obtaining such field examination.
2.5.6 Computation of Interest and Fees.
---------------------------------
All applicable Fees and interest shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Any
change in the interest rate on any of the Obligations resulting from a change
in the Applicable Interest Rate shall become effective as of the opening of
business on the day on which such change in the Applicable Interest Rate is
announced.
2.5.7 Maximum Interest Rate.
----------------------
In no event shall any interest rate provided for hereunder
exceed the maximum rate permissible for corporate borrowers under applicable
law for loans of the type provided for hereunder (the "Maximum Rate"). If,
in any month, any interest rate, absent such limitation, would have exceeded
the Maximum Rate, then the interest rate for that month shall be the Maximum
Rate, and, if in future months, that interest rate would otherwise be less
than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the
amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in full of the
Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would, but for
this Section, have been paid or accrued if the interest rates otherwise set
forth in this Agreement had at all times been in effect, then the Borrowers
shall, to the extent permitted by applicable law, pay the Agent for the
ratable benefit of the Lenders, an amount equal to the excess of (a) the
lesser of (i) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect or (ii) the amount of interest
which would have accrued had the interest rates otherwise set forth in this
Agreement, at all times, been in effect over (b) the amount of interest
actually paid or accrued under this Agreement. In the event that a court
determines that the Agent and the Lenders have received interest and other
charges hereunder in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if
there are no Obligations outstanding, the Lenders shall refund to the
Borrowers such excess.
2.5.8 Payments.
---------
All payments of the Obligations, including, without
limitation, principal, interest, Prepayments, and Fees, shall be paid by the
Borrowers without setoff or counterclaim to the Agent (except as otherwise
provided herein) at the Agent's office specified in Section 9.1 (Notices) in
immediately available funds not later than noon (Eastern Time) on the due
date of such payment. All payments received by the Agent after such time
shall be deemed to have been received by the Agent for purposes of computing
interest and Fees and otherwise as of the next Business Day. Payments shall
not be considered received by the Agent until such payments are paid to the
Agent in immediately available funds.
2.5.9 Liens; Setoff.
--------------
The Borrowers hereby grant to the Agent and to the Lenders
a continuing Lien for all of the Obligations (including, without limitation,
the Agent's Obligations) upon any and all monies, Investment Property, and
other property of the Borrowers and the Proceeds thereof, now or hereafter
held or received by or in transit to, the Agent, any of the Lenders, and/or
any Affiliate of the Agent and/or any of the Lenders, from or for the
Borrowers, and also upon any and all deposit accounts (general or special)
and credits of the Borrowers, if any, with the Agent, any of the Lenders or
any Affiliate of the Agent or any of the Lenders, at any time existing,
excluding any deposit accounts held by the Borrowers in their capacity as
trustee for Persons who are not Borrowers or Affiliates of the Borrowers.
Without implying any limitation on any other rights the Agent and/or the
Lenders may have under the Financing Documents or applicable Laws, during the
continuance of an Event of Default, the Agent and the each of the Lenders,
respectively, are hereby authorized by the Borrowers at any time and from
time to time, without notice to the Borrowers, to set off, appropriate and
apply any or all items hereinabove referred to against all Obligations
(including, without limitation, the Agent's Obligations) then outstanding
(whether or not then due), all in such order and manner as shall be
determined by the Agent in its sole and absolute discretion.
2.5.10 Requirements of Law.
--------------------
In the event that any Lender shall have determined in good
faith that (a) the adoption of any Capital Adequacy Regulation, or (b) any
change in any Capital Adequacy Regulation or in the interpretation or
application thereof or (c) compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding any capital
adequacy (whether or not having the force of law) from any central bank or
Governmental Authority, does or shall have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such
Lender, as a consequence of the obligations of such Lender hereunder to a
level below that which such Lender or any corporation controlling such Lender
would have achieved but for such adoption, change or compliance (taking into
consideration the policies of such Lender and the corporation controlling
such Lender, with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time, after submission by such
Lender to the Borrowers of a written request therefor and a statement of the
basis for such determination, the Borrowers shall pay to such Lender such
additional amount or amounts in order to compensate for such reduction.
2.5.11 Guaranty.
(a) Each Borrower hereby unconditionally and
irrevocably, guarantees to the Agent and the Lenders:
(i) the due and punctual payment in
full (and not merely the collectibility) by the other
Borrowers of the Obligations, including unpaid and
accrued interest thereon, in each case when due and
payable, all according to the terms of this Agreement,
the Notes and the other Financing Documents;
(ii) the due and punctual payment in
full (and not merely the collectibility) by the other
Borrowers of all other sums and charges which may at any
time be due and payable in accordance with this
Agreement, the Notes or any of the other Financing
Documents;
(iii) the due and punctual performance
by the other Borrowers of all of the other terms,
covenants and conditions contained in the Financing
Documents; and
(iv) all the other Obligations of the
other Borrowers.
(b) The obligations and liabilities of each
Borrower as a guarantor under this Section 2.5.11 shall be absolute and
unconditional and joint and several, irrespective of the genuineness,
validity, priority, regularity or enforceability of this Agreement, any of
the Notes or any of the Financing Documents or any other circumstance which
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. Each Borrower in its capacity as a guarantor expressly agrees
that the Agent and the Lenders may, in their sole and absolute discretion,
without notice to or further assent of such Borrower and without in any way
releasing, affecting or in any way impairing the joint and several
obligations and liabilities of such Borrower as a guarantor hereunder:
(i) waive compliance with, or any
defaults under, or grant any other indulgences under or
with respect to any of the Financing Documents;
(ii) modify, amend, change or
terminate any provisions of any of the Financing
Documents;
(iii) grant extensions or renewals of
or with respect to the Credit Facilities, the Notes or
any of the other Financing Documents;
(iv) effect any release,
subordination, compromise or settlement in connection
with this Agreement, any of the Notes or any of the
other Financing Documents;
(v) agree to the substitution,
exchange, release or other disposition of the Collateral
or any part thereof, or any other collateral for the
Loan or to the subordination of any lien or security
interest therein;
(vi) make advances for the purpose of
performing any term, provision or covenant contained in
this Agreement, any of the Notes or any of the other
Financing Documents with respect to which the Borrowers
shall then be in default;
(vii) make future advances pursuant to
this Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or
otherwise transfer the Commitments, the Obligations, the
Notes, any of the other Financing Documents or any
interest therein, all as and to the extent permitted by
the provisions of this Agreement;
(ix) deal in all respects with the
other Borrowers as if this Section 2.5.11 were not in
effect;
(x) effect any release, compromise
or settlement with any of the other Borrowers, whether
in their capacity as a Borrower or as a guarantor under
this Section 2.5.11, or any other guarantor; and
(xi) provide debtor-in-possession
financing or allow use of cash collateral in proceedings
under the Bankruptcy Code, it being expressly agreed by
all Borrowers that any such financing and/or use would
be part of the Obligations.
(c) The obligations and liabilities of each
Borrower, as guarantor under this Section 2.5.11, shall be primary, direct
and immediate, shall not be subject to any counterclaim, recoupment, set off,
reduction or defense based upon any claim that a Borrower may have against
any one or more of the other Borrowers, the Agent, any one or more of the
Lenders and/or any other guarantor and shall not be conditional or contingent
upon pursuit or enforcement by the Agent or other Lenders of any remedies it
may have against the Borrowers with respect to this Agreement, the Notes or
any of the other Financing Documents, whether pursuant to the terms thereof
or by operation of law. Without limiting the generality of the foregoing,
the Agent and the Lenders shall not be required to make any demand upon any
of the Borrowers, or to sell the Collateral or otherwise pursue, enforce or
exhaust its or their remedies against the Borrowers or the Collateral either
before, concurrently with or after pursuing or enforcing its rights and
remedies hereunder. Any one or more successive or concurrent actions or
proceedings may be brought against each Borrower under this Section 2.5.11,
either in the same action, if any, brought against any one or more of the
Borrowers or in separate actions or proceedings, as often as the Agent may
deem expedient or advisable. Without limiting the foregoing, it is
specifically understood that any modification, limitation or discharge of any
of the liabilities or obligations of any one or more of the Borrowers, any
other guarantor or any obligor under any of the Financing Documents, arising
out of, or by virtue of, any bankruptcy, arrangement, reorganization or
similar proceeding for relief of debtors under federal or state law initiated
by or against any one or more of the Borrowers, in their respective
capacities as borrowers and guarantors under this Section 2.5.11, or under
any of the Financing Documents shall not modify, limit, lessen, reduce,
impair, discharge, or otherwise affect the liability of each Borrower under
this Section 2.5.11 in any manner whatsoever, and this Section 2.5.11 shall
remain and continue in full force and effect. It is the intent and purpose
of this Section 2.5.11 that each Borrower shall and does hereby waive all
rights and benefits which might accrue to any other guarantor by reason of
any such proceeding, and the Borrowers agree that they shall be liable for
the full amount of the obligations and liabilities under this Section 2.5.11,
regardless of, and irrespective to, any modification, limitation or discharge
of the liability of any one or more of the Borrowers, any other guarantor or
any obligor under any of the Financing Documents, that may result from any
such proceedings.
(d) Each Borrower, as guarantor under this
Section 2.5.11, hereby unconditionally, jointly and severally, irrevocably and
expressly waives:
(i) presentment and demand for
payment of the Obligations and protest of non-payment;
(ii) notice of acceptance of this
Section 2.5.11 and of presentment, demand and protest
thereof;
(iii) notice of any default hereunder
or under the Notes or any of the other Financing
Documents and notice of all indulgences;
(iv) notice of any increase in the
amount of any portion of or all of the indebtedness
guaranteed by this Section 2.5.11;
(v) demand for observance,
performance or enforcement of any of the terms or
provisions of this Section 2.5.11, the Notes or any of
the other Financing Documents;
(vi) all errors and omissions in
connection with the Lender's administration of all
indebtedness guaranteed by this Section 2.5.11, except
errors and omissions resulting from acts of bad faith;
(vii) any right or claim of right to
cause a marshalling of the assets of any one or more of
the other Borrowers;
(viii) any act or omission of the Agent
or the Lenders which changes the scope of the risk as
guarantor hereunder; and
(ix) all other notices and demands
otherwise required by law which the Borrower may
lawfully waive.
Within ten (10) days following any request of the Agent so
to do, each Borrower will furnish the Agent and the Lenders and such other
persons as the Agent may direct with a written certificate, duly acknowledged
stating in detail whether or not any credits, offsets or defenses exist with
respect to this Section 2.5.11.
2.5.12 ACH Transactions and Swap Transactions.
---------------------------------------
The Borrowers may request and any Lender or its Affiliates
may, in their sole and absolute discretion, provide ACH Transactions and Swap
Transactions although the Borrowers are not required to do so. In the event
the Borrowers request any Lender or its Affiliates to procure ACH
Transactions or Swap Transactions, then the Borrowers agree to indemnify and
hold any Lender or its affiliates harmless from any and all obligations now
or hereafter owing to the or its affiliates. The Borrowers agree to pay any
Lender or its Affiliates all amounts owing to any Lender or its Affiliates
pursuant to ACH Transactions and Swap Transactions. In the event the
Borrowers shall not have paid to any Lender or its Affiliates such amounts,
any Lender may cover such amounts by an advance under the Revolving Loan,
which advance shall be deemed to have been requested by the Borrowers. The
Borrowers acknowledge and agree that the obtaining of ACH Transactions and
Swap Transactions from any Lender or its Affiliates (a) is in the sole and
absolute discretion of such Lender or its Affiliates and (b) is subject to
all rules and regulations of such Lender or its Affiliates.
Section 2.6 Settlement Among Lenders.
-------------------------
2.6.1 Revolving Loan.
---------------
It is agreed that each Lender's Net Outstandings are
intended by the Lenders to be equal at all times to such Lender's Revolving
Credit Pro Rata Share of the aggregate outstanding principal amount of the
Revolving Loan outstanding. Notwithstanding such agreement, the several and
not joint obligation of each Lender to fund the Revolving Loans made in
accordance with the terms of this Agreement ratably in accordance with such
Lender's Revolving Credit Pro Rata Share and each Lender's right to receive
its ratable share of principal payments on the Revolving Loan in accordance
with its Revolving Credit Pro Rata Share, the Lenders agree that in order to
facilitate the administration of this Agreement and the Financing Documents
that settlement among them may take place on a periodic basis in accordance
with the provisions of this Section 2.6.
2.6.2 Settlement Procedures as to Revolving Loan.
-------------------------------------------
(a) In General. To the extent and in the
manner hereinafter provided in this Section 2.6.2, settlement among the Lenders
as to the Revolving Loan may occur periodically on Settlement Dates determined
from time to time by the Agent, which may occur before or after the
occurrence or during the continuance of a Default or Event of Default and
whether or not all of the conditions set forth in Section 5.2 (Conditions to
All Extensions of Credit) have been met. On each Settlement Date payments
shall be made by or to Citizens and the other Lenders in the manner provided
in this Section 2.6.2 in accordance with the Settlement Report delivered by
the Agent pursuant to the provisions of this Section 2.6.2 in respect of such
Settlement Date so that as of each Settlement Date, and after giving effect
to the transactions to take place on such Settlement Date, each Lender's Net
Outstandings shall equal such Lender's Revolving Credit Pro Rata Share of the
Revolving Loan outstanding.
(b) Selection of Settlement Dates. If the
Agent elects, in its discretion, but subject to the consent of Citizens, to
settle accounts among the Lenders with respect to principal amounts of Revolving
Loan less frequently than each Business Day, then the Agent shall designate
periodic Settlement Dates which may occur on any Business Day after the
Closing Date; provided, however, that the Agent shall designate as a
Settlement Date any Business Day which is an Interest Payment Date; and
provided further, that a Settlement Date shall occur at least once during
each seven-day period. The Agent shall designate a Settlement Date by
delivering to each Lender a Settlement Report not later than 12:00 noon
(Eastern Time) on the proposed Settlement Date, which Settlement Report shall
be with respect to the period beginning on the next preceding Settlement Date
and ending on such designated Settlement Date.
(c) Non-Ratable Loans and Payments. Between
Settlement Dates, the Agent shall request and Citizens may (but shall not be
obligated to) advance to the Borrowers out of Citizens own funds, the entire
principal amount of any advance under the Revolving Loan requested or deemed
requested pursuant to Section 2.1.2 (Procedure for Making Advances Under the
Revolving Loan) (any such advance under the Revolving Loan being referred to
as a "Non-Ratable Loan"). The making of each Non-Ratable Loan by Citizens
shall be deemed to be a purchase by Citizens of a 100% participation in each
other Lender's Revolving Credit Pro Rata Share of the amount of such Non-
Ratable Loan. All payments of principal, interest and any other amount with
respect to such Non-Ratable Loan shall be payable to and received by the
Agent for the account of Citizens. Upon demand by Citizens, with notice to
the Agent, each other Lender shall pay to Citizens, as the repurchase of such
participation, an amount equal to 100% of such Lender's Revolving Credit Pro
Rata Share of the principal amount of such Non-Ratable Loan. Any payments
received by the Agent between Settlement Dates which in accordance with the
terms of this Agreement are to be applied to the reduction of the outstanding
principal balance of Revolving Loan, shall be paid over to and retained by
Citizens for such application, and such payment to and retention by Citizens
shall be deemed, to the extent of each other Lender's Revolving Credit Pro
Rata Share of such payment, to be a purchase by each such other Lender of a
participation in the advance under the Revolving Loan (including the
repurchase of participations in Non-Ratable Loans) made by Citizens. Upon
demand by another Lender, with notice thereof to the Agent, Citizens shall
pay to the Agent, for the account of such other Lender, as a repurchase of
such participation, an amount equal to such other Lender's Revolving Credit
Pro Rata Share of any such amounts (after application thereof to the
repurchase of any participations of Citizens in such other Lender's Revolving
Credit Pro Rata Share of any Non-Ratable Loans) paid only to Citizens by the
Agent.
(d) Net Decrease in Outstandings. If on any
Settlement Date the increase, if any, in the dollar amount of any Lender's
Net Outstandings which is required to comply with the first sentence of
Section 2.6.1 (Revolving Loan) is less than such Lender's Revolving Credit
Pro Rata Share of amounts received by the Agent but paid only to Citizens
since the next preceding Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Revolving Credit Pro Rata Share
of such amounts to the increase in such Lender's Net Outstandings, and
Citizens shall pay to the Agent, for the account of such Lender, the excess
allocable to such Lender.
(e) Net Increase in Outstandings. If on any
Settlement Date the increase, if any, in the dollar amount of any Lender's
Net Outstandings which is required to comply with the first sentence of
Section 2.6.1 (Revolving Loan) exceeds such Lender's Revolving Credit Pro
Rata Share of amounts received by the Agent but paid only to Citizens since
the next preceding Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's Revolving Credit Pro Rata Share
of such amounts to the increase in such Lender's Net Outstandings, and such
Lender shall pay to the Agent, for the account of Citizens, any excess.
(f) No Change in Outstandings. If a Settlement
Report indicates that no advance under the Revolving Loan has been made
during the period since the next preceding Settlement Date, then such
Lender's Revolving Credit Pro Rata Share of any amounts received by the
Agent but paid only to Citizens shall be paid by Citizens to the Agent, for
the account of such Lender. If a Settlement Report indicates that the
increase in the dollar amount of a Lender's Net Outstandings which is
required to comply with the first sentence of Section 2.6.1 (Revolving Loan)
is exactly equal to such Lender's Revolving Credit Pro Rata Share of amounts
received by the Agent but paid only to Citizens since the next preceding
Settlement Date, such Lender and the Agent, in their respective records,
shall apply such Lender's Revolving Credit Pro Rata Share of such amounts to
the increase in such Lender's Net Outstandings.
(g) Return of Payments. If any amounts
received by Citizens in respect of the Obligations are later required to be
returned or repaid by Citizens to the Borrowers or any other obligor or their
respective representatives or successors in interest, whether by court order,
settlement or otherwise, in excess of Citizens' Revolving Credit Pro Rata Share
of all such amounts required to be returned by all Lenders, each other Lender
shall, upon demand by Citizens with notice to the Agent, pay to the Agent for
the account of Citizens, an amount equal to the excess of such Lender's
Revolving Credit Pro Rata Share of all such amounts required to be returned by
all Lenders over the amount, if any, returned directly by such Lender.
