EXHIBIT 10.5
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ALION SCIENCE AND TECHNOLOGY CORPORATION
1750 Tysons Boulevard
Suite 1300
McLean, Virginia 22102
$39,900,000 6% Junior Subordinated Notes of
Alion Science and Technology Corporation
due ___________, 2010
Warrants for [___________] Shares of Common Stock of
Alion Science and Technology Corporation (subject to adjustment)
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SELLER NOTE SECURITIES PURCHASE AGREEMENT
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_____________, 2002
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TABLE OF CONTENTS
PAGE
1. Description of Acquisition...........................................1
2. Authorization of Securities; etc.....................................1
3. Sale and Purchase of Securities......................................2
4. Closing..............................................................2
5. Conditions To Closing................................................2
5.1 Representations and Warranties Correct......................2
5.2 Performance; No Default.....................................3
5.3 Related Transactions........................................3
5.4 Compliance Certificate......................................4
5.5 Opinion of Counsel for the Company..........................4
5.6 Opinion of Counsel for the ESOP.............................4
5.7 Legal Investment; Certificate...............................4
5.8 Sale and Purchase Not Forbidden by Law......................4
5.9 Proceedings and Documents...................................4
5.10 Existence and Authority of the Company......................4
5.11 Private Placement Number....................................4
5.12 Consents and Approvals......................................4
5.13 Absence of Litigation, Orders, Etc..........................4
5.14 Satisfactory Proceedings....................................5
5.15 Blue Sky....................................................5
5.16 Waiver of Conditions........................................5
6. Representations and Warranties.......................................5
6.1 Organization, Standing, etc.................................5
6.2 Authority, Execution and Delivery; Transaction Documents....5
6.3 No Conflict; Governmental Consents..........................6
6.4 Subsidiaries; Capitalization................................6
6.5 Subchapter S Status.........................................8
7. Prepayment of Notes..................................................8
7.1 Allocation of Partial Prepayments of Notes..................8
7.2 Notice of Optional Prepayments of Notes.....................8
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.3 Maturity; Accrued Interest; Surrender, etc. of Notes........8
7.4 Payment on Non-Business Days................................9
8. Subordination of Notes...............................................9
9. Affirmative and Negative Covenants of the Company....................9
9.1 Payment of Interest and Principal...........................9
9.2 Limitation on Dividends and Distributions...................9
10. Definitions..........................................................9
10.1 Definitions of Capitalized Terms............................9
10.2 Other Definitions..........................................15
10.3 Laws.......................................................15
11. Remedies............................................................16
11.1 Events of Default Defined; Acceleration of Maturity........16
11.2 Suits for Enforcement, etc.................................18
11.3 No Election of Remedies....................................18
11.4 Remedies Not Waived........................................18
11.5 Application of Payments....................................19
12. Registration, Transfer and Exchange of Securities...................19
13. Replacement of Securities...........................................19
14. Appointment of Directors............................................19
15. Amendment and Waiver................................................20
16. Method of Payment of Securities.....................................20
17. Expenses; Indemnity.................................................20
18. Taxes...............................................................21
19. Communications......................................................21
20. Survival of Agreements, Representations and Warranties, etc.........22
21. Successors and Assigns; Rights of Other Holders.....................22
22. Purchase for Investment; ERISA......................................22
23. Assignment; Right of First Offer....................................24
23.1 Right of First Offer.......................................24
23.2 Minimum Amounts and Increments.............................26
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TABLE OF CONTENTS
(CONTINUED)
PAGE
24. Governing Law; Jurisdiction; Waiver of Jury Trial...................26
25. Rule 144A...........................................................26
26. Miscellaneous.......................................................27
27. Confidential Information............................................27
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Schedule I Schedule of Holders
Schedule II Schedule of ESOP Plan Documents
Schedule III Schedule of ESOT Transaction Documents
Exhibit 2(a) Form of Note
Exhibit 2(b) Form of Warrant
Exhibit 2(c) Form of PIK Note
Exhibit 5.3(a) Form of Mezzanine Note
Exhibit 5.3(b) Outstanding Indebtedness
Exhibit 5.3(e) Form of Rights Agreement
Exhibit 5.5 Opinion of Baker & McKenzie
Exhibit 5.6 Opinion of [Paul, Weiss, Rifkind, Wharton &
Garrison]
Exhibit 6.2 Names; Jurisdictions of Incorporation;
Subsidiaries, etc.
Exhibit 6.3 Conflicts; Government Consents
Exhibit 6.4(a) Shares; Stockholders
Exhibit 6.4(b) Other Securities; Commitments; Preemptive and
Registration Rights
ALION SCIENCE AND TECHNOLOGY CORPORATION
1750 Tysons Boulevard
Suite 1300
McLean, Virginia 22102
__________, 2002
To each of the Holders named
on Schedule I attached hereto
Ladies and Gentlemen:
ALION SCIENCE AND TECHNOLOGY CORPORATION, a Delaware corporation (the
"Company"), agrees with you as follows. Certain terms used herein are defined
in section 11.
1. Description of Acquisition. The Company has agreed to acquire
substantially all of the assets of IIT Research Institute, a not-for-profit
Illinois corporation ("IITRI") for consideration of $117,100,000 (subject to
certain adjustments as provided in the Asset Purchase Agreement) pursuant to
the IITRI Acquisition Documents. In order to consummate the IITRI Acquisition,
the holders have agreed to accept a portion of the purchase price in Notes and
Warrants of the Company on the terms and pursuant to the conditions set forth
in this Agreement.
2. Authorization of Securities; etc.
(a) The Company has authorized the issue of its 6%
Junior Subordinated Notes due __________, 2010 (herein, together with
any notes issued in exchange therefor or replacement thereof, called
the "Notes") in the aggregate principal amount of $39,900,000. The
Notes are to be substantially in the form of Exhibit 2(a) attached
hereto.
(b) The Company has authorized the issue of its
warrants evidencing rights to purchase ___________ shares of its
Common Stock (subject to adjustment) (herein, together with any
warrants issued in exchange therefor or replacement thereof, called
the "Warrants"). The Warrants are to be substantially in the form of
Exhibit 2(b) attached hereto.
(c) Interest on the Notes shall accrue at 6% per annum
computed on the actual number of days elapsed in any year (based on a
year of twelve 30-day months and a 360 day year). Through the sixth
anniversary of the Closing Date, interest on the Notes will be
payable quarterly in arrears in the form of payment-in-kind notes
("PIK Notes"). The PIK Notes are to be substantially in the form of
Exhibit 2(c) attached hereto. Interest paid in PIK Notes will not be
compounded and PIK Notes will therefore be non-interest
bearing obligations, payable as provided in the PIK Notes in two
equal installments on the seventh and eighth anniversaries of the
Closing Date. After the sixth anniversary of the Closing Date,
interest on the Notes is payable quarterly, in cash at a rate of 16%
per annum computed on the actual number of days elapsed in any year
(based upon a year of twelve 30-day months and a 360 day year). The
first installment of interest on the Notes is payable on __________,
2002, and thereafter interest is payable on the Notes, quarterly in
arrears on the last Business Day of March, June, September and
December of each year, commencing _______, 2002 and at maturity. In
no event shall the amount paid or agreed to be paid by the Company as
interest on any Note exceed the highest lawful rate permissible under
any law applicable thereto.
(d) Principal on the Notes is payable as provided in
the Notes in two equal installments on the seventh and eighth
anniversaries of the Closing Date.
3. Sale and Purchase of Securities. The Company will issue to you as
consideration under the Asset Purchase Agreement and, subject to the terms and
conditions hereof and in reliance upon the representations and warranties of
the Company contained herein and in the other Operative Documents, you will
accept from the Company, at the Closing specified in section 4, such
Securities as are specified on that portion of Schedule I attached hereto as
is applicable to you.
4. Closing. The closing of the sale and delivery of the Securities
hereunder (the "Closing") shall take place at the office of Baker & McKenzie,
Chicago, on ________, 2002 (or such other date to which you may agree) (the
"Closing Date"). At the Closing, the Company will deliver to you the
Securities in the form of one or more Notes and Warrants, in such
denominations and registered in such names as are specified on Schedule I
attached hereto, and in each case dated and, in the case of each Note, bearing
interest from, the Closing Date. If at the Closing the Company shall fail to
tender the Securities to be delivered to you thereat as provided herein, or if
at the Closing any of the conditions specified in section 5 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved
of all further obligations under this Agreement or to close the acquisition
transaction contemplated by the Acquisition Documents, without thereby waiving
any other rights you may have by reason of such failure or such
non-fulfillment.
5. Conditions To Closing. Your obligation to accept the Securities to
be delivered to you hereunder at the Closing is subject to the fulfillment to
your satisfaction, prior to or at the Closing, of the following conditions:
5.1 Representations and Warranties Correct. The representations
and warranties made by the Company herein and in the other Operative Documents
shall have been true and correct when made and shall be true and correct as of
the time of the Closing (after giving effect to the transactions consummated
at the Closing).
5.2 Performance; No Default. The Company shall have performed
all agreements and complied with all conditions contained herein and in the
other Operative Documents required to be performed or complied with by it
prior to or at the Closing, and at the time of the Closing, no
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Default or Event of Default shall exist and no condition shall exist which has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect.
5.3 Related Transactions.
(a) The IITRI Acquisition shall have been consummated
in accordance with the Acquisition Documents. No material term or
condition of the Acquisition Documents shall have been amended,
modified, supplemented or waived, other than as the same may be or
may have been amended as of the Closing pursuant to the terms and
conditions of the applicable Acquisition Document (true and correct
copies of which have been or will be provided to you on or prior to
Closing). The purchase price of the Acquired Business shall be paid
at the time of the Closing as follows: (i) an aggregate of
$56,000,000 shall be paid in cash in immediately available funds,
(ii) an aggregate of $__________ shall be paid by the issuance of the
Mezzanine Notes, each in the form of Exhibit 5.3(a) attached hereto,
and (iii) an aggregate of $39,900,000 shall be paid by the issuance
of the Notes hereunder. The terms of the Acquisition Documents shall
be satisfactory to you in all material respects.
(b) The debt and equity capitalization of the Company
shall be satisfactory to you in all material respects. Without
limiting the generality of the foregoing, after giving effect to the
IITRI Acquisition, as of the Closing the Company shall not have any
outstanding Indebtedness other than that evidenced by the Notes and
that which is specified on Exhibit 5.3(b) attached hereto.
(c) The Bank Documents shall have been executed and
delivered and shall be in full force and effect. The Company shall
have established pursuant thereto (i) a $25,000,000 five-year senior
secured revolving credit facility, and (ii) a $35,000,000 five-year
senior secured term loan facility. The terms of the Bank Documents
and the Mezzanine Notes pursuant to which the Notes are subordinated
to the Bank Documents and the Mezzanine Notes, shall be satisfactory
to you in all material respects.
(d) The Organizational Documents of the Company shall
be satisfactory to you in all material respects.
(e) You, the ESOP and each other holder of any Shares
(or options therefor) issued by the Company shall have entered into a
rights agreement in substantially the form of Exhibit 5.3(e) attached
hereto (the "Rights Agreement"), the terms of which shall be
satisfactory to you and which shall be in full force and effect.
(f) You, the ESOP and the Company shall have entered
into a Warrant in substantially the form of Exhibit 2(b) attached
hereto, the terms of which shall be satisfactory to you and which
shall be in full force and effect.
5.4 Compliance Certificate. At the Closing, you shall have
received an Officers' Certificate, dated the Closing Date, certifying that the
conditions specified in sections 5.1, 5.2 and 5.3(a) and (c) have been
fulfilled.
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5.5 Opinion of Counsel for the Company. At the Closing, you
shall have received opinions, dated the Closing Date, from Baker & McKenzie,
counsel to the Company, in substantially the form of Exhibit 5.5 attached
hereto.
5.6 Opinion of Counsel for the ESOP. At the Closing, you shall
have received an opinion, dated the Closing Date, [Paul, Weiss, Rifkind,
Wharton & Garrison], special counsel to the ESOP, in substantially the form of
Exhibit 5.6 attached hereto.
5.7 Legal Investment; Certificate. Your acceptance of the
Securities to be issued pursuant hereto shall be permitted under the laws and
regulations of any jurisdiction to which you are subject (without resort to
any provision of any such law permitting limited investments by you without
restriction as to the character of the particular investment).
5.8 Sale and Purchase Not Forbidden by Law. The offer, issue,
sale and delivery by the Company of the Securities to be issued pursuant
hereto and your acceptance of such Securities at the Closing shall not be
prohibited by and shall not subject you to any tax, penalty, or liability
under or pursuant to any law, statute, rule or regulation.
5.9 Proceedings and Documents. All proceedings in connection
with the transactions contemplated by the Operative Documents and all
agreements, documents and instruments incident to such transactions shall be
satisfactory in substance and form to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
copies of such agreements, documents and instruments as you or they may
reasonably request.
5.10 Existence and Authority of the Company. On or prior to the
Closing Date, you shall have received a certificate of good standing with
respect to the Company, certified copies as of a recent date of the
Organizational Documents of the Company, certified copies of the Transaction
Documents and evidence with respect to the authorization of the transactions
contemplated by this Agreement, the other Operative Documents and the other
Transaction Documents.
5.11 Private Placement Number. On or prior to the Closing Date,
Baker & McKenzie, special counsel for the Company, shall have duly made the
appropriate filings with Standard & Poor's CUSIP Service Bureau in order to
obtain the requisite private placement numbers for the Notes and the Warrants.
5.12 Consents and Approvals. All necessary consents, approvals
and authorizations of, and declarations, registrations and filings with,
governmental bodies and non-governmental Persons required in order to
consummate the transactions contemplated herein, in the Bank Documents and the
Acquisition Documents shall have been obtained or made and shall be in full
force and effect.
5.13 Absence of Litigation, Orders, Etc. There shall not be
pending or, to the knowledge of the Company, threatened, any action, suit,
proceeding, governmental investigation or arbitration against or affecting any
of the Company, or the respective assets or property of such Persons which
seeks to enjoin or restrain any of the transactions contemplated herein or in
the other Operative Documents, the Acquisition Documents or which is
reasonably likely to have
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a Material Adverse Effect. No order of any court, arbitrator or governmental
body shall be in effect which purports to enjoin or restrain any of the
transactions contemplated herein or which you reasonably believe in good faith
could constitute a Material Adverse Effect.
5.14 Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, the Notes,
the Warrants, the other Operative Documents shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a copy
(executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
5.15 Blue Sky. The Company shall have made all filings reasonably
requested by you (if any shall be required) under applicable state securities
laws necessary to consummate the issuance of the Notes and Warrants pursuant
to this Agreement in compliance with such laws.
5.16 Waiver of Conditions. If the conditions specified in this
section 5 have not been fulfilled, you may waive compliance by the Company
with any such condition to such extent as you may in your sole discretion
determine. Nothing in this section 5.16 shall operate to relieve the Company
of its obligations hereunder or to waive any of your rights against the
Company.
6. Representations and Warranties. The Company represents and warrants
that as of the Closing (after giving effect to the transactions consummated at
the Closing, including, without limitation, the IITRI Acquisition):
6.1 Organization, Standing, etc. The Company (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) is duly qualified to do
business as a foreign entity and is in good standing under the laws of each
jurisdiction in which failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect, and (c) has all
requisite power and authority to own, operate and encumber its property and to
conduct its business as presently conducted and as proposed to be conducted.
6.2 Authority, Execution and Delivery; Transaction Documents.
(a) Power and Authority. The Company has the requisite
power and authority to execute, deliver and perform this Agreement
and the other Operative Documents and (ii) to file the Transaction
Documents which must be filed by it in connection with this Agreement
and the other Operative Documents with any Governmental Authority.
(b) Execution and Delivery. The execution, delivery,
performance and filing, as the case may be, of each of this Agreement
and the other Operative Documents which must be executed or filed by
the Company in connection with this Agreement, the IITRI Acquisition
or the ESOT Transaction or otherwise and to which the Company is
party, and the consummation of the transactions contemplated hereby
and thereby, have been duly approved by the respective boards of
directors and, if necessary, the shareholders of the Company, and
such approvals have not been rescinded. No other action or
proceedings on the part of the Company are necessary to consummate
such transactions.