(h) Payments to Agent, Lenders.
(i) Payment by any Lender to the
Agent shall be made not later than 2:00 p.m. (Eastern
Time) on the Business Day such payment is due, provided
that if such payment is due on demand by another Lender,
such demand is made on the paying Lender not later than
10:00 a.m. (Eastern Time) on such Business Day. Payment
by the Agent to any Lender shall be made by wire
transfer to such Lender's specified account set forth on
Exhibit C attached hereto, promptly following the
Agent's receipt of funds for the account of such Lender
and in the type of funds received by the Agent, provided
that if the Agent receives such funds at or prior to
12:00 p.m. noon (Eastern Time), the Agent shall pay such
funds to such Lender by 2:00 p.m. (Eastern Time) on such
Business Day. If a demand for payment is made after the
applicable time set forth above, the payment due shall
be made by 2:00 p.m. (Eastern Time) on the first
Business Day following the date of such demand.
(ii) If a Lender shall, at any time,
fail to make any payment to the Agent required
hereunder, the Agent may, but shall not be required to,
retain payments that would otherwise be made to such
Lender hereunder and apply such payments to such
Lender's defaulted obligations hereunder, at such time,
and in such order, as the Agent may elect in its sole
discretion.
(iii) With respect to the payment of
any funds under this Section 2.6.2, whether from the
Agent to a Lender or from a Lender to the Agent, the
party failing to make full payment when due pursuant to
the terms hereof shall, upon demand by the other party,
pay such amount together with interest on such amount at
the Federal Funds Rate.
2.6.3 Settlement of Other Obligations.
--------------------------------
All other amounts received by the Agent on account of, or
applied by the Agent to the payment of, any Obligation owed to the Lenders
(including, without limitation, Fees payable to the Lenders and proceeds from
the sale of, or other realization upon, all or any part of the Collateral
following an Event of Default) that are received by the Agent not later than
11:00 a.m. (Eastern Time) on a Business Day will be paid by the Agent to each
Lender on the same Business Day, and any such amounts that are received by
the Agent after 11:00 a.m. (Eastern Time) will be paid by the Agent to each
Lender on the following Business Day. Unless otherwise stated herein, the
Agent shall distribute Fees payable to the Lenders ratably to the Lenders
based on each Lender's Revolving Credit Pro Rata Share and shall distribute
proceeds from the sale of, or other realization upon, all or any part of the
Collateral following an Event of Default ratably to the Lenders based on the
amount of the Obligations then owing to each Lender.
2.6.4 Presumption of Payment.
-----------------------
Unless the Agent shall have received notice from a Lender
prior to 12:00 p.m. noon (Eastern Time) on the date of the requested date for
the making of advances under the Revolving Loan that such Lender will not
make available to the Agent, such Lender's Revolving Credit Pro Rata Share of
the advances to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on such date in accordance with
this, and the Agent, in its sole discretion may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding
amount on behalf of such Lender.
If and to the extent such Lender shall not have so made
available to the Agent its Revolving Credit Pro Rata Share of the advances
under the Revolving Loan made on such date, and the Agent shall have so made
available to the Borrowers a corresponding amount on behalf of such Lender,
such Lender shall, on demand, pay to the Agent such corresponding amount,
together with interest thereon, at the Federal Funds Rate, for each day from
the date such corresponding amount shall have been so available by the Agent
to the Borrowers until the date such amount shall have been repaid to the
Agent. Such Lender shall not be entitled to payment of any interest which
accrues on the amount made available by the Agent to the Borrowers for the
account of such Lender until such time as such Lender reimburses the Agent
for such amount, together with interest thereon, as provided in this Section
2.6.4.
A certificate of the Agent submitted to any Lender with
respect to any amounts owing to the Agent by such Lender under this Section
shall be conclusive and binding on such Lender, absent manifest error. If
such Lender does not pay such amounts to the Agent promptly upon the Agent's
demand, the Agent shall promptly notify the Borrowers of such Lender's
failure to make payment, and the Borrowers shall immediately repay such
amounts to the Agent, together with accrued interest thereon at the
applicable rate on the Revolving Loan, all without prejudice to the rights
and remedies of the Agent against any defaulting Lender. Any and all amounts
due and payable to the Agent by the Borrowers under this Section constitute
and shall be part of the Agent's Obligations.
Unless the Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to the Agent that the
Borrowers will not make such payment in full, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date and the
Agent in its sole discretion may, in reliance upon such assumption, cause to
be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrowers shall not have so
made such payment in full to the Agent and the Agent shall have distributed
to any Lender all or any portion of such amount, such Lender shall repay to
the Agent on demand the amount so distributed to such Lender, together with
interest thereon at the Federal Funds Rate, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent.
ARTICLE III
THE COLLATERAL
--------------
Section 3.1 Debt and Obligations Secured.
-----------------------------
All property and Liens assigned, pledged or otherwise granted under or
in connection with this Agreement (including, without limitation, those under
Section 3.2 (Grant of Liens)) or any of the Financing Documents shall secure
(a) the payment of all of the Obligations, including, without limitation, any
and all Outstanding Letter of Credit Obligations and any and all Agent's
Obligations, and (b) the performance, compliance with and observance by the
Borrowers of the provisions of this Agreement and all of the other Financing
Documents or otherwise under the Obligations. The security interest and Lien
of each Lender in such property shall rank equally in priority with the
interest of each other Lender, but the security interest and Lien of the
Agent with respect to the Agent's Obligations shall be superior and paramount
to the security interest and Lien of the Lenders.
Section 3.2 Grant of Liens.
---------------
Each of the Borrowers hereby assigns, pledges and grants to the Agent,
for the ratable benefit of the Lenders and for the benefit of the Agent with
respect to the Agent's Obligations, and agrees that the Agent and the Lenders
shall have a perfected and continuing security interest in, and Lien on, all
of the Borrowers' Accounts, Inventory, Government Contracts, Chattel Paper,
Documents, Instruments, Equipment, Investment Property, and General
Intangibles and all of the Borrower's deposit accounts with any financial
institution with which the Borrower maintains deposits, whether now owned or
existing or hereafter acquired or arising, all returned, rejected or
repossessed goods, the sale or lease of which shall have given or shall give
rise to an Account or Chattel Paper, all insurance policies relating to the
foregoing, all books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to the foregoing and all
Equipment and General Intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and
Proceeds of the foregoing. Each of the Borrowers further agrees that the
Agent, for the ratable benefit of the Lenders and for the benefit of the
Agent with respect to the Agent's Obligations, shall have in respect thereof
all of the rights and remedies of a secured party under the Uniform
Commercial Code as well as those provided in this Agreement, under each of
the other Financing Documents and under applicable Laws.
Section 3.3 Collateral Disclosure List.
---------------------------
On or prior to the Closing Date, the Borrowers shall deliver to the
Agent a list (the "Collateral Disclosure List") which shall contain such
information with respect to each Borrower's business and real and personal
property as the Agent may require and shall be certified by a Responsible
Officer of each of the Borrowers, all in the form provided to the Borrowers
by the Agent. Promptly after demand by the Agent, the Borrowers, as
appropriate, shall furnish to the Agent an update of the information
contained in the Collateral Disclosure List at any time and from time to time
as may be requested by the Agent.
Section 3.4 Personal Property.
------------------
The Borrowers acknowledge and agree that it is the intention of the
parties to this Agreement that the Agent, for the ratable benefit of the
Lenders and for the benefit of the Agent with respect to the Agent's
Obligations, shall have a first priority, perfected Lien, in form and
substance satisfactory to the Agent and its counsel, on all of the Borrowers'
assets of any kind and nature whatsoever, whether now owned or hereafter
acquired, subject only to the Permitted Liens, if any. In furtherance of the
foregoing.
3.4.1 Investment Property, Chattel Paper, Promissory
----------------------------------------------
Notes, etc.
-----------
On the Closing Date and without implying any limitation on
the scope of Section 3.2 (Grant of Liens), each of the Borrowers shall
deliver to the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, all originals
of all of the Borrower's letters of credit, Investment Property, Chattel
Paper, Documents and Instruments and, if the Agent so requires, shall execute
and deliver a separate pledge, assignment and security agreements in form and
content acceptable to the Agent, which pledge, assignment and security
agreements shall assign, pledge and grant a Lien to the Agent, for the
ratable benefit of the Lenders and for the benefit of the Agent with respect
to the Agent's Obligations on all of each Borrower's letters of credit,
Investment Property, Chattel Paper, Documents and Instruments.
In the event that any of the Borrowers shall acquire
after the Closing Date any letters of credit, Investment Property, Chattel
Paper, Documents or Instruments, each such Borrower shall promptly so notify the
Agent and deliver the originals of all of the foregoing to the Agent promptly
and in any event within ten (10) days of each acquisition.
All letters of credit, Investment Property, Chattel Paper,
Documents and Instruments shall be delivered to the Agent endorsed and/or
assigned as required by the pledge, assignment and security agreement and/or
as the Agent may require and, if applicable, shall be accompanied by blank
irrevocable and unconditional stock or bond powers.
3.4.2 Patents, Copyrights and Other Property Requiring
------------------------------------------------
Additional Steps to Perfect.
----------------------------
On the Closing Date and without implying any limitation on
the scope of Section 3.2 (Grant of Liens), the Borrowers shall execute and
deliver all Financing Documents and take all actions requested by the Agent
in order to perfect a first priority assignment of Patents, Copyrights,
Trademarks, customer lists or any other type or kind of intellectual property
acquired by any of the Borrowers after the Closing Date.
3.4.3 Government Contracts Requiring Additional Steps
-----------------------------------------------
to Perfect.
-----------
Each Borrower covenants and agrees that it shall provide
Lenders with all necessary information and will execute and deliver such
documents as are required to comply with the Federal Assignment of Claims Act
of 1940 (31 U.S.C. s3727 and 41 U.S.C. s15), to perfect Lenders' security
interest in Government Contracts on such Government Contracts as Lender may
determine in its sole discretion.
Section 3.5 Record Searches.
----------------
As of the Closing Date and thereafter at the time any Financing
Document is executed and delivered by the Borrowers pursuant to this Section,
the Agent shall have received, in form and substance satisfactory to the
Agent, such Lien or record searches with respect to all of the Borrowers
and/or any other Person, as appropriate, and the property covered by such
Financing Document showing that the Lien of such Financing Document will be a
perfected first priority Lien on the property covered by such Financing
Document subject only to Permitted Liens or to such other matters as the
Agent may approve.
Section 3.6 Costs.
------
The Borrowers agree to pay, as part of the Enforcement Costs and to the
fullest extent permitted by applicable Laws, on demand all costs, fees and
expenses incurred by the Agent and/or any of the Lenders in connection with
the taking, perfection, preservation, protection and/or release of a Lien on
the Collateral, including, without limitation:
(a) customary fees and expenses incurred by
the Agent and/or any of the Lenders in preparing, reviewing,
negotiating and finalizing the Financing Documents from time to
time (including, without limitation, reasonable attorneys' fees
incurred in connection with preparing, reviewing, negotiating,
and finalizing any of the Financing Documents, including, any
amendments and supplements thereto);
(b) all filing and/or recording taxes or
fees;
(c) all costs of Lien and record searches;
and
(d) all related costs, fees and expenses.
Section 3.7 Release.
--------
Upon the indefeasible repayment in full in cash of the Obligations and
performance of all Obligations of the Borrowers and all obligations and
liabilities of each other Person, other than the Agent and the Lenders, under
this Agreement and all other Financing Documents, the termination and/or
expiration of all of the Commitments, all Letters of Credit and all
Outstanding Letter of Credit Obligations, upon the Borrowers' request and at
the Borrowers' sole cost and expense, the Agent shall release and/or
terminate any Financing Document but only if and provided that there is no
commitment or obligation (whether or not conditional) of the Agent and/or any
of the Lenders to re-advance amounts which would be secured thereby and/or no
commitment or obligation of the Agent to issue any Letter of Credit or return
or restore any payment of any Current Letter of Credit Obligations.
Section 3.8 Inconsistent Provisions.
------------------------
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this
Agreement govern.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Representations and Warranties.
-------------------------------
The Borrowers, for themselves and for each other, represent and warrant
to the Agent and the Lenders, as follows:
4.1.1 Subsidiaries.
-------------
The Borrowers have the Subsidiaries listed on the
Collateral Disclosure List attached hereto and made a part hereof and no
others. Each of the Subsidiaries is a Wholly Owned Subsidiary except as
shown on the Collateral Disclosure List, which correctly indicates the nature
and amount of each Borrower's ownership interests therein.
4.1.2 Good Standing.
--------------
Each Borrower and its Subsidiaries (a) is a corporation
duly organized, existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has the corporate power to own its
property and to carry on its business as now being conducted, and (c) is duly
qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary.
4.1.3 Power and Authority.
--------------------
Each Borrower has full corporate power and authority to
execute and deliver this Agreement, the other Financing Documents to which it
is a party, to make the borrowings and request Letters of Credit under this
Agreement, and to incur and perform the Obligations whether under this
Agreement, the other Financing Documents or otherwise, all of which have been
duly authorized by all proper and necessary corporate action. No consent or
approval of shareholders or any creditors of any Borrower, and no consent,
approval, filing or registration with or notice to any Governmental Authority
on the part of any Borrower, is required as a condition to the execution,
delivery, validity or enforceability of this Agreement, or any of the other
Financing Documents, the performance by any Borrower of the Obligations.
4.1.4 Binding Agreements.
-------------------
This Agreement and the other Financing Documents executed
and delivered by the Borrowers have been properly executed and delivered and
constitute the valid and legally binding obligations of the Borrowers and are
fully enforceable against each of the Borrowers in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties, and general principles of equity
regardless of whether applied in a proceeding in equity or at law.
4.1.5 No Defaults, Violations.
------------------------
(a) No Default or Event of Default has
occurred and is continuing.
(b) None of the Borrowers nor any of their
respective Subsidiaries is in default under or with respect to any obligation
under any existing mortgage, indenture, contract or agreement binding on it
or affecting its property in any respect which could be materially adverse to
the business, operations, property or financial condition of any Borrower, or
which could materially adversely affect the ability of any Borrower to
perform its obligations under this Agreement or the other Financing
Documents, to which any Borrower is a party.
4.1.6 Compliance with Laws.
---------------------
(a) None of the Borrowers nor any of their
respective Subsidiaries is in violation of any applicable Laws (including,
without limitation, any Laws relating to employment practices, to
environmental, occupational and health standards and controls) or order,
writ, injunction, decree or demand of any court, arbitrator, or any
Governmental Authority affecting any Borrower or any of its properties, the
violation of which, considered in the aggregate, could materially adversely
affect the business, operations or properties of any Borrower and/or its
Subsidiaries.
(b) No Borrower is a Sanctioned Person or
has any of its assets in a Sanctioned Country or does business in or with, or
derives any of its operating income from investments in or transactions with,
Sanctioned Persons or Sanctioned Countries in violation of economic sanctions
administered by OFAC. The proceeds from the Loan will not be used to fund
any operations in, finance any investments or activities in, or make any
payments to, a Sanctioned Person or a Sanctioned Country; except that
proceeds from the Loan may be used to fund operations in or finance
investments or activities in a Sanctioned Country if such work is performed
under a contract with the United States government.
4.1.7 Investment Company Act.
-----------------------
None of the Borrowers nor any of their respective
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, nor is it, directly or indirectly,
controlled by or acting on behalf of any Person which is an investment
company within the meaning of said Act.
4.1.8 Litigation.
-----------
Except as otherwise disclosed on Schedule 4.1.8 attached
hereto and made a part hereof, there are no proceedings, actions or
investigations pending or, so far as any Borrower knows, threatened before or
by any court, arbitrator or any Governmental Authority which, in any one case
or in the aggregate, if determined adversely to the interests of any Borrower
or any Subsidiary, would have a material adverse effect on the business,
properties, condition (financial or otherwise) or operations, present or
prospective, of any Borrower.
4.1.9 Financial Condition.
--------------------
The consolidated financial statements of the Borrowers
dated March 31, 2009, are complete and correct and fairly present the
financial position of each of the Borrowers and its Subsidiaries and the
results of their operations and transactions in their surplus accounts as of
the date and for the period referred to and have been prepared in accordance
with GAAP applied on a consistent basis throughout the period involved.
There are no liabilities, direct or indirect, fixed or contingent, of any
Borrower or any Subsidiary as of the date of such financial statements that
are not reflected therein or in the notes thereto. There has been no adverse
change in the financial condition or operations of any Borrower or any
Subsidiary since the date of such financial statements and to the Borrowers'
knowledge no such adverse change is pending or threatened. None of the
Borrowers nor any Subsidiary has guaranteed the obligations of, or made any
investment in or advances to, any Person, except as disclosed in such
financial statements.
4.1.10 Full Disclosure.
----------------
The financial statements referred to in Section 4.1.9
(Financial Condition) of this Agreement, the Financing Documents (including,
without limitation, this Agreement), and the statements, reports or
certificates furnished by any Borrower in connection with the Financing
Documents (a) do not contain any untrue statement of a material fact and (b)
when taken in their entirety, do not omit any material fact necessary to make
the statements contained therein not misleading. There is no fact known to
any Borrower which such Borrower has not disclosed to the Agent and the
Lenders in writing prior to the date of this Agreement with respect to the
transactions contemplated by the Financing Documents which materially and
adversely affects or in the future could, in the reasonable opinion of that
Borrower materially adversely affect the condition, financial or otherwise,
results of operations, business, or assets of any Borrower or of any
Subsidiary.
4.1.11 Indebtedness for Borrowed Money.
--------------------------------
Except for the Obligations and except as set forth in
Schedule 4.1.11 attached hereto and made a part hereof, the Borrowers have no
Indebtedness for Borrowed Money. The Agent has received photocopies of all
promissory notes evidencing any Indebtedness for Borrowed Money set forth in
Schedule 4.1.11, together with any and all subordination agreements, other
agreements, documents, or instruments securing, evidencing, guarantying or
otherwise executed and delivered in connection therewith.
4.1.12 Taxes.
------
Each of the Borrowers and its Subsidiaries has filed all
returns, reports and forms for Taxes which, to the knowledge of the
Borrowers, are required to be filed, and has paid all Taxes as shown on such
returns or on any assessment received by it, to the extent that such Taxes
have become due, unless and to the extent only that such Taxes, assessments
and governmental charges are currently contested in good faith and by
appropriate proceedings by a Borrower, such Taxes are not the subject of any
Liens other than Permitted Liens, and adequate reserves therefor have been
established as required under GAAP. All tax liabilities of the Borrowers
were as of the date of audited financial statements referred to in Section
4.1.9 (Financial Condition), and are now, adequately provided for on the
books of the Borrowers and its Subsidiaries, as appropriate. No tax
liability has been asserted by the Internal Revenue Service or any state or
local authority against any Borrower for Taxes in excess of those already
paid.
4.1.13 ERISA.
------
With respect to any Plan that is maintained or contributed
to by any Borrower and/or by any Commonly Controlled Entity or as to which
any of the Borrowers retains material liability: (a) no "accumulated funding
deficiency" as defined in Code s412 or ERISA s302 has occurred, whether or
not that accumulated funding deficiency has been waived; (b) no Reportable
Event has occurred other than events for which reporting has been waived or
that are unlikely to result in material liability for any of the Borrowers;
(c) no termination of any plan subject to Title IV of ERISA has occurred; (d)
neither any Borrower nor any Commonly Controlled Entity has incurred a
"complete withdrawal" within the meaning of ERISA s4203 from any Multi-
employer Plan that is likely to result in material liability for one or more
of the Borrowers; (e) neither any Borrower nor any Commonly Controlled Entity
has incurred a "partial withdrawal" within the meaning of ERISA s4205 with
respect to any Multi-employer Plan that is likely to result in material
liability for one or more of the Borrowers; (f) no Multi-employer Plan to
which any Borrower or any Commonly Controlled Entity has an obligation to
contribute is to the knowledge of the Borrowers, in "reorganization" within
the meaning of ERISA s4241 nor has notice been received by any Borrower or
any Commonly Controlled Entity that such a Multi-employer Plan will be placed
in "reorganization."
4.1.14 Title to Properties.
--------------------
The Borrowers have good and marketable title to all of
their respective properties, including, without limitation, the Collateral
and the properties and assets reflected in the balance sheets described in
Section 4.1.9 (Financial Condition). The Borrowers have legal, enforceable
and uncontested rights to use freely such property and assets. All of such
properties, including, without limitation, the Collateral which were
purchased, were purchased for fair consideration and reasonably equivalent
value in the ordinary course of business of both the seller and the Borrowers
and not, by way of example only, as part of a bulk sale.
4.1.15 Patents, Trademarks, Etc.
-------------------------
Each of the Borrowers and its Subsidiaries owns,
possesses, or has the right to use all necessary Patents, licenses,
Trademarks, Copyrights, permits and franchises to own its properties and to
conduct its business as now conducted, without known conflict with the rights of
any other Person. Any and all obligations to pay royalties or other charges
with respect to such properties and assets are properly reflected on the
financial statements described in Section 4.1.9 (Financial Condition).
4.1.16 Employee Relations.
-------------------
Except as disclosed on Schedule 4.1.16 attached hereto and
made a part hereof, (a) no Borrower nor any Subsidiary thereof nor any of the
Borrower's or Subsidiary's employees is subject to any collective bargaining
agreement, (b) no petition for certification or union election is pending
with respect to the employees of any Borrower or any Subsidiary and no union
or collective bargaining unit has sought such certification or recognition
with respect to the employees of a Borrower, (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge
of the Borrowers after due inquiry, threatened between any Borrower and its
employees, and (d) no Borrower nor any Subsidiaries is subject to an
employment contract, commission contract or bonus agreement. Hours worked
and payments made to the employees of any one or more of the Borrowers have
not been in violation of the Fair Labor Standards Act or any other applicable
law dealing with such matters. All payments due from any one or more of the
Borrowers or for which any claim may be made against a Borrower, on account
of wages and employee and retiree health and welfare insurance and other
benefits have been paid or accrued as a liability on its books. The
consummation of the transactions contemplated by the Financing Agreement or
any of the other Financing Documents will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Borrower is a party or by which
it is bound.
4.1.17 Presence of Hazardous Materials or Hazardous
--------------------------------------------
Materials Contamination.
------------------------
To the best of each Borrower's knowledge, (a) no Hazardous
Materials are located on any real property owned, controlled or operated by
of any Borrower or for which any Borrower is, or is claimed to be,
responsible, except for reasonable quantities of necessary supplies for use
by a Borrower in the ordinary course of its current line of business and
stored, used and disposed in accordance with applicable Laws; and (b) no
property owned, controlled or operated by any Borrower or for which any
Borrower has, or is claimed to have, responsibility has ever been used as a
manufacturing, storage, or dump site for Hazardous Materials nor is affected
by Hazardous Materials Contamination at any other property.
4.1.18 Perfection and Priority of Collateral.
--------------------------------------
The Agent and the Lenders have, or upon execution and
recording of this Agreement and the Security Documents will have, and will
continue to have as security for the Obligations, a valid and perfected Lien
on and security interest in all Collateral, free of all other Liens, claims
and rights of third parties whatsoever except Permitted Liens, including,
without limitation, those described on Schedule 4.1.18 attached hereto and
made a part hereof.
4.1.19 Places of Business and Location of Collateral.
----------------------------------------------
The information contained in the Collateral Disclosure
List is complete and correct. The Collateral Disclosure List completely and
accurately identifies the address of (a) the chief executive office of each
Borrower, (b) any and each other place of business of each Borrower, (c) the
location of all books and records pertaining to the Collateral, and (d) each
location, other than the foregoing, where any of the Collateral is located.
The proper and only places to file financing statements with respect to the
Collateral within the meaning of the Uniform Commercial Code are the filing
offices for those jurisdictions in which any one or more of the Borrowers
maintain a place of business as identified on the Collateral Disclosure List.
4.1.20 Business Names and Addresses.
-----------------------------
In the five (5) years preceding the date hereof, no
Borrower has changed its name, identity or corporate structure, has conducted
business under any name other than its current name, and has conducted its
business in any jurisdiction other than those disclosed on the Collateral
Disclosure List.
4.1.21 Equipment.
----------
All Equipment is personalty and is not and will not be
affixed to real estate in such manner as to become a fixture or part of such
real estate. No equipment is held by any Borrower on a sale on approval
basis.
4.1.22 Inventory.
----------
The Inventory of the Borrowers is (a) of good and
merchantable quality, free from defects, (b) not stored with a bailee,
warehouseman, carrier, or similar party, (c) not on consignment, sale on
approval, or sale or return, and (d) located at the places of business set
forth on the Collateral Disclosure List. No goods offered for sale by any
Borrower are consigned to or held on sale or return terms by that Borrower.
4.1.23 Accounts.
---------
With respect to all Accounts and to the best of the
Borrowers' knowledge (a) they are genuine, and in all respects what they
purport to be, and are not evidenced by a judgment, an Instrument, or Chattel
Paper (unless such judgment has been assigned and such Instrument or Chattel
Paper has been endorsed and delivered to the Agent for the benefit of itself
and the Lenders); (b) they represent bona fide transactions completed in
accordance with the terms and provisions contained in the invoices, purchase
orders and other contracts relating thereto, and the underlying transaction
therefor is in accordance with all applicable Laws; (c) the amounts shown on
the respective Borrower's books and records, with respect thereto are
actually and absolutely owing to that Borrower and are not contingent or
subject to reduction for any reason other than regular discounts, credits or
adjustments allowed by that Borrower in the ordinary course of its business;
(d) no payments have been or shall be made thereon except payments turned
over to the Agent by the Borrowers to reduce the Obligations; (e) all Account
Debtors thereon have the capacity to contract; and (f) the goods sold, leased
or transferred or the services furnished giving rise thereto are not subject
to any Liens except the security interest granted to the Agent and the
Lenders by this Agreement and Permitted Liens.
4.1.24 Compliance with Eligibility Standards.
--------------------------------------
Each Account included in the calculation of the Borrowing
Base does and will at all times meet and comply with all of the standards for
Eligible Receivables. With respect to those Accounts which the Agent has
deemed Eligible Receivables (a) there are no facts, events or occurrences
which in any way impair the validity, collectibility or enforceability
thereof or tend to reduce the amount payable thereunder; and (b) there are no
proceedings or actions known to any Borrower which are threatened or pending
against any Account Debtor which might result in any material adverse change
in the Borrowing Base.
4.1.25 Solvency
--------
Each of the Borrowers is Solvent prior to and after giving
effect to the making of the Loans.
4.1.26 Claims and Investigations.
--------------------------
There exist no pending or threatened claims,
investigations (whether formal or informal), litigation, disputes, protests or
other controversies involving the Borrowers or any Affiliate pertaining to or
arising out of any contract with any Governmental Authority which, if
adversely determined, would have a material adverse effect on the business,
assets, operations or condition, financial or otherwise, of the Borrowers or
any Affiliate. Neither the Borrowers nor any Affiliate has filed nor has any
basis for filing any claims or demands for payment against the United States
or any other party arising out of or in connection with any such contract,
other than progress billings, public vouchers, and invoices submitted in the
ordinary course of business.
4.1.27 Government Contract Obligations.
--------------------------------
With respect to all Government Contracts no Borrower or
any Affiliate has defaulted under any Government Contract which default would be
a basis of terminating such Government Contract.
4.1.28 Margin Regulations.
-------------------
None of the proceeds from the Loans have been or will be
used, directly or indirectly, for the purpose of "buying" or "carrying" any
"Margin Stock" within the respective meanings of each of the quoted terms
under Regulation U of the Federal Reserve Board as now and from time to time
hereafter in effect, for the purpose of reducing or retiring any indebtedness
which was originally incurred to buy or carry any "Margin Stock" or for any
other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation T, U or X of the Federal Reserve
Board as now and from time to time hereafter in effect.
Section 4.2 Survival; Updates of Representations and Warranties.
----------------------------------------------------
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall
survive the Closing Date, the making of any advance under the Loans and
extension of credit made hereunder, and the incurring of any other
Obligations and shall be deemed to have been made at the time of each request
for, and again at the time of the making of, each advance under the Loans or
the issuance of each Letter of Credit, except that the representations and
warranties which relate to the financial statements which are referred to in
Section 4.1.9 (Financial Condition), shall also be deemed to cover financial
statements furnished from time to time to the Agent and the Lenders pursuant
to Section 6.1.1 (Financial Statements).
ARTICLE V
CONDITIONS PRECEDENT
--------------------
Section 5.1 Conditions to the Initial Advance and Initial Letter of
-------------------------------------------------------
Credit.
-------
The making of the initial advance under the Loans and the issuance of
the initial Letter of Credit is subject to the fulfillment on or before the
Closing Date of the following conditions precedent in a manner satisfactory
in form and substance to the Agent and its counsel:
5.1.1 Organizational Documents - Borrowers
------------------------------------
The Agent shall have received for each Borrower:
(a) a certificate of good standing certified
by the Secretary of State, or other appropriate Governmental Authority, of the
state of incorporation of such Borrower;
(b) a certified copy from the appropriate
Governmental Authority under which such Borrower is organized, of
such Borrower's recorded limited partnership certificate and all
recorded amendments thereto;
(c) a certificate of qualification to do
business for such Borrower certified by the Secretary of State or
other Governmental Authority of each state in which such Borrower
conducts business;
(d) a certificate dated as of the Closing
Date by the Secretary or an Assistant Secretary of such Borrower
covering:
(i) true and complete copies of that
Borrower's corporate charter, bylaws, and all amendments
thereto;
(ii) true and complete copies of the
resolutions of its Board of Directors authorizing (A) the
execution, delivery and performance of the Financing
Documents, (B) the borrowings hereunder, and (C) the
granting of the Liens contemplated by this Agreement and
the Financing Documents to which that Borrower is a party;
(iii) the incumbency, authority and
signatures of the officers of such Borrower authorized to
sign this Agreement and the other Financing Documents to
which such Borrower is a party; and
(iv) the identity of such Borrower's
current directors, common stock holders and other equity
holders, as well as their respective percentage ownership
interests.
5.1.2 Consents, Licenses, Approvals, Etc.
-----------------------------------
The Agent shall have received copies of all consents,
licenses and approvals, required in connection with the execution, delivery,
performance, validity and enforceability of the Financing Documents such
consents, licenses and approvals shall be in full force and effect.
5.1.3 Notes.
------
The Agent shall have received for delivery to each of the
Lenders the Revolving Credit Notes and a Swing Line Note, each conforming to
the requirements hereof and executed by a Responsible Officer of each
Borrower and attested by a duly authorized representative of each Borrower.
5.1.4 Financing Documents and Collateral.
-----------------------------------
Each Borrower shall have executed and delivered the
Financing Documents to be executed by it, and shall have delivered original
Chattel Paper, Instruments, Investment Property, and related Collateral and
all opinions, and other documents contemplated by ARTICLE III (The
Collateral).
5.1.5 Other Documents, Etc.
---------------------
The Agent shall have received such other certificates,
opinions, documents and instruments confirmatory of or otherwise relating to
the transactions contemplated hereby as may have been reasonably requested by
the Agent.
5.1.6 Payment of Fees.
----------------
The Agent and the Lenders shall have received payment of
any Fees due on or before the Closing Date.
5.1.7 Collateral Disclosure List.
---------------------------
Each Borrower shall have delivered the Collateral
Disclosure List required under the provisions of Section 3.3 (Collateral
Disclosure List) duly executed by a Responsible Officer of each Borrower.
5.1.8 Recordings and Filings.
-----------------------
Each Borrower shall have: (a) executed and delivered all
Financing Documents required to be filed, registered or recorded in order to
create, in favor of the Agent and the Lenders, a perfected Lien in the
Collateral (subject only to the Permitted Liens) in form and in sufficient
number for filing, registration, and recording in each office in each
jurisdiction in which such filings, registrations and recordations are
required, and (b) delivered such evidence as the Agent may deem satisfactory
that all necessary filing fees and all recording and other similar fees, and
all Taxes and other expenses related to such filings, registrations and
recordings will be or have been paid in full.
5.1.9 Insurance Certificate.
----------------------
The Agent shall have received an insurance certificate in
accordance with the provisions of Section 6.1.8 (Insurance) and Section
6.1.20 (Insurance With Respect to Equipment and Inventory).
5.1.10 Landlord's Waivers.
-------------------
The Agent shall have received a landlord's waiver from
each landlord of each and every business premise requested by the Agent, leased
by each Borrower and on which any of the Collateral is or may hereafter be
located, which landlords' waivers must be reasonably acceptable to the Agent
and its counsel in their sole and absolute discretion.
Section 5.2 Conditions to all Extensions of Credit.
---------------------------------------
The making of all advances under the Loans and the issuance of all
Letters of Credit is subject to the fulfillment of the following conditions
precedent in a manner satisfactory in form and substance to the Agent and its
counsel:
5.2.1 Compliance.
-----------
Each Borrower shall have complied and shall then be in
compliance with all terms, covenants, conditions and provisions of this
Agreement and the other Financing Documents that are binding upon it.
5.2.2 Borrowing Base.
---------------
The Borrowers shall have furnished all Borrowing Base
Reports required by Section 2.1.4 (Borrowing Base Report), there shall exist
no Borrowing Base Deficiency, and as evidence thereof, the Borrowers shall
have furnished to the Agent such reports, schedules, certificates, records
and other papers as may be requested by the Agent, and the Borrowers shall be
in compliance with the provisions of this Agreement both immediately before
and immediately after the making of the advance requested.
5.2.3 Default.
--------
There shall exist no Event of Default or Default
hereunder.
5.2.4 Representations and Warranties.
-------------------------------
The representations and warranties of each of the
Borrowers contained among the provisions of this Agreement shall be true and
with the same effect as though such representations and warranties had been made
at the time of the making of, and of the request for, each advance under the
Loans or the issuance of each Letter of Credit, except that the
representations and warranties which relate to financial statements which are
referred to in Section 4.1.9 (Financial Condition), shall also be deemed to
cover financial statements furnished from time to time to the Agent pursuant
to Section 6.1.1 (Financial Statements).
5.2.5 Adverse Change.
---------------
No adverse change shall have occurred in the condition
(financial or otherwise), operations or business of any Borrower that would,
in the good faith judgment of the Agent, materially impair the ability of
that Borrower to pay or perform any of the Obligations.
5.2.6 Legal Matters.
--------------
All legal documents incident to each advance under the
Loans and each of the Letters of Credit shall be reasonably satisfactory to
counsel for the Agent.
ARTICLE VI
COVENANTS OF THE BORROWERS
--------------------------
Section 6.1 Affirmative Covenants.
----------------------
So long as any of the Obligations (or any the Commitments therefor)
shall be outstanding hereunder, the Borrowers agree jointly and severally
with the Agent and the Lenders as follows:
6.1.1 Financial Statements.
---------------------
The Borrowers shall furnish to the Agent and the Lenders:
(a) Annual Statements and Certificates. The
Borrowers shall furnish to the Agent and the Lenders as soon as available,
but in no event more than ninety (90) days after the close of the Borrowers'
fiscal years, (i) a copy of the annual financial statement in reasonable
detail satisfactory to the Agent relating to the Borrowers and their
Subsidiaries, prepared in accordance with GAAP and examined and certified by
independent certified public accountants satisfactory to the Agent, which
financial statement shall include a consolidated and consolidating balance
sheet of the Borrowers and their Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income, cash flows and
changes in shareholders equity of the Borrowers and their Subsidiaries for
such fiscal year, and (ii) a Compliance Certificate, in substantially the
form attached to this Agreement as Exhibit D, containing a detailed
computation of each financial covenant in this Agreement which is applicable
for the period reported, a certification that no change has occurred to the
information contained in the Collateral Disclosure List (except as set forth
in any schedule attached to the certification), each prepared by a
Responsible Officer of the Borrowers in a format acceptable to the Agent and
(iii) if issued, a management letter (including those marked draft) in the
form prepared by the Borrowers' independent certified public accountants and
within thirty (30) days of such issuance.