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(c) Transaction Documents. Each of this Agreement and
the other Operative Documents to which the Company is a party has
been duly executed, delivered or filed, as the case may be, by it and
constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms (except as enforceability may
be limited by bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally), is in full force and
effect, and no material term or condition of the Transaction
Documents has been amended, modified or waived from the terms and
conditions contained in the Transaction Documents delivered to the
holders pursuant to Section 5.3 of this Agreement, and the Company
has, and, to the best of the Company's knowledge, all other parties
thereto have, performed and complied with all the terms, provisions,
agreements and conditions set forth therein and required to be
performed or complied with in all material respects by such parties,
and no unmatured default, default or breach of any covenant by any
such party exists thereunder.
6.3 No Conflict; Governmental Consents. The execution, delivery
and performance of each of this Agreement, the other Operative Documents and
the other Transaction Documents to which the Company or any of its
Subsidiaries is a party do not and will not (a) conflict with the
Organizational Documents of the Company, (b) conflict with, result in a breach
of or constitute (with or without notice or lapse of time or both) a default
under any Requirement of Law or Contractual Obligation of the Company, or
require termination of any Contractual Obligation of the Company which
termination could reasonably be expected to have a Material Adverse Effect, or
(c) require any approval of the Company's board of directors or stockholders
except such as have been obtained. Except as set forth on Exhibit 6.3 attached
hereto, the execution, delivery and performance of each of the Transaction
Documents to which the Company is a party do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by any Governmental Authority except filings, consents or notices
which have been made, obtained or given, or which, if not made, obtained or
given, individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
6.4 Subsidiaries; Capitalization.
(a) Exhibit 6.4(a) attached hereto (i) contains a
description of the corporate structure of the Company or its
Subsidiaries; and (ii) accurately sets forth (A) the correct legal
name, the jurisdiction of incorporation and the jurisdictions in
which each of the Company and the direct and indirect Subsidiaries of
the Company are qualified to transact business as a foreign
corporation, and (B) the authorized, issued and outstanding shares of
each class of Capital Stock of the Company and each of its
Subsidiaries and the owners of such shares (both as of the Closing
Date and on a fully-diluted basis). None of the Company's
Subsidiaries is a Foreign Subsidiary. Except for (i) mandatory
redemption or repurchase of Capital Stock of the Company as a result
of distributions by the ESOT to participants of the ESOP pursuant to
the ESOP Plan Documents subsequent to their termination of employment
with the Company or any Controlled Group member, (ii) as required by
Section 401(a)(28) of the Code or any substantially similar
Requirement of Law, (iii) the Incentive Arrangements disclosed on
Exhibit 6.4(a), and the Warrants and Mezzanine Warrants, (iv) the put
and call rights contained in the Warrants and the
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Mezzanine Warrants, or (v) agreements otherwise disclosed on Exhibit
6.4(a), none of the issued and outstanding Capital Stock of the
Company is subject to any vesting, redemption, or repurchase
agreement, and there are no warrants or options outstanding with
respect to such Capital Stock, except for the Warrants and the
Mezzanine Warrants and except as may be in effect from time to time
with respect to Incentive Arrangements. The outstanding Capital
Stock of the Company is duly authorized, validly issued, fully paid
and nonassessable and is not Margin Stock; and, except as provided in
the Rights Agreement, the Warrants and the Mezzanine Warrants, not
subject to any preemptive right, right of first refusal or offer or
similar right on the part of any other Person, and all of such
Capital Stock has been (or will have been) offered and issued in
accordance with all applicable laws. Except as set forth on Exhibit
6.4(a) attached hereto and except to the extent Persons may be deemed
beneficial owners by virtue of familial relationships with a holder
of Capital Stock or in connection with a trust established for the
benefit of family members by a holder of Capital Stock, the owners of
the Capital Stock indicated on Exhibit 6.4(a) attached hereto own the
Capital Stock indicated on such exhibit free of any Lien, proxy,
voting agreement, voting trust, stockholders agreement (other than
the Rights Agreement) or similar agreement or restriction. Except as
set forth on Exhibit 6.4(a) attached hereto, neither the
Organizational Documents nor any other agreement, document or
instrument binding on or applicable to the Company or any of its
Subsidiaries or any of its stockholders contains any provision
requiring a higher voting requirement with respect to action taken
(and/or to be taken) by its board of directors or stockholders than
that which would apply in the absence of such provision.
(b) Except as provided in the Rights Agreement, the
Warrants, the Mezzanine Warrants and except as set forth on Exhibit
6.4(b) attached hereto (after giving effect to the consummation of
the transactions consummated at the Closing under the Transaction
Documents), (i) there are no outstanding securities convertible into
or exercisable or exchangeable for any Capital Stock of the Company
and no outstanding agreements for the purchase from, or sale or
issuance by, the Company or any of its Subsidiaries of any of their
respective Capital Stock or any securities convertible into or
exercisable or exchangeable for such Capital Stock; (ii) there are no
agreements on the part of the Company or any of its Subsidiaries to
issue, sell or distribute any of their respective Capital Stock,
other securities or assets; (iii) neither the Company nor any of its
Subsidiaries has any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of their respective Capital
Stock or other securities or any interest therein or to pay any
dividend or make any distribution in respect thereof; and (iv) no
Person is entitled to any rights with respect to the registration of
any Capital Stock or other securities of the Company or any of its
Subsidiaries under the Securities Act (or the securities laws of any
other jurisdiction).
(c) The aggregate number of shares of Common Stock
issuable upon exercise in full of the Warrants immediately after the
Closing is __________, which, if then issued, would constitute [____
percent __%] of the Common Stock (calculated assuming the conversion,
exercise and exchange of all outstanding securities convertible into
and exercisable or exchangeable for shares of Common Stock,
including, without limitation, the Warrants, __________ shares of
Common Stock to be reserved for issuance under a
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Company stock appreciation rights plan and _________ shares of Common
Stock to be reserved for issuance under a Company phantom stock plan
for issuance under a Company phantom stock plan). The Company has
reserved __________ shares of Common Stock solely for issuance upon
exercise of the Warrants.
6.5 Subchapter S Status. As of the Closing Date, the Company has
executed or caused all other Persons to execute the applicable election forms
or other filings required to be made for purposes of the Company's election to
be taxed as an "S corporation" as such term is defined in Section 1361 of the
Code. Beginning with the Company's taxable year ending September 30, 2002, the
Company was as of the Closing Date taxable as an S corporation. The ESOT is
not subject to tax imposed under the Code with respect to any item of income
or loss of the Company or any Subsidiary of the Company.
7. Prepayment of Notes. The Notes may be prepaid in whole or part at
any time, without premium or penalty.
7.1 Allocation of Partial Prepayments of Notes. In the case of
each partial prepayment of the Notes under section 7, the principal amount to
be prepaid shall be allocated among all of the Notes at the time outstanding
(excluding any Notes at the time owned by the Company or any of its
Affiliates) in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof, with adjustments, to the extent practicable, to
compensate for any prior prepayments not made exactly in such proportion.
7.2 Notice of Optional Prepayments of Notes. In the case of each
prepayment under section 7, the Company shall give written notice thereof to
each holder of any Notes not less than 5 nor more than 60 days prior to the
date fixed for such prepayment. Each such notice shall set forth: (a) the date
fixed for prepayment; (b) the aggregate principal amount of Notes to be
prepaid on such date; (c) the aggregate principal amount of Notes held by such
holder to be prepaid on such date; and (d) the amount of the accrued interest,
if any, to be paid to such holder on such date.
7.3 Maturity; Accrued Interest; Surrender, etc. of Notes. In the
case of each prepayment of all or any part of any Note, the principal amount
to be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to
such date, if any, due thereon. Any Note prepaid in full shall be marked "paid
in full", surrendered to the Company at the Company's principal place of
business promptly following prepayment and canceled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid principal amount of any
Note.
7.4 Payment on Non-Business Days. If any amount hereunder or
under the Notes shall become due on a day which is not a Business Day, such
payment shall be due on the next succeeding Business Day.