(b) Quarterly Statements and Certificates.
The Borrowers shall furnish to the Agent and the Lenders as soon as
available, but in no event more than forty-five (45) days after the close of
the Borrowers' first (1st) three (3) fiscal quarters, consolidated and
consolidating balance sheets of the Borrowers and its Subsidiaries as of the
close of such period, consolidated and consolidating income, cash flows and
changes in shareholders equity statements for such period, and a Compliance
Certificate, in substantially the form attached to this Agreement as Exhibit
D, containing a detailed computation of each financial covenant in this
Agreement which is applicable for the period reported, a certification that
no change has occurred to the information contained in the Collateral
Disclosure List (except as set forth on any schedule attached to the
certification), each prepared by a Responsible Officer of or on behalf of
each Borrower in a format acceptable to the Agent, all as prepared and
certified by a Responsible Officer of the Borrowers and accompanied by a
certificate of that officer stating whether any event has occurred which
constitutes a Default or an Event of Default hereunder, and, if so, stating
the facts with respect thereto.
(c) Monthly Reports. The Borrowers shall
furnish to the Agent and the Lenders within twenty (30) days after the end of
each fiscal month, a Borrowing Base Report, and a report containing the
following information:
(i) a detailed aging schedule of all
Receivables by Account Debtor, in such detail, and
accompanied by such supporting information, as the Agent
may from time to time reasonably request;
(ii) a detailed aging of all accounts
payable by supplier, in such detail, and accompanied by
such supporting information, as the Agent may from time
to time reasonably request; and
(iii) such other information as the
Agent may reasonably request.
(d) Contract Backlog Report. With the
quarterly financial statements to be delivered hereunder or at such other times
as the Agent may request, reports relating to the Receivables included in any
Borrowing Base Report submitted during such quarter setting forth a
description of contracts giving rise to such Receivables, the percentage of
completion of the work to be performed with respect to such contracts, the
amounts billed under such contracts and the amounts remaining to be billed,
in form and detail satisfactory to the Agent.
(e) Government Contract Audits. Promptly
after any Borrower's receipt thereof, notice of any final decision of a
contracting officer disallowing costs aggregating more than One Hundred Thousand
Dollars ($100,000), which disallowed costs arising out of any audit of such
Borrower's contract with a Governmental Authority.
(f) Annual Projections. The Borrowers shall
furnish to the Lender as soon as available, but in no event less than forty-
five (45) days after the end of each fiscal year, management prepared annual
financial projections on a consolidated basis for the Borrowers for the
immediately succeeding fiscal year in each case describing such projections
in detail satisfactory to the Agent in its sole and absolute discretion.
(g) Additional Reports and Information. The
Borrowers shall furnish to the Agent and the Lenders promptly, such
additional information, reports or statements as the Agent and/or any of the
Lenders may from time to time reasonably request.
6.1.2 Reports to SEC and to Stockholders.
-----------------------------------
The Borrowers will furnish to the Agent and the Lenders,
promptly upon the filing or making thereof, but in no event more than ten
(10) days after such filing or making, at least one (l) copy of all financial
statements, reports, notices and proxy statements sent by any Borrower to its
stockholders, and of all regular and other reports filed by any Borrower with
any securities exchange or with the Securities and Exchange Commission.
6.1.3 Recordkeeping, Rights of Inspection, Field
------------------------------------------
Examination, Etc.
-----------------
(a) Each of the Borrowers shall, and shall
cause each of its Subsidiaries to, maintain (i) a standard system of accounting
in accordance with GAAP, and (ii) proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its properties, business and activities.
(b) Each of the Borrowers shall, and shall
cause each of its Subsidiaries to, permit authorized representatives of the
Agent to visit and inspect the properties of the Borrowers and its Subsidiaries,
to review, audit, check and inspect the Collateral at any time with or without
notice, to review, audit, check and inspect the Borrowers' other books of
record at any time with or without notice and to make abstracts and
photocopies thereof, and to discuss the affairs, finances and accounts of the
Borrowers and their Subsidiaries, with the officers, directors, employees and
other representatives of the Borrowers and their Subsidiaries and their
respective accountants, all at such times during normal business hours and
other reasonable times and as often as the Agent may reasonably request.
(c) Each of the Borrowers hereby irrevocably
authorizes and directs all accountants and auditors employed by any of the
Borrowers and/or any of their Subsidiaries at any time prior to the repayment
in full of the Obligations to exhibit and deliver to the Agent and the
Lenders copies of any and all of the financial statements, trial balances,
management letters, or other accounting records of any nature of any or all
of the Borrowers and/or any or all of their respective Subsidiaries in the
accountant's or auditor's possession, and to disclose to the Agent and any of
the Lenders any information they may have concerning the financial status and
business operations of any or all of the Borrowers and/or any or all of their
respective Subsidiaries. Further, each of the Borrowers hereby authorizes
all Governmental Authorities to furnish to the Agent and the Lenders copies
of reports or examinations relating to any and all of the Borrowers and/or
any or all Subsidiaries, whether made by the Borrowers or otherwise.
(d) Any and all costs and expenses incurred
by, or on behalf of, the Agent in connection with the conduct of any of the
foregoing, including, without limitation, travel, lodging, meals, and other
shall be part of the Enforcement Costs and shall be payable to the Agent upon
demand. The Borrowers acknowledge and agree that such expenses may include,
but shall not be limited to, any and all out-of-pocket costs and expenses of
the Agent's employees and agents in, and when, traveling to any of the
Borrowers' facilities.
6.1.4 Corporate Existence.
--------------------
Each of the Borrowers shall maintain, and cause each of
its Subsidiaries to maintain, its corporate existence in good standing in the
jurisdiction in which it is incorporated and in each other jurisdiction where
it is required to register or qualify to do business if the failure to do so
in such other jurisdiction might have a material adverse effect on the
ability of the Borrower to perform the Obligations, on the conduct of the
Borrower's operations, on the Borrower's financial condition, or on the value
of, or the ability of the Agent and the Lenders to realize upon, the
Collateral.
6.1.5 Compliance with Laws.
---------------------
Each of the Borrowers shall comply, and cause each of its
Subsidiaries to comply, with all applicable Laws and observe the valid
requirements of Governmental Authorities, the noncompliance with or the non-
observance of which might have a material adverse effect on the ability of
the Borrowers to perform the Obligations, on the conduct of the Borrowers'
operations, on the Borrowers' consolidated financial condition, or on the
value of, or the ability of the Agent and the Lenders to realize upon, the
Collateral.
6.1.6 Preservation of Properties.
---------------------------
Each of the Borrowers will, and will cause each of its
Subsidiaries to, at all times (a) maintain, preserve, protect and keep its
properties, whether owned or leased, in good operating condition, working
order and repair (ordinary wear and tear excepted), and from time to time
will make all proper repairs, maintenance, replacements, additions and
improvements thereto needed to maintain such properties in good operating
condition, working order and repair, and (b) do or cause to be done all
things necessary to preserve and to keep in full force and effect its
material franchises, leases of real and personal property, trade names,
Patents, Trademarks, Copyrights and permits which are necessary for the
orderly continuance of its business.
6.1.7 Line of Business.
-----------------
Each of the Borrowers will continue to engage
substantially in the business of providing diversified engineering, technical
and management services.
6.1.8 Insurance.
----------
Each of the Borrowers will, and will cause each of its
Subsidiaries to, at all times maintain with "A" or better rated insurance
companies such insurance as is required by applicable Laws and such other
insurance, in such amounts, of such types and against such risks, hazards,
liabilities, casualties and contingencies as are usually insured against in
the same geographic areas by business entities engaged in the same or similar
business, including, without limitation, commercial and general liability
coverage for Borrowers' business, fiduciary, management, director and officer
and products liability coverage. Without limiting the generality of the
foregoing, each of the Borrowers will, and will cause each of its
Subsidiaries to, keep adequately insured all of its property against loss or
damage resulting from fire or other risks insured against by extended
coverage and maintain public liability insurance against claims for personal
injury, death or property damage occurring upon, in or about any properties
occupied or controlled by it, or arising in any manner out of the businesses
carried on by it, all in such amounts not less than the Agent shall
reasonably determine from time to time. Each insurance policy must include a
lender's loss payee endorsement and an additional insured endorsement in
favor of Agent in a form acceptable to Lender and shall provide for at least
thirty (30) days prior written notice to Agent of any cancellation thereof.
Each of the Borrowers shall deliver to the Agent on the Closing Date (and
thereafter on each date there is a material change in the insurance coverage)
a certificate from the Borrowers' insurance carrier of the Borrowers
containing a detailed list of the insurance then in effect and stating the
names of the insurance companies, the types, the amounts and rates of the
insurance, dates of the expiration thereof and the properties and risks
covered thereby. Each insurance certificate shall name Agent as lender's
loss payee or an additional insured, as appropriate and provide for at least
thirty (30) days prior written notice to Agent of any cancellation thereof.
Within thirty (30) days after notice in writing from the Agent, the Borrowers
will obtain such additional insurance as the Agent may reasonably request.
6.1.9 Taxes.
------
Except to the extent that the validity or amount thereof
is being contested in good faith and by appropriate proceedings, each of the
Borrowers will, and will cause each of its Subsidiaries, to pay and discharge
all Taxes prior to the date when any interest or penalty would accrue for the
nonpayment thereof. Each of the Borrowers shall furnish to the Agent at such
times as the Agent may require proof satisfactory to the Agent of the making
of payments or deposits required by applicable Laws including, without
limitation, payments or deposits with respect to amounts withheld by any of
the Borrowers from wages and salaries of employees and amounts contributed by
any of the Borrowers on account of federal and other income or wage taxes and
amounts due under the Federal Insurance Contributions Act, as amended.
6.1.10 ERISA.
------
Each Borrower will, and will cause each of its Commonly
Controlled Entities to, comply with the funding requirements of ERISA with
respect to Plans for its respective employees. No Borrower will permit with
respect to any Plan (a) any prohibited transaction or transactions under
ERISA or the Internal Revenue Code, which results, or may result, in any
material liability of the Borrower, or (b) any Reportable Event if, upon
termination of the Plan or Plans with respect to which one or more such
Reportable Events shall have occurred, there is or would be any material
liability of the Borrower to the PBGC. Upon the Agent's request, each
Borrower will deliver to the Agent a copy of the most recent actuarial
report, financial statements and annual report completed with respect to any
Plan.
6.1.11 Notification of Events of Default and Adverse
---------------------------------------------
Developments.
-------------
Each of the Borrowers shall promptly notify the Agent upon
obtaining knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or their knowledge
threatened against any of the Borrowers or any of their Subsidiaries and of the
entry of any judgment or Lien (other than any Permitted Liens) against any of
the assets or properties of any of the Borrowers or any Subsidiary where the
claims against any Borrower or any Subsidiary exceed Two Hundred Fifty Thousand
Dollars ($250,000) and are not covered by insurance;
(d) any event, development or circumstance
whereby the financial statements furnished hereunder fail in any material
respect to present fairly, in accordance with GAAP, the financial condition
and operational results of any of the Borrowers or any of their respective
Subsidiaries;
(e) any default under any contract with any
Governmental Authority or any event which if not corrected could give rise to
a default under any such contract or a termination for convenience;
(f) any judicial, administrative or arbitral
proceeding pending against any of the Borrowers or any of their respective
Subsidiaries and any judicial or administrative proceeding known by any of
the Borrowers to be threatened against any Borrower or any Subsidiary which,
if adversely decided, could materially adversely affect the financial
condition or operations (present or prospective) of any Borrower or any
Subsidiary;
(g) the receipt by any of the Borrowers or any
Subsidiary of any notice, claim or demand from any Governmental Authority which
alleges that any of the Borrowers or any Subsidiary is in violation of any of
the terms of, or has failed to comply with any applicable material Laws
regulating its operation and business, including, but not limited to, the
Occupational Safety and Health Act and the Environmental Protection Act; and
(h) any other development in the business or
affairs of any of the Borrowers or any of their respective Subsidiaries which
may be materially adverse; in each case describing in detail satisfactory to
the Agent the nature thereof and the action the Borrowers propose to take with
respect thereto.
6.1.12 Hazardous Materials; Contamination.
-----------------------------------
Each of the Borrowers agrees to:
(a) give notice to the Agent immediately upon
acquiring knowledge of the presence of any Hazardous Materials or any Hazardous
Materials Contamination on any property owned, operated or controlled by any
Borrower or for which any Borrower is, or is claimed to be, responsible
(provided that such notice shall not be required for Hazardous Materials placed
or stored on such property in accordance with applicable Laws in the ordinary
course (including, without limitation, quantity) of a Borrower's line of
business expressly described in this Agreement), with a full description
thereof;
(b) promptly comply with any Laws requiring the
removal, treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Agent with satisfactory evidence of such
compliance;
(c) provide the Agent, within thirty (30) days
after a demand by the Agent, with a bond, letter of credit or similar financial
assurance evidencing to the Agent's satisfaction that the necessary funds are
available to pay the cost of removing, treating, and disposing of such Hazardous
Materials or Hazardous Materials Contamination and discharging any Lien which
may be established as a result thereof on any property owned, operated or
controlled by any Borrower or for which any Borrower is, or is claimed to be,
responsible; and
(d) as part of the Obligations, defend, indemnify
and hold harmless the Agent, each of the Lenders and each of their respective
agents, employees, trustees, successors and assigns from any and all claims
which may now or in the future (whether before or after the termination of this
Agreement) be asserted as a result of the presence of any Hazardous Materials or
any Hazardous Materials Contamination on any property owned, operated or
controlled by any Borrower for which any Borrower is, or is claimed to be,
responsible. Each Borrower acknowledges and agrees that this indemnification
shall survive the termination of this Agreement and the Commitments and the
payment and performance of all of the other Obligations.
6.1.13 Disclosure of Significant Transactions.
---------------------------------------
Each of the Borrowers shall deliver to the Agent a written
notice describing in detail each transaction by it involving the purchase,
sale, lease, or other acquisition or loss or casualty to or disposition of an
interest in Fixed or Capital Assets (other than Capital Expenditures
permitted by Section 6.2.20 of this Agreement) which exceeds Two Hundred
Fifty Thousand Dollars ($250,000.00), said notices to be delivered to the
Agent within thirty (30) days of the occurrence of each such transaction.
6.1.14 Financial Covenants.
--------------------
(a) Fixed Charge Coverage Ratio. Borrowers
will maintain, on a consolidated basis and tested as of the last day of each of
Borrowers' fiscal quarters, commencing on March 31, 2009, for the four (4)
quarter period ending on that date, a Fixed Charge Coverage Ratio of not less
than 1.25 to 1.00.
(b) Leverage Ratio. Borrowers will
maintain, on a consolidated basis and tested as of the last day of each of
Borrowers' fiscal quarters, commencing on March 31, 2009, for the four (4)
quarter period ending on that date, a Leverage Ratio of not greater than 3.00
to 1.00.
(c) Profitability. Borrowers will maintain,
on a consolidated basis and tested as of the last day of each of Borrowers'
fiscal quarters, commencing on March 31, 2009, during the three (3) month period
ending on that date, net income, minus cash dividends declared by Borrowers
during such period, in excess of $1.00.
(d) Capital Expenditures. None of the
Borrowers will, or will permit any Subsidiary to, directly or indirectly (by way
of the acquisition of the securities of a Person or otherwise), make any Capital
Expenditures that would, in the aggregate for all of the Borrowers and their
Subsidiaries (taken as a whole), exceed two percent (2.0%) of Borrowers'
combined net revenue on a consolidated basis. This covenant shall be tested
as of the last day of each of Borrowers' fiscal quarters for the four (4)
quarter period ending on that date, commencing with the fiscal quarter ending
on March 31, 2009.
6.1.15 Collection of Receivables.
--------------------------
Until such time that the Agent shall notify the Borrowers
of the revocation of such privilege, the Borrowers and their Subsidiaries
shall at their own expense have the privilege for the account of, and in
trust for, the Agent and the Lenders of collecting their Receivables and
receiving in respect thereto all Items of Payment and shall otherwise
completely service all of the Receivables including (a) the billing, posting
and maintaining of complete records applicable thereto, (b) the taking of
such action with respect to the Receivables as the Agent may request or in
the absence of such request, as each of the Borrowers and each of the
Subsidiaries may deem advisable; and (c) the granting, in the ordinary course
of business, to any Account Debtor, any rebate, refund or adjustment to which
the Account Debtor may be lawfully entitled, and may accept, in connection
therewith, the return of goods, the sale or lease of which shall have given
rise to a Receivable and may take such other actions relating to the settling
of any Account Debtor's claim as may be commercially reasonable. The Agent
may, at its option, at any time or from time to time after and during the
continuance of an Event of Default hereunder, revoke the collection privilege
given in this Agreement to any one or more of the Borrowers and each of the
Subsidiaries by either giving notice of its assignment of, and Lien on the
Collateral to the Account Debtors or giving notice of such revocation to the
Borrowers. The Agent shall not have any duty to, and the Borrowers hereby
release the Agent and the Lenders from all claims of loss or damage caused by
the delay or failure to collect or enforce any of the Receivables or to
preserve any rights against any other party with an interest in the
Collateral. The Agent shall be entitled at any time and from time to time to
confirm and verify Receivables.
6.1.16 Assignments of Receivables.
---------------------------
Each Borrower will promptly, upon request, execute and
deliver to the Agent written assignments, in form and content acceptable to
the Agent, of specific Receivables or groups of Receivables; provided,
however, the Lien and/or security interest granted to the Agent, for the
ratable benefit of the Lenders and for the benefit of the Agent with respect
to the Agent's Obligations, under this Agreement shall not be limited in any
way to or by the inclusion or exclusion of Receivables within such
assignments. Receivables so assigned shall secure payment of the Obligations
and are not sold to the Agent and/or the Lenders whether or not any
assignment thereof, which is separate from this Agreement, is in form
absolute. The Borrowers agree that neither any assignment to the Lender nor
any other provision contained in this Agreement or any of the other Financing
Documents shall impose on the Agent or the Lenders any obligation or
liability of any of the Borrowers with respect to that which is assigned and
the Borrowers hereby agree jointly and severally to indemnify the Agent and
the Lenders and hold the Agent and the Lenders harmless from any and all
claims, actions, suits, losses, damages, costs, expenses, fees, obligations
and liabilities which may be incurred by or imposed upon the Agent and/or any
of the Lenders by virtue of the assignment of and Lien on any Borrower's
rights, title and interest in, to, and under the Collateral.