8. Subordination of Notes . Notwithstanding anything herein to the
contrary, payments on the Notes and the rights of the holders of the Notes, is
subordinated to payments on, and the rights of the holders of, Senior
Indebtedness (as defined in the respective Subordination Agreements), all as
further provided in the Subordination Agreements. To the extent the
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Company is not a party to a Subordination Agreement, you agree to use
reasonable efforts to promptly furnish to the Company a copy of such
Subordination Agreement; provided that the failure to provide such copy shall
not result in any liability to any holder or otherwise effect the obligations
of the Company under this Agreement or the other Operative Documents.
9. Affirmative and Negative Covenants of the Company. From and after the
date of this Agreement, and thereafter so long as any of the Notes shall
remain outstanding, the Company will duly perform and observe, for the benefit
of the holders of the Notes, each and all of the covenants and agreements
applicable to it as hereinafter set forth:
9.1 Payment of Interest and Principal. The Company shall make
due and punctual payments of principal and interest on the Notes when and as
such principal and interest shall become due and payable (subject to
applicable grace periods).
9.2 Limitation on Dividends and Distributions. The Company will
not authorize, declare or make, or incur any liability to make, dividends,
repurchases or redemptions or other distributions in respect of its Capital
Stock other than in connection with (i) the redemption or repurchase for value
of any Capital Stock as a result of distributions by the ESOT of such Capital
Stock to participants in the ESOP pursuant to the ESOP Plan Documents
subsequent to participant's termination of employment with the Company or any
Collateral Group member, or (ii) as required by Section 401(a)(28) of the Code
or any substantially similar Requirement of Law, (iii) in the form of
administrative fees or expenses of the ESOP or the ESOT including, without
limitation, the fees of the ESOT Trustee in accordance with the ESOP Plan
Documents, (iv) as contributions to the ESOT in accordance with the ESOP Plan
Documents, or (v) the Warrants or the Mezzanine Warrants.
10. Definitions.
10.1 Definitions of Capitalized Terms. The terms defined in this
section 10.1, whenever used in this Agreement, shall, unless the context
otherwise requires, have the following respective meanings:
"Acquired Business" means the Business, as described in the
Acquisition Documents.
"Acquisition Documents" means the Asset Purchase Agreement and the
other agreements, documents and instruments related thereto or executed and
delivered in connection therewith.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if the
controlling Person is the "beneficial owner" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of greater than fifty percent (50%) or
more of the Voting Stock of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of Capital Stock,
by contract or otherwise; provided that, for purposes hereof, in no event
shall any holders or other institutional holder of Securities be deemed to be
an Affiliate of the Company or any of its Subsidiaries.
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"Asset Purchase Agreement" means each of the Amended and Restated
Asset Purchase Agreement dated as of _________ __, 2002 by and between the
Company and the Seller.
"Bank Credit Agreement" means the Credit Agreement dated as of
_________ __, 2002 by and among the Company, various financial institutions
party thereto, LaSalle Bank National Association, as agent, as amended,
restated, supplemented, refunded, substituted, refinanced, modified or
replaced from time to time.
"Bank Documents" means the Bank Credit Agreement, the Collateral
Documents, and all other documents, instruments, notes and agreements executed
in connection therewith or contemplated thereby, as the same may be as
amended, restated, supplemented, refunded, substituted, refinanced, modified
or replaced from time to time.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for business in New York, New York and Chicago, Illinois.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Closing" and "Closing Date" shall have the respective meanings
specified in section 4.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral Documents" shall have the meaning provided in the Bank
Credit Agreement.
"Commission" means the Securities and Exchange Commission or any
other federal agency from time to time administering the Securities Act and/or
the Exchange Act.
"Common Stock" means the Common Stock, [$.01] par value, of the
Company as constituted on the Closing Date and any shares into which such
Common Stock shall have been changed or any Capital Stock resulting from any
reclassification of such Common Stock.
"Company" shall have the meaning specified in the first paragraph of
this Agreement.
"Competitor" means any Person which generated at least twenty percent
(20%) of its total revenue (on a consolidated basis together with its direct
and indirect subsidiary entities and its direct and indirect parent entities)
from government contracts in its last fiscal year preceding the proposed
transfer, other than any Financial Institution.
"Contractual Obligation" means, as applied to any Person, any
provision of any equity or debt securities issued by that Person or any
indenture, mortgage, deed of trust, security agreement, pledge agreement,
guaranty, contract, undertaking, agreement or instrument, in any
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case in writing, to which that Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject.
"Controlled Group" means the group consisting of (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Company; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Code) with the Company;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Company, any corporation described in
clause (i) above or any partnership or trade or business described in clause
(ii) above.
"Default" means any condition or event which constitutes or, after
notice or lapse of time or both, would constitute an Event of Default.
"ESOP" means the employee benefit plan titled "The Alion Science and
Technology Corporation Employee Ownership, Savings and Investment Plan" and
adopted and maintained by the Company pursuant to the applicable ESOP Plan
Documents.
"ESOP Fiduciary" means the named fiduciary under ERISA of the ESOP.
As of the Closing Date, the ESOP Fiduciary is the ESOP Committee of the
Company.
"ESOP Plan Documents" means, collectively, the documents identified
in Schedule II to this Agreement and the ESOT Transaction Documents, each as
may be amended, supplemented or modified as provided herein.
"ESOT" means the trust titled "The Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Trust" and adopted and
maintained by the Company pursuant to the applicable ESOP Plan Documents.
"ESOT Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated as of ________, 2002, by and between the Borrower and the
ESOT.
"ESOT Transaction" means the series of transactions contemplated by
and described in the ESOT Transaction Documents, including but not limited to
the ESOT's purchase of up to 100% of the Capital Stock of the Company pursuant
to the ESOT Stock Purchase Agreement.
"ESOT Transaction Documents" means, collectively, the ESOT Stock
Purchase Agreement and the other documents identified on Schedule III to this
Agreement, as each may be amended, supplemented or modified as provided
herein.
"ESOT Trustee" means the trustee of the ESOT. As of the Closing Date
the ESOT Trustee is State Street Bank and Trust Company.
"Event of Default" shall have the meaning specified in section 11.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from
time to time.
"Financial Institution" means any insurance company, bank, trust
company, pension fund (whether private, public or governmental), mutual fund
or any other entity which is primarily engaged in the business of investing
for its own account or accounts of others in debt or equity securities of
issuers that are not Affiliates of the Company, regardless of whether or not
such Financial Institution has an investment in a person or entity that
generated at least 20% of its total revenue from government contracts;
provided that not more than 50% of the Voting Stock of such Financial
Institution is owned and controlled, directly or indirectly, by a person or
entity that generated at least 20% on a consolidated basis of its total
revenue from government contracts.
"IITRI" means IIT Research Institute, a not-for-profit Illinois
corporation ("IITRI") controlled by the Illinois Institute of Technology, a
not-for-profit Illinois corporation ("IIT").
"IITRI Acquisition" means the acquisition by the Company of the
Acquired Businesses pursuant to the Acquisition Documents.
"Incentive Arrangements" means any warrants, stock ownership,
restricted stock, stock option, stock appreciation rights plans, "phantom"
stock plans, deferred compensation arrangements, employment agreements,
non-competition agreements, subscription and stockholders agreements and other
incentive and bonus plans and similar arrangements made in connection with the
retention of directors, officers or employees of the Company and its
Subsidiaries.
"Indemnified Costs" shall have the meaning specified in section 17.
"Indemnitee" shall have the meaning specified in section 17.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, lien (statutory or otherwise), preference, priority, security
interest, chattel mortgage or other charge or encumbrance of any kind, or any
other type of preferential arrangement, including, without limitation, the
lien or retained security title of a conditional vendor and any easement,
right of way or other encumbrance on title to real property and any lease
having substantially the same effect as any of the foregoing.
"Material Adverse Effect" means a material adverse effect upon (i)
the business, assets, condition (financial or otherwise), operations,
performance, properties, or results of operations of the Company, any
Subsidiary Guarantor, or the Company and its Subsidiaries in each case taken
as a whole, (ii) the ability of the Company, any Subsidiary Guarantor or the
Company and its Subsidiaries to perform their respective obligations under
this Agreement and the other
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Operative Documents, (iii) the ability of the Holders to enforce their
respective obligations under this Agreement and the other Operative Documents,
or (iv) the validity or enforceability of this Agreement, other Operative
Documents, or the rights or remedies of the Holders hereunder and thereunder.