6.1.17 Government Accounts.
--------------------
The Borrowers will upon request of the Agent immediately
notify the Agent if any of the Receivables arise out of contracts with the
United States or with any other Governmental Authority, and, if requested by
the Agent, execute any Instruments and take any steps required by the Agent
in order that all moneys due and to become due under such contracts shall be
assigned to the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, and notice
thereof given to the Governmental Authority under the Federal Assignment of
Claims Act or any other applicable Laws.
6.1.18 Notice of Returned Goods, etc.
------------------------------
The Borrowers will promptly notify, and will cause the
Subsidiaries to promptly notify, the Agent of the return, rejection or
repossession of any goods of the Borrowers or any Subsidiaries sold or
delivered in respect of any Receivables, and of any claims made in regard
thereto to the extent that the aggregate purchase price of any such goods in
any given calendar month exceeds in the aggregate One Hundred Fifty Thousand
Dollars ($150,000.00) for such month.
6.1.19 Inventory.
----------
With respect to the Inventory, the Borrowers and their
Subsidiaries will, after an Event of Default: (a) maintain a perpetual
inventory reporting system at all times, (b) keep correct and accurate
records itemizing and describing the kind, type, quality and quantity of
Inventory, the Borrowers' and Subsidiaries' cost therefor and the selling
price thereof, all of which records shall be available to the officers,
employees or agents of the Agent upon demand for inspection and copying
thereof; (c) not store any Inventory with a bailee, warehouseman or similar
Person without the Agent's prior written consent, which consent may be
conditioned on, among other things, delivery by the bailee, warehouseman or
similar Person to the Agent of warehouse receipts, in form acceptable to the
Agent, in the name of the Agent evidencing the storage of Inventory and the
interests of the Agent and the Lenders therein; (d) permit the Agent and its
agents or representatives to inspect and examine the Inventory and to check
and test the same as to quality, quantity, value and condition at any time or
times hereafter during the Borrowers' and Subsidiaries' usual business hours
or at other reasonable times and (e) at the Agent's request, designate the
Agent as the consignee on all bills of lading and other negotiable and non-
negotiable documents. The Borrowers shall be permitted to sell their
Inventory in the ordinary course of business until the occurrence of an Event
of Default.
6.1.20 Insurance With Respect to Equipment and
---------------------------------------
Inventory.
----------
The Borrowers will (a) maintain and cause each of their
Subsidiaries to maintain hazard insurance with fire and extended coverage on
the Equipment and Inventory in an amount at least equal to the lesser amount
of the outstanding principal amount of the Obligations or the fair market
value of the Equipment and Inventory (but in any event sufficient to avoid
any co-insurance obligations) and with a specific endorsement to each such
insurance policy pursuant to which the insurer provides for lender's loss
payee and additional insured endorsements in favor of Agent in a form
acceptable to Agent, agrees to give the Agent at least thirty (30) days
written notice before any alteration or cancellation of such insurance policy
and that no act or default of any of the Borrowers shall affect the right of
the Agent to recover under such policy in the event of loss or damage; (b)
file, and cause each of their Subsidiaries to file, with the Agent, upon its
request, a detailed list of the insurance then in effect and stating the
names of the insurance companies, the amounts and rates of the insurance,
dates of the expiration thereof and the properties and risks covered thereby;
and (c) within thirty (30) days after notice in writing from the Agent,
obtain, and cause each of their Subsidiaries to obtain, such additional
insurance as the Agent may reasonably request.
6.1.21 Maintenance of the Collateral.
------------------------------
The Borrowers will maintain the Collateral in good working
order, saving and excepting ordinary wear and tear, and will not permit
anything to be done to the Collateral that may materially impair the value
thereof. The Agent, or an agent designated by the Agent, shall be permitted
to enter the premises of each of the Borrowers and their Subsidiaries and
examine, audit and inspect the Collateral at any reasonable time and from
time to time without notice. The Agent shall not have any duty to, and the
Borrowers hereby release the Agent and the Lenders from all claims of loss or
damage caused by the delay or failure to collect or enforce any of the
Receivables or to, preserve any rights against any other party with an
interest in the Collateral.
6.1.22 Equipment.
----------
The Borrowers shall (a) maintain all Equipment as
personalty, (b) not affix any Equipment to any real estate in such manner as
to become a fixture or part of such real estate, and (c) shall hold no
Equipment on a sale on approval basis. The Borrowers hereby declare their
intent that, notwithstanding the means of attachment, no goods of the
Borrowers hereafter attached to any realty shall be deemed a fixture, which
declaration shall be irrevocable, without the Agent's consent, until all of
the Obligations have been paid in full and all of the Commitments and Letters
of Credit have been terminated or have expired.
6.1.23 Defense of Title and Further Assurances.
----------------------------------------
At their expense, the Borrowers will defend the title to
the Collateral (and any part thereof), and will immediately execute,
acknowledge and deliver any financing statement, renewal, affidavit, deed,
assignment, continuation statement, security agreement, certificate or other
document which the Agent may require in order to perfect, preserve, maintain,
continue, protect and/or extend the Lien or security interest granted to the
Agent, for the ratable benefit of the Lenders and for the benefit of the
Agent with respect to the Agent's Obligations, under this Agreement, under
any of the other Financing Documents and the first priority of that Lien,
subject only to the Permitted Liens. The Borrowers will from time to time do
whatever the Agent may require by way of obtaining, executing, delivering,
and/or filing financing statements, landlords' or mortgagees' waivers,
notices of assignment and other notices and amendments and renewals thereof
and the Borrowers will take any and all steps and observe such formalities as
the Agent may require, in order to create and maintain a valid Lien upon,
pledge of, or paramount security interest in, the Collateral, subject to the
Permitted Liens. The Borrowers shall pay to the Agent on demand all taxes,
costs and expenses incurred by the Agent in connection with the preparation,
execution, recording and filing of any such document or instrument. To the
extent that the Proceeds of any of the Accounts or Receivables of the
Borrowers are expected to become subject to the control of, or in the
possession of, a party other than the Borrowers or the Agent, the Borrowers
shall cause all such parties to execute and deliver on the Closing Date
security documents, financing statements or other documents as requested by
the Agent and as may be necessary to evidence and/or perfect the security
interest of the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, in those
Proceeds. The Borrowers agree that a copy of a fully executed security
agreement and/or financing statement shall be sufficient to satisfy for all
purposes the requirements of a financing statement as set forth in Article 9
of the applicable Uniform Commercial Code. Each Borrower hereby irrevocably
appoints the Agent as the Borrower's attorney-in-fact, with power of
substitution, in the name of the Agent or in the name of the Borrower or
otherwise, for the use and benefit of the Agent for itself and the Lenders,
but at the cost and expense of the Borrowers and without notice to the
Borrowers, to execute and deliver any and all of the instruments and other
documents and take any action which the Lender may require pursuant the
foregoing provisions of this Section 6.1.23.
6.1.24 Business Names; Locations.
--------------------------
Each Borrower will notify and cause each of the
Subsidiaries to notify the Agent not less than thirty (30) days prior to (a)
any change in the name under which the Borrower or the applicable Subsidiary
conducts its business, (b) any change of the location of the chief executive
office of the applicable Borrower or Subsidiary, and (c) the opening of any
new place of business or the closing of any existing place of business, and
any change in the location of the places where the Collateral, or any part
thereof, or the books and records, or any part thereof, are kept.
6.1.25 Use of Premises and Equipment.
------------------------------
The Borrowers agree that until the Obligations are fully
paid and all of the Commitments and the Letters of Credit have been
terminated or have expired, the Agent (a) after and during the continuance of
an Event of Default, may use any of the Borrowers' owned or leased lifts,
hoists, trucks and other facilities or equipment for handling or removing the
Collateral; and (b) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located, and may proceed over
and through any of the Borrowers' owned or leased property.
6.1.26 Protection of Collateral.
-------------------------
The Borrowers agree that the Agent may at any time
following an Event of Default take such steps as the Agent deems reasonably
necessary to protect the interest of the Agent and the Lenders in, and to
preserve the Collateral, including, the hiring of such security guards or the
placing of other security protection measures as the Agent deems appropriate,
may employ and maintain at any of the Borrowers' premises a custodian who
shall have full authority to do all acts necessary to protect the interests
of the Agent and the Lenders in the Collateral and may lease warehouse
facilities to which the Agent may move all or any part of the Collateral to
the extent commercially reasonable. The Borrowers agree to cooperate fully
with the Agent's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as the Agent may reasonably direct. All
of the Agent's expenses of preserving the Collateral, including any
reasonable expenses relating to the compensation and bonding of a custodian,
shall be part of the Enforcement Costs.
6.1.27 SunTrust Deposit Account.
-------------------------
At all times that SunTrust remains a Lender under this
Agreement, Borrowers hereby agree to maintain an average collected balance of
not less than Six Hundred Thousand Dollars ($600,000) at all times in a non-
interest bearing demand Deposit Account held at SunTrust.
6.1.28 Post-Closing Financial Statements.
----------------------------------
VSE will furnish to the Lender a post-closing pro-forma
consolidated balance sheet of Borrowers and its Subsidiaries as of
immediately after consummation of any Permitted Acquisition and the
transactions incident thereto (each a "Post-closing Balance Sheet") together
with post-closing financial projections for the fiscal year period subsequent
to the Permitted Acquisition (each a "Post-closing Financial Projections").
The Post-closing Financial Projections will represent Borrowers best estimate
of the future operations of each Borrower and are based on reasonable and
conservative assumptions.
6.1.29 Officer's Certificate
---------------------
(a) In connection with any Permitted
Acquisition, VSE will deliver to the Agent within ten (10) Business Days prior
to the closing date of any Permitted Acquisition an Officer's Certificate in the
form attached hereto as Exhibit F-1 duly signed by a Responsible Officer of
VSE certifying that all of the conditions required for a Permitted
Acquisition hereunder have been fully satisfied by the Borrowers and showing
the calculations of all financial covenants on a pro forma basis for such
Permitted Acquisition in sufficient detail satisfactory to the Agent.
(b) In connection with the delivery of an
Additional Borrower Joinder Supplement pursuant to clause (x) of the
definition of Permitted Acquisitions, VSE will also deliver to the Agent an
Officer's Certificate in the form attached hereto as Exhibit F-2 duly signed
by a Responsible Officer of VSE certifying that the transactions contemplated
by a Permitted Acquisition have been fully satisfied and closed by the
Borrowers and Target.
Section 6.2 Negative Covenants.
-------------------
So long as any of the Obligations or the Commitments or Letters of
Credit therefor shall be outstanding hereunder, the Borrowers agree with the
Agent and the Lenders that without the prior written consent of the Agent and
the Lenders:
6.2.1 Capital Structure, Merger, Acquisition or Sale
----------------------------------------------
of Assets.
----------
None of the Borrowers will alter or amend their capital
structure, authorize any additional class of equity, issue any stock or
equity of any class, enter into any merger or consolidation or amalgamation,
windup or dissolve themselves (or suffer any liquidation or dissolution) or
acquire all or substantially all the assets of any Person (other than in
connection with a Permitted Acquisition), or sell, lease or otherwise dispose
of any of its assets (except Inventory disposed of in the ordinary course of
business prior to an Event of Default). Any consent of the Agent to the
disposition of any assets may be conditioned on a specified use of the
proceeds of disposition.
6.2.2 Subsidiaries.
-------------
None of the Borrowers will create or acquire any
Subsidiaries other than the Subsidiaries identified on the Collateral
Disclosure List and Permitted Acquisitions that may become Subsidiaries.
6.2.3 Issuance of Stock.
------------------
None of the Borrowers will issue, or grant any option or
right to purchase, any of its capital stock, except for stock issued under
the terms of existing stock option plans, provided that no Event of Default
has occurred or would exist after giving effect to the issuance, grant or
purchases.
6.2.4 Purchase or Redemption of Securities, Dividend
----------------------------------------------
Restrictions.
-------------
Declare or pay any dividends; purchase, redeem, retire, or
otherwise acquire for value any of its capital stock now or hereafter
outstanding; make any distribution of assets to its stockholders whether in
cash, assets or obligations of a Borrower; allocate or otherwise set apart
any sum for the payment of any dividend or distribution on, or for the
purchase, redemption, or retirement of, any shares of its capital stock; make
any other distribution by reduction of capital or otherwise in respect of any
shares of its capital stock; or permit any Subsidiary to purchase or
otherwise acquire for value any stock of a Borrower or another Subsidiary,
except that if there is no Default at such time and no covenant violation
would occur (a) VSE may pay cash dividends, which dividends shall not exceed
Three Million Dollars ($3,000,000) in the aggregate per fiscal year, (b) a
Borrower may declare and deliver dividends and make distributions payable
solely in its common stock; (c) a Borrower may purchase or otherwise acquire
shares of its capital stock by exchange for or out of the proceeds received
from a substantially concurrent issue of new shares of its capital stock and
(d) VSE, during each fiscal year, may repurchase shares of its capital stock
in amounts not to exceed Ten Million Dollars ($10,000,000), provided, that,
at the time of each such repurchase, there is at least Ten Million Dollars
($10,000,000) of availability under the Revolving Loan, including any Swing
Line Loans, and Outstanding Letter of Credit Obligations.
6.2.5 Indebtedness.
-------------
None of the Borrowers will create, incur, assume or suffer
to exist any Indebtedness for Borrowed Money or permit any Subsidiary to do
so, except:
(a) the Obligations;
(b) current accounts payable arising in the
ordinary course;
(c) Indebtedness secured by Permitted Liens;
(d) Subordinated Indebtedness, if approved by
the Requisite Lenders;
(e) Indebtedness of the Borrowers existing on
the date hereof and reflected on the financial statements furnished pursuant
to Section 4.1.9 (Financial Condition);
(f) Assumed Indebtedness of any Target
incurred after the Closing Date in the ordinary course of business, if
approved by the Requisite Lenders; and
(g) Indebtedness of the Borrowers not otherwise
permitted by this Agreement which, in the aggregate, does not exceed Fifty
Thousand Dollars ($50,000).
6.2.6 Investments, Loans and Other Transactions.
------------------------------------------
Except as otherwise provided in this Agreement, none of
the Borrowers will, and will permit any of its Subsidiaries to, (a) make,
assume, acquire or continue to hold any investment in any real property (unless
used in connection with its business and treated as a Fixed or Capital Asset of
any Borrower or any Subsidiary) or any Person, whether by stock purchase,
capital contribution, acquisition of indebtedness of such Person or otherwise
(including, without limitation, investments in any joint venture or
partnership), (b) guaranty or otherwise become contingently liable for the
Indebtedness or obligations of any Person, or (c) make any loans or advances,
or otherwise extend credit to any Person, except:
(i) any advance to an officer or employee of any
Borrower or any Subsidiary, provided that the aggregate amount of all such
advances by all of the Borrowers and their Subsidiaries (taken as a whole) shall
not exceed at any time outstanding the aggregate principal sum of (a) (i) Two
Hundred Fifty Thousand Dollars ($250,000) for all such loans by the Borrower,
plus (ii) reasonable advances for anticipated business expenses of employees
that would be reimbursed to such employees under such Borrower's expense
reimbursement policy, and (b) Two Million Dollars ($2,000,000) for all loans
from VSE to Affiliates.
(ii) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business;
(iii) any investment in Cash Equivalents, which are
pledged to the Agent, for the ratable benefit of the Lenders and for the benefit
of the Agent with respect to the Agent's Obligations, as collateral and security
for the Obligations;
(iv) trade credit extended to customers in the
ordinary course of business;
(v) investments in any Targets pursuant to any
Permitted Acquisition; and
(vi) investments consisting of Deposit
Accounts permitted pursuant to Section 6.2.19.
6.2.7 Stock of Subsidiaries.
----------------------
None of the Borrowers will sell or otherwise dispose of
any shares of capital stock of any Subsidiary (except in connection with a
merger or consolidation of a Wholly Owned Subsidiary into any of the Borrowers
or another Wholly Owned Subsidiary of any of the Borrowers or with the
dissolution of any Subsidiary) or permit any Subsidiary to issue any
additional shares of its capital stock except pro rata to its stockholders.
6.2.8 Subordinated Indebtedness.
--------------------------
None of the Borrowers will, nor will permit any Subsidiary
to make:
(a) any payment of principal of, or interest on, any
of the Subordinated Indebtedness, if a Default or an Event of Default then
exists hereunder or would result from such payment;
(b) any payment of the principal or interest due on
the Subordinated Indebtedness as a result of acceleration thereunder or a
mandatory prepayment thereunder;
(c) any amendment or modification of or supplement
to the documents evidencing or securing the Subordinated Indebtedness; and
(d) payment of principal or interest on the
Subordinated Indebtedness other than when due (without giving effect to any
acceleration of maturity or mandatory prepayment).
6.2.9 Liens.
------
Each Borrower agrees that it (a) will not create, incur,
assume or suffer to exist any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, or permit any Subsidiary so to do,
except for Liens securing the Obligations and Permitted Liens, (b) will not
agree to, assume or suffer to exist any provision in any instrument or other
document for confession of judgment, cognovit or other similar right or
remedy, (c) will not allow or suffer to exist any Permitted Liens to be
superior to Liens securing the Obligations, (d) will not enter into any
contracts for the consignment of goods, will not execute or suffer the filing
of any financing statements or the posting of any signs giving notice of
consignments, and will not, as a material part of its business, engage in the
sale of goods belonging to others, other than sales of goods belonging to
others which have been disclosed to the Agent, and (e) will not allow or
suffer to exist the failure of any Lien described in the Security Documents
to attach to, and/or remain at all times perfected on, any of the property
described in the Security Documents.
6.2.10 Transactions with Affiliates.
-----------------------------
None of the Borrowers nor any of their Subsidiaries will
enter into or participate in any transaction except in the ordinary course of
business, with any Affiliate or, except in the ordinary course of business,
with the officers, directors, employees and other representatives of any
Borrower and/or any Subsidiary.
6.2.11 Other Businesses.
-----------------
None of the Borrowers nor any of their Subsidiaries will
engage directly or indirectly in any business other than its current line of
business described elsewhere in this Agreement.
6.2.12 ERISA Compliance.
-----------------
None of the Borrowers nor any Commonly Controlled Entity
shall: (a) engage in or permit any "prohibited transaction" (as defined in
ERISA); (b) cause any "accumulated funding deficiency" as defined in ERISA
and/or the Internal Revenue Code; (c) terminate any pension plan in a manner
which could result in the imposition of a lien on the property of any
Borrower pursuant to ERISA; (d) terminate or consent to the termination of
any Multi-employer Plan; or (e) incur a complete or partial withdrawal with
respect to any Multi-employer Plan.
6.2.13 Prohibition on Hazardous Materials.
-----------------------------------
None of the Borrowers shall place, manufacture or store or
permit to be placed, manufactured or stored any Hazardous Materials on any
property owned, operated or controlled by any Borrower or for which any
Borrower is responsible other than Hazardous Materials placed or stored on
such property in accordance with applicable Laws in the ordinary course of a
Borrower's business expressly described in this Agreement.
6.2.14 Method of Accounting; Fiscal Year.
----------------------------------
None of the Borrowers will:
(a) change the method of accounting employed
in the preparation of any financial statements furnished to the Agent under
the provisions of Section 6.1.1 (Financial Statements), unless required to
conform to GAAP and on the condition that the Borrowers' accountants shall
furnish such information as the Agent may request to reconcile the changes
with the Borrowers' prior financial statements
(b) change its fiscal year from a year ending
on December 31st.
6.2.15 Compensation.
-------------
None of the Borrowers nor any Subsidiary will pay any
bonuses, fees, compensation, commissions, salaries, drawing accounts, or
other payments (cash and non-cash), whether direct or indirect, to any
stockholders of any Borrower or any Subsidiary, or any Affiliate of any
Borrower or any Subsidiary, other than reasonable compensation for actual
services rendered by stockholders in their capacity as officers or employees.
6.2.16 Transfer of Collateral.
-----------------------
None of the Borrowers nor any of their Subsidiaries will
transfer, or permit the transfer, to another location of any of the
Collateral or the books and records related to any of the Collateral.
6.2.17 Sale and Leaseback.
-------------------
None of the Borrowers nor any of the Subsidiaries will
directly or indirectly enter into any arrangement to sell or transfer all or
any substantial part of its fixed assets and thereupon or within one year
thereafter rent or lease the assets so sold or transferred.
6.2.18 Disposition of Collateral.
--------------------------
None of the Borrowers will sell, discount, allow credits
or allowances, transfer, assign, extend the time for payment on, convey, lease,
assign, transfer or otherwise dispose of the Collateral, except, prior to an
Event of Default, dispositions expressly permitted elsewhere in this
Agreement, the sale of Inventory in the ordinary course of business, and the
sale of unnecessary or obsolete Equipment, but only if the proceeds of the
sale of such Equipment are (a) used to purchase similar Equipment to replace
the unnecessary or obsolete Equipment or (b) immediately turned over to the
Agent for application to the Obligations in accordance with the provisions of
this Agreement.
6.2.19 Deposit Accounts.
-----------------
Schedule 6.2.19 lists all of the Deposit Accounts of each
Borrower as of the Closing Date. After the Closing Date, none of the
Borrowers will, or will permit any Subsidiary to, directly or indirectly,
maintain or establish any bank account or Deposit Account with any bank or
financial institution that is not a Lender which in the aggregate maintains
balances of greater than One Hundred Thousand Dollars ($100,000), unless
prior to opening such account, Borrower or such Subsidiary enters into a
Deposit Account Control Agreement. The provisions of this Section requiring
Deposit Account Control Agreements shall not apply to Deposit Accounts (a)
exclusively used for payroll, payroll taxes, employee travel reimbursement,
and other employee wage and benefit payments to or for the benefit of
Borrowers' employees and identified in detail satisfactory to Agent by
Borrowers and (b) established after the Closing Date by Borrowers for
purposes other than described in clause (a) of this Section, in each case,
upon the prior written approval of Agent in its sole and absolute discretion
and for each such Deposit Account that is approved by Agent, Borrower will
disclose, on the annual Compliance Certificate delivered to Agent pursuant to
Section 6.1.1(a), the average collected account balances of all such Deposit
Accounts for each of the preceding twelve (12) months.
ARTICLE VII
DEFAULT AND RIGHTS AND REMEDIES
-------------------------------
Section 7.1 Events of Default.
------------------
The occurrence of any one or more of the following events shall
constitute an "Event of Default" under the provisions of this Agreement:
7.1.1 Failure to Pay.
---------------
The failure of the Borrowers to pay any of the Obligations
as and when due and payable in accordance with the provisions of this
Agreement, the Notes and/or any of the other Financing Documents.
7.1.2 Breach of Representations and Warranties.
-----------------------------------------
Any representation or warranty made in this Agreement or
in any report, statement, schedule, certificate, opinion (including any opinion
of counsel for the Borrowers), financial statement or other document
furnished in connection with this Agreement, any of the other Financing
Documents, or the Obligations, shall prove to have been false or misleading
when made (or, if applicable, when reaffirmed) in any material respect.
7.1.3 Failure to Comply with Covenants.
---------------------------------
The failure of the Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in this Agreement.
7.1.4 Default Under Other Financing Documents or
------------------------------------------
Obligations.
------------
A default shall occur under any of the other Financing
Documents or under any other Obligations, and such default is not cured
within any applicable grace period provided therein.
7.1.5 Receiver; Bankruptcy.
---------------------
Any Borrower or any Subsidiary shall (a) apply for or
consent to the appointment of a receiver, trustee or liquidator of itself or
any of its property, (b) admit in writing its inability to pay its debts as
they mature, (c) make a general assignment for the benefit of creditors, (d)
be adjudicated a bankrupt or insolvent, (e) file a voluntary petition in
bankruptcy or a petition or an answer seeking or consenting to reorganization
or an arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law or statute, or an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law, or take corporate
action for the purposes of effecting any of the foregoing, (f) by any act
indicate its consent to, approval of or acquiescence in any such proceeding
or the appointment of any receiver of or trustee for any of its property, or
suffer any such receivership, trusteeship or proceeding to continue
undischarged for a period of sixty (60) days, or (g) by any act indicate its
consent to, approval of or acquiescence in any order, judgment or decree by
any court of competent jurisdiction or any Governmental Authority enjoining
or otherwise prohibiting the operation of a material portion of any
Borrower's or any Subsidiary's business or the use or disposition of a
material portion of any Borrower's or any Subsidiary's assets.
7.1.6 Involuntary Bankruptcy, etc.
----------------------------
(a) An order for relief shall be entered in any
involuntary case brought against any Borrower or any Subsidiary under the
Bankruptcy Code, or (b) any such case shall be commenced against any Borrower or
any Subsidiary and shall not be dismissed within sixty (60) days after the
filing of the petition, or (c) an order, judgment or decree under any other Law
is entered by any court of competent jurisdiction or by any other Governmental
Authority on the application of a Governmental Authority or of a Person other
than any Borrower or any Subsidiary (i) adjudicating any Borrower, or any
Subsidiary bankrupt or insolvent, or (ii) appointing a receiver, trustee or
liquidator of any Borrower or of any Subsidiary, or of a material portion of
any Borrower's or any Subsidiary's assets, or (iii) enjoining, prohibiting or
otherwise limiting the operation of a material portion of any Borrower's or
any Subsidiary's business or the use or disposition of a material portion of
any Borrower's or any Subsidiary's assets, and such order, judgment or decree
continues unstayed and in effect for a period of thirty (30) days from the
date entered.
7.1.7 Judgment.
---------
Unless adequately insured in the opinion of the Agent, the
entry of a final judgment for the payment of money involving more than
$200,000 against any Borrower or any Subsidiary, and the failure by such
Borrower or such Subsidiary to discharge the same, or cause it to be
discharged, within thirty (30) days from the date of the order, decree or
process under which or pursuant to which such judgment was entered, or to
secure a stay of execution pending appeal of such judgment.
7.1.8 Execution; Attachment.
----------------------
Any execution or attachment shall be levied against the
Collateral, or any part thereof, and such execution or attachment shall not
be set aside, discharged or stayed within thirty (30) days after the same
shall have been levied.
7.1.9 Default Under Other Borrowings.
-------------------------------
Default shall be made with respect to any Indebtedness for
Borrowed Money of any of the Borrowers (other than the Loans) in excess of
Two Hundred Thousand Dollars ($200,000) if the effect of such default is to
accelerate the maturity of such Indebtedness for Borrowed Money or to permit
the holder or obligee thereof or other party thereto to cause such
Indebtedness for Borrowed Money to become due prior to its stated maturity.
7.1.10 Challenge to Agreements.
------------------------
Any Borrower or any Guarantor shall challenge the validity
and binding effect of any provision of any of the Financing Documents or
shall state its intention to make such a challenge of any of the Financing
Documents or any of the Financing Documents shall for any reason (except to
the extent permitted by its express terms) cease to be effective or to create
a valid and perfected first priority Lien (except for Permitted Liens) on, or
security interest in, any of the Collateral purported to be covered thereby.
7.1.11 Material Adverse Change.
------------------------
The Agent, in its sole discretion, determines in good
faith that a material adverse change has occurred in the financial condition of
any of the Borrowers.
7.1.12 Impairment of Position.
-----------------------
The Agent, in its sole discretion, determines in good
faith that an event has occurred which impairs the prospect of payment of any
of the Obligations and/or the value of the Collateral.
7.1.13 Collateral Inadequacy.
----------------------
The determination in good faith by the Agent that the
security for the Obligations is inadequate.
7.1.14 Change in Ownership.
--------------------
The failure of VSE to own at least fifty one percent (51%)
of the voting capital stock of each of the other Borrowers.
7.1.15 Liquidation, Termination, Dissolution, Change in
------------------------------------------------
Management, etc.
----------------
Any Borrower shall liquidate, dissolve or terminate its
existence or any change occurs in the management or control of any Borrower
without the prior written consent of the Agent.
7.1.16 De-Listing of Stock.
--------------------
The failure of the stock of VSE to be listed on NASDAQ or
a national stock exchange.
7.1.17 Government Default.
-------------------
The issuance to a Borrower or any Subsidiary of (a) a cure
notice or a show-cause notice relating to a possible termination for default
under any contract which is either a contract with a Governmental Authority
or is a subcontract (at any tier) which is related to a contract between a
third party and Governmental Authority and, within thirty (30) calendar days
after the date of such notice, no written notification is received by such
Borrower or such Subsidiary from the cognizant contracting officer or
customer official stating that a termination will not occur; or (b) a notice
of actual termination of default (complete or partial), under any such
contract or subcontract; provided, however, that no Event of Default shall be
declared based upon clauses (a) or (b) of this Section 7.1.17 if the notice
in question is issued at a time when the Unearned Contract Value of the
contract or subcontract in question is less than $500,000.
Section 7.2 Remedies.
---------
Upon the occurrence of any Event of Default, the Agent may, in the
exercise of its sole and absolute discretion from time to time, and shall, at
the direction of the Requisite Lenders, at any time thereafter exercise any
one or more of the following rights, powers or remedies.
7.2.1 Acceleration.
-------------
The Agent may declare any or all of the Obligations to be
immediately due and payable, notwithstanding anything contained in this
Agreement or in any of the other Financing Documents to the contrary, without
presentment, demand, protest, notice of protest or of dishonor, or other
notice of any kind, all of which the Borrowers hereby waive.
7.2.2 Further Advances.
-----------------
The Agent may from time to time without notice to the
Borrowers suspend, terminate or limit any further advances, loans or other
extensions of credit under the Commitments, under this Agreement and/or under
any of the other Financing Documents. Further, upon the occurrence of an
Event of Default or Default specified in Sections 7.1.5 (Receiver;
Bankruptcy) or 7.1.6 (Involuntary Bankruptcy, etc.), the Commitments and any
agreement in any of the Financing Documents to provide additional credit
and/or to issue Letters of Credit shall immediately and automatically
terminate and the unpaid principal amount of the Notes (with accrued interest
thereon) and all other Obligations then outstanding, shall immediately become
due and payable without further action of any kind and without presentment,
demand, protest or notice of any kind, all of which are hereby expressly
waived by the Borrowers.
7.2.3 Uniform Commercial Code.
------------------------
The Agent shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code and other
applicable Laws. Upon demand by the Agent, the Borrowers shall assemble the
Collateral and make it available to the Agent, at a place designated by the
Agent. The Agent or its agents may without notice from time to time enter
upon any Borrower's premises to take possession of the Collateral, to remove
it, to render it unusable, to process it or otherwise prepare it for sale, or
to sell or otherwise dispose of it.
Any written notice of the sale, disposition or other
intended action by the Agent with respect to the Collateral which is sent by
regular mail, postage prepaid, to the Borrowers at the address set forth in
Section 9.1 (Notices), or such other address of the Borrowers which may from
time to time be shown on the Agent's records, at least ten (10) days prior to
such sale, disposition or other action, shall constitute commercially
reasonable notice to the Borrowers. The Agent may alternatively or
additionally give such notice in any other commercially reasonable manner.
Nothing in this Agreement shall require the Agent to give any notice not
required by applicable Laws.
If any consent, approval, or authorization of any state,
municipal or other Governmental Authority or of any other Person or of any
Person having any interest therein, should be necessary to effectuate any
sale or other disposition of the Collateral, the Borrowers agree to execute
all such applications and other instruments, and to take all other action, as
may be required in connection with securing any such consent, approval or
authorization.
The Borrowers recognize that the Agent may be unable to
effect a public sale of all or a part of the Collateral consisting of
Investment Property by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and other applicable Federal and state
Laws. The Agent may, therefore, in its discretion, take such steps as it may
deem appropriate to comply with such Laws and may, for example, at any sale
of the Collateral consisting of securities restrict the prospective bidders
or purchasers as to their number, nature of business and investment
intention, including, without limitation, a requirement that the Persons
making such purchases represent and agree to the satisfaction of the Agent
that they are purchasing such securities for their account, for investment,
and not with a view to the distribution or resale of any thereof. The
Borrowers covenant and agree to do or cause to be done promptly all such acts
and things as the Agent may request from time to time and as may be necessary
to offer and/or sell the securities or any part thereof in a manner which is
valid and binding and in conformance with all applicable Laws. Upon any
such sale or disposition, the Agent shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral consisting of securities
so sold.
7.2.4 Specific Rights With Regard to Collateral.
------------------------------------------
In addition to all other rights and remedies provided
hereunder or as shall exist at law or in equity from time to time, the Agent
may (but shall be under no obligation to), without notice to any of the
Borrowers, and each Borrower hereby irrevocably appoints the Agent as its
attorney-in-fact, with power of substitution, in the name of the Agent and/or
any or all of the Lenders and/or in the name of any or all of the Borrowers
or otherwise, for the use and benefit of the Agent and the Lenders, but at
the cost and expense of the Borrowers and without notice to the Borrowers:
(a) request any Account Debtor obligated on any of
the Accounts to make payments thereon directly to the Agent, with the Agent
taking control of the Proceeds thereof;
(b) compromise, extend or renew any of the
Collateral or deal with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of
all or any part of the Collateral;
(d) copy, transcribe, or remove from any place of
business of any Borrower or any Subsidiary all books, records, ledger sheets,
correspondence, invoices and documents, relating to or evidencing any of the
Collateral or without cost or expense to the Agent or the Lenders, make such
use of any Borrower's or any Subsidiary's place(s) of business as may be
reasonably necessary to administer, control and collect the Collateral;
(e) repair, alter or supply goods if necessary to
fulfill in whole or in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable
proceedings to enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound,
exchange or adjust claims in respect of any of the Collateral or any legal
proceedings brought in respect thereof;
(i) endorse or sign the name of any Borrower
upon any Items of Payment, certificates of title, Instruments, Investment
Property, stock powers, documents, documents of title, financing statements,
assignments, notices or other writing relating to or part of the Collateral
and on any proof of claim in bankruptcy against an Account Debtor;
(j) clear Inventory through customs in the Agent's
or any Borrower's name and to sign and deliver to customs officials powers of
attorney in any Borrower's name for such purpose;
(k) notify the Post Office authorities to change
the address for the delivery of mail to the Borrowers to such address or Post
Office Box as the Agent may designate and receive and open all mail addressed
to any of the Borrowers; and
(l) take any other action necessary or beneficial
to realize upon or dispose of the Collateral or to carry out the terms of this
Agreement.
7.2.5 Application of Proceeds.
------------------------
Any proceeds of sale or other disposition of the
Collateral will be applied by the Agent to the payment first of any and all
Agent's Obligations, then to any and all Enforcement Costs, and any balance of
such proceeds will be remitted to the Lenders in like currency and funds
received ratably in accordance with their respective Pro Rata Shares of such
balance. Each Lender shall apply any such proceeds received from the Agent to
its Obligations in such order and manner as such Lender shall determine. If the
sale or other disposition of the Collateral fails to fully satisfy the
Obligations, the Borrowers shall remain liable to the Agent and the Lenders
for any deficiency.