"Mezzanine Notes" means the Company's Senior Subordinated Notes due
___________, 2008 issued pursuant to the Acquisition Agreement in the initial
aggregate principal amount of $__________.
"Mezzanine Warrants" means warrants of the Company evidencing rights
to purchase ________ shares of the Company's Common Stock (subject to
adjustment) issued to holders of the Company's Mezzanine Notes and includes
any warrants issued in exchange therefor or in replacement thereof.
"Notes" means, collectively, the Notes specified in section 2(a)
issued on the Closing Date and any PIK Notes.
"Officers' Certificate" means a certificate signed on behalf of the
Company by its President or by its chief financial officer or treasurer.
"Operative Documents" means this Agreement, the Securities, the
Rights Agreement, the Subordination Agreements, and each of the other
agreements, documents and instruments executed in connection herewith and
therewith, each as it may from time to time be amended, modified or
supplemented.
"Organizational Documents" of any Person means such Person's charter
and by-laws, partnership agreement, operating agreement, trust agreement, as
applicable, and/or any other similar agreement, document or instrument.
"Person" means an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"PIK Notes" shall have the meaning specified in section 2(c).
"Qualified IPO" means the consummation of one or more underwritten
public offerings of the Company's Common Stock which results in aggregate
gross proceeds to the sellers in such offerings of not less than U.S.
$30,000,000 (excluding proceeds received in such offerings from "affiliates"
of the Company, within the meaning of Rule 12b-2 of SEC under the 1934 Act
(other than any holder of Notes) or the ESOP) and pursuant to which the
Company obtains a listing for its shares on a United States national
securities exchange, the Nasdaq Market System, or an automated quotation
system of nationally recognized standing.
"Required Holders" as applied to describe the requisite holder or
holders of any class of the Securities, means, at any date, the holder or
holders of 51% or more in interest of such class of Securities at the time
outstanding (excluding all Securities at the time owned by the Company or any
Affiliate of the Company).
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"Requirements of Law" means, as to any Person, the Organizational
Documents of such Person, and any law, rule or regulation, or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject including, without limitation,
the Securities Act, the Exchange Act, Regulations T, U and X, ERISA, the Fair
Labor Standards Act, the Worker Adjustment and Retraining Notification Act,
Americans with Disabilities Act of 1990, and any certificate of occupancy,
zoning ordinance, building, environmental or land use requirement or permit or
environmental, labor, employment, occupational safety or health law, rule or
regulation, including Environmental, Health or Safety Requirements of Law.
"Rights Agreement" shall have the meaning specified in section
5.3(e).
"Securities" means the Notes, the Warrants and, unless the context
clearly requires otherwise, the Warrant Shares, each of which is a "Security".
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Sellers" shall have the meaning provided in section 1.
"Shares" of any Person shall include any and all shares of capital
stock, partnership interests, membership interests, or other shares,
interests, participations or other equivalents (however designated and of any
class) in the capital of, or other ownership interests in, such Person.
"Source" shall have the meaning specified in section 22(b).
"Subordination Agreements" means collectively, (a) that certain
Subordination Agreement dated as of the date hereof by and among the Company,
the holders of the Notes, and LaSalle Bank National Association, as agent, and
(b) that certain Subordination Agreement dated as of the date hereof by and
among the Company, the holders of the Notes and the holders of the Mezzanine
Notes.
"Subsidiary" of any Person at any date means (a) any other Person a
majority (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such
first-mentioned Person and (b) any other Person with respect to which such
first-mentioned Person and/or any one or more other Subsidiaries of such
first-mentioned Person (i) is entitled to more than 50% of such Person's
profits or losses or more than 50% of such Person's assets on liquidation or
(ii) holds an equity interest in such Person of more than 50%. As used herein,
unless the context clearly required otherwise, the term "Subsidiary" refers to
a Subsidiary of the Company.
"Transaction Documents" means this Agreement, the other Operative
Documents, the Bank Documents and the documents executed and delivered, or
adopted, by the Company or any of its Subsidiaries or the ESOT Trustee or the
ESOP Fiduciary in connection with the IITRI Acquisition, the ESOT Transaction
and the issuance of the Seller Notes, including, without
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limitation, the Asset Purchase Agreement, the ESOT Agreements, the ESOP Plan
Documents, the Seller Notes and the Warrants.
"U.S. Qualified Persons" means those persons that (i) are defined as
U.S. persons in Section 7701(a)(3) of the Code and (ii) are U.S. citizens or
entities organized under U.S. federal or state laws which are not owned,
controlled or influenced, directly or indirectly, by a foreign person (or term
of like meaning) under the National Industrial Security Program Operating Manual
(or any successor document) as amended from time to time.
"Voting Stock", when used with reference to any Person, means Capital
Stock (however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than Capital Stock having such power only
by reason of the happening of a contingency.
"Warrant Shares" means any Capital Stock (or Other Securities (as
defined in the Warrants)) issued (or issuable, as applicable) upon exercise of
any Warrants, each of which is a "Warrant Share".
"Warrants" shall have the meaning specified in section 2(b).
10.2 Other Definitions. The terms defined in this section 10.2,
whenever used in this Agreement, shall, unless the context otherwise requires,
have the respective meanings hereinafter specified.
"this Agreement" (and similar references to any of the other Operative
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of similar import shall
refer to this Seller Note Securities Purchase Agreement for $39,900,000 6%
Junior Subordinated Notes of the Company as the same may from time to time be
amended, modified or supplemented.
"beneficial ownership" of any Capital Stock or other securities of any
Person shall be determined in the manner set forth in Rule 13d-3 of the
Commission under the Exchange Act.
a "class" of Securities shall refer to the Notes, the Warrants and/or
the Warrant Shares, as the case may be, each of which is a separate class.
"corporation" shall include an association, joint stock company,
business trust or other similar organization.
10.3 Laws. All references herein to laws, statutes, rules and
regulations shall, unless the context clearly requires otherwise, be deemed to
refer to any law, statute, rule, regulation and any other governmental
restriction, standard and/or requirement promulgated, issued and/or enforced by
any domestic or foreign federal, state or local government, governmental agency,
authority, court, instrumentality or regulatory body, including, without
limitation, those of the United States of America or any state thereof or the
District of Columbia.
11. Remedies.
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11.1 Events of Default Defined; Acceleration of Maturity. If any one
or more of the following events ("Events of Default") shall occur (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment
of all or any part of the principal of, or premium (if any) on, any Note
when and as the same shall become due and payable, whether at the stated
maturity thereof, by notice of or demand for prepayment, or otherwise;
or
(b) if default shall be made in the due and punctual payment
of any interest on any Note when and as such interest shall become due
and payable and such default shall have continued for a period of three
Business Days; or
(c) if default shall be made in the performance or
observance of any covenant, agreement or condition contained in section
9.2; or
(d) if an involuntary case shall be commenced against the
Company and the petition shall not be dismissed, stayed, bonded or
discharged within sixty (60) days after commencement of the case; or a
court having jurisdiction in the premises shall enter a decree or order
for relief in respect of the Company in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law; or
(e) if a decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers
over the Company or over all or a substantial part of the property of
the Company shall be entered; or an interim receiver, trustee or other
custodian of the Company or of all or a substantial part of the property
of the Company shall be appointed or a warrant of attachment, execution
or similar process against any substantial part of the property of the
Company shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance; or
(f) if the Company shall (i) commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (ii) consent to the entry of an order for relief in
an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, (iii) consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all
or a substantial part of its property, (iv) make any assignment for the
benefit of creditors or (v) take any corporate action to authorize any
of the foregoing; or
(g) if any representation or warranty made by or on behalf
of the Company in this Agreement or in any of the other Operative
Documents or in any agreement,
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document or instrument delivered under or pursuant to any provision
hereof or thereof shall prove to have been materially false or incorrect
on the date as of which made; or
(h) if, at any time, this Agreement or any of the other
Operative Documents shall for any reason (other than the scheduled
termination thereof in accordance with its terms) expire, fail to be in
full force and effect or be disaffirmed, repudiated, canceled,
terminated or declared to be unenforceable, null and void.