7.2.6 Performance by Agent.
---------------------
If the Borrowers shall fail to pay the Obligations or
otherwise fail to perform, observe or comply with any of the conditions,
covenants, terms, stipulations or agreements contained in this Agreement or
any of the other Financing Documents, the Agent without notice to or demand
upon the Borrowers and without waiving or releasing any of the Obligations or
any Default or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and
at the expense of the Borrowers, and may enter upon the premises of the
Borrowers for that purpose and take all such action thereon as the Agent may
consider necessary or appropriate for such purpose and each of the Borrowers
hereby irrevocably appoints the Agent as its attorney-in-fact to do so, with
power of substitution, in the name of the Agent, in the name of any or all of
the Lenders, or in the name of any or all of the Borrowers or otherwise, for
the use and benefit of the Agent, but at the cost and expense of the
Borrowers and without notice to the Borrowers. All sums so paid or advanced
by the Agent together with interest thereon from the date of payment, advance
or incurring until paid in full at the Post-Default Rate and all costs and
expenses, shall be deemed part of the Enforcement Costs, shall be paid by the
Borrowers to the Agent on demand, and shall constitute and become a part of
the Agent's Obligations.
7.2.7 Other Remedies.
---------------
The Agent may from time to time proceed to protect or
enforce the rights of the Agent and/or any of the Lenders by an action or
actions at law or in equity or by any other appropriate proceeding, whether
for the specific performance of any of the covenants contained in this
Agreement or in any of the other Financing Documents, or for an injunction
against the violation of any of the terms of this Agreement or any of the
other Financing Documents, or in aid of the exercise or execution of any
right, remedy or power granted in this Agreement, the Financing Documents,
and/or applicable Laws. The Agent and each of the Lenders is authorized to
offset and apply to all or any part of the Obligations all moneys, credits
and other property of any nature whatsoever of any or all of the Borrowers
now or at any time hereafter in the possession of, in transit to or from,
under the control or custody of, or on deposit with, the Agent, any of the
Lenders or any Affiliate of the Agent or any of the Lenders.
ARTICLE VIII
THE AGENT
Section 8.1 Appointment.
------------
Each Lender hereby designates and appoints Citizens as its agent under
this Agreement and the Financing Documents, and each Lender hereby
irrevocably authorizes the Agent to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and
the Financing Documents and to exercise such powers as are set forth herein
or therein, together with such other powers as are reasonably incidental
thereto. The Agent agrees to act as such on the express conditions contained
in this ARTICLE VIII. The provisions of this ARTICLE VIII are solely for the
benefit of the Agent and the Lenders and neither the Borrowers nor any Person
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the
Agent shall act solely as an administrative representative of the Lenders and
does not assume and shall not be deemed to have assumed any obligation toward
or relationship of agency or trust with or for the Lenders, the Borrowers or
any Person. The Agent may perform any of its duties hereunder, or under the
Financing Documents, by or through its agents or employees.
Section 8.2 Nature of Duties.
-----------------
8.2.1 In General
----------
The Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Financing Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Each Lender
shall make its own independent investigation of the financial condition and
affairs of the Borrowers in connection with the extension of credit hereunder
and shall make its own appraisal of the credit worthiness of the Borrowers,
and the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the Closing
Date or at any time or times thereafter. If the Agent seeks the consent or
approval of any of the Lenders to the taking or refraining from taking of any
action hereunder, then the Agent shall send notice thereof to each Lender.
The Agent shall promptly notify each Lender any time that the applicable
percentage of Lenders has instructed the Agent to act or refrain from acting
pursuant hereto.
8.2.2 Express Authorization
---------------------
The Agent is hereby expressly and irrevocably authorized
by each of the Lenders, as agent on behalf of itself and the other Lenders:
(a) to receive on behalf of each of the Lenders any
payment or collection on account of the Obligations and to distribute to each
Lender its Pro Rata Share of all such payments and collections so received as
provided in this Agreement;
(b) to receive all documents and items to be
furnished to the Lenders under the Financing Documents (nothing contained
herein shall relieve the Borrowers of any obligation to deliver any item
directly to the Lenders to the extent expressly required by the provisions of
this Agreement);
(c) to act or refrain from acting in this Agreement
and in the other Financing Documents with respect to those matters so designated
for the Agent;
(d) to act as nominee for and on behalf of the
Lenders in and under this Agreement and the other Financing Documents;
(e) to arrange for the means whereby the funds of
the Lenders are to be made available to the Borrowers;
(f) to distribute promptly to the Lenders, if
required by the terms of this Agreement, all written information, requests,
notices, Loan Notices, payments, Prepayments, documents and other items
received from the Borrowers or other Person;
(g) to amend, modify, or waive any provisions of
this Agreement or the other Financing Documents on behalf of the Lenders subject
to the requirement that certain of the Lenders' consent be obtained in certain
instances as provided in Section 9.2 (Amendments; Waivers);
(h) to deliver to the Borrowers and other Persons,
all requests, demands, approvals, notices, and consents received from any of the
Lenders;
(i) to exercise on behalf of each Lender all rights
and remedies of the Lenders upon the occurrence of any Event of Default and/or
Default specified in this Agreement and/or in any of the other Financing
Documents or applicable Laws;
(j) to execute any of the Security Documents
and any other documents on behalf of the Lenders as the secured party for the
benefit of the Agent and the Lenders; and
(k) to take such other actions as may be
requested by the Requisite Lenders.
Section 8.3 Rights, Exculpation, Etc.
-------------------------
Neither the Agent nor any of its officers, directors, employees or
agents shall be liable to any Lender for any action taken or omitted by them
hereunder or under any of the Financing Documents, or in connection herewith
or therewith, except that the Agent shall be obligated on the terms set forth
herein for performance of its express obligations hereunder, and except that
the Agent shall be liable with respect to its own gross negligence or willful
misconduct. The Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from the other Lenders any payment in excess of the
amount to which they are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous payments received by
them). The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectible, or
sufficiency of this Agreement or any of the Financing Documents or the
transactions contemplated thereby, or for the financial condition of any
Person. The Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any of the Financing Documents or the
financial condition of any Person, or the existence or possible existence of
any Default or Event of Default. The Agent may at any time request
instructions from the Lenders with respect to any actions or approvals which
by the terms of this Agreement or of any of the Financing Documents the Agent
is permitted or required to take or to grant, and the Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the
Financing Documents until it shall have received such instructions from the
applicable percentage of the Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting under this Agreement or
any of the other Financing Documents in accordance with the instructions of
the applicable percentage of the Lenders and notwithstanding the instructions
of the Lenders, the Agent shall have no obligation to take any action if it,
in good faith, believes that such action exposes the Agent to any liability.
Section 8.4 Reliance.
---------
The Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message
or other communication (including any writing, telex, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Financing Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it. The Agent
may deem and treat the original Lenders as the owners of the respective Notes
for all purposes until receipt by the Agent of a written notice of
assignment, negotiation or transfer of any interest therein by the Lenders in
accordance with the terms of this Agreement. Any interest, authority or
consent of any holder of any of the Notes shall be conclusive and binding on
any subsequent holder, transferee, or assignee of such Notes. The Agent
shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by the Agent in its sole discretion.
Section 8.5 Indemnification.
----------------
Each Lender, severally, agrees to reimburse and indemnify the Agent for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements
including, without limitation, Enforcement Costs, of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any of the
Financing Documents or any action taken or omitted by the Agent under this
Agreement for any of the Financing Documents, in proportion to each Lender's
Pro Rata Share, all of the foregoing as they may arise, be asserted or be
imposed from time to time; provided, however, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
obligations of the Lenders under this Section 8.5 shall survive the payment
in full of the Obligations and the termination of this Agreement.
Notwithstanding the foregoing, if the Agent, after having received any such
reimbursement from any or all of the Lenders, shall later recover, from a
source other than a Lender, all or any portion of the amount reimbursed, the
Agent shall share such recovery with the reimbursing Lenders in proportion to
their contribution to such reimbursement.
Section 8.6 Citizens Individually.
----------------------
With respect to its Commitments and the Loans made by it, and the Notes
issued to it, Citizens shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to
the extent set forth herein for any other Lender. The terms "the Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include Citizens in its individual capacity as a Lender
or one of the Requisite Lenders. Citizens and its Affiliates may lend money
to, accept deposits from and generally engage in any kind of banking, trust
or other business with the Borrowers, any Affiliate of any Borrower, or any
other Person or any of their officers, directors and employees as if Citizens
were not acting as the Agent pursuant hereto and the Agent may accept fees
and other consideration from the Borrowers, any Affiliate of the Borrowers or
any of their officers, directors and employees for services in connection
with this Agreement or otherwise without having to account for or share the
same with the Lenders.
Section 8.7 Successor Agent.
----------------
8.7.1 Resignation.
------------
The Agent may resign from the performance of all its
functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to the Borrowers and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to Section 8.7.2 (Appointment of Successor) or as
otherwise provided below.
8.7.2 Appointment of Successor.
-------------------------
Upon any such notice of resignation pursuant to Section
8.7.1 (Resignation), the Requisite Lenders shall appoint a successor to the
Agent. If a successor to the Agent shall not have been so appointed within
said thirty (30) Business Day period, the Agent retiring, upon notice to the
Borrowers, shall then appoint a successor Agent who shall serve as the Agent
until such time, as the Requisite Lenders appoint a successor the Agent as
provided above.
8.7.3 Successor Agent.
----------------
Upon the acceptance of any appointment as the Agent under
the Financing Documents by a successor Agent, such successor to the Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the Agent retiring, and the Agent retiring shall be
discharged from its duties and obligations under the Financing Documents.
After any Agent's resignation as the Agent under the Financing Documents, the
provisions of this ARTICLE VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under the Financing
Documents.
Section 8.8 Collateral Matters.
-------------------
8.8.1 Release of Collateral.
----------------------
The Lenders hereby irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any property covered by this Agreement or the Financing Documents:
(a) upon termination of the Commitments and payment
and satisfaction of all Obligations;
(b) constituting property being sold or disposed of
if the Borrowers certify to the Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and the Agent may rely in
good faith conclusively on any such certificate, without further inquiry);
(c) constituting property leased to the Borrowers
under a lease which has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and which has not been, and is not
intended by the Borrowers to be, renewed or extended; or
(d) constituting property covered by Permitted
Liens with lien priority superior to those Liens in favor or for the benefit
of the Lenders.
In addition during any fiscal year of the Borrowers (x) the Agent may
release Collateral having a book value of not more than 10% of the book value
of all Collateral, (y) the Agent, with the consent of Requisite Lenders, may
release Collateral having a book value of not more than 25% of the book value
of all Collateral and (z) the Agent, with the consent of the Lenders having
100% of (i) the Commitments and (ii) Loans, may release all the Collateral.
8.8.2 Confirmation of Authority, Execution of
---------------------------------------
Releases.
---------
Without in any manner limiting the Agent's authority to
act without any specific or further authorization or consent by the Lenders as
set forth in Section 8.8.1 (Release of Collateral), each Lender agrees to
confirm in writing, upon request by the Borrowers, the authority to release
any property covered by this Agreement or the Financing Documents conferred
upon the Agent under Section 8.8.1 (Release of Collateral). So long as no
Event of Default is then continuing, upon receipt by the Agent of
confirmation from the requisite percentage of the Lenders, of its authority
to release any particular item or types of property covered by this Agreement
or the Financing Documents, and upon at least five (5) Business Days prior
written request by the Borrowers, the Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of the Liens granted to the Agent for the benefit of the
Lenders herein or pursuant hereto upon such Collateral; provided, however,
that (a) the Agent shall not be required to execute any such document on
terms which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release of
such Liens without recourse or warranty, and (b) such release shall not in
any manner discharge, affect or impair the Obligations or any Liens upon (or
obligations of any Person, in respect of), all interests retained by any
Person, including, without limitation, the proceeds of any sale, all of which
shall continue to constitute part of the property covered by this Agreement
or the Financing Documents.
8.8.3 Absence of Duty.
----------------
The Agent shall have no obligation whatsoever to any
Lender, the Borrowers or any other Person to assure that the property covered
by this Agreement or the Financing Documents exists or is owned by the
Borrowers or is cared for, protected or insured or has been encumbered or
that the Liens granted to the Agent on behalf of the Lenders herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority,
or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent in this Section
8.8.3 or in any of the Financing Documents, it being understood and agreed
that in respect of the property covered by this Agreement or the Financing
Documents or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its discretion, given the Agent's own
interest in property covered by this Agreement or the Financing Documents as
one of the Lenders and that the Agent shall have no duty or liability
whatsoever to any of the other the Lenders.
Section 8.9 Agency for Perfection.
----------------------
Each Lender hereby appoints the Agent and each other Lender as agent
for the purpose of perfecting the Lenders' Liens in Collateral which, in
accordance with Article 9 of the Uniform Commercial Code in any applicable
jurisdiction or otherwise, can be perfected only by possession. Should any
Lender (other than the Agent) obtain possession of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent's request
therefor, shall deliver such Collateral to the Agent or in accordance with
the Agent's instructions.
Section 8.10 Exercise of Remedies.
---------------------
Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Financing Document or to
realize upon any collateral security for the Loans, it being understood and
agreed that such rights and remedies may be exercised only by the Agent.
Section 8.11 Consents.
---------
(a) In the event the Agent requests the
consent of a Lender and does not receive a written denial thereof, or a written
notice from a Lender that due course consideration of the request requires
additional time, in each case, within ten (10) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have
given such consent.
(b) In the event the Agent requests the
consent of a Lender and such consent is denied, then Citizens may, at its
option, require such Lender to assign its interest in the Loans to Citizens for
a price equal to the then outstanding principal amount thereof plus accrued and
unpaid interest, fees and costs and expenses due such Lender under the
Financing Documents, which principal, interest, fees and costs and expenses
will be paid on the date of such assignment. In the event that Citizens
elects to require any Lender to assign its interest to Citizens, Citizens
will so notify such Lender in writing within thirty (30) days following such
Lender's denial, and such Lender will assign its interest to Citizens no
later than five (5) days following receipt of such notice.
Section 8.12 Dissemination of Information.
-----------------------------
The Agent will provide the Lenders with any information received by the
Agent from the Borrowers which is required to be provided to the Agent or to
the Lenders hereunder; provided, however, that the Agent shall not be liable
to any Lender for any failure to do so, except to the extent that such
failure is attributable to the Agent's gross negligence or willful
misconduct.
Section 8.13 Discretionary Advances.
-----------------------
The Agent may, in its sole discretion, make, for the account of the
Lenders on a pro rata basis, advances under the Revolving Loan of up to 10%
in excess of the Borrowing Base (but not in excess of the limitation set
forth in aggregate Revolving Credit Commitments) for a period of not more
than 30 consecutive days.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.1 Notices.
--------
All notices, requests and demands to or upon the parties to this
Agreement shall be in writing (including facsimile and electronic mail) and
shall be deemed to have been given or made when delivered by hand on a
Business Day, or two (2) days after the date when deposited in the mail,
postage prepaid by registered or certified mail, return receipt requested, or
when sent by overnight courier, on the Business Day next following the day on
which the notice is delivered to such overnight courier, addressed as
follows:
Borrowers: VSE Corporation
2550 Huntington Avenue
Alexandria, Virginia 22303
Attention: Mr. Richard J. Hannah
Facsimile: (703) 329-4687
Agent: Citizens Bank of Pennsylvania
8521 Leesburg Pike
Suite 405
Vienna, Virginia 22182
Attention: Mr. Owen B. Burman
Facsimile: (703) 610-6070
with a copy to: Troutman Sanders LLP
1660 International Drive
Suite 600
McLean, Virginia 22102
Attention: Richard M. Pollak, Esq.
Facsimile: (703) 448-6511
SunTrust SunTrust Bank
8330 Boone Blvd.
Suite 700
Vienna, Virginia 22182
Attn: Ms. Linda Bergmann
Facsimile: (703) 442-1613
By written notice, each party to this Agreement may change the address
to which notice is given to that party, provided that such changed notice
shall include a street address to which notices may be delivered by overnight
courier in the ordinary course on any Business Day.
Section 9.2 Amendments; Waivers.
--------------------
9.2.1 In General.
-----------
This Agreement and the other Financing Documents may not
be amended, modified, or changed in any respect except by an agreement in
writing signed by the Agent, the Requisite Lenders and the Borrowers, and, to
the extent provided in Section 9.2.2 (Circumstances Where Consent of all of
the Lenders is Required), by an agreement in writing signed by the Agent, all
of the Lenders and the Borrowers. No waiver of any provision of this
Agreement or of any of the other Financing Documents, nor consent to any
departure by the Borrowers therefrom, shall in any event be effective unless
the same shall be in writing signed by the Requisite Lenders. No course of
dealing between the Borrowers and the Agent and/or any of the Lenders and no
act or failure to act from time to time on the part of the Agent and/or any
of the Lenders shall constitute a waiver, amendment or modification of any
provision of this Agreement or any of the other Financing Documents or any
right or remedy under this Agreement, under any of the other Financing
Documents or under applicable Laws. Without implying any limitation on the
foregoing, and subject to the provisions of Section 9.2.2 (Circumstances
Where Consent of all of the Lenders is Required):
(a) Any waiver or consent shall be effective
only in the specific instance, for the terms and purpose for which given,
subject to such conditions as the Agent and Lenders may specify in any such
instrument.
(b) No waiver of any Default or Event of Default
shall extend to any subsequent or other Default or Event of Default, or impair
any right consequent thereto.
(c) No notice to or demand on the Borrowers in any
case shall entitle the Borrowers to any other or further notice or demand in the
same, similar or other circumstance.
(d) No failure or delay by the Lenders to insist
upon the strict performance of any term, condition, covenant or agreement of
this Agreement or of any of the other Financing Documents, or to exercise any
right, power or remedy consequent upon a breach thereof, shall constitute a
waiver, amendment or modification of any such term, condition, covenant or
agreement or of any such breach or preclude the Lenders from exercising any such
right, power or remedy at any time or times.
(e) By accepting payment after the due date of any
amount payable under this Agreement or under any of the other Financing
Documents, the Lenders shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under this Agreement or
under any of the other Financing Documents, or to declare a default for failure
to effect such prompt payment of any such other amount.
9.2.2 Circumstances Where Consent of all of the
-----------------------------------------
Lenders is Required.