then, in the case of any Event of Default (other than one of the character
described in subdivisions (d), (e), or (f) of this section 11.1) and at the
option of the Required Holders of the Notes at the time outstanding (excluding
any Notes at the time owned by any of the Company or any of its Affiliates),
exercised by written notice to the Company, the principal of all Notes shall
forthwith become due and payable, together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Company shall forthwith upon any such
acceleration pay to the holder or holders of all the Notes then outstanding the
entire principal of and interest accrued on the Notes; provided that, in the
case of an Event of Default of the character described in subdivisions (a) or
(b) of this section 11.1 and irrespective of whether all of the Notes have been
declared due and payable by the Required Holders of the Notes at the time
outstanding, any holder of Notes who or which has not consented to any waiver
with respect to such Event of Default may, at the option of such holder, by
written notice to the Company, declare all Notes then held by such holder to be,
and such Notes shall thereupon become, forthwith due and payable, together with
interest accrued thereon, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, and the Company shall
forthwith upon any such acceleration pay to such holder the entire principal of
and interest accrued on such Notes; provided, further, that, in the case of an
Event of Default of the character described in subdivisions (d), (e) or (f) of
this section 11.1, the principal of all Notes shall forthwith become due and
payable, together with interest accrued thereon (including any interest accruing
after the commencement of any action or proceeding under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable domestic or
foreign federal or state bankruptcy, insolvency or other similar law, and any
other interest that would have accrued but for the commencement of such
proceeding, whether or not any such interest is allowed as an enforceable claim
in such proceeding), without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Company shall forthwith
upon any such acceleration pay to the holder or holders of all the Notes then
outstanding the entire principal of and interest accrued on the Notes.
Notwithstanding the foregoing provisions, at any time after the
occurrence of any Event of Default and of notice thereof, if any, by any holder
or holders of Notes and before any judgment, decree or order for payment of the
money due has been obtained by or on behalf of any holder or holders of the
Notes, the Required Holders of the Notes by written notice to the Company, may
rescind and annul such Event of Default and/or notice of such Event of Default
and the consequences thereof with respect to all of the Notes (including any
Notes which were accelerated pursuant to the first proviso in the preceding
paragraph by any holder or holders on account of an Event of Default of the
character described in subdivision (a) or (b) of this section 11.1) if:
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(1) the Company has paid a sum sufficient to pay
(A) all overdue installments of interest on all
Notes at the rate specified in the Notes;
(B) the principal of any Notes which have become due
otherwise than by such Event of Default or notice thereof and
interest thereon at the rate for overdue amounts specified in
such Notes; and
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate for overdue
amounts specified in such Notes; and
(2) all Defaults and Events of Default, other than the
non-payment of the principal of Notes which have become due solely by
such acceleration, have been cured or waived as provided in section 11.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
11.2 Suits for Enforcement, etc. In case any one or more of the
Events of Default specified in section 11.1 shall have occurred, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under section 11.1, the holder of any Note may proceed to
protect and enforce its rights either by suit in equity or by action at law, or
both. The Company stipulates that the remedies at law of the holder or holders
of the Securities in the event of any default or threatened default by the
Company in the performance of or compliance with any covenant or agreement in
this Agreement or any of the other Operative Documents are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance thereof, whether
by an injunction against a violation thereof or otherwise.
11.3 No Election of Remedies. No remedy conferred in this Agreement
or in any of the other Operative Documents upon the holder of any Security is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or thereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
11.4 Remedies Not Waived. No course of dealing between the Company
and/or any of its Subsidiaries, on the one hand, and any holder of any Security,
on the other hand, and no delay by any such holder in exercising any rights
hereunder or under any of the other Operative Documents shall operate as a
waiver of any rights of any such holder.
11.5 Application of Payments. In case any one or more of the Events
of Default specified in section 11.1 shall have occurred, all amounts to be
applied to the prepayment or payment of any Notes, shall be applied, after the
payment of all related costs and expenses incurred by the holders of the Notes
(including, without limitation, compensation to any and all trustees,
liquidators, receivers or similar officials and reasonable fees, expenses and
disbursements of counsel) first to interest and then to the principal amount of
the Notes.
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12. Registration, Transfer and Exchange of Securities. Securities issued
hereunder shall be issued in registered form. The Company shall keep at its
principal executive office (which is now located at the address set forth at the
beginning of this Agreement), registers in which it shall provide for the
registration and transfer of the Securities. The name and address of each holder
of the Securities shall be registered in such registers. The Company shall give
to any institutional holder of any Security promptly (but in any event within 10
days) following request therefor, a complete and correct copy of the names and
addresses of all registered holders of the Securities issued by it and the
amount and kind of Securities held by each. Whenever any Security or Securities
shall be surrendered for transfer or exchange, the Company(ies) that issued such
Security, at its expense, will execute and deliver in exchange therefor a new
Security or Securities (in such denominations and registered in such name or
names as may be requested by the holder of the surrendered Security or
Securities), in the same aggregate unpaid principal amount (in the case of the
Notes) or exercisable for the same aggregate number of Capital Stock (in the
case of any Warrants) or in the same aggregate number of Capital Stock (in the
case of any Warrant Share), as applicable, as that of the Security or Securities
so surrendered. Each such new Note shall be dated and bear interest from the
date to which interest shall have been paid on the surrendered Note or dated the
date of the surrendered Note if no interest shall have been paid thereon. The
Company may treat the Person in whose name any Security is registered as the
owner of such Security for all purposes.
13. Replacement of Securities. Upon receipt of satisfactory evidence of the
loss, theft, destruction or mutilation of any Security and (in the case of loss,
theft or destruction) of satisfactory indemnity, and (in the case of mutilation)
upon surrender of such Security, the Company(ies) that issued such Security at
its (or their) expense, will execute and deliver in lieu of such Security a new
Security of like tenor and, in the case of any new Note, dated so as not to
result in any loss of interest. Your unsecured agreement to indemnify and/or
affidavit and that of any other institutional holder shall constitute
satisfactory indemnity and/or satisfactory evidence of loss, theft or
destruction for the purpose of this section 13.
14. Appointment of Directors. As provided in the Rights Agreement and
subject to the terms thereof, (a) the Required Holders of the Notes shall have
the right to nominate one nominee for election to the board of directors of the
Company, provided that such nominee satisfies the eligibility criteria for board
members of the Company (as in effect on the Closing Date and reasonably amended
in good faith from time to time) and provided further that the Company's board
of directors shall consist of no more than twelve members, (b) the ESOT trustee
shall vote the ESOP's shares in favor of such nominee, subject to the trustee's
fiduciary obligations, and (c) the right granted by this section 14 shall exist
until the earlier of (i) repayment in full of the Notes or (ii) a Qualified IPO.
15. Amendment and Waiver.
(a) Any term of this Agreement and, unless explicitly
provided otherwise therein, of any of the other Operative Documents may,
with the consent of the Company, be amended, or compliance therewith may
be waived, in writing only, by the Required Holders of each class of
Securities entitled to the benefits of such term, provided that (i)
without the consent of each affected holder of the Notes, no such
amendment or waiver
-19-
shall (A) change the amount of the principal of or any rate of interest
on any of the Notes or change the payment terms of any of the Notes, or,
except as provided in the Notes, subordinate the obligation of the
Company to pay any amount due on the Notes to any other obligation, or
(B) change the percentage of holders of Notes required to approve any
such amendment, effectuate any such waiver or accelerate payment of the
Notes. Executed or true and correct copies of any amendment, waiver or
consent effected pursuant to this section 15 shall be delivered by the
Company to each holder of Securities forthwith (but in any event not
later than five days) following the effective date thereof.
(b) The Company will not, directly or indirectly, request or
negotiate for, or offer or pay any remuneration or grant any security as
an inducement for, any proposed amendment or waiver of any of the
provisions of this Agreement or any of the other Operative Documents
unless each holder of the Securities (irrespective of the kind and
amount of Securities then owned by it) shall be informed thereof by the
Company and, if such holder is entitled to the benefit of any such
provision proposed to be amended or waived, shall be afforded the
opportunity of considering the same, shall be supplied by the Company
with sufficient information to enable it to make an informed decision
with respect thereto and shall be offered and, if such offer is accepted
by such holder, paid such remuneration and granted such security on the
same terms.