--------------------
Notwithstanding anything to the contrary contained herein,
no amendment, modification, change or waiver shall be effective without the
consent of all of the Lenders to:
(a) extend the maturity of the principal of, or
interest on, any Note or of any of the other Obligations;
(b) reduce the principal amount of any Note or of
any of the other Obligations, the rate of interest thereon or the Fees due to
the Lenders, except as expressly permitted therein;
(c) change the aggregate Commitments;
(d) change the date of payment of principal of, or
interest on, any Note or of any of the other Obligations;
(e) change the method of calculation utilized in
connection with the computation of interest and Fees;
(f) change the manner of pro rata application by the
Agent of payments made by the Borrowers, or any other payments required
hereunder or under the other Financing Documents;
(g) modify this Section, Section 8.8.1 (Release of
Collateral), Section 8.12 (Dissemination of Information), or the definition of
"Requisite Lenders";
(h) release or agree to subordinate any material
portion of any Collateral or Financing Document (except to the extent provided
herein or therein);
(i) change the standards used in determining
Eligible Receivables if the Borrowing Base is materially increased as a result
of the change; or
(j) change the definition of "Borrowing
Base".
Additionally, no change may be made to the amount of a Lender's
Commitment or to the Lender's percentage of all Commitments without the prior
written consent of that Lender.
Section 9.3 Cumulative Remedies.
--------------------
The rights, powers and remedies provided in this Agreement and in the
other Financing Documents are cumulative, may be exercised concurrently or
separately, may be exercised from time to time and in such order as the Agent
shall determine, subject to the provisions of this Agreement, and are in
addition to, and not exclusive of, rights, powers and remedies provided by
existing or future applicable Laws. In order to entitle the Agent to
exercise any remedy reserved to it in this Agreement, it shall not be
necessary to give any notice, other than such notice as may be expressly
required in this Agreement. Without limiting the generality of the foregoing
and subject to the terms of this Agreement, the Agent may:
(a) proceed against any one or more of the
Borrowers with or without proceeding against any other Person
(including, without limitation, any one or more of the
Guarantors) who may be liable (by endorsement, guaranty,
indemnity or otherwise) for all or any part of the Obligations;
(b) proceed against any one or more of the
Borrowers with or without proceeding under any of the other
Financing Documents or against any Collateral or other collateral
and security for all or any part of the Obligations;
(c) without reducing or impairing the
obligation of the Borrowers and without notice, release or
compromise with any guarantor or other Person liable for all or
any part of the Obligations under the Financing Documents or
otherwise;
(d) without reducing or impairing the
obligations of the Borrowers and without notice thereof:
(i) fail to perfect the Lien in any or
all Collateral or to release any or all the Collateral or
to accept substitute Collateral;
(ii) approve the making of advances
under the Revolving Loan under this Agreement;
(iii) waive any provision of this
Agreement or the other Financing Documents;
(iv) exercise or fail to exercise rights
of set-off or other rights; or
(v) accept partial payments or extend
from time to time the maturity of all or any part of the Obligations.
Section 9.4 Severability.
-------------
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
(a) the validity, legality and enforceability
of the remaining provisions shall remain effective and binding on
the parties thereto and shall not be affected or impaired
thereby;
(b) the obligation to be fulfilled shall be
reduced to the limit of such validity;
(c) if such provision or part thereof
pertains to repayment of the Obligations, then, at the sole and
absolute discretion of the Agent, all of the Obligations of the
Borrowers to the Agent and the Lenders shall become immediately
due and payable; and
(d) if the affected provision or part thereof
does not pertain to repayment of the Obligations, but operates or
would prospectively operate to invalidate this Agreement in whole
or in part, then such provision or part thereof only shall be
void, and the remainder of this Agreement shall remain operative
and in full force and effect.
Section 9.5 Assignments by Lenders.
-----------------------
Any Lender may, with the prior written consent of the Agent (which
consent shall not be unreasonably withheld), but without notice to or consent
of the Borrowers, assign to any Person (each an "Assignee" and collectively,
the "Assignees") all or a portion of such Lender's Commitments; provided
that, unless such Lender has assigned all of its Commitments, after giving
effect to such assignment, such Lender must continue to hold a Pro Rata Share
of the Commitments at least equal to Five Million Dollars ($5,000,000). Any
Lender that elects to make such an assignment shall pay to the Agent, for the
exclusive benefit of the Agent, an administrative fee for processing each
such assignment in the amount of Three Thousand Five Hundred Dollars
($3,500). Such Lender and its Assignee shall notify the Agent and the
Borrowers in writing of the date on which the assignment is to be effective
(the "Adjustment Date"). On or before the Adjustment Date, the assigning
Lender, the Agent, the Borrowers and the respective Assignee shall execute
and deliver a written assignment agreement in a form acceptable to the Agent,
which shall constitute an amendment to this Agreement to the extent necessary
to reflect such assignment. Upon the request of any assigning Lender
following an assignment made in accordance with this Section 9.5, the
Borrowers shall issue new Notes to the assigning Lender and its Assignee
reflecting such assignment, in exchange for the existing Notes held by the
assigning Lender.
In addition, notwithstanding the foregoing, any Lender may at any time
pledge all or any portion of such Lender's rights under this Agreement, any
of the Commitments or any of the Obligations to a Federal Reserve Bank.
Section 9.6 Participations by Lenders.
--------------------------
Any Lender may at any time sell to one or more financial institutions
participating interests in any of such Lender's Obligations or Commitments;
provided, however, that (a) no such participation shall relieve such Lender
from its obligations under this Agreement or under any of the other Financing
Documents to which it is a party, (b) such Lender shall remain solely
responsible for the performance of its obligations under this Agreement and
under all of the other Financing Documents to which it is a party, and (c)
the Borrowers, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing Documents.
Section 9.7 Disclosure of Information by Lenders.
-------------------------------------
In connection with any sale, transfer, assignment or participation by
any Lender in accordance with Section 9.5 (Assignments by Lenders) or Section
9.6 (Participations by Lenders), each Lender shall have the right to disclose
to any actual or potential purchaser, assignee, transferee or participant all
financial records, information, reports, financial statements and documents
obtained in connection with this Agreement and/or any of the other Financing
Documents or otherwise.
Section 9.8 Successors and Assigns.
-----------------------
This Agreement and all other Financing Documents shall be binding upon
and inure to the benefit of the Borrowers, the Agent and the Lenders and
their respective heirs, personal representatives, successors and assigns,
except that the Borrowers shall not have the right to assign their rights
hereunder or any interest herein without the prior written consent of the
Agent and the Requisite Lenders.
Section 9.9 Continuing Agreements.
----------------------
All covenants, agreements, representations and warranties made by the
Borrowers in this Agreement, in any of the other Financing Documents, and in
any certificate delivered pursuant hereto or thereto shall survive the making
by the Lenders of the Loans, the issuance of Letters of Credit by the Agent
and the execution and delivery of the Notes, shall be binding upon the
Borrowers regardless of how long before or after the date hereof any of the
Obligations were or are incurred, and shall continue in full force and effect
so long as any of the Obligations are outstanding and unpaid. From time to
time upon the Agent's request, and as a condition of the release of any one
or more of the Security Documents, the Borrowers and other Persons obligated
with respect to the Obligations shall provide the Agent with such
acknowledgments and agreements as the Agent may require to the effect that
there exists no defenses, rights of setoff or recoupment, claims,
counterclaims, actions or causes of action of any kind or nature whatsoever
against the Agent, any or all of the Lenders, and/or any of its or their
agents and others, or to the extent there are, the same are waived and
released.
Section 9.10 Enforcement Costs.
------------------
The Borrowers agree to pay to the Agent on demand all Enforcement
Costs, together with interest thereon from the date incurred or advanced
until paid in full at a per annum rate of interest equal at all times to the
Post-Default Rate. Enforcement Costs shall be immediately due and payable at
the time advanced or incurred, whichever is earlier. Without implying any
limitation on the foregoing, the Borrowers agree, as part of the Enforcement
Costs, to pay upon demand any and all stamp and other Taxes and fees payable
or determined to be payable in connection with the execution and delivery of
this Agreement and the other Financing Documents and to save the Agent and
the Lenders harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay any Taxes or fees
referred to in this Section. The provisions of this Section shall survive
the execution and delivery of this Agreement, the repayment of the other
Obligations and shall survive the termination of this Agreement.
Section 9.11 Applicable Law; Jurisdiction.
-----------------------------
9.11.1 Applicable Law.
---------------
As a material inducement to the Agent and the Lenders to
enter into this Agreement, each of the Borrowers acknowledges and agrees that
the Financing Documents, including, this Agreement, shall be governed by the
Laws of the State, as if each of the Financing Documents and this Agreement
had each been executed, delivered, administered and performed solely within
the State even though for the convenience and at the request of the
Borrowers, one or more of the Financing Documents may be executed elsewhere.
The Agent and the Lenders acknowledge, however, that remedies under certain
of the Financing Documents that relate to property outside the State may be
subject to the laws of the state in which the property is located.
9.11.2 Submission to Jurisdiction.
---------------------------
The Borrowers irrevocably submit to the jurisdiction of
any state or federal court sitting in the State over any suit, action or
proceeding arising out of or relating to this Agreement or any of the other
Financing Documents. Each of the Borrowers irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment in any such suit, action or proceeding brought in any
such court shall be conclusive and binding upon the Borrowers and may be
enforced in any court in which the Borrowers are subject to jurisdiction, by
a suit upon such judgment, provided that service of process is effected upon
the Borrowers in one of the manners specified in this Section or as otherwise
permitted by applicable Laws.
9.11.3 Appointment of Agent for Service of Process.
--------------------------------------------
The Borrowers hereby irrevocably designate and appoint CT
Corporation System, 4701 Cox Road, Suite 301, Glen Allen, Virginia 23060, as
the Borrowers' authorized agent to receive on the Borrowers' behalf service
of any and all process that may be served in any suit, action or proceeding
of the nature referred to in this Section in any state or federal court
sitting in the State. If such agent shall cease so to act, the Borrowers
shall irrevocably designate and appoint without delay another such agent in
the State satisfactory to the Agent and shall promptly deliver to the Agent
evidence in writing of such other agent's acceptance of such appointment and
its agreement that such appointment shall be irrevocable.
9.11.4 Service of Process.
-------------------
Each of the Borrowers hereby consents to process being
served in any suit, action or proceeding of the nature referred to in this
Section by (a) the mailing of a copy thereof by registered or certified mail,
postage prepaid, return receipt requested, to the Borrower at the Borrower's
address designated in or pursuant to Section 9.1 (Notices), and (b) serving a
copy thereof upon the agent, if any, designated and appointed by the Borrower
as the Borrower's agent for service of process by or pursuant to this
Section. The Borrowers irrevocably agree that such service (y) shall be
deemed in every respect effective service of process upon the Borrowers in
any such suit, action or proceeding, and (z) shall, to the fullest extent
permitted by law, be taken and held to be valid personal service upon the
Borrowers. Nothing in this Section shall affect the right of the Agent to
serve process in any manner otherwise permitted by law or limit the right of
the Agent otherwise to bring proceedings against the Borrowers in the courts
of any jurisdiction or jurisdictions.
Section 9.12 Duplicate Originals and Counterparts.
-------------------------------------
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and all taken together shall constitute but one and
the same instrument.
Section 9.13 Headings.
---------
The headings in this Agreement are included herein for convenience
only, shall not constitute a part of this Agreement for any other purpose,
and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
Section 9.14 No Agency.
----------
Nothing herein contained shall be construed to constitute the Borrowers
as the agent of the Agent or any of the Lenders for any purpose whatsoever or
to permit the Borrowers to pledge any of the credit of the Agent or any of
the Lenders. Neither the Agent nor any of the Lenders shall be responsible or
liable for any shortage, discrepancy, damage, loss or destruction of any part
of the Collateral wherever the same may be located and regardless of the
cause thereof. Neither the Agent nor any of the Lenders shall, by anything
herein or in any of the Financing Documents or otherwise, assume any of the
Borrowers' obligations under any contract or agreement assigned to the Agent
and/or the Lenders, and neither the Agent nor any of the Lenders shall be
responsible in any way for the performance by the Borrowers of any of the
terms and conditions thereof.
Section 9.15 Date of Payment.
----------------
Should the principal of or interest on the Notes become due and payable
on other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day and in the case of principal, interest shall be
payable thereon at the rate per annum specified in the Notes during such
extension.
Section 9.16 Entire Agreement.
-----------------
This Agreement is intended by the Agent, the Lenders and the Borrowers
to be a complete, exclusive and final expression of the agreements contained
herein. Neither the Agent, the Lenders nor the Borrowers shall hereafter
have any rights under any prior agreements pertaining to the matters
addressed by this Agreement but shall look solely to this Agreement for
definition and determination of all of their respective rights, liabilities
and responsibilities under this Agreement.
Section 9.17 Waiver of Trial by Jury.
------------------------
THE BORROWERS, THE AGENT AND THE LENDERS HEREBY JOINTLY AND SEVERALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE
AGENT AND/OR ANY OR ALL OF THE LENDERS MAY BE PARTIES, ARISING OUT OF OR IN
ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING DOCUMENTS,
OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the
Borrowers, the Agent and the Lenders, and the Borrowers, the Agent and the
Lenders hereby represent that no representations of fact or opinion have been
made by any individual to induce this waiver of trial by jury or to in any
way modify or nullify its effect. The Borrowers, the Agent and the Lenders
further represent that they have been represented in the signing of this
Agreement and in the making of this waiver by independent legal counsel,
selected of their own free will, and that they have had the opportunity to
discuss this waiver with counsel.
Section 9.18 Liability of the Agent and the Lenders.
---------------------------------------
The Borrowers hereby agree that neither the Agent nor any of the
Lenders shall be chargeable for any negligence, mistake, act or omission of
any accountant, examiner, agency or attorney employed by the Agent and/or any
of the Lenders in making examinations, investigations or collections, or
otherwise in perfecting, maintaining, protecting or realizing upon any lien
or security interest or any other interest in the Collateral or other
security for the Obligations.
By inspecting the Collateral or any other properties of the Borrowers
or by accepting or approving anything required to be observed, performed or
fulfilled by the Borrowers or to be given to the Agent and/or any of the
Lenders pursuant to this Agreement or any of the other Financing Documents,
neither the Agent nor any of the Lenders shall be deemed to have warranted or
represented the condition, sufficiency, legality, effectiveness or legal
effect of the same, and such acceptance or approval shall not constitute any
warranty or representation with respect thereto by the Agent and/or the
Lenders.
Section 9.19 Indemnification.
----------------
The Borrowers agrees to indemnify and hold harmless, the Agent, the
Lenders, the respective parent and Affiliates of the Agent and the Lenders
and the respective parent's and Affiliates' officers, directors,
shareholders, employees and agents (each an "Indemnified Party," and
collectively, the "Indemnified Parties"), from and against any and all
claims, liabilities, losses, damages, costs and expenses (whether or not such
Indemnified Party is a party to any litigation), including without
limitation, reasonable attorney's fees and costs and costs of investigation,
document production, attendance at depositions or other discovery, incurred
by any Indemnified Party with respect to, arising out of or as a consequence
of (a) this Agreement or any of the other Financing Documents, including
without limitation, any failure of the Borrowers to pay when due (at
maturity, by acceleration or otherwise) any principal, interest, fee or any
other amount due under this Agreement or the other Loan documents, or any
other Event of Default; (b) the use by the Borrowers of any proceeds advanced
hereunder; (c) the transactions contemplated hereunder; or (d) any claim,
demand, action or cause of action being asserted against (i) the Borrowers or
any of their Affiliates by any other Person, or (ii) any Indemnified Party by
the Borrowers in connection with the transactions contemplated hereunder.
Notwithstanding anything herein or elsewhere to the contrary, the Borrowers
shall not be obligated to indemnify or hold harmless any Indemnified Party
from any liability, loss or damage resulting from the gross negligence,
willful misconduct or unlawful actions of such Indemnified Party. Any amount
payable to the Agent and/or the Lenders under this Section will bear interest
at the Post-Default Rate from the due date until paid.
Section 9.20 Patriot Act Notice.
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To help fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record
information that identifies each person who opens an account. For purposes
of this section, account shall be understood to include loan accounts.
[Signatures Appear on the Following Pages]
IN WITNESS WHEREOF, each of the parties hereto have executed and
delivered this Amended and Restated Business Loan and Security Agreement
under their respective seals as of the day and year first written above.
BORROWERS:
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WITNESS/ATTEST: VSE CORPORATION
_________________________ By: ____________________________(Seal)
Name:
Title:
WITNESS/ATTEST: ENERGETICS INCORPORATED
_________________________ By: ____________________________(Seal)
Name:
Title:
WITNESS/ATTEST: VSE SERVICES INTERNATIONAL, INC.
_________________________ By: ____________________________(Seal)
Name:
Title:
WITNESS/ATTEST: INTEGRATED CONCEPTS AND RESEARCH
CORPORATION
_________________________ By: ____________________________(Seal)
Name:
Title:
WITNESS/ATTEST: G&B SOLUTIONS, INC.
_________________________ By: ____________________________(Seal)
Name:
Title:
LENDERS:
--------
WITNESS: CITIZENS BANK OF PENNSYLVANIA,
in its capacity as a Lender
_________________________ By: ____________________________(Seal)
Name:
Title:
WITNESS: SUNTRUST BANK,
in its capacity as a Lender
_________________________ By: ____________________________(Seal)
Name:
Title:
AGENT:
------
WITNESS: CITIZENS BANK OF PENNSYLVANIA,
in its capacity as Agent
_________________________ By: ____________________________(Seal)
Name:
Title:
LIST OF EXHIBITS
----------------
A. Additional Borrower Joinder Supplement
B-1. Form of Revolving Credit Note
B-2 Form of Replacement Revolving Credit Note
B-3 Form of Swing Line Note
C. Account Information for Wire Transfer
D. Form of Compliance Certificate
E. Form of Increased Revolving Facility Activation Notice
F-1. Form of Officer's Certificate
F-2. Form of Officer's Certificate
LIST OF SCHEDULES
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Schedule 4.1.8 Litigation
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Schedule 4.1.11 Indebtedness for Borrowed Money
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Schedule 4.1.16 Employee Relations
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Schedule 4.1.18 Perfection and Priority of Collateral
- ---------------
Schedule 6.2.19 Deposit Accounts
- ---------------