(c) In determining whether the requisite holders of
Securities have given any authorization, consent or waiver under this
section 16, any Securities owned by the Company or any of their
respective Affiliates shall be disregarded and deemed not to be
outstanding.
16. Method of Payment of Securities. Irrespective of any provision hereof or
of the other Operative Documents to the contrary, so long as you or any other
institutional holder shall hold any Security, all payments due on such Security
shall be made to you or such other institutional holder by the method and at the
address for such purpose specified in Schedule I attached hereto or by such
other method or at such other address as you or such institutional holder may
designate in writing (given as provided in section 19), without requiring any
presentation or surrender of such Security, except that if any Security shall be
paid, prepaid and/or repurchased in full, such Security shall be surrendered to
the Company(ies) that issued such Security promptly following such payment,
prepayment or repurchase and canceled.
17. Expenses; Indemnity. The Company will (without duplication as to any
holder), jointly and severally, pay or cause to be paid (or reimbursed, as the
case may be) and will defend, indemnify and hold you (and each other holder of
any of the Securities) and each of your (and such other holder's) directors,
officers, employees, agents, advisors and Affiliates (each, an "Indemnitee")
harmless in respect of all reasonable costs, losses, expenses (including,
without limitation, the reasonable fees, costs, expenses and disbursements of
counsel) and damages (collectively, "Indemnified Costs") incurred by or asserted
against any Indemnitee in connection with the negotiation, execution, delivery,
performance and/or enforcement of this Agreement or any of the other Operative
Documents (including, without limitation, so-called work-outs and/or
restructurings and all amendments, waivers and consents hereunder and
thereunder, whether or not effected) and/or the consummation of the transactions
contemplated hereby and thereby or
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which may otherwise be related in any way to this Agreement or any other
Operative Documents or such transactions or such Indemnitee's relationship to
the Company or any of their respective Affiliates or any of their respective
properties and assets. Notwithstanding the foregoing, the Company shall not have
any obligation to an Indemnitee under this Section 17 with respect to any
Indemnified Cost which arose solely and directly as a result of the gross
negligence, willful misconduct or bad faith of such Indemnitee.
18. Taxes. The Company will pay all taxes and fees (including interest and
penalties), including, without limitation, all issuance and documentary stamp
and similar taxes, which may be payable in respect of the execution and delivery
of this Agreement and each of the other Operative Documents.
19. Communications. Unless otherwise provided herein, any notice required or
permitted under this Agreement shall be given in writing and shall be delivered
(a) by hand, (b) by mail, certified mail, return receipt requested, or (c) by
facsimile to the party to be notified, at the address indicated for such party
on the signature page hereof, or at such other address as such party may
designate by prior written notice to the other party. Unless otherwise provided
herein, notices shall be deemed to have been given and served (a) where
delivered by hand, at time of delivery, (b) where delivered by mail, on
acknowledgement of receipt as shown by the date indicated on the return receipt
as having been received, and (c) where delivered by facsimile, 24 hours after
transmission confirmation by the transmitting machine unless within those 24
hours the intended recipient has informed the sender that the transmission was
received in an incomplete or unreadable form, or the transmission report of the
sender indicates a faulty or incomplete transmission. If such receipt is on a
day that is not a working day or is later than 5 p.m. (local time) on a working
day, the notice shall be deemed to have been given and served on the next
working day. Any such communication must be sent (i) if to the Company (or any
Subsidiary of the Company), to the Company (or such Subsidiary) at:
Alion Science and Technology Corporation
1750 Tysons Boulevard
Suite 1300
McLean, VA 22102
Attention: Stephen Trichka, Esq.
Telecopy No.: (703) 714-6508
with a copy (which shall not constitute notice) to:
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006
Attention: Marc R. Paul
Telecopy No.: (202) 452-7074
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or at such other address (or telecopy number) as may be furnished in writing by
the Company to each holder of any Security and (ii) if to you, at your address
for such purpose set forth in Schedule I attached hereto, with a copy (which
shall not constitute notice) to:
McDermott, Will & Emery
227 West Monroe
Suite 4700
Chicago, IL 60606
Attention: Michael L. Boykins, Esq.
Telecopy No.: (312) 984-7700
and if to any other holder of any Security, at the address of such holder as it
appears on the applicable register maintained pursuant to section 12, or at such
other address as may be furnished in writing by you or by any other holder to
the Company.
20. Survival of Agreements, Representations and Warranties, etc. All
agreements, representations and warranties of the Company contained herein and
in the other Operative Documents shall be deemed to have been relied upon by you
and shall survive the execution and delivery of this Agreement and each of the
other Operative Documents, the issue, sale and delivery of the Securities and
payment therefor and any disposition of the Securities by you, whether or not
any investigation at any time is made by you or on your behalf. All
indemnification provisions, shall survive the date upon which none of the
Securities shall be outstanding and the termination of this Agreement and each
of the other Operative Documents.
21. Successors and Assigns; Rights of Other Holders. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents shall bind and inure to the benefit of and be enforceable by the
Company and you, successors to the Company and your successors and assigns, and,
in addition, shall inure to the benefit of and be enforceable by each holder
from time to time of any Securities who, upon acceptance thereof, shall, without
further action, be entitled to enforce the applicable provisions and enjoy the
applicable benefits hereof and thereof. The Company may not assign any of their
rights or obligations hereunder or under any of the other Operative Documents
without the written consent of the Required Holders of each class of Securities
then outstanding.
22. Purchase for Investment; ERISA.
(a) You represent and warrant (i) that you have been
furnished with all information that you have requested for the purpose
of evaluating your proposed acquisition of the Notes to be issued to you
pursuant hereto, (ii) that you will acquire such Notes for your own
account for investment and not for distribution in any manner that would
violate applicable securities laws, but without prejudice to your rights
to dispose of such Notes or a portion thereof to a transferee or
transferees, in accordance with such laws and the Rights Agreement, if
applicable, if at some future time you deem it advisable to do so, (iii)
that you are an "accredited investor", as defined in Regulation D of the
Commission under the Securities Act, (iv) you can bear the economic risk
of your investment in the Notes and that you have such knowledge and
experience and
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business matters that you are capable of evaluating the merits and risk
of your investment in the Notes and (v) you have had an opportunity to
ask questions and receive answers from the Company regarding the terms
and conditions of the acquisition of the Notes and the business,
properties, prospects and financial condition of the Company. You
understand that the Notes are characterized as "restricted securities"
under the federal securities laws and applicable blue sky laws inasmuch
as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act and such blue sky laws only in certain limited
circumstances. In this connection, you represent that you familiar with
SEC Rule 144, as presently in effect, and understand the resale
limitations imposed thereby and by the Securities Act and such blue sky
laws. The acquisition of such Notes by you at the Closing shall
constitute your confirmation of the foregoing representations and
warranties. You understand that, in making the representations and
warranties contained in section 6.2, the Company is relying, to the
extent applicable, upon your representations and warranties contained
herein.
(b) You represent that at least one of the following
statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(i) the Source is an "insurance company general
account" as defined in Section V(e) of Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and, except as
you have disclosed to the Company in writing pursuant to this
section (i), the amount of reserves and liabilities for the
general account contract(s) held by or on behalf of any employee
benefit plan or group of plans maintained by the same employer
or employee organization do not exceed 10% of the total reserves
and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the
insurer; or
(ii) the Source is a separate account of an insurance
company maintained by you in which an employee benefit plan (or
its related trust) has an interest, which separate account is
maintained solely in connection with your fixed contractual
obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan
(including any annuitant) are not affected in any manner by the
investment performance of the separate account; or
(iii) the Source is either (A) an insurance company
pooled separate account, within the meaning of PTE 90-1 (issued
January 29, 1990), or (B) a bank collective investment fund,
within the meaning of the PTE 91-38 (issued July 12, 1991) and,
except as you have disclosed to the Company in writing pursuant
to this section (iii), no employee benefit plan or group of
plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or
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(iv) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or "QPAM"
(within the meaning of Part V of the QPAM Exemption), no
employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of
the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither
the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the
QPAM Exemption) owns a 5% or more interest in the Company and
(A) the identity of such QPAM and (B) the names of all employee
benefit plans whose assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this
section (iv); or
(v) the Source is a governmental plan; or
(vi) the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or
more employee benefit plans, each of which has been identified
to the Company in writing pursuant to this section (vi); or
(vii) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the
coverage of ERISA.
As used in this section 23(b), the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall
have the respective meanings assigned to such terms in Section 3 of
ERISA, and the term "QPAM Exemption" means PTE 84-14 (issued March 13,
1984).
23. Assignment; Right of First Offer.
23.1 Right of First Offer. Subject to the provisions of this section
23, the Notes may not be assigned to any person that (so long as no Event of
Default described in any of Sections 11.1(a), (b), (d), (e), or (f) has occurred
in which event the consent of the Company shall not be required) is a Competitor
(provided that this limitation shall be waived with respect to a proposed
transferee if the Company determines in its reasonable discretion that such
proposed transferee does not then compete with the Company or any entity
controlled by the Company) or not a U.S. Qualified Person at the time of
assignment, provided that the Company shall have a right of first offer on such
assignment as follows:
(a) First Offer.
(i) If the holder proposes to sell or otherwise
transfer the Notes or any portion thereof it holds at such time
(collectively, the "Transfer Interests") to any third party
other than an Affiliate of such holder (other than a sale or
transfer in
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connection with a Demand Registration or Piggy-Back Registration
under the Rights Agreement), the holder is required to first
notify the Company, by delivering to the Company a written
notice ("Sale Notice") in accordance with Section 19, stating
the holder's bona fide intention to sell or otherwise transfer
the Transfer Interests. The Company shall have the exclusive
right, for a period of thirty (30) days from its receipt of the
Sale Notice, to make an offer to purchase the Transfer Interests
at a price to be proposed by the Company.
(ii) Subject to Section 23.1(c) below, if either (x)
the Company does not deliver to the holder written notice of an
offer to purchase the Transfer Interests ("Purchase Notice")
within thirty (30) days after the Company's receipt of the Sale
Notice, or (y) the holder has rejected the Company's offer, the
holder shall be entitled to sell the Transfer Interests at a
price which is no less than ninety percent (90%) of the last
price offered by the Company for the Transfer Interests (the
"Last Offer Price"), to any third party that is not an Affiliate
of the holder at any time during the period of nine (9) months
following the date of delivery of the Sale Notice by the holder
to the Company, without the obligation to provide any further
offers or notices to the Company.
(b) Second Offer.
(i) If the holder proposes to sell or otherwise
transfer the Transfer Interests to a third party that is not an
Affiliate of the holder at a price that is less than ninety
percent (90%) of the Last Offer Price (the "Proposed Sale
Price"), the holder shall, prior to consummating such sale or
transfer of the Transfer Interests to the third party, make an
offer to the Company in writing and in accordance with Section
19 (the "Second Sale Notice"), to sell the Transfer Interests to
the Company at the Proposed Sale Price.
(ii) Subject to Section 23.1(c) below, if the Company
does not deliver to the holder written notice of acceptance of
any offer made pursuant to Section 23.1(b)(i) within thirty (30)
days after the Company's receipt of the Second Sale Notice, the
Company shall be deemed to have waived its rights to purchase
the Transfer Interests, and the holder shall be entitled to sell
or otherwise transfer the Transfer Interests at the Proposed
Sale Price to such unrelated third party within nine (9) months
following the date of delivery of the Sale Notice, without the
obligation to provide any further offers or notices to the
Company.
(c) If the holder proposes to sell or otherwise transfer the
Transfer Interests to a third party that is not an Affiliate of the
holder at any time after the expiry of the nine-month period referenced
in Section 23.1(a)(ii) or Section 23.1(b)(ii), as the case may be, then
the holder shall again be required to comply with all the obligations
and requirements contained in Sections 23.1(a) and 23.1(b).
(d) Payment of the Purchase Price shall be made in cash in
immediately available funds within sixty (60) days after the date (if
any) that a purchase price is agreed for the Company's purchase of the
Transfer Interests.
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23.2 Minimum Amounts and Increments. Subject to Section 23.1, the
Notes may be assigned in minimum amounts of $5,000,000 and in increments of
$1,000,000 in excess thereof, provided that the holder may assign the Notes in a
smaller minimum amount in connection with the transfer of all of the remaining
Notes of such holder.
24. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and,
unless explicitly provided otherwise therein, each of the other Operative
Documents, including the validity hereof and thereof and the rights and
obligations of the parties hereunder and thereunder, and all amendments and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of the State of Illinois without giving effect to any choice of
law or conflicts of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction. The Company, to the
extent that it may lawfully do so, hereby consents to service of process, and to
be sued, in the State of Illinois and consents to the jurisdiction of the courts
of the State of Illinois and the United States District Court for the Northern
District of Illinois, as well as to the jurisdiction of all courts to which an
appeal may be taken from such courts, for the purpose of any suit, action or
other proceeding arising out of any of its obligations hereunder or thereunder
or with respect to the transactions contemplated hereby or thereby, and
expressly waives any and all objections it may have as to venue in any such
courts. The Company further agrees that a summons and complaint commencing an
action or proceeding in any of such courts shall be properly served and shall
confer personal jurisdiction if served personally or by certified mail to it at
its address set forth in section 19 or as otherwise provided under the laws of
the State of Illinois. Notwithstanding the foregoing, each of the Company agrees
that nothing contained in this section 24 shall preclude the institution of any
such suit, action or other proceeding in any jurisdiction other than the State
of Illinois. THE COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST IT IN RESPECT OF ITS
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
25. Rule 144A. The Company will take, or will cause to be taken, such action
as any holder of Securities may reasonably request from time to time to
facilitate any sale or disposition by any such holder of any Securities without
registration under the Securities Act and/or any applicable securities laws
within the limitation of the exemptions provided by any rule or regulation
thereunder, including, without limitation, Rule 144A under the Securities Act.
26. Miscellaneous. The headings in this Agreement and in each of the other
Operative Documents are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof or thereof. This Agreement (together with
the other Operative Documents) embodies the entire agreement and understanding
between you and each of the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof. Each covenant contained
herein and in each of the other Operative Documents shall be construed (absent
an express provision to the contrary) as being independent of each other
covenant contained herein and therein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. If any provision in this Agreement or in any
of the other Operative Documents refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be
-26-
applicable, whether such action is taken directly or indirectly by such Person,
whether or not expressly specified in such provision. In case any provision in
this Agreement or any of the other Operative Documents shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This Agreement
and, unless explicitly provided otherwise therein, each of the other Operative
Documents, may be executed in any number of counterparts and by the parties
hereto or thereto, as the case may be, on separate counterparts but all such
counterparts shall together constitute but one and the same instrument.
27. Confidential Information.
For the purposes of this Section 27, "Confidential Information" means
such information delivered to each holder by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
holder as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (i) becomes publicly
available other than as a result of a breach of this Agreement, (ii) becomes
available to any holder on a non-confidential basis from a source other than the
Company or its Subsidiaries or (iii) was available to any holder on a
non-confidential basis prior to its disclosure to such holder.
Each holder will use reasonable efforts to maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
holder in good faith to protect confidential information of third parties
delivered to such holder; provided that such holder may deliver or disclose
Confidential Information to (i) each holder's directors, trustees, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
holder's Notes), (ii) each holder's financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 27, (iii) any other
holder, (iv) any Person to which any holder sells or offers to sell its Notes or
any part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 27), (v) any Person from whom any holder offers to
purchase any security of the Company (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 27), (vi) any federal or state regulatory authority having
jurisdiction over any holder, (vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about such holder's investment
portfolio, (viii) each holder's investors or fund participants in the ordinary
course, (ix) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation
or order applicable to such holder, (x) in response to any subpoena or other
legal process, (y) in connection with any litigation to which such holder is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such holder may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under its Notes and the other Operative Documents. Each holder, by
its acceptance of a Note,
-27-
will be deemed to have agreed to be bound by and to be entitled to the benefits
of this Section 27 as though it were a party to this Agreement.
[The remainder of this page is intentionally left blank.]
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement under seal among you and the Company. Please
then return one of such counterparts to the Company.
Very truly yours,
ALION SCIENCE AND TECHNOLOGY CORPORATION
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
The foregoing Agreement is hereby
agreed to as of the date thereof.
IIT RESEARCH INSTITUTE
By:
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Name:
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Title:
